The Hindu Business Line : NMDC asks contracted buyers to stick to long-term pacts

Hyderabad, Dec. 23 National Mineral Development Corporation (NMDC) has asked its contracted buyers to lift at least 90 per cent of their contracted ore agreed under the Long Term Agreements (LTAs).

The company said failing which it would review the LTAs that it has entered with them.

“LTAs are entered into between two parties to insulate both against market fluctuations. There have been some instances where buyers, especially steelmakers have not carried out adequate offtake of iron ore agreed under the LTA and this is not justified,” Mr Rana Som, Chairman and Managing Director, NMDC, told Business Line.

The company is also looking at expanding its customer base so that it could insulate itself against the market fluctuations.

“Even though the per capita lifting of ore may be less due to the over all recession, if we expand our customer base and offer material to those who were requesting supply but could not get it because of the LTAs it will be helping some steel plants and also helping NMDC sell its product in the market,” Mr Som said.

This is the second action taken on by the company to help beat the recession in the steel sector. It had earlier, on December 4, cut prices across the board by 25 per cent.

Mr Som also said they have invited applications from domestic primary and secondary steelmakers to lift material depending on the availability.

“Based on their performance, when we finalise the list of long term customers for next year we shall consider them.

“It will, however, depend on the availability of material to induct new long term customers and performance and potential that has been exhibited by them,” he added.

According to the Government data, offtake of NMDC’s iron ore dipped by up to 30 per cent in October-November. It is, however, still not clear if the production cut would be immediate.

NMDC currently produces around 30 million tonnes of iron ore annually, it exports around 3.5 million tonnes, while the rest is sold to domestic steel producers such as RINL, Essar, JSW and Ispat Industries.

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