The state exchequer has been hit to the tune of Rs 29,059 crore over the last 10 years due to unsold ore. In Karnataka, 70 per cent of the sourcing is by JSW. With only a few active purchasers of fines in the auctions, there is no competitive bidding and large quantities of material are sold at the base price.
For instance, the 57 grade of iron ore fines from Odisha have realised an average Rs 1,550 per tonne (wet metric tonnes or wmt) ex-mines, during February/March. Karnataka prices of the same stood at Rs 1,490 per wmt (2per cent lower).
The domestic NMDC-benchmark prices were drastically revised downwards during May/June by Rs 900 per tonne. In December 2017, the apex court had raised the production cap in Karnataka to 35 mt.
However, in 2020-21, production was estimated at 36.66 mt, against a demand of 32.62 mt.
Hence, “there was clearly no shortage of supply to necessitate any continuation in restrictions,” said the mining company executive.
He added that under the new auction regime (introduced in 2015), several end-users have secured mining rights and commercial production of ore from such leases, and hence their dependency on the e-auction has fallen.
The surplus is only expected to increase. Hence, “an alternative market is urgently required, given that iron ore may remain unsold even if the entire domestic demand is met from leases in Karnataka, and without recourse to material from outside the state,” said the Federation of Indian Mineral Industries (FIMI).