Auction of only a few blocks at a time when there is too much competition is creating an artificial scarcity, said Naveen Jindal, Chairman of JSPL in Minerals, Mining and Metals E-conclave recently organised by the Bengal Chamber of Commerce and Industry.
Indian state of Odisha had conducted auction of 19 blocks of iron ore in February-March, in which interested companies ended-up paying high premiums to secure blocks, which is unviable or unsustainable, Jindal noted.
Only five of those 19 mines are operational, which created a shortage of iron ore in the domestic market leading skyrocketing iron ore prices which deeply hurt the domestic steelmakers.
India’s state-owned company National Mineral Development Corporation’s (NMDC) iron ore prices have almost double since June-end. Iron ore fines, which was at Rs2,160/mt around June-end, is now priced at Rs4,110/mt.
During the conclave, question also arises whether iron ore exports should be banned or not due to shortage of iron ore. Sumit Deb, NMDC chairman and managing director, said most of its exports had 57-58pc Fe content which was not utilised by the domestic steel industry.
Iron ore with more than 58pc Fe content attracts export duty. Deb also pointed out that in the case of pellet exports, there was no duty and was being exported with very little value addition.