JSW Steel Buys Ore Fines from Goa in an E-auction
Co buys 8,484 tonnes of iron ore fines at .` 1,830 per tonne
JSW Steel bought its maiden lot of iron ore fines from Goa at a price of .` 1,830 per tonne recently. The transaction is significant because it is also the first time that a major domestic steel maker has participated in an e-auction of Goan ore, which is considered low grade and usually earmarked for exports.
In contrast, Goa’s first e-auction of iron ore, following the mining ban in September 2012, surprisingly saw zero participation from big steel companies in February this year even as exporters and mine owners bid for the commodity aggressively. JSW bought 8,484 tonnes of iron ore fines at a price of .` 1,830 per tonne from the e-auction in Goa recently. It got a fairly good deal since the fines had a 58.5% iron (Fe) content. It also purchased another lot of 3,000 tonnes of fines of 59.5% Fe content at a price of .` 1,970 per tonne. Goa’s Directorate of Mines & Geology (DMG) is holding auctions to sell iron ore that is lying idle in jetties and ports across the state, since September 2012. Earlier, JSW had cited high logistics costs and low grade of ore as reasons for not warming up to the e-auction. Elaborating on the company’s recent move, Seshagiri Rao, joint managing director of JSW Steel said: “We decided to take part in Goa auction recently since we are considering all options to maintain continuous supply of ore. Considering the average grades available in Goa, both the transactions have been satisfactory. Until now, logistics has been the main problem as far as Goa ore is concerned. But this time we hope to use it in our Dolvi unit. We may even take it to Vijaynagar.”
Analysts feel JSW made a smart strategic move by deciding to try out Goan ore. “Any steel company would like to keep its supply lines as diverse as possible. In that sense, JSW could be preparing for a possible scenario in the future. Another reason is that the grades offered were good in the third auction, considering the usual grades that one finds in Goa. Also, the base price was low. Thus, it made sense for JSW to participate in it,” Prakash Duvvuri, head of research at Ore Team. Rao said JSW is seriously looking at taking part in auctions from now on. It has already been blending low grade ores with higher grades from Odisha and NMDC’s Bacheli mines for its Vijaynagar unit in the wake of the Karnataka mining crisis. Other steel companies are likely to follow JSW’s move of sourcing lower grades of ore, with paucity of ore poised to drive a lot of domestic steel companies to try a blend different grades and thus increasingly utilise lower grades.