Karnataka to auction 4-5 mt of iron ore dumps

The current supply of iron ore is pegged at 14 mt, which is projected to go up to 22 mt provided more new mines start operating and NMDC increases its capacity to 10 mt

The year 2014 is set to herald better days for the iron ore-starved steel industry in Karnataka. The Supreme Court-appointed monitoring committee to oversee e-auction of iron ore in the state is readying to put on auction an additional four or five million tonnes (mt) of iron ore dumps, which contain mostly sub-grade iron ore (with Fe content of 45-50 per cent), for auction as the demand-supply gap still remains wide.

This follows the resumption of mining by Sesa Sterlite, the largest private sector miner in Karnataka, in Chitradurga district during the last week of December 2013. Sesa is expected to put out close to one million tonnes in the January-March quarter of FY14. The company is permitted to produce 2.29 mt a year.

Since only 19 mines have started producing ore, the supply is still not sufficient enough to meet the requirement of the steel industry. Taking into account the huge gap in demand and supply, the monitoring committee has decided to increase e-auction of dumps, sources said.

The move follows a direction from the Central Empowered Committee (CEC) of the apex court. At the recently-held review meeting with all stakeholders of the mining and steel industry, the CEC directed the monitoring committee to auction more dumps.

The committee, which sold around four mt of sub-grade ore from 21 dumps in 2013, is readying to put on auction another four-five mt this year to bridge the demand-supply gap. The steel industry requires 35-40 mt of iron ore in a year to reach the full capacity of 16-17 mt of steel per annum in Karnataka.

However, the current supply of ore is pegged at 14 mt, projected to go up to 22 mt it more new mines start operating and NMDC increases its capacity to 10 mt, steel industry sources said.

“There are some eco-sensitive areas where dumps are not removed. The monitoring committee officials are visiting mines one by one to take samples and are releasing dumps for auction gradually. We expect another five-six mines will be permitted to put out the dumps for auction in the fourth quarter of this year,” sources close to the auction process told Business Standard.

The iron content in these dumps is estimated to be 45-50 per cent and considered unfit for steel making. However, mills such as JSW Steel and BMM Ispat, among others, have installed new-technology benefication plants to make use of such low-grade ore, industry analysts said.

JSW Steel has been buying huge quantity of dumps at e-auctions, as the monitoring committee has stipulated the entire lot has to be lifted by one single bidder. The dumps are sold in lot sizes of 200,000 tonnes to 500,000 tonnes. The monitoring committee sold 20 mt of iron ore through e-auction between April and December 2013. This includes dumps and freshly-mined iron ore.