Steel producers and iron ore miners in Karnataka today traded charges of cartellisation against each other.
The steel industry, represented through various industry bodies, alleged that private iron ore producers have formed a cartel in Karnataka and is selling the raw material at a price as high as Rs 5,000 per tonne.
Reacting strongly to the allegation, mining industry body FIMI accused the steel industry of forming a cartel in the state. JSW Steel, BMM Ispat and Kalyani Steel alone have purchased more than 75 per cent of the ore which has been sold in the state since April, 2013, FIMI alleged.
"This looks like a possible cartelisation (by 3 steel producers)," said Basant Poddar, Chairman of Southern Zone of Federation of Indian Mineral Industries (FIMI).
He also said that he is giving "an open challenge" to the steel industry to prove the charges and is "willing to face any investigation on this issue".
Otherwise, the steel industry should retract the statement, he said, adding "it is most absurd, ridiculous and preposterous charge by the steel industry. They are making wild allegations".
Earlier, President of Karnataka Iron & Steel Manufacturers Association (KISMA) Vinod Nowal told reporters here that base price of iron ore, which is sold through e-auction route only in Karnataka following a Supreme Court order, has risen to an "unprecedented and exceptional" level.
"Some private iron ore miners have formed a cartel and have uniformly increased base price without any direct link to increase in production cost," said Nowal, who is also Deputy Managing Director of JSW Steel.
Suketu Shah, Joint MD of Mukand Ltd and a KISMA member, said: "Something needs to be done on an emergency basis... The scarcity of iron ore has allowed miners to do profiteering."
The bone of contention between the two sides was Sesa Goa (now Sesa Sterlite) fixing the base price of its iron ore, having 61 per cent Fe, at Rs 5,000 per tonne in the last e-auctions, held on January 31.
Citing Sesa Goa's price, the steel producers alleged that prices of various grades of iron ore since April, 2013 have risen exorbitantly and is too high a price than state-owned NMDC's rates in the state. They further said the rates have risen sharply since October, 2013 when some Category-B mines restarted production.
"We fear that the rates will increase further unless there is some fair price mechanism. Our demand is that the Supreme Court should appoint an ex-judge as regulator to monitor the prices," said R K Goyal, Managing Director of Kalyani Steel.
However, FIMI's Poddar said that prices vary as per the grade and quantity of a miner owner and a standalone example can not be termed as cartelisation. Moreover, base price is not the indicator, but it is the final bid price, he added.
