NMDC extracts 100 pc hike in ore prices from Japanese mills

Days after securing a hike in prices for its ore from domestic buyers, state-run mineral giant National Mineral Development Corporation (NMDC) has notched up another victory by securing a 102 per cent hike on its ore exports to Japanese steel mills implying that it will now get $129 per tonne on its exports instead of $65 currently. The navratna company has secured the hike in the midst of a raging debate between the Steel and Commerce ministries on the propriety of such a move by the PSU.

“Yes, NMDC has managed to secure a 96 per cent hike on its export prices from its Japanese buyers. What more, the JSMs have also agreed to give a bonus hike of 6 per cent on its Baladila Lump Ore to the navratna company. Now it is likely to get $129 per tonne on exports,” Steel Secretary Pramod Kumar Rastogi told The Indian Express. He said NMDC Chairman and Managing Director Rana Som along with senior officials of his ministry have secured the hike after recent negotiations with the JSMs. Som had pointed out that NMDC is required to pay additional railway freight of about Rs 1,000 per tonne for exporting the mineral besides the imposition of 15 per cent ad-valorem duty (now 8 per cent) on ore export has entailed additional liability to it. “As a consequence it appears that NMDC will have to incur an additional cost of around Rs 1,800 per metric tone for its exports which would bring down its net realisation to an abnormally low figure,” he had said.

The CMD said his company would have no justification to export unless the additional cost incurred on account of railway surcharge and export duty is reimbursed by its overseas buyers-Japanese Steel Mills and Posco. The PSU cited that private miners in the country are charging market prices for their ore from the domestic buyers and the prices of calibrated ore prevailing currently varies between Rs 5,500 to Rs 7,000 per tonne depending on size and Ferrous content. NMDC on the other hand supplies about 95 per cent of its produce through LTAs.

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But steel and commerce ministries were divided on the issue. While the steel ministry endorsed its mining giant’s proposal to include rail freight and 15 per cent export duty costs on top of a higher price for iron ore, the commerce ministry has opposed it saying India would risk jeopardising its commercial relations with the two countries. The commerce ministry observed that revenues from rail freight and export duty accrue to the government and hence should not be built into export prices.

The steel ministry, however, argued that long-term agreements were between business enterprises of the two countries, and NMDC is a navaratna and should take decisions in its own interest. The ministry thereafter gave the go-ahead to NMDC to negotiate with Japanese buyers.