Sponge iron firms pay 80% more on coal

Sponge iron manufacturers are paying up to 80% premium to secure most of the long-term fuel supply contracts being offered by Coal India. The contracts are being secured through an auction mechanism handled by MSTC where the highest bidder wins. Some 450,000 tonnes of coal of various grades were offered to sponge iron manufacturers in the first three days of the auction, which were fully booked within minutes of the offer, the executive cited earlier said, adding that premiums being offered ranged between 20% and 80% of the base price. The government last year decided against renewing fuel supply agreements signed on nomination basis with the nonpower companies, and said these pacts would be replaced with supply contracts decided through e-auctions.