New Delhi: India’s state-run miner NMDC Ltd is likely to fix prices for iron ore it supplies to all steel makers only after talks with key Japanese clients, due to begin in May, are over, its chairman said on Monday.
But Rana Som said once agreed, the new prices would apply on exports from 1 April. “We have already informed our long-term customers that prices are subject to revision from April 1, and they will be notified about it after the prices are fixed with Japanese steel mills,” Som said. “The negotiations are expected to start sometime in May and only after that new iron ore long-term contract prices are likely to be announced.”
NMDC, which accounts for about 15% of India’s iron ore production, sells contracted iron ore at prices based on those of the world’s top miners —Brazilian miner Vale, BHP Billiton and Rio Tinto. Vale said last month its big clients had agreed to a 65% rise in prices for the year starting from 1 April. Som said NMDC’s talks with Japanese firms would only begin once the mills have completed deals with the big three.
In the financial year ended March, its iron ore output was 30.6 million tonnes, nearly all of which was sold under long-term contracts, Som said. The firm exported 3.4 million tonnes of iron ore in 2007-08, out of which 3 million tonnes went to Japan and the rest to South Korea. “We will increase our output over last year’s level,” he said. At home, NMDC sells under long-term contracts to Vishakhapatnam Steel Plant, Essar Steel, Ispat Industries, Vikram Ispat and dozens of smaller firms. Domestic iron ore prices are being monitored by domestic steel makers, who have asked the government to lower import duties on metallurgical coke, zinc and other raw materials to help keep steel prices from rising.
Steel prices in India have jumped by more than a fifth in the past three months, but last week some domestic steel makers rolled back prices of some products following an appeal by the steel ministry.