NMDC May Stop Iron Ore Exports

India's public sector mining company, National Mineral Development Corporation (NMDC), may stop exports of high-grade iron ore if international ore
prices, contracted under long-term agreements (LTA) with other countries, continue to fall sharply.

The move is expected to hit steel companies in Japan and Korea that source a large part of their iron ore requirements from India.

“Our resources are not meant for exports at throwaway prices. If prices fall very low, we will not export,” NMDC chairman and managing director Rana Som told reporters on the sidelines of a Ficci conference on steel.

NMDC exports about four million tonnes of high-grade iron ore from mines in Bailadila annually for consumption by steel companies in Japan and South Korea through LTAs signed with the countries usually valid for a one-year period. This constitutes about 11% of the company’s total ore production.

Mr Som said the negotiations for LTA with overseas companies, which have already started, may be extended up to October as the company would like to watch how LTA benchmarks are reached by international players. “If prices fall further by 40-45%, we may not consider exports,” said Mr Som.

The LTA prices will also become benchmark prices for the domestic iron ore sold under long-term contracts. But a delay in the decision on prices could come as a setback for domestic steelmakers. These companies were expecting up to a 40% reduction in iron ore prices under long-term contracts with effect from April 1, owing to the drop in global spot market prices.

NMDC increased long-term price of iron ore fines by 10.5% and that of lumps by up to 40% in October last year even as iron ore prices were slumping globally on the back of softening demand. But bowing to pressure from domestic steelmakers, the company slashed prices by almost 25% in December.

Source: Economic Times