Mumbai: After staying away from e-auctions for Goa iron ore for the last three months, India’s largest private steel maker JSW Steel Ltd (JSW) bid for two lots in the latest e-auction held on 12 May.

The bid was placed because the company had been expecting a hit to supplies from Odisha ahead of a Supreme Court order on mining in the state. On 16 May, the Supreme Court ordered a temporary ban on 26 mines in Odisha due to non-renewal of their leases.

JSW Steel sources upto 20% of its monthly iron ore requirement of 1.2 million tonnes from Odisha.

“There were mainly two reasons why we opted for Goa ore: first, the grades available to us were of higher quality; and second, the expected ban on Odisha would have further worsened the iron ore supply situation for us," said Jayant Acharya, director, commercial, JSW Steel.

According to the bid-sheets published by Goa’s department of mines and geology on 17 May, JSW lifted 11,484 metric tonnes of iron ore.

Acharya added that the company was experimenting with the economics and logistics of bringing Goa ore to its Vijayanagar plant in Karnataka, even though it is relatively of low-quality.

“We have a beneficiation facility on our plant premises at Vijayanagar and hence we can improve the quality and use it. This will not add to the cost of ore substantially," he said, without detailing how much the two activities will add to the per tonne cost of iron ore sourced from Goa.

He added that the company is scouting for all possible sources of iron ore including imports.

Analysts, however, feel that it is not economical for most companies to source ore from Goa.

“The most important thing is the grade. I believe if JSW gets a grade in the range of 50% Fe (iron) content, it will not be viable for the company to use it. A higher grade at a reasonable cost is a good bet," said Goutam Chakraborty, an analyst with Emkay Global Financial Services.

Fe content is a system of grading the quality of iron ore based on its iron content.

He added that JSW sourced up to 2 million tonnes of iron ore from outside Karnataka on an annualized basis, out of which Odisha contributed substantially. Chakraborty from Emkay, in his latest report, said the mining ban in Odisha will take at least six months to be lifted, and this will affect up to 30-35 million tonnes of iron ore output from Odisha.