OMC’s iron ore auctions see low buying interest
The latest round of iron ore e-auctions by Odisha Mining Corporation (OMC) saw subdued buying interest. OMC offered 508,000 tonnes of iron ore but barely 200,000 tonnes was booked, leaving an unsold inventory of 308,000 tonnes.
Both iron ore lumps and fines were on offer from OMC’s key operating mines of Gandhmardhan, Daitari and Koira.
The response to the auctions was weak as OMC continued its stand to hike base prices of lumps and fines. The floor price of lumpy ore was in the range of ~2,2002,600 a tonne. Similarly, fines’ reserve price was fixed in the band of ~900-1,300 a tonne. The raise in floor prices by OMC was despite a plunge in sponge iron prices of the order of ~2,500-~3,000 a tonne since the last auctions.
“OMC’s floor price at iron ore e-auctions is based on the pricing mechanism adopted by the Indian Bureau of Mines (IBM) which is faulty. Pricing mechanism has to be made more realistic and transparent,” said a senior official with a steel company.
OMC has refused to budge from its pricing stand, ignoring concerns flagged by steel makers. R Vineel Krishna, managing director, OMC, could not be contacted for his comment. Though OMC has drawn a road map for higher iron ore output targets and agreed to augment production at its mines, the results have not yet shown up.
OMC had set a target to achieve a production figure of 20 million tonnes (mt) by 2017-18 but it looks challenging given OMC’s current actual annual production hovering around six million tonnes.