Last Updated: 7/23/2014 3:59:00 PM
The electronic auction of iron ore as directed by the Supreme Court commenced on Wednesday and the first day of auctions witnessed the total sale of 400,000 metric tonnes at around 25 per cent more than the base price. As many as 60 buyers from the steel and sponge iron manufacturing companies in Karnataka participated in the e-auction and bought about 100 lots of 4,000 tonnes each of iron ore. The auction is understood to have fetched around Rs 180 crore.
According to industry sources the public sector MSTC, which was appointed by the Supreme Court to conduct the auction had fixed a base price of Rs 2,700 per tonne for iron ore fines and Rs 3,700 per tonne for iron ore lumps with 63 and above grade. The auctions were held through the e-auction portal, www.mstcecommerce.com.
The three mines from Bellary, Hospet and Sandur region, such as V S Lad, Mysore Minerals Ltd and Lakshminarayana Mining Company (LMC) had put on auction around 400,000 metric tonnes. LMC alone had made available 200,000 metric tonnes of fines and lumps on auction.
However, at the end of on Wednesday’s auctions, 60 companies bought 400,000 tonnes of iron ore. The auction witnessed around 25 per cent appreciation on the base price fixed by MSTC.
“As stipulated by the apex court, the bidders, who have submitted earnest money deposit (EMD) online with the MSTC, will have to pay the royalty and forest development tax to the state department of mines and geology within seven days from the date of auction. Once the royalty and FDT are paid, the mines department will issue the mineral dispatch permit to remove the allotted iron ore from the mine heads at their own cost within seven days,” steel industry sources told Business Standard.
As the Central Empowered Committee (CEC) has not cleared the three mines from all the charges of irregularities, the proceeds of on Wednesday’s e-auction would be deposited with the state government until further orders of the apex court, the sources said.
The e-auctions would be held every Wednesday and at least three times during a month until the stocks are cleared. According to the CEC, there are about 25 million tonnes of iron ore lying at various mine heads in Karnataka. Based on the CEC report, the Supreme Court, in its order on September 2, 2011 permitted monthly auctions of 1.5 million tonnes of iron ore from stockpiles in the state.
Subsequently, the Supreme Court had ordered for setting up of a three member monitoring committee comprising Deepak Sharma, Additional principal chief conservator of forests, H R Srinivasa, director, department of mines and geology and U V Singh, chief conservator of forests. The committee is planning to auction about 400,000 metric tonnes of iron ore every week.
Around 14 million tonnes of iron ore is available in Bellary, seven million tonnes in Chitradurga and 4 million tonnes in Tumkur districts.
The buyers of iron ore, however, are restricted from exporting the iron ore as directed by the Supreme Court. With the apex court banning halting the mining of iron ore temporarily, the domestic steel industry is facing a severe shortage of raw material. The present auction is expected to ease the pressure on steel companies to some extent, the industry sources added.