Odisha miners increase iron ore fines price by 6-8%

The new miners need to contribute an amount equal to 10% of the royalty

Merchant miners in Odisha have tinkered with iron ore fines prices, raising it by six to eight per cent. The increase in prices has stemmed from the state government’s move to collect contribution from the lessees for District Mineral Foundation (DMF) with retrospective effect from January 12, 2015.

According to the guidelines listed in the amended Mines and Minerals Development & Regulation Act, miners who have bagged leases before January 12, 2015 would have to fork out 30 per cent of the royalty as DMF contribution. An industry estimate put the figure for such miners at Rs 1,500 crore in case of Odisha.

New miners will need to contribute 10 per cent of the royalty. The Federation of Indian Mineral Industries had moved the Delhi High Court against the Odisha government’s decision to collect DMF dues retrospectively.
 

KEY TAKEAWAYS

• Miners who bagged leases before January 12, 2015 would have to fork out 30% of royalty as DMF contribution
   
• New miners have to pay 10% of royalty
   
• Ex-mines price of iron ore fines for March has gone up to Rs 1,275 a tonne, from Rs 1,200 in February
   
• Price raise has come amid huge stockpile of iron ore fines at mines pit heads
   
• Inventory of iron ore fines was 60.93 mt in 2014-15

“Despite the direction of the Delhi High Court, the state government has taken coercive action to raise demand of arrears on DMF retrospectively, resulting in hike in prices of iron ore,” said an official with a steel firm.

The ex-mines price of iron ore fines (with 62.5 per cent Fe grade) for March has gone up to Rs 1,275 a tonne, inclusive of royalty from Rs 1,200 in February. In Odisha, iron ore prices are steep because the state government charges a uniform, high royalty rate even for the lowest grade of ore, violating statutory provisions. For iron ore fines, royalty was higher than the statutes by Rs 300-400 a tonne.

The price raise has come amid a huge stockpile of iron ore fines at mines pit heads. By the end of 2014-15, the inventory reached 60.93 million tonnes (mt). Around 70 per cent of Odisha’s iron ore output consist of fines. Pellet makers, key users of iron ore fines, are struggling to keep operations afloat due to escalating prices. Although the state has a pellet manufacturing capacity of 28 mt a year, most pellet plants have shut down while the remaining were operating at a bare minimum level. Pellet, an intermediate product in steel making, competed with calibrated lump ore. But, since lumpy ore is comparatively cheaper, most steel makers have shunned buying of pellets.