The first round of e-auction in Goa, under which 0.5 million tonnes of iron ore was put up for sale, saw healthy premiums on Monday with Sesa Sterlite seeing all of its ore being picked up, MSTC officials said.
State-owned MSTC has been conducting the e-auction in Goa under the aegis of the monitoring committee set up to oversee the entire process across the country.
While the auctions got a good response, major steel players such as JSW Steel, Kalyani Steel, Mukand Steel, BMM Ispat ? the major offtakers of iron ore in the e-auctions in Karnataka ? refrained from it.
?We are still in the testing phase. The steel companies will wait till the time the auctions evolve and the prices gravitate to an optimum level. Plus, most of the ore on offer is of low quality which cannot be used in the blast furnaces across India,? said the MSTC official.
In the first round of auction, 0.5 million tonnes was offered.
?While the first round got bids at a premium of around 35%, the second round, which had higher lot sizes, got bids at a premium of almost 45%,? the official said and added that expectations are that the forthcoming auctions will see higher participation.
In all 10 companies ? mostly from the trading fraternity ? participated in the auctions.
Another reason for non-participation of steel companies was due to a high earnest money deposit (EMD) which the companies have to pay to participate in the auctions.
?The price is very high, to the tune of Rs 2.5 crore for a lot size of 10,000 tonnes. This is of course a deterrent. Karnataka’s EMD is around Rs 5 lakh for a lot size of 4,000 tonnes,? said the managing director of a steel company. MSTC sources say the value of EMD is a decision of the Goa Government and it is a one-time payment till the time a bidder is a part if the bidding process.
?It will be refunded if he decides not to participate at all. And in case of default, it will be completely forfeited,? the official pointed out.
According to the bidding document issued by the directorate of mines and geology, government of Goa, the bidding companies have to shell out some preliminary sum as earnest money deposit (EMD) at a rate of Rs 2.5 crore for bidding up to 10,000 tonnes, Rs 5 crore for up to 20,000 tonnes, Rs 7.5 crore for bidding up to 50,000 tonnes and Rs 10 crore for bidding over 50,000 tonnes.
According to directorate of mines, the actual price at which the lots will be closed will be finalised in the next few days and that will give an understanding as to how the e-auctions will progress in the state.
However, a senior official in the Goa government said JSW Steel, which had earlier shown keen interest to lift ore from Goa in the e-auctions and had actively participated in the recently held training programmes by the state government, did not participate in the bidding. The government of Goa, however, had categorically mentioned that none of the players who have been allegedly involved in illegal mining would be allowed to bid for the ore and this reduced the number of final bidders to almost 11.
The iron ore thus auctioned will also be allowed to export and foreign players were also allowed to bid through an Indian arm.
