Singapore (Platts)
Indian state-owned trading company MSTC Ltd has begun electronic auction sales of minehead stocks of manganese ore available with Karnataka miner Sandur Manganese & Iron Ores (Smiore).
The auctions are on the lines of the iron ore e-auction sales the trader has been holding in the southern Indian state since September 2011.
An estimated 25,000-30,000 mt/month of manganese ore is expected to be auctioned over the next two to three months, Platts learnt from the Indian Supreme Court-appointed monitoring committee, which is overseeing the auction.
The first e-auction for manganese ore was held on September 21 in which some 27,560 mt were sold, a Bangalore-based monitoring committee official told Platts. The second auction is yet to be scheduled but is planned for the third week of October. Smiore has about 80,000 mt of manganese ore stock available to be auctioned over the next three to four months, the official added.
In the September 21 auction, the booking price of most cargoes was at a premium of about 25% on average over the respective floor price for lot sizes of 500 mt. Larger-sized cargoes were mostly sold at floor price levels, bid documents show.
The floor price for ore cargoes containing 36-68% Mn had been set at Rupee 6,500/mt ($125/mt). A 500 mt lot of this ore grade was sold at Rupee 7,950/mt and another at Rupee 7,800/mt.
A 4,012 mt cargo of the same ore grade was auctioned at Rupee 6,500/mt to SAIL Refractory Unit, a part of state-owned Steel Authority of India Ltd (Sail). All prices are on ex-stockyard basis. Royalty charges of 4.2%, VAT of 4%, and forest development tax of 12% are additional.
Smiore had been forced to suspend manganese mining operations in addition to iron ore production when Karnataka’s mining ban took effect in August 2011.
Prior to the ban, the company had had environmental clearances to mine up to 600,000 mt/year of manganese ore though production itself had averaged only 300,000 mt/year.
With the Indian Supreme Court and allied investigative authorities reassessing ore production limits in the wake of the illegal mining scandal in the state, Smiore would be permitted to mine only up to 180,000 mt/year of manganese ore when it is allowed to resume mining operations, a Bangalore-based company official told Platts.
It could take another two months for Smiore to resume manganese ore production, the official added.
Smiore operates a 4,000 mt/month silico-manganese smelter at Vyasanakere in Karnataka’s Bellary district, some 60-70 km east of Sandur. The works hosts two furnaces of about 2,000 mt/month capacity each but only one furnace is presently operational, producing about 1,500-2,000 mt/month of silicon manganese, the official said. The furnace is fed with manganese ore from stocks presently available with Smiore.
Although MSTC has been conducting e-auction sales for Karnataka-origin iron ore since September 2011, it was only in May this year that the Supreme Court permitted the sale of silico-manganese ore from Smiore’s stocks, Platts noted from the company’s announcement to the Bombay stock exchange earlier this year.
Only domestic end-users are permitted to bid in the auction sales while traders and exporters are barred from participation.
source: http://www.platts.com / Singapore (Platts) / Home> News & Analysis / October 03rd, 2012
–Anitha Krishnan, anitha_krishnan@platts.com –Martin O’Rourke, martin_orourke@platts.com