The public sector NMDC Ltd, the largest producer of iron ore in the country, is subsidising the Japanese steel industry at the expense of India’s domestic steel industry complain sponge iron manufacturers.

The net realisation per tonne of iron ore (mostly lumpy variety) exported by NMDC to Japan is around Rs 1,527. As against this, domestic sponge iron producers pay Rs 5,390 per tonne of iron ore sourced from NMDC. The difference thus is Rs 3,863 per tonne, point out sponge iron industry sources.

Giving the break-up, the sources point out that the FOB price of one tonne of Baladila lumpy ore exported to Japan is $134 per tonne. At an exchange rate of $1=Rs 55, the sale price works out to Rs 7,370 per tonne, which includes railway freight (Rs 2,488 per tonne), port charges (Rs 140 per tonne), other miscellaneous export expenses (Rs 150 per tonne), export duty at 30 per cent (Rs 2,211 per tonne), royalty (Rs 650 per tonne) and MMTC’s commission at the rate of 2.8 per cent (Rs 206.36 per tonne). In other words, the FOB price includes an amount of Rs 5843.36 per tonne charged on various heads not under NMDC. The net realisation of NMDC, therefore, comes to Rs 1,526.64 per tonne, or roughly Rs 1,527 per tonne.

“We took up the issue with NMDC whose top brass threw up hands laying the blame at the doors of the Commerce Ministry,” the sources told Business Line. “We wonder what could be the compulsion of the Commerce Ministry to prevail upon NMDC to export high quality iron ore to Japan at a low price and to charge a much higher price from the domestic steel producers.”

As it is there is a shortage of iron ore in the country due to various restrictions imposed by the Governments of the major iron ore producing States. The situation, it is pointed out, is particularly bad in Odisha, the largest producer of high quality iron ore, where a handful of iron ore producers have virtually formed a cartel by taking advantage of the present situation. NMDC, though a Central Government organisation, is no different.

(This article was published on November 22, 2012)
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