New Delhi: State-owned NMDC will conduct an e-auction on Friday for the sale of 3 lakh tonnes of iron ore to steel and allied industries in Karnataka, which are struggling to keep their units operational due to an acute shortage of the raw material.

"On October 14, we are going to auction about 3 lakh tonnes of ore," NMDC Chairman Rana Som told a news agency.

He added that NMDC is looking to increase the quantum of iron ore to be sold through the e-auction route in the coming days. This will be second auction conducted by the mining major in a span of 10 days, having sold about 2 lakh tonnes of ore on October 4.

In addition, the company has also requested the apex court-appointed monitoring committee to "at least" double the number of auctions in a week, so that piling up of iron ore stocks can be avoided, Som said.

The auction of iron ore mined by the state-owned company was necessitated following an apex court order last month, wherein NMDC was directed to sell all iron ore produced from Karnataka exclusively through the competitive bidding route.

The directive was made applicable irrespective of the long-term contracts NMDC has entered into with various firms. The company is the only firm that has been kept out of the purview of a mining ban imposed in the state by the Supreme Court.

NMDC currently produces about 20,000 tonnes of iron ore per day from its two mines in Karnataka, Som said, adding that the company has resorted to some production cuts due to increased inventories. "After the auctions, we will resort to our daily production levels of 30,000 tonnes, as the stocks will have eased out," he said.

The move is expected to bring some respite to the steel industry and allied units like sponge and pig iron manufacturers in the state, which are grappling with acute shortfalls following the apex court's ban on mining in the state, industry sources said.

Sources added that including the quantity sold by NMDC on October 4, so far about 3.54 lakh tonnes of iron ore has been sold through competitive bidding since September 14, when the first auction was conducted.

Of this, JSW Steel, the largest steel producer in Karnataka, with a total production capacity of 10 million tonnes in a year, has bought over 1.80 million tonnes, about 55 per cent of the total quantity put up for auction.

The company had resorted to a massive 70 per cent cut in steel production late last month due to the continuous shortage of iron ore.

"The situation has improved slightly, but delivery of the ore is still a big concern. Less than one lakh tonnes of iron ore have been delivered to us so far, although our purchase was more than 1.8 million tonnes," a senior JSW official said.

(Agencies)