India’s APMDC prepares to float new barite tender

By IM Staff
Published: Friday, 27 November 2015

Previously awarded contracts for barite mining India were set to expire on 30 November, prompting APMDC to consider new tender terms.

By Sunder Singh

India’s Andhra Pradesh Mining Development Corp. (APMDC) is gearing up to launch a new tender for barite mining and exports, as the initial six month tenure of the last round of auctions draws to a close.

After fumbling an initial attempt to sell off mineral rights at the end of April this year, Hyderabad-based APMDC successfully concluded the tender to mine and ship barite in the southeast Indian state at the end of May, with four domestic firms winning contracts to exploit the oilfield drilling clay. 

Mumbai-based Ashapura Group, and Chennai-headquartered Oren Hydrocarbons and Trimex Sands Pvt Ltd, each received licences to mine 100,000 tonnes barite with a specific gravity (SG) grade of 4.2. Another Indian company, IBC Ltd, successfully bid for 50,000 tonnes SG 4.1 material for a period of six months. Each of the companies is reported to be in the final stages of utilising their allotted quotas.

Speaking to IM, APMDC’s general manager, Sri Ramakrisna, said: "We are on the verge of successful completion of the barite tender process conducted earlier this year. On the expiry of the six month period [30November], we will announce a new tender for barite."

Ramakrisna added that the government run agency has not yet finalised the details of the new tender, but hinted that the upcoming auction would be for one year contracts. When questioned about the floor price of the tender, APMDC declined to comment, but admitted that the barite industry is facing tough market conditions in light of stagnating oil prices and declining production of crude oil.

In order to address the non-participation of foreign companies in the last tender process, APMDC said it plans to introduce special provisions in the forthcoming bidding round. The agency indicated that it will make barite available on an FOB basis from three Indian ports to attract international bidders. Bidding in the last auction was based on ex-mine prices.

According to industry sources, international companies stayed away from the last tender because of what they considered to be problematic logistics and infrastructure for carrying out barite mining in Andhra Pradesh. Foreign businesses find it difficult to operate in Indian territories due to excessive bureaucracy and the number of licences and permits needed to run mines.

None of the successful bidders which participated in the latest tender were prepared to comment publicly on what they considered to be appropriate benchmark prices for barite in the new auction, but most confessed to IM privately that there should be a downward revision of around 12-15% in prices in order to reflect the weak conditions in the global oilfield industry.