Ore-starved iron and steel manufacturers in Karnataka have started looking at sourcing the mineral from other states like Orissa and Jharkhand, as the prices of the raw material in the Southern state, sold through e-auction route, are hitting the roof.
The trend was visible in last round of auctions held on last Friday and Saturday, where about 59 per cent of the offered quantity of ore remained unsold as prices touched as high as Rs 3,900 a tonne for 62 per cent grade of ore, industry sources said.
The high prices were witnessed against a base price of Rs 2,010 a tonne for the 57 per cent grade to a base price of Rs 2,750 a tonne for 62 per cent grade of ore, the sources added.
The Supreme Court appointed monitoring committee had put on offer 8,76,000 tonnes of ore, having iron content of 55 to 62 per cent, for the auctions. Of this, only 3,64,000 tonnes of ore found buyers due to higher prices, the sources said.
“Bringing iron ore from Jharkhand or Orissa is at least assured supply. But here in Karnataka, no one knows when they would get the delivery of ore, bought in e-auctions due to logistical issues.
“For example, our purchase of ore was about 3.2 lakh tonnes since the beginning of the auctions on September 14 but the delivery has been little over 30,000 tonnes of ore,” said a senior official of BMM Ispat, which runs a sponge iron unit of 7.5 lakh tonnes a year capacity.
The official, who requested anonymity, added that ore in Jharkhand is available at about Rs 4,200 a tonne, including the transportation cost of Rs 2,200, but the supplies would be timely.
On the other hand, “cost in Karnataka, bought through e-auctions, comes to about Rs 3,200 a tonne after paying all taxes and transportation cost, but it is marred by huge delays,” the BMM Ispat official said.
Echoing similar views, a senior JSW Steel official said that sky-rocketing prices are deterring the local industry from participating in the bidding rounds and companies are now exploring options like transporting it from Chhattisgarh or Jharkhand.
Since August, iron and steel industries in Karnataka have been facing acute shortage of the ore following a mining ban imposed by the Supreme Court in the state.
To resolve the crisis, the apex court had allowed e-auction of 2.5 million tonnes of iron ore per month from the mines in Karnataka, including of state-run NMDC.