PANJIM: Amidst worries that Sesa Sterlite may shut down its pig iron plants if the iron ore e-auction process does not continue, certain sections of the mining industry have come out – albeit on condition of anonymity – that it’s a blackmail tactic by the conglomerate. They point out that Sesa Sterlite has been offered iron ore by traders who purchased it during the five e-auctions held last year.
However, Sesa Sterlite, admitting that offers have been received from the traders regarding purchase of ore, argued that the traders charge a non-realistic price, much higher than the present market value, which is not viable for the company.
Sesa Sterlite in a letter to Directorate of Mines and Geology (DMG) said it would have to shut down its pig iron plants by April 25 if iron ore e-auctions are not conducted regularly. Last year, the company bought 7.7 lakh tons of iron ore specifically for the pig iron plant. The company requires 3,100 MT of iron ore fines and 1000 MT of iron ore lumps per day.
However, the sections of competing mining firms claim that there is enough ore through auction in Goa available and the winners of the auction are willing to sell it to Sesa Sterlite at the same price as in Karnataka.
A senior captain of the industry said, “It is a part of Sesa’s blackmailing tactics to force ore to be sold to them at a lower price, as the international prices have crashed drastically. With ore available to them from the existing auctions without they having to pay transportation costs, there is no reason for them to raise false red flags.”
However, Sesa Sterlite has countered the claim stating that the company is ready to purchase the ore if sold at current market value, which is 32 Dollars for 58 grade ore. “The traders, who purchased ore during the e-auction, approached us with non-realistic prices. The prices were much higher than the present market value and the company cannot afford it,” Vice-president A N Joshi said.
Joshi explained that when the first e-auction process was held in February, last year the value of 58 grade ore was 80 dollars, which at present is 32 dollars. “Now the traders want us to buy ore at 80 to 100 dollars, which is more than the double the present market price,” he said adding, “When we have our own ore mined and ready for e-auction, we want government to sell the same at present market value.”
Meanwhile there could be another impediment to more e-auctions in the State. The Supreme Court in its April 21, 2014 order declared all extraction post 2007 illegal and thereby directed the auction route to be taken to dispose of all such ore to bring revenue to the State. However the amendment to the Mines and Minerals Development Regulation (MMDR) Act, has allowed functioning of all non-captive mines till 2026, which in effect is an extension of the lease and not a cancellation.
According to a small mine owner who is a member of FMI, it is likely that some lease holders may approach the Supreme Court with a prayer that auctions should be stopped since the reason for taking that route – illegality of ore mines after 2007 – has been rectified by the amended MMDR Act.
