The Ministry of Steel is formulating a policy to protect small steel producers hit by volatility in iron ore prices by making it available to them at a ‘reasonable’ price.

Recently, the Government made Coal India supply a specific quantity of coal in e-auction at a fixed base price, including the cost of production and pre-determined profit.

The coal e-auction is also restricted to specific region to limit competition and sharp surge in prices. A similar model is being worked out for iron ore.

Currently, NMDC, the largest supplier of iron ore, considers average international iron prices to fix the base prices making it difficult for small steel producers to bid in the auction.

Speaking on the sidelines of the ‘25th Steel Consumers’ Council meeting in Mumbai on Saturday, Chaudhary Birendra Singh, Union Minister of Steel, said the Ministry has appointed a committee two months ago to study ways to curtail the sudden spike in prices of iron ore supplied by public sector companies such as NMDC.

“I am told the committee already had three meetings and a final recommendation is expected by this month end. We will act on it by the end of next month,” he said.

On measures restricting imports, Singh said the industry is under the impression that the government is making policies listening to protect only six to eight large steel companies, but that is a misconception. On the possibility of extending the safeguard duty beyond the February deadline amidst rising concern expressed by small and medium enterprises, he said things have improved a lot since the measures were taken and it is now time to review.