The Hindu Business Line : `Iron ore exports set to touch Rs 1,393 cr'

INDIA'S exports of iron ore during the current fiscal are set to go up to Rs 1,393 crore, against last year's Rs 827 crore, following the firming up of price and quantity by a consortium of Indian iron ore exporting team led by MMTC which visited Japan and South Korea recently.

Disclosing this to Business Line here in an interview, the Chairman-cum-Managing Director of MMTC, Mr S.D. Kapoor, said that a delegation comprising top brass of National Mineral Development Corporation (NMDC), Hyderabad, Kudremukh Iron Ore Company Ltd (KIOCL) and MMTC and senior official of the Commerce and Steel Ministries visited the major steel making countries such as Japan and South Korea.

He said that in Japan the team held a series of negotiations with the steel mills comprising Nippon Steel, GFE, and a new company after the merger of NKK and Kawasaki and Sumitomo Metal Industry and Nissan. The outcome of these negotiations was that 71.5 per cent increase in lumps and fine prices over last year prices was secured in line with the global price of the metal.

Stating that the team had been able to secure settlement on a number of pending issues, Mr Kapoor said that as a result a sort of price parity was brought in and anomalies and discrepancies ironed out. He said for instance the Donimalai fines of NMDC ore were fetching slightly lower price as compared to the Bailadila fines as the delegation successfully convinced the Japanese that the Donimalai fines in terms of quality have similar properties as that of Bailadila fines. The team also succeeded in getting a little higher increase for Kudremukh concentrates over and above the 71.5 per cent increase. "Since the mines of the Kudremukh were to be closed by the end of December, we had to balance the reduced quantity supply of these ores with higher price demand," he said.

He said the value of contract signed with Japanese steel companies at the negotiated price for the current fiscal amounts to Rs 1,007 crore, against Rs 590 crore the Indian companies obtained during 2004-05. This is also the last year of the five-year contract, which is valid till March 2006.

Mr Kapoor said that Japanese steel mills have come forward with a plea to renewing this agreement further and evinced interest to consider investment in India, which would help strengthen the competitiveness of Indian ore through development of mines and infrastructure. This would also enable Japanese steel mills to procure Indian iron ore against new long-term agreement from April 2006, he added.

Asked to amplify this interest by Japanese steel mills to strengthen their supply source, he said that the Japanese side was keen to expand Vizag Outer Harbour as the most prospective project to be developed. The proposal for seeking official development assistance (ODA) loan for expansion of Vizag Outer Harbour has been made by the Vizag Port Trust and is now with the Department of Economic Affairs, Ministry of Finance for putting forth to the Japanese Government.

Mr Kapoor said that the team visited Seoul, South Korea and held extensive negotiations with Posco, the leading steel maker. The team was able to secure similar higher increase settlement with Posco and the value of the contract with this company amounts to Rs 386 crore in the current fiscal, against Rs 237 crore last fiscal.

He made it clear that in the negotiations with both the main purchasing countries, the performance under the current long-term contract has been at the minimum of the range. This is to accommodate any eventuality in case the domestic demand shows a rise to provide greater flexibility for supplies to the Indian side.

Mr Kapoor said that MMTC exports of iron would be from three major east coast ports of Chennai, Vizag and Paradip.

The Indian bottoms would carry 30 per cent of iron ore cargo for export. Where the ports do not allow larger vessels, 100 per cent by foreign vessels would be resorted to meet the buyer's request, he said.

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