Steel companies want easing of ore auction norms

Steel companies have asked for easing the mandatory G2level exploration norm for conduct of mineral block auctions.

“These norms are (only) indicative and there is provision for their relaxation under the Rules," said an official with a steel company.

This was among the issues raised by companies in the segment with Union steel minister Birender Singh during his recent Odisha visit. They argued that strict adherence to this was proving a detriment to holding of mineral auctions within a time frame.

They suggested that iron ore blocks be reserved for the iron and steel industry under one of the sub-provisions of the Mneral Auction Rules, 2015. These blocks have been witness to intense competition at auctions between steel makers, especially those without captive raw material. About 75 per cent of steel producers in the country are without captive ore blocks, quite the opposite of the situation in China.

Also, steel units say royalty rates on iron ore are too high, at 15 per cent ad valorem, steepest in the world. Australia charges 6.5-7.5 per cent, Brazil two per cent, South Africa 0.5-7 per cent and China 0.5-4 per cent. At the Indian rate, the cumulative impact of royalty is 25.79 per cent of the Indian Bureau of Mines (IBM) price at mine head despatch and 50.1 per cent of the IBM price on steel plant despatch. If pellets are used instead of less available lumps, the impact comes to 70 per cent.

More, the country's advantage of being a large repository of iron ore resources is lost, is the complaint, when premium payment for mines allocated through the auction route touches more than 100 per cent. The premium payment is over and above the royalty amount and mandatory contributions to the District Mineral Foundation and National Mineral Exploration Trust.