Karnataka to allow 4-mt iron ore e-auction this month

Ore-starved iron and steel manufacturers in Karnataka are set to get a much-needed relief this week, with the state government allowing the release of a higher quantity of iron ore from the existing stockpile through electronic auction.

The Supreme Court-appointed monitoring committee, which is supervising the electronic auction of iron ore in Karnataka, has decided to put up 4 million tonnes (mt) of ore for bids in October. Of this, 2 mt would be auctioned tomorrow. A stockpile of 25 mt has been lying at various mines in the state. Tomorrow’s auction will the third one. A total of 1.24 mt was sold through the two auctions in September .

The move comes after the iron and steel industry pleaded with the Karnataka chief minister for supply of at least 2.5 mt of iron ore a month.

The Karnataka Iron and Steel Manufacturers Association (Kisma), led by JSW Steel vice-chairman and Managing Director Sajjan Jindal, had recently urged the government to conduct e-auctions every day or on alternate days to ensure a continuous supply of the raw material for their furnaces.

“We expect to buy close to 1.5 mt at the third auction tomorrow,” said Vinod Nowal, director & CEO, JSW Steel.

The decision to release a higher quantity through e-auctions would help the sponge iron, pig iron and steel mills, which are dependent on iron ore from Karnataka, to restore normal production. The iron and steel industry was on the verge of closure due to the severe shortage of iron ore following the suspension of mining activity after a direction from the Supreme Court.

According to Kisma, the industry in Karnataka requires 104,000 tonnes per day an average, while the supply was 20,000 tonnes, as only NMDC was allowed to operate its mines.

“During the first two auctions, held on September 14 and 29, we had auctioned 1.24 mt at an average rate 20 per cent higher than the base price. Of the 40 bidders listed with NMDC, 16 were successful in the second auction. The ore will be made available to steel mills dependent on the ore from NMDC’s mines in Bellary on a priority basis,” H R Srinivasa, director, Department of Mines and Geology, Karnataka, told Business Standard.

Srinivasa said the second auction saw sale of 932,000 tonnes and generated Rs 227 crore at an average sale value of Rs 2,500 a tonne.

He said about 2 mt would be put up for bidding in the third round tomorrow. This includes about 232,000 tonnes from the NMDC mines. The Supreme Court, in its order on September 23, had ordered that iron ore from NMDC mines could be released through e-auctions. However, Srinivasa ruled out the possibility of conducting e-auctions on a daily or alternate-day basis, as demanded by Kisma. Kisma also demanded that the government open iron ore mines that were found legal and within the regulatory framework by the Joint Inspection Committee appointed by the apex court, to enable a continuous supply of iron ore to the industry.