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

The Economic Times - - Economy - RAKHI MAZUM­DAR

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.

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