The ongoing blame game between Karnataka’s iron ore producers and their clients reached a new pitch on Tuesday with the mine owners launching a counter tirade against the steel companies.

Mining industry body, the Federation of Indian Mineral Industries, denied that a mining cartel was selling ore at high prices in the State or causing short supply of ore; on the contrary three to four steel majors had formed a cartel and artificially kept iron ore prices low in Karnataka auctions.

At a press conference here, FIMI Chairman (South) Basant Poddar and Managing Director of Sesa Sterlite (formerly Sesa Goa) Prasun K. Mukherjee rubbished steel companies’ allegations against mining firms and said the prices were market driven. They said a newspaper advertisement issued on Monday by the Karnataka Iron & Steel Manufacturers’ Association (KISMA), the mini blast furnace industry and two State-based bodies was false and malicious.

“The quantities fixed by the Supreme Court for each mine lease [are too] insignificant for any one mining company to dictate prices or think of cartelisation. Moreover, the mine owners have been fixing the reserve price after clearance from the Supreme Court and all approvals from government.

“It is astonishing to see this weird allegation when 70 per cent of the iron ore in e-auction is being supplied by the National Minerals Development Corporation, a Government of India company [whose] reserve price is abysmally low compared to private mine owners.”

“The steel industry is selectively targeting Karnataka mine owners,” Mr. Poddar and Mr. Mukherjee said. In the last two years, some steel plants had bought two million tonnes of ore from Eastern States at high prices; whereas a similar quantity of ore lumps and fines of private mines and the NMDC remained unsold in Karnataka auctions.

Currently only 21 of the 115 mines in the non-C category were operational in the State. Of the 12 million tonnes produced since April 1, 2013, the cartel of three to four private steel majors bought almost 75 per cent of Karnataka’s ores in e-auctions and artificially depressed the price of ore sold by NMDC.

On November 7, 2013, NMDC iron ore fines were sold through e-auction at Rs. 3154 a tonne; the price increased to Rs. 4110 on December 10 but suddenly fell to Rs. 3227 on December 27. “What has caused such sudden downward revision in the price of iron ore which is supposed to be in short supply in Karnataka?”

“Any cartelisation is on the buying side,” Mr. Mukherjee said, adding the artificially low price in the absence of a large number of buyers subverted the very objective of e-auction. The government was also losing some of the revenue due to it as royalty and taxes.

Some of the same profit-making steel companies, according to him, even enjoyed subsidies by way of `export-parity’ ore prices while abusing the system.

They called the steel industry campaign eye-wash to ensure continued iron ore supply and surrogate subsidy from a government State company.