The Indian government’s policy to bring only a limited number of iron ore blocks for public auction is creating distortion in the marketplace, Navin Jindal, chairman of Jindal Steel and Power Limited (JSPL), said on Thursday, December 10.
“The government cannot be a hoarder. They should bring out a lot of blocks at a time. Why should the government, state or center, bring only a few blocks at a time? Because they want to maximize on their own premiums,” Mr. Jindal said addressing a mining and minerals seminar.
The JSPL chairman said that there is too much competition when artificial scarcity is created and people end up paying huge premiums and they become unsustainable.
“Iron ore is our strength. Companies like JSPL which have to depend on the market to purchase 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,” Jindal said.
It may be noted that, of the 24 iron ore blocks where mining leases expired on March 31, 2020, and fresh auctions were held and new mining leases awarded, only five have been brought back into production.
In fact, significantly, all the five iron ore blocks which have resumed production and dispatches were secured by JSPL and ArcelorMittal Nippon Steel Limited (AMNS) at the recently concluded auctions.