Resume iron ore exports to Japan: Mathai

Foreign Secretary wants team sent to Tokyo to quickly conclude talks on LTA

The freeze on iron-ore exports has led to a diplomatic crisis of sorts. Foreign Secretary Ranjan Mathai has sent an SOS to Commerce Secretary Rahul Khullar suggesting that he send a team to Tokyo to promptly conclude talks on the LTA Long Term Agreement that fixes ore prices for five years and resume exports.

In his letter,dated December 30,Mathai underlined the urgency by referring to the assurances given by Prime Minister Manmohan Singh to his Japanese counterpart Yoshihiko Noda at their recent bilateral summit.

Mathai said that on July 7,the Cabinet had cleared the LTAs renewal and exports by Minerals and Metals Trading Corporation MMTC. He noted the Steel Ministrys stand that iron ore exports by National Mineral Development Corporation NMDC was unsustainable given the Supreme Court restricting exports from its Karnatakas mines on July 29.

But he added: Our iron ore exports to Japan though small has connected us historically and has been the foundation of the present day diversified and intense bilateral trade and economic relationship. The delay in finalising the LTAs by India has been viewed with concern by the Japanese side.

The Japanese Premier raised the issue with Prime Minister Manmohan Singh on December 28 during his recent visit to India. He assured his Japanese counterpart that we will address their concern. This letter was also sent to Steel Secretary P K Misra.

As per the existing LTA between NMDC and these nations which expired on March 31 last year each year the PSU supplied 2.3 million tonnes of iron ore to Japanese steel mills. This stopped in February 2011.

NMDC has been traditionally supplying iron ore to Japanese and South Korean buyers,who are squarely dependent on it for raw material security.

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However,the navratna company is firmly opposed to resumption of exports to them owing to host of reasons.

The steel ministry had expressed a view that the exports should not be allowed as the Comptroller and Auditor General CAG and the Income Tax Department had raised objections. The CAG had questioned the rationale behind exporting iron ore when local demand for it was on the rise. The I-T department criticised NMDC for selling at long term prices instead of spot prices and losing substantial revenues.