Odisha Mining Corporation slashes sized iron ore rates by 7%

Odisha Mining Corporation (OMC), which sells about half a million tonne sized iron ore every quarter from Koira region, has reduced rates by five to seven% for April-June period, compared with the previous quarter.

Sized ore having 62% iron content is now sold at Rs 5,050 per tonne at Koira mining circle, lower than Rs 5,354 per tonne priced in January-March period. Iron ore of 65 grade is fixed at Rs 6,200 per tonne, against Rs 6,711 per tonne set by the state-run miner.

All the rates are ex-mine basis and include royalty. The ore produced in Koira region is primarily used for sponge iron making.

OMC decides iron ore rates by auctioning a fraction of the total salable quantity every quarter and declares the benchmark rate after arriving at average price. The rates of price setting tender (PST) was opened in late March. Out of 75,000 tonne offered this time, ore from Koira region was 40,000 tonne.

Traders had already anticipated a price fall in OMC auction due to weak global and domestic trends. In International markets, 62 grade iron ore rate has slipped by more than 14% to $135 per tonne since reaching a high in February on poor demand and better supply situation. In local markets, the largest miner NMDC cut iron ore rates recently by 7% citing slackening of demand from steel makers.

OMC controls about a tenth of Odisha’s iron ore trade, and the rest is commanded by private miners such as Rungta Sons and Essel Mining. Many traders track OMC rates to decide the rates of their mineral, which vary from place to place because of the iron content and other chemical properties such as presence of manganese and bauxite.

For current quarter, OMC raised iron ore rates of Barbil and Gandhamardana sector by as much as 14% to about Rs 4,000 per tonne because of better demand. These ores can be directly used in blast furnaces.

“The overall trend for iron ore is likely to remain bearish for at least a couple of quarter due to poor demand,” said an iron ore buyer of OMC.

Due to price fall, Odisha missed its mining revenue collection target by 6.5% in 2012-13. The revenue, which is largely comprised of iron ore royalty charged at 10% of selling price ,stood at Rs 5352.94 crore in 2012-13 as against a target of Rs  5,700 crore.