Differential pricing of iron ore likely to create competition concerns: CCI

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The differential pricing of iron ore is likely to create competition concerns and exports of iron ore should also be discouraged, according to a study by fair trade regulator CCI.

In its market study on 'Dynamics of Competition in the Mining Sector in India With A Focus On Iron Ore', the watchdog has also flagged possible issues with pricing of iron ore from captive mines.

"The allocation of captive mines to some players creates entry barriers in the iron ore and steel sector as entry and successful operation becomes costly for new firms," the Competition Commission of India (CCI) said in a release.

As per the study, the differential pricing of iron ore for different end users is likely to create competition concerns.

The amendments in mining law in 2021 have allowed the captive mines to sell up to 50 per cent of surplus iron ore in the open market which is likely to boost the supply of iron ore in the market, the study said.

However, it noted that when a captive mine sells its surplus input to other entities, it is crucial to monitor the prices charged to ensure that it does not result in high costs for the buyer firm, especially if the buyer competes with captive mine owned firm in the steel market.

"... exports of iron ore should be discouraged while simultaneously encouraging high value-added activities, including domestic production of steel, which will control the prices as well," CCI said.