E-auction of piled-up iron ore at the mining sites in Karnataka covered by the recent Supreme Court (SC) order is expected to clear the higher grade ore while the miners may be forced to wait for selling their low grade material.
The SC has allowed to clear already extracted iron ore at the mining sites in three districts of the state as per the recommendation made by the Central Empowered Committee (CEC). Around 15 million tonne (mt) may be in the category of higher grade with 60% plus Fe content and the remaining 10 mt in the lower grade, which will not be consumed by the domestic industry.
The ban on mining is continuing in this area except for the state-owned National Mineral Development Corporation (NMDC). The CEC has assessed that around 25 million tonnes of iron ore have been extracted even before the ban and lying in the mining sites in these three districts.
The miners said the companies bidding for iron ore will look for high grade ore and lumps and they may neglect the low grade ore. Talking to FE, Basant Poddar, managing director of Mineral Enterprises (MEL), which has a mining lease in Chitradurga district, said, ?It is not clear what kind of mechanism will be arrived at to auction low grade iron ore as local secondary steel mills and sponge iron manufacturers will not prefer them.?
Poddar is also the southern region chairman of Federation of Indian Mineral Industries (Fimi).
There are around 100 sponge iron companies depending on the ore in Karnataka in addition to some pellet manufacturers and steel mills. The sponge iron producers and secondary steel mills prefer lumps as they do not have technology to use fines of low grade ore. He said the 25 million tonnes of existing stock has multiple grades of iron ore.
As per the SC order, the government-owned Metal Scrap Trading Corporation (MSTC) should auction 1.5 mt of iron ore every month. The high grade iron ore may be cleared in the first seven months and the miners have to struggle to find customers to move their low grade material, Poddar added. MEL has declared a stock of 8 mt with around 50% fe grade.
Mohamad Iqbal Hothur, managing partner of Hothur Iron Ore, which has a mining lease in Bellary, said this is the first time in the country that the government is auctioning the iron ore mined by the private sector players. The miners should have right to market their product, he said. ?If the companies bid only for higher grade, how can the miners dispose low grade ore,? he said. Hothur has 2-million tonnes of extracted iron ore with majority portion being lower grade.
According to analysts, the major steel producers like JSW Steel, Kalyani Steel, Mukund and Sathvana Ispat and pellet producers like Bharat Mines and Minerals (BMM) and MSPL would buy multiple grade iron ore. MSTC is likely to auction the ore in a week?s time.