Iron ore is a strength for India but at a particular cost, Jindal Steel & Power chairman, Naveen Jindal, said on Wednesday, alluding to the unsustainable premiums quoted for the Odisha auctions earlier this year.
Speaking at the ‘Minerals, Mining and Metals’ e-conclave organised by the Bengal Chamber of Commerce and Industry, Jindal said, whether it’s coal or iron ore blocks, government cannot be a hoarder. “If a few blocks are auctioned at a time then there is too much competition and an artificial scarcity is created. People end up paying a huge premium and then they become unsustainable,” he explained.
The high premiums quoted for Odisha iron ore mines auctioned in February and March have made them unviable. Bidders had paid a huge premium, the average being 106 per cent. As a result, only five out of 19 blocks auctioned are operational.
This has resulted in a shortage, which in turn, has led to a surge in prices. Jindal pointed out that “Prices had shot up in the last four months. This was hurting the steel industry,” he added.
Steel prices have increased sharply in the past few months. While it is fueled by revival of domestic demand and in line with international trend, the surge in iron ore prices have also added to it. Moreover, the shortage was impacting steel production for some steelmakers.
Coal and mines secretary, Anil Kumar Jain, accepted, “Odisha auctions had not gone the intended way. I do hope in the coming months, production stabilizes,” he said. Comparing with commercial coal mining bids, he said that the bids had got the right kind of response at 35 per cent on an average. Whereas, in iron ore, it shot up and then people defaulted, he pointed out. The highest premium quoted for Odisha auction block, it may be mentioned, was 154 per cent.
NMDC chairman and managing director, Sumit Deb, said, most of its exports have 57-58 per cent Fe content which is not utilised by the domestic steel industry.