Odisha steel industry pleads for fair pricing of iron ore

The All Odisha Steel Federation (AOSF), an association of secondary and finished steel makers, has urged the ministerial panel on raw material supply to address issues pertaining to pricing and availability of minerals ahead of the next meeting of the committee on Thursday.

It said, though the recent state government notification to reserve half of the iron ore output for local units was beneficial for the industry, the mine owners were deliberately quoting higher rates.

“After this notification, the mine owners have informed about the availability of ore for the steel units through media and letters to ‘Kalinga Nagar Association’ and 'AOSF'. They are intentionally quoting such a high rates that the industry can’t afford to buy the raw material,” P L Kandoi, president of the AOSF, wrote to the ministerial committee.

Accusing the mine owners of cartelization, he said, “they are doing so with an intention to prove that the decision to allocate 50 per cent iron ore for state based units is not workable, so that they can build up an argument to force the government to either cancel the order or modify it with a toned down ore quota for domestic industries,” Kandoi said.

The steel makers have been demanding that miners must lower rates as the current market prices are about 10 times higher than cost of production of the mineral. The mine owners, however, refuted the charges saying the rates are always determined by supply and demand.

“There is no question of cartelisation since many industries based outside Odisha are buying iron ore at the prevailing market price and still making profit. If a domestic steel maker wants, he can always negotiate with the miner on price”, said Rajiv Lochan Mohanty, president of Eastern Zone Miners' Association (EZMA), a trade body representing about 56 miners.

The state steel and mines ministry, on December 5, had ordered the miners to set aside half of their monthly iron ore production for domestic steel units at a fair market price in order to solve the constraints in raw material supply.

The order was intended to benefit about hundred-odd secondary steel makers of the state, which were facing acute raw material supply crunch with most of the mine owners exporting iron ore abroad, leaving the local steel units high and dry.

“The purpose of the notification will be achieved when a fair price mechanism is implemented,” said Kandoi.

The steel makers' body has suggested that state-run Odisha Mining Corporation (OMC) should first lower iron ore prices, which will influence others to cut prices.