The Federation of Indian Mineral Industries has denied the allegation of “cartelisation” in fixing iron ore prices, and said the prices of the mineral are high because of market dynamics.
Earlier, steelmakers, including JSW Steel Ltd, had accused private miners from Karnataka of cartelisation and profiteering.
“It’s the steel companies that have in turn formed a cartel. Of the 12 million tonnes (mt) auctioned by (state-run miner) NMDC from April 2013 to mid-January 2014, three steel companies – JSW, Kalyani Steel and BMM Ispat – bought 9 mt,” Prasun K Mukherjee, Managing Director of Sesa Sterlite Ltd, told reporters here while spelling out the federation’s stand on the issue.
Quantity for each mine lease is fixed by the Supreme Court. The quantity mined is insignificant for any mining company to have the strength to dictate prices or think of forming a cartel.
“Moreover, the miners are fixing the reserve price post resumption of production after clearance from the Supreme Court. It’s astonishing to see this weird allegation when 70 per cent of the iron ore in e-auction is being supplied by NMDC,” said Mukherjee.
NMDC’s reserve price is lower than that of private miners. “It’s actually this dominance of a few buyers which has led to the abuse of the system and to cartelisation. They decide which auction to buy, what ore to buy and at what price. The cartel of steel companies, particularly for buying NMDC ore, has artificially kept the prices of iron ore low.”
For example, the price of NMDC iron ore fines sold through e-auction on November 7, 2013 was ₹3,154 a tonne which increased to ₹4,110 on December 10. Suddenly, it was reduced to ₹3,227 a tonne on December 23. “What change has caused such a sudden downward revision in price of iron ore which is said to be in short supply in Karnataka?” Mukherjee asked.
Steel industry cartels are engaged in forging alliances so that the market sentiments remain low and private mining companies can be targeted. “Such artificial reduction in the price in the absence of a large number of buyers is subverting the very objective of e-auction and in the process, the Government revenue, by way of royalty/FDT/ other taxes, is also impacted negatively,” said Basant Poddar, Vice-President of the Federation.