Flawed iron ore policy
The government policy to bring only a limited number of iron ore blocks for public auction is creating distortion in the marketplace, Naveen Jindal, chairman of Jindal Steel & Power Ltd, said.
“The government cannot be a hoarder. They should bring out a lot of blocks at a time... Why should the government, state or the Centre, bring only a few blocks at a time. Because they want to maximise on their premiums,” Jindal asked.
Speaking at an e-conclave organised by the Bengal Chamber of Commerce & Industry, Jindal said there is too much competition when artificial scarcity is created and people end up paying huge premiums and then they become unsustainable.
“Iron ore is our strength but at a particular cost,” he added.
Companies such as JSPL which depend on market purchase for iron ore are having a hard time because prices have shot up in the last six months.
Those who bid high to corner blocks now find the asset unviable and leave them closed.
Out of 19 blocks auctioned off earlier this year, only 5 which were cornered by JSW Steel and AM/NS India, are operational now. The lowest a miner agreed to pay to the government in this round of auction was about 95 per cent of the quarterly price declared by Indian Bureau of Mine (IBM), which is linked to market price, while the highest topped 150 per cent.