News and Events

Karnataka iron ore e-auction base price reduced by 10%

The ore-starved steel companies in Karnataka, which had complained of high base prices at the electronic auctions, have more than one reason to feel happy at the next round of e-auctions. The monitoring committee has not only lowered the base price for the next auction, scheduled for tomorrow, but also increased the availability of ore to two million tonnes (mt) from 1.5 mt during each of the past five auctions.

“We have lowered the base price by 10 per cent on high-grade iron ore with 63 per cent Fe content at this week’s e-auctions. During earlier auctions, ore of the same grade was sold at a base price of Rs 2,700 a tonne for fines and Rs 3,700 a tonne for lumps. We have fixed prices after taking into account several factors like cost of production for miners and the prevailing international prices,” an official in the department of mines and geology said.

A majority of steel companies, including JSW Steel, Kalyani Steel, BMM Ispat and MSPL, among others, had complained of higher base prices compared to the international prices during the last five rounds. Some companies had even backed out of the last two auctions.

The monitoring committee, appointed by the Supreme Court to oversee e-auctions of iron ore in Karnataka, has also increased the overall quantity of iron ore to be auctioned to 40 mt from 25 mt announced earlier. The quantity had gone up after adding the ore produced from NMDC mines, the official said.

At present, only government-owned NMDC is allowed to carry out mining.

The apex court had initially allowed the auction of 25-mt stockpile at various mines in the three districts of Bellary, Chitradurga and Tumkur. So far, in the first two months of auctions, about 5.8 mt have been auctioned. However, due to procedural delays, only about 2.5 mt have been moved to the respective steel companies.

The committee has put about 2 mt of iron ore at this week’s auctions. Another 1-1.5 mt would be auctioned by the end of November, the official said.

“Considering the problems faced by steel companies in sourcing raw material, we have decided to put on auction about 4 mt every month,” the official said.

For the November 16 auction, the committee has also included ore from mines in Chitradurga, which is known for low-grade products. Of the 2 mt coming up for auctions this week, about 500,000-600,000 tonnes would come from NMDC mines. The ore from Tumkur mines would be made available for auctions very soon, the official added.