NMDC to negotiate iron ore prices with foreign mills

NMDC to negotiate iron ore prices with foreign mills

New Delhi: Country’s largest iron ore miner NMDC Ltd is likely to negotiate the long-term contract prices of its iron ore exported to foreign steel makers this week, said government sources.

The move holds significance for domestic steel producers like Essar, Ispat and RINL, as prices of iron ore supplied by NMDC to them are determined on the basis of the percentage increase accepted by Japanese and South Korean steel mills duly adjusted to rupee-dollar parity.

“An Indian delegation including officials from NMDC and Ministries of Commerce and Steel would leave for a five-day visit to Japan and Korea from September 29 to finalise annual price and quantity of iron ore to be supplied to the steel mills there," a senior government official said.

The Ministry of External Affairs has already given its no objection to the tour from political angle, he added.

NMDC’s price negotiation with the foreign steel producers including Posco has been in limbo for last couple of months following Commerce Ministry’s reservation on the PSU’s plan seeking up to 97% hike in iron ore prices.

The Ministry is of the view that NMDC should go for a moderate price revision taking into account India’s long-term bilateral trade relationship with the two countries.

It is also thinks the entire exercise by NMDC to get higher tariff from exports to Japan and Korea is based on the presumption that its domestic long-term prices would be revised upwards from Rs2,546 to Rs3,510 a tonne.

The Steel Ministry, however, has given its nod to the revision of rates stating the prices are to be negotiated with steel makers and not with the two countries.

Of its 30 million tons of annual iron ore production, NMDC exports around 3.5 million tons.