The Hindu Business Line : `Ore exporters must enter into long-term pacts with China'

Ore exporters should strike a long-term agreement with with China and other countries instead of risking their business through spot price contract and then worrying over a downward trend in imports by that country.

The industry should also take steps to consolidate the highly fragmented sector with larger capital infusion, for inducting efficient technologies and improving infrastructure, to retain its competitiveness in the international market.

These were the broad points that came up at the two-day Indian Iron Ore Summit organised here Monday by the Federation of Indian Mineral Industries .

Mr A.K. Jhadav, Union Secretary for Steel and Mines, while referring to the new mining policy in the pipeline, said with China continuing to be the dominant buyer of ore, it was imperative for the ore exporters to enter into a long-term supply agreement through hard price negotiations each year or every six months.

"Unless earnest steps are taken in this direction, I am afraid they may find it difficult to remain in business for too long from now," he warned.

India's export to China appeared to be filling up an ad hoc gap between demand and supply and therefore were likely to be temporary, Mr Jadhav said.

Despite China's dependence on Indian exports being large and continuing, it is surprising that exporters continued with spot price contract.

"We have then to conclude that either we are not competitive enough to enter into long-term agreements with Chinese buyers at international benchmark prices or we are more intent on making windfall profits in the short run than on international trade relationships in the long run," he said.

Mr Ramesh Kumar, Chairman, National Mineral Development Corporation, said India was capable of meeting the demand both of domestic and international markets. However, he felt that it was necessary to evolve a system of cost-effective logistic services to remain competitive. Otherwise, the heavily stretched infrastructure, particularly the railway lines and the ports, could prove a major hindrance.

Mr Arshdeep Singh of Cargill India said it was imperative for the highly fragmented mining sector to consolidate to achieve cost and supply efficiencies by investing in modern technologies.

More Stories on : Steel | Exports & Imports

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page