NMDC set to ask buyers to lift 90 pc of contracted ore

With the offtake of iron ore produced from its mines dipping by nearly 38 per cent during the past two months sending jitters through the steel ministry...

With the offtake of iron ore produced from its mines dipping by nearly 38 per cent during the past two months sending jitters through the steel ministry, state-run National Mineral Development Corporation NMDC is set to ask its buyers to lift at least 90 per cent of their contracted ore agreed under their Long Term Agreements LTAs, failing which the navratna company may review their LTAs. Besides, it is also planning to broad base its clientele in a bid to insulate itself against short-term market fluctuations.

8220;The LTA is entered into by two buyers essentially to insulate both parties against market fluctuations. There have been some instances where buyers mostly steelmakers have not carried out adequate offtake of iron ore agreed under the LTA. This is simply not acceptable. They will have to lift at least 90 per cent of total ore as agreed under the LTA or NMDC could review their agreements,8221; a senior ministry official told The Indian Express.

But simultaneously, with the spectre of decreasing offtake looming large in its mind, the PSU is also planning to dish out an advertisement soon seeking to enlist more domestic buyers to neutralise the possibility of existing buyers shying away from lifting their quantity of ore.

But truly speaking, NMDC is yet to see any major impact on its production, though it wants to be prepared for the future. The ministry8217;s top brass have, however, expressed their apprehension that in the event of lower offtake, its PSU could have to resort to production cuts. The ministry official cited that during the October-November period, the offtake by buyers have slid by almost 38 per cent, which is why there is panic in the ministry.

Steel companies particularly, are feeling pressure on their margins due to the steep rise in global coke prices. Prices of finished steel, too, have dipped with global hot-rolled steel prices being quoted at 700 a tonne, down nearly 27 per cent.