Taking cue from the Competition Commission of India’s order against 11 cement companies recently, sponge iron units are planning to approach the Commission against some private iron ore miners. They allege that these miners, mostly from Odisha, have formed a cartel.
The office-bearers of several State-level sponge iron manufacturers’ associations are to meet in Delhi shortly to firm up their plan. They will also meet senior officials of the Ministries concerned in the Union Government, it is learnt.
In the past one year, the domestic price of iron ore has been raised at least by Rs 1,000 a tonne by these miners. In May alone, the price was hiked by Rs 500 a tonne. During the period the international price dropped by at least 30 per cent. More important, an estimated half of the sponge iron units are either closed or are operating much below their capacity.
“Given the present situation in the market, the iron ore price should be reduced at least by 20 per cent,” said a spokesman for a State-level sponge iron manufacturers’ association.
Crackdown
For iron ore, the sponge iron manufacturers in the country are by and large dependent on the supplies from mines in Odisha. This is because private mining in Karnataka has virtually come to a halt following a Supreme Court order and Goa’s ore, mostly of inferior quality, is by and large exported. Odisha’s iron ore mining, it is complained, is controlled by less than a dozen miners. The crackdown on illegal mining by the Odisha Government for the past one year or so has hit operation of many mines, causing shortage of the ore. The argument of the Odisha miners, therefore, is that the recent price hike is the inevitable outcome of free interplay of market forces, with demand far exceeding supply. But the sponge iron units are not convinced.
The sponge iron manufacturers make it clear that public sector organisations such as NMDC and Odisha Mining Corporation (OMC) are not part of the cartel but any announcement of price increase by private miners will have some effect on the prices declared by the State-owned enterprises.
Meanwhile, OMC, an Odisha Government undertaking, is believed to have received a not-so-satisfactory response to its bids for supplying high grade iron ore. The bidders, it is learnt, have quoted prices which are lower by Rs 200 to 300 a tone (5 to 7 per cent) for the July-September supply as compared with the prices OMC received in the current quarter.