Odisha miners raise iron ore prices as expiry of mining leases draws closer

MUMBAI: Odisha-based miners have raised iron ore prices by up to 10% even as supply from the state hit an all-time high as steel makers stock the mineral in anticipation of a supply disruption when multiple mine leases expire at the end of this fiscal.

Iron ore prices have gone up by Rs 150 to Rs 300 per tonne due to a combination of seasonal demand uptick and stockpiling of the mineral by still mills, as per a JP Morgan report citing data from Steelmint.

Prices could further rise by as much as 15% over the next three months given the high price differential between domestic and imported iron ore, the report said. Domestic iron ore prices are estimated around $65 per tonne as against $85 to $90 per tonne for imported ore.

State-owned NMDC, however, is yet to announce any price hike.

A direct consequence of a surge in iron ore price would be an increase in the price of steel. Domestic steel companies could raise prices by as much as Rs 2000 per tonne over the next three months, JP Morgan said. The have already raised prices by up to Rs 1500 per tonne in the past two months.

Leases of 17 non-captive iron ore mines in the country’s largest iron ore producing state are set to lapse on 31 March 2020. These mines collectively produce more than 60 million tonnes of iron ore annually – more than a quarter of the country’s total production – as per a McKinsey report. New lessees for the mines after reauctioning will need an array of clearances including Environment Clearance (EC) and Forest Clearance (FC), potentially delaying the resumption of mining.