"With all these capacities coming back to operation, iron ore prices would see some correction in the near future," says a senior official of a large mining company. There are already signs of softening of prices, the rate coming down by about Rs 100 per tonne, he added.
However, the price drop might not be so significant. The mining companies have paid large amounts as compensation for overproduction to be eligible for resuming of operations. They would be eager to recover the amount before 2020, when the tenure of their leases expires in line with a new law.
The rate for ore fines had gone up from Rs 1,400 a tonne to Rs 2,200 a tonne; lumps had risen from Rs 2,700 a tonne to Rs 4,500 a tonne between October and January.
Despite the closure, Odisha, which meets a little over half the nation's iron ore need for steel making, is on course to meet its annual target. In 2017-18 (which ends on March 31) so far, it had already produced nearly 92.9 mt up to February 20, compared to 90 mt in the corresponding period of 2016-17 and 102 mt for the full year.
The Supreme Court, while disposing of a case filed by non-government organisation Common Cause, had asked the mining entities which had produced iron ore/manganese in violation of environmental and forest norms, and the approved mining plan, to pay compensation to the extent of 100 per cent of the value of ore raised by them in excess of their permitted limits by December 31.
Of 132 iron ore/ manganese mines sent notices for such violation, 76 paid fully. The other 56 paid partially or not at all. The state has till date collected Rs 115.11 billion from the companies on this head, against the demand notices for Rs 175 billion.