The problems of iron ore miners in two districts of Karnataka continue even after the commencement of e-auctions. For, the miners in Chitradurga and Tumkur, which mainly produce low-grade iron ore fines, find no takers for their produce at the auctions.
Online auctions of iron ore commenced in Karnataka from September 14, following a Supreme Court direction earlier that month. The apex court had, on September 2, granted permission for the sale through an e-auction of about 25 million metric tonne of the existing stock of iron ore in the districts of Bellary, Chitradurga and Tumkur. Low-grade iron ore forms one-third of this stock in the two southeastern districts of Chitradurga and Tumkur.
Production of low-grade iron ore constitutes 20-25 per cent of the state’s total annual iron ore output at 12-15 million tonnes.
However, in the last two rounds of auctions on September 14 and 29, none of the steel manufacturers or pig iron and sponge iron-makers have bothered to show interest to buy low-grade iron ore fines from Chitradurga and Tumkur districts. The main reason is that there is no proper technology available with the steel makers in the country to exploit low-grade iron ore. The ore is largely exported to China, where steel mills blend it with high-grade ore and produce steel.
Mineral Enterprises Limited (MEL), one of the low-grade ore producers, noted that there were around 8 million metric tonnes of low-grade iron ore lying unutilised at various mines in Chitradurga and Tumkur ever since the Karnataka government imposed ban on exports in July last year. “Even at the auctions held last month, no steel mill has come forward to lift the material as they are finding it easy to buy high-grade iron ore from Bellary,” company managing director Basant Poddar told Business Standard.
MEL has 176,000 metric tonnes of low-grade iron ore lying in their mine in Chitradurga. At present, the ore with Fe content of 55 per cent and below fetches about Rs 850 per metric tonne. While, the 63 Fe-grade iron ore fetched up to Rs 5,800 per metric tonne during the auctions as against the average market rate of Rs 3,500 per tonne.
Federation of Indian Mineral Industries said the present system of e-auctions is choking the dispatches of iron ore. “The weekly or fortnightly auctions are not a good idea,” said its director (south) D V Pichamuthu. “It is causing a lot of problems for producers and steel mills, as there is no smooth movement of ore.”
Karnataka-based steel manufacturers like JSW Steel, Kalyani, Kirloskar Ferrous, MSPL and BMM Ispat among others have been buying iron ore at the e-auctions held on the MSTC Ltd platform as directed by the apex court. Among these companies, only JSW Steel has facility to use low-grade iron ore, but even they have not shown interest to take it, Poddar said. “It would be expensive for them to transport the ore from these two districts to Toranagal, where they have their steel plant,” he added.
These ore producers from both the districts, which are suffering from huge losses owing to absence any business over the last 14 months, have approached the Supreme Court to secure permission to export their produce. “We have filed an application seeking permission to export our produce as there are no takers in India for low-grade ore. We have engaged (senior counsel) Mukul Rohatgi to fight our case in the apex court,” Poddar said.
In addition to MEL and Sesa Goa, the Federation of Indian Mineral Industries has filed a separate application seeking relief for the industry, he added.
