More Karnataka e-auctions to help ore-starved steel cos

Written by Jaishankar Jayaramiah | Bangalore | Updated: Sep 30 2011, 07:24am hrs
Steel mills, including JSW Steels 10-million tonne per annum (mtpa) plant in Bellary, that depend on iron ore from Karnataka are expected to get more raw material in the coming days. With the Supreme Court-constituted monitoring committee deciding to e-auction iron ore frequently, steel output is also expected to rise.

According to industry sources, around 3-million tonne of iron ore will be e-auctioned next week to meet the demand from iron and steel industries. An official attached to Metal Scrap Trading Corporation (MSTC) told FE that around 1.1 million tonne of iron ore was placed for e-auctioning on Thursday.

As per the SC order, the state-owned MSTC should e-auction 1.5 million tonne per month (mtpm) from its 25-million-tonne stock in private mining sites in iron-ore rich Bellary, Chitradurga and Tumkur districts. The latest SC order came as a relief for steel mills, which found it difficult to meet iron ore requirements, after the apex court imposed a ban on mining in the three districts following complaints of illegal mining.

MSTC conducted its first e-auction on September 14 and material had started moving on September 21.In the first e-auction, MSTC sold around 3.75 lakh tonne of iron ore, industry watchers revealed.

According to JSW Steel vice-chairman and MD Sajjan Jindal, who met Karnataka chief minister Sadhanada Gowda on Wednesday along with other steel mill owners, the industry in Karnataka requires around 80,000 tonne of iron ore per day but only 30,000 tonne of the mineral sold through e-auction has been moved from the mining sites so far. He said the SC-constituted monitoring committee has assured expediting the process of e-auctioning and it would be done on a weekly basis.

Dinesh Singhi, managing director of BMM Ispat, a Bellary-based pellet manufacturer, told FE that the monitoring committee overseeing the e-auction has assured frequent auctioning of iron ore in the coming weeks. He said the next auction is likely to be on October 4.

JSW, which runs 10-mtpa capacity integrated steel mill in Bellary, requires around 60,000 tonne of iron ore per day to run the factory at full capacity while the remaining iron and steel units including BMM Ispat, Kalyani Steel, Satavahana Steel and Kirloskar Ferrous shares the remaining resources.

Due to decline in supply of raw material, JSW has already cut down production at its Vijayanagar plant near Bellary to 30%. JSW's Vijayanagar facility is the country's largest steel production plant with around 8,000 permanent employees and 10,000 sub-contract labourers.

The market has already started witnessing steel shortage while the prices have also gone up due to production cuts in the mills in Karnataka. According to Singh, the steel prices have increased by around Rs 1,000 per tonne in the past one week. He said the Karnataka government has assured that it would take steps to speed up the process of moving the auctioned material from the mining site to the factories.