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India permits NMDC to resume supplies to Japan, S Korea
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9th January 2012
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KOLKATA (miningweekly.com) - The Indian government has permitted the country’s largest iron-ore miner, NMDC Limited, to resume negotiations for long-term agreements with steel mills in Japan and South Korea, as well as to commit to iron-ore exports at least until 2014.

The Indian Steel Ministry has been opposing exports by NMDC on the grounds of conserving the resource for domestic industry. However, foreign secretary Ranjan Mathai intervened, demanding that NMDC send a delegation to Japan and South Korea to start talks on supply agreements in the interests of India’s bilateral relations with the two countries.

In his communications to the steel and commerce ministries the foreign secretary pointed out that iron-ore exports by NMDC needed to be restarted immediately in view of the assurances given by Prime Minister Manmohan Singh to his Japanese counterpart, Yoshihiko Noda during their bilateral summit on December 28.

In view of the Steel Ministry’s opposition, NMDC’s exports to South Korea and Japan had dwindled over a period to levels of around two-million tons a year, and had come to a complete halt by February 2011.

The Comptroller and Auditor Genera, which mandatorily audits the majority government-owned entities, including NMDC, made adverse reports against the iron-ore producer for exporting iron-ore based on long-term agreements instead of spot prices, and claimed that this had resulted in lower price realisations by the miner.

“Given higher output in the current year and few mines coming back to production, we would not have to divert any iron-ore from the domestic market for exports,” a senior NMDC official said.

“However, once long-term supply agreements were finalised with steel mills in Japan and South Korea as per government direction, initially total exports to those country would remain at low levels of about two- to three-million tons, since domestic markets would continue to be a priority,” an official said.

During the period between April and November last year, the company’s production increased by some 27.5% to 18-million tons. Total production to the end of March this year was forecast at 28-million tons against 26-million tons during corresponding previous fiscal year, the official said.

Production at two of the company’s mines, Donimalai and Kumarswamy, in the southern Indian province of Karnataka, had also restarted from August last year, after the Supreme Court made an exemption for NMDC, permitting the miner to operate its two mines, after the Court banned iron-ore mining in the state in an effort to prevent illegal mining.
 

Edited by: Esmarie Swanepoel

 

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Picture by: Bloomberg