Railways may be told to buy out low-grade iron ore

The Ministry of Steel may help Indian Iron and Steel Company (IISCO) dispose of its low grade iron ore by urging the Railways to allot adequate rakes.

These, along with other suggestions, are a part of final recommendations and conclusions proffered by the Ganeshan committee to the steel ministry.

Since IISCO has both low-grade iron ore and high-grade ore left in its stock, the committee has given two kinds of methodologies for disposal of ore.

On the issue of procedure for sale and price of high-grade ore of 62.5 per cent to 63 per cent, IISCO has been asked to sell half of the ore on 'long-term basis' and the rest through spot sale.

This could be done either through an open tender system or electronic disposal.

It has been further suggested to the management of IISCO to set aside about 5 per cent of reserves from spot sales for meeting any emergency or unforeseen commitments in spot prices.

In view of IISCO's annual production of high-grade ore, which varies from 1.4 to 1.5 million tonnes, the management has been asked to explore the possibility of packaging low-grade and high-grade iron ore.

For low-grade iron ore, the panel has recommended that IISCO should revert to open bidding system or even go for e-auctioning system.

'Aggressive marketing by tying up with potential customers and long-term agreements for the quantity with annual revision of prices' are part of the other recommendation made by the committee for distribution of low-grade ore.

The committee found very low lifting of rakes by MMTC from IISCO. IISCO was contracted to supply 1 million tonne of iron ore to MMTC at Rs 175 per metric tonne, but MMTC just took 14 per cent of the supply.

Hence, 'it shall be in the interest of IISCO', said the committee, to close the contract with MMTC on 14 September of this year, 'without breaking the other contract clause'.