Odisha Mining Corporation (OMC) is planning to have a fresh look at its online iron ore auction method after last few sales through this mode have yielded lukewarm response, leading to large stacks of unsold fines at mines pithead.
In the latest auction conducted earlier this week, the state-run miner received bids for only 70,000 tonne iron ore, out of roughly half a million tonne ore on offer as the steel plants shied away from making bids citing higher base price.
The trend was seen in previous auctions also. OMC said, it will study the reasons and find out faults in the process.
"We do not know what is wrong with the process and we are examining the reasons for such less participation in bids. We will look for answers this time," said an official of the state undertaking.
Initially, when the e-auction process started towards the end of 2014, steel plants complained of higher base prices of lump and fines and refused to take part in the auction process. Since then OMC has reduced the rates, but it is not enough, said an auction participant.
"OMC has reduced its base price of fines in the last few auctions to the level of 40 per cent, whereas in the last three e-auctions base price of lumps have remained unchanged, despite material not getting booked or sold," the Odisha chapter of Indian Chambers of Commerce (ICC) said in a memorandum to the state steel minister on Wednesday.
Base rates of calibrated lump ore (CLO) or sized iron ore have remained around Rs 3,000 per tonne in last three online auctions of OMC for ore excavated from three main regions. The rates are, however, lower than January when it was priced around Rs 4,000 per tonne.
"We have taken measures to reduce rates whenever there is poor response. But it is private mine owners who are main culprit, as they reduce their rates as soon as we announce our prices. Anyway, we will certainly take a decision soon related to e-auction process," the official said.
In global markets, iron ore rates have come down by more than 10 per cent since January because of supply glut and lower demand from China, the top steel producer. In domestic market, iron ore rates for exports are quoted around $50 (Rs 3,200) per tonne.
According to buyers in Odisha, the iron ore lump rates must be lower than global rates at around Rs 2,500 per tonne at pithead as the buyers have to fork out a hefty amount to transport them to their plant site.