Home ECONOMY Odisha steel industries resent unfair ore price mechanism

Odisha steel industries resent unfair ore price mechanism


Reported by Sandeep Pattnaik

Bhubaneswar, July 4:

The recent resolution of the Odisha government to reserve at least 50 per cent of iron ore lumps and fines produced in the mines for the end user industries  in the state which have no captive mines, may have come as a relief to these beleaguered units, but their price war with the mines owners continues to worry them no end.

In April 2 this year, the Odisha High Court, which had upheld the state government‘s directive of December 5, 2012 to allot at least 50% iron ore to steel industries having no captive mines, had called for a mechanism to ensure this within three months.

The steel makers body All Odisha State Federation [AOSF] has dubbed the State Government’s resolution to make iron ore available to standalone industries at “an equitable manner on payment of prevailing fair market price” a big joke.

“The Price mechanism is not going to change the prevailing system. The equitable price mechanism refers to Indian Bureau of Mines [IBM] fixing the price on the basis of sale price of mine owners to the user industries. Mine owners sell the iron ore at exorbitant prices,” President AOSF P L Kandoi said.

“What a joke on pricing? IBM decides the rates based on mine owners rates and mine owners rates will now be decided by IBM. This needs to be sorted out,” he ridiculed the notification issued by the Steel and Mines department.

According to the department’s notification, the standalone mining lessees will be paid the fair market price prevailing on the date of pre-emption. The basic minimum sale price for different grades of iron ore will be fixed as per the price published by the Indian Bureau of Mines in the ‘Monthly Statistics of Mineral Production’.

Standalone mineral based industries in the state will have to apply to the Director of Mines for purchase of iron ore lumps and fines for use in their plants within the state. The notification says the application will have to be made in the format prescribed by the state government with a declaration indicating the requirement of iron ore lumps and fines.

The Director of Mines will consolidate the quarterly requirement of all the state-based industries to know the quantity of ore lumps and fines to be purchased by the state from standalone mines located in the state in the upcoming quarter in exercise of its right of pre-emption.

The pre-emption will be in conformity with the memo issued by the state government on December 5, 2012. The pre-empted iron ore will be subsequently transferred to genuinely needy user industries located in the state, subject to the overall control of the state government, it said.

However, the right of pre-emption will not be exercised in respect of mining lessees who have subsisting agreements with the state based industries for supply of iron ore to the extent of 50 percent of their production or more in any quarter, it said.

Most of the steel manufacturing companies in the state are either operating at a much reduced capacity or have shut down due to the iron ore imbroglio. Around two lakh people engaged in over one hundred steel and sponge iron plants have been out of jobs due to iron ore supply crisis, Kandoi claimed.

The federation had in January, 2012 urged the government to fix a price cap on raw materials, enlistment of all existing manufacturing units for their requirement of iron ore, chrome ore on long term basis, rationalization freight rates and water cess.