Coal India has secured a booking of about 2.05 million tonnes (mt) against the offer of 3.78 mt in the first tranche of linkage auction for the non-regulated sponge iron sector, said industry officials.
"Coal linkage or fuel supply agreements worth 3.78 mt were on offer in the first Coal linkage auction for the sponge iron sector. Consumers booked about 2.05 mt," said Coal Consumers' Association of India's Secretary General Subhasri Chaudhuri. The linkage would be for five years, while there is an exit clause in the agreement where the consumers can exit after two years without giving any penalty, she said.
The auction process started on June 10 and concluded on June 16. According to industry sources, the auction was conducted in 18 slots spanning six days. There were no bidders in some of the slots while only in three slots, the booking exceeded the offer amount and hence attracted a premium over the notified price in such cases.
"An unenthusiastic response among consumers has been noticed. Steel sector is going through a difficult time. This is the first of a kind initiative and thus consumers also took a conservative approach," Chaudhuri said.
Referring to views from coal consumers of the sponge iron sector, she said, the response could have been better, had most of the offers matched the industry requirements
Consumers, however hailed the initiative as it would be beneficial for the consumers of the non-regulated sector like sponge iron. The auction for cement, captive power and other sectors will also be conducted.
