Indian government owned and operated Rashtriya Ispat Nigam Limited (RINL), which operates a 6.3 million mt per year steel mill without a captive iron ore mine, is unable to secure an iron ore mine in competition with private sector steel companies at auctions, a company official said on Thursday, August 10.
The company official said that at the last auction of iron ore mines in the eastern Indian state of Odisha competitive bids put in by private sector steel companies were 300 percent higher than the bid submitted by RINL.
As a government company, RINL made its own assessment of the valuation of bids, the economic viability of operating a mine and other norms which prevented the government-owned steel producer from matching the price bids put in by private sector companies, the official added. Under such circumstances, RINL will have to continue to hope for allocation of a captive mine through the government’s preferential dispensation route, he added.
The official pointed out that the central Indian state of Rajasthan has offered a magnetite reserve but, apart from the poor quality of the raw material, the site in Rajasthan is too far from RINL’s steel mills located at the port town of Vishakhapatnam in southern India.
RINL has incurred costs of about INR 4,000/mt ($62/mt) in sourcing iron ore through commercial sale, inclusive of transportation and royalty payments, while it would cost in the range of INR 400-600/mt ($6-9/mt) if sourced from a captive mine.