Say no to auctions, sponge iron firms tell Odisha Mining Corp

Last Updated: Tue, Jan 08, 2013 19:30 hrs

Faced with shortage of raw material and high prices of iron ore, sponge iron makers in Odisha have asked state-controlled miner Odisha Mining Corporation (OMC) to abandon the auction-based method of price determination.

“OMC should abandon the current auction-based method of price determination and bring down the prices of its iron ore. The corporation should also dispense with the system of empanelment and its raw material may be made available to all state-based industries only,” said P L Mohanty, chairman of the Odisha Sponge Iron Manufacturers’ Association (OSIMA).

“Prices of iron ore fixed by the mine owners are directly based on prices fixed by OMC and now that OMC has small quantities to offer in its price discovery auctions, the bids are high. The government should consider proactive steps, not initiate restrictive measures that would lead to litigation and stagnation, which would be in no one’s interest,” he added.

The current iron ore prices had resulted from a constant mismatch of demand and supply, Mohanty said, adding the requirement of state-based industries that didn’t have captive sources was 15 million tonnes. This could easily be met by OMC alone, given the deposits it held, he said.

OSIMA has submitted a memorandum to Prasanna Acharya, Odisha’s finance minister and chairman of the inter-ministerial committee formed by the state to formulate a long-term policy to supply ore to local industries. In the memorandum, it suggested OMC aggressively raise the production of iron ore, as a glut in the market would automatically bring down prices. It has also demanded all mine owners mandatorily sell a portion of their produce to state-based industries, adding all units that can technically use fines be allowed to lift iron ore fines.

To utilise iron ore fines, the government should discourage its export and actively consider promoting pelletisation units for captive use, the association said. The allocation of fines from OMC and other mine owners on a long-term basis to a group of members interested to set up pelletisation plants for captive use should be encouraged, it added.

OSIMA has 108 members, of which 86 do not have any captive source for iron ore.

“We have always been realistic in our suggestions. Coal prices at an all-time high and the recent crisis in the iron ore mining industry in the state have resulted in production touching an all-time low and the prices of iron ore skyrocketing. This has sounded the death knell for many a sponge iron industry units in Odisha,” OSIMA said in the memorandum.

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