Bhubanewar | March 22, 2016: Merchant miners in Odisha have tinkered with iron ore fines prices, raising it by six to eight per cent. The price hike has stemmed from the state government's move to collect contribution from the lessees for District Mineral Foundation (DMF) with retrospective effect from January 12, 2015.

According to the guidelines listed in the amended Mines and Minerals Development & Regulation (MMDR) Act, miners who have bagged leases prior to January 12, 2015 would have to fork out 30 per cent of the royalty amount as DMF contribution.

An industry estimate has put the figure for such miners at Rs 1,500 crore in case of Odisha where the state government has decided to collect the DMF contribution from leaseholders from back date.

The new miners need to contribute an amount equal to 10 per cent of the royalty.Federation of Indian Mineral Industries (Fimi) had moved the Delhi High Court, protesting the Odisha government's decision to collect DMF dues retrospectively.

"Despite the direction of the Delhi High Court, the state government has taken coercive action to raise demand of arrears on DMF retrospectively, resulting in hike in prices of iron ore", said an official with a steel firm.

The ex-mines price of iron ore fines (with 62.5 per cent Fe grade) for March has now gone up to Rs 1,275 a tonne, inclusive of royalty, DMF and National Mineral Exploration Trust (NMET) compared to Rs 1200 in February.

In Odisha, the iron ore prices are steeper since the state government charged a uniform, highest royalty rate even for the lowest grade of ore, violating statutory provisions.

In cases of iron ore fines of varying grades, the royalty rates in Odisha were higher by Rs 300-400 a tonne compared to the royalty as per statute.

The price hike has come amid a huge stockpile of iron ore fines at mines pit heads. By the end of 2014-15, inventory of iron ore fines had reached 60.93 million tonne.

Around 70 per cent of Odisha's iron ore output consisted of fines. Pellet makers, the key users of iron ore fines, were struggling to keep operations afloat due to escalating prices of raw material.

Though the state has a pellet manufacturing capacity of 28 million tonne per annum, most of the pellet plants have shut down while the balance were operating at a bare minimum level for survival. Pellet, an intermediate product in steel making, competed with calibrated lump ore. But since lumpy ore was comparatively cheaper, most steel makers shunned buying of pellets.

(Source: http://www.business-standard.com/)