OMC scraps chrome ore e-auction citing technical glitch

Last Updated: Tue, Jul 10, 2012 19:00 hrs

The Odisha Mining Corporation (OMC), which had gone for online auction of chrome ore for the first time in India in June, has canceled the process citing technical error by the conducting agency and has ordered a fresh auction.

“As per our norms, if two bidders offer same price for a particular material, then the bidder quoting higher quantity would be awarded the lot. But the e-auction conducting agency MSTC India had forgotten to include this command in the software code, due to which bidder for higher quantity did not get priority. Hence, we have asked them to cancel the auction,” Saswat Mishra, chairman-cum-managing director (CMD) of OMC said.

MSTC India had intimated about this error to OMC and has agreed to make necessary changes in the software for fresh auction, which will be conducted in the last week of this month, he added.

MSTC India is the auctioning agency for government companies and is already conducting iron ore e-auction in Karnataka and coal e-auction for Coal India Ltd (CIL).

The state-run OMC had gone for chrome ore e-auction for the first time to get better price realisation of the mineral after it was forced to cut prices of the mineral in April this year following poor market demand. On June 22 it held e-auction for outside Odisha buyers and on June 25 auction, players from Odisha took part.

Industrial buyers, however, said OMC scrapped the tender due to lower bidding for the mineral.

“OMC is not honouring the tender price which was arrived at through a transparent process. It has now scrapped the tender and extended old prices for July month as well,” rued P L Kandoi, president of All Odisha Steel Federation (AOSF). OMC officials refuted the allegations made by the bidders. “Some bidders quoted lower price for high grade while they bid higher for low grade chrome ore. If we would have gone ahead with this process, then it would have been difficult to explain the auditing agency why we sold high grade ore cheaper than low grade mineral,” said an OMC official.

OMC has extended the chrome ore prices of April-June quarter for the month of July. It expects to sell the ore at the new auction rates from August 1.

For the material earmarked for sale in April-June quarter, OMC had cut the rates to Rs 12,003 per tonne including royalty for ore with 54 per cent chrome content, much lower than Rs 17,658 per tonne quoted in the previous quarter.

Chrome ore finds its usage primarily in stainless steel industries, apart from refractories. Many Odisha-based industries depend upon OMC supplies to run their units.

Nearly all of India’s chrome ore is found in Odisha with OMC having control over one-third of production. Few players such as Tata Steel, Indian Metal and Ferro alloys, Facor and Balasore Alloys have also their captive mines in the state.

In the upcoming fresh e-auction, OMC will sell about 83,000 tonne chrome ore and 50,000 tonne of chrome ore concentrate. OMC has stipulated that while 70 per cent chrome ore will be reserved for local industries, there will be no such restriction for sale of chrome concentrate.

OMC had decided to conduct chrome ore auction online after traders and industry users complained about its monopoly in deciding mineral prices before the Competition Commission of India (CCI).

“The CCI has rejected steel makers’ plea about OMC monopoly in iron ore rate fixation. In chrome ore case, we have filed our reply and are awaiting the decision,” Mishra said.

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