Miners cut iron ore prices amid low offtake, slump in market rates

Steel makers feel the step by private lessees would goad state run Odisha Mining Corporation to go forSteel makers feel the step by private lessees would goad state-run Odisha Mining Corporation to go for a sharp cut a sharp cut in its iron ore price

Merchant miners in Odisha have announced cut in prices of iron ore fines and lumps, taking cue from other mineral rich states and also amid low offtake of ore by steel units.

The rate cut ranged from 10-25 per cent depending on the individual miner. The downward revision in prices is expected to stabilise prices, making ore more affordable for the state based steel industries which are bleeding losses. Non- captive leaseholders like Rungta Mines, Indrani Patnaik, Serajuddin Mines, KJS Ahluwalia, K N Ram and Kaypee Enterprises have slashed ore rates, which will be a huge spell of relief to the steel firms.

On an average, prices of iron ore lumps of 62 per cent Fe grade (and higher) have fallen from the level of Rs 3,300 a tonne to Rs 2,900 or even lower in case of some miners. Rates of lumps have been cut in the band of Rs 400-1,000 per tonne whereas in case of fines, prices are down Rs 200-300 per tonne from the previous level of Rs 1,400-1,600 per tonne.

Steel makers feel the step by private lessees would goad state-run Odisha Mining Corporation (OMC) to go for a sharp cut in its iron ore prices that are ruling high despite piling inventory.

"The rate cut by private miners should spur OMC to reduce its e-auction floor prices that are unacceptably high. In any case, the correction in iron ore prices by non captive lessees is a welcome step. It will stabilise prices and ensure raw material availability at optimal prices", said a senior official of a steel company.

OMC had pegged the price of iron ore lumps at Rs 2,400-2,500 per tonne at its last e-auction organised in August this year.

Manish Kharbanda, executive director and group head (mines & minerals), JSPL said: "The price cut by merchant miners is welcome. But, there is scope for rates of iron ore lumps and fines to fall further by Rs 300 -500 per tonne to bring prices to more realistic level. Also production from merchant mines needs to be maximised. OMC, also needs to slash prices since its stock is piling up as ore lifting has been quite low on account of uneconomic prices and high transport rates. Besides, the steps announced by the state government for rationalising mineral transport rates and cracking down on the transport mafia need to translate in to ground level actions."

Trade sources said the reduction in iron ore prices in other states has prompted the merchant miners to announce the rate cut.

Of late, top iron ore producer, National Mineral Development Corporation (NMDC) reduced its lump prices by Rs 100-400 per tonne, keeping fines price unchanged. In Karnataka, the bid prices from private mines (for 63.6 per cent grade Fe) stood at Rs 2,400 per tonne for lumps and Rs 1,100 per tonne (for 60 per cent grade Fe) fines.

As of now, only 46 out of 143 iron ore mines are operational in the state. Of the 46 operational mines, eight are captive mines while the rest 38 being merchant mines. The merchant mines have a combined production capacity of 106.07 million tonne per annum.

Iron ore production in Odisha crashed to 47.35 million tonne (mt) in 2014-15 compared to 77.91 mt in the year ago fiscal as several key mines remained under shutdown due to the Supreme Court's order in May 2014.