Industry body calls for 25% cut in iron ore prices by NMDC

Author: Paul Ploumis
16 Apr 2015 Last updated at 04:05:47 GMT
NEW DELHI (Scrap Monster): The Indian industry body, The Associated Chambers of commerce of India (ASSOCHAM) has urged the government to reduce the prices charged on iron ore by the state-owned National Mineral Development Corporation (NMDC). According to them, NMDC’s iron ore prices are at least 25% higher when compared with other miners in the state of Odisha. A reduction in price will help enable domestic steel industry to become more competitive, it noted.

In a communication addressed to Union Steel and Mines Ministry, the apex body stated that cheaper steel exports from other competitive Asian economies such as China, Japan and Korea continue to pose threat to the sustainability of domestic steel industry in the country. The industry is also adversely affected by the higher domestic iron ore prices. As per estimates, NMDC is charging at least 25% more as compared with other miners. The state-owned NMDC is the country’s leading iron ore producer.

The offer price for 63% Fe iron ore fines by other miners in Odisha averages around Rs 2,150 per tonne. This is about Rs 500 to Rs 600 lower when compared with Rs 2,340 per tonne charged by NMDC. Although the company had announced cut in iron ore lump and fines prices in January this year, the prices of iron ore fines by them are still higher when compared with prevailing domestic and international iron ore prices. Incidentally, international iron ore prices have declined sharply in March this year. A corresponding price cut is not being implemented by the company, ASSOCHAM stated.

The state administration had recently come up with a new iron ore pricing formula to address the worries of domestic steel industry and ensure long term supply contracts. The domestic steel industry in India has been under pressure due to several factors including economic slowdown and higher iron ore prices.