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Our Bureau

New Delhi, Aug. 23 Producers of sponge iron and pig iron and iron-ore miners are contemplating to enter into bilateral contracts and eliminate middlemen operating in this sector.

At a meeting initiated by the Ministry of Steel between the iron ore miners and sponge and pig iron makers, it has been decided that producers and miners will enter into fixed-term contracts at negotiated prices with quality and quantity specifications.

The Secretary General of the Federation of Indian Mineral Industries, Mr R.K. Sharma, told Business Line after the meeting, “It is our natural priority to supply ore to domestic producers. We have been insisting on long-term contracts.”

There are only 10 sponge iron plants owned by mine owners. Most of the other plants buy from middlemen.

It came out during the meeting that these plants were sourcing iron ore from middlemen as it came cheap. The middlemen were collecting the ore in small quantities (one or two tonnes) from farmers in the Bellary-Hospet area whose farmlands are rich in iron ore.

“We have said that if the producers give us the specifications of their requirements, such as the physical and chemical composition of the ore they need, we will see which mine meets those specifications and then the mine owner and the producer concerned will be able to enter into a long-term bilateral contract,” he said.

The term of the contract could be between three months to one year for which the price, volume and quality will be clearly spelt out, Mr Sharma said.

Another meeting between sponge iron makers and iron ore miners is scheduled to be held next week in Kolkata.

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