NMDC plans to hike ore prices for next quarter

India's largest iron ore producerNMDC will increase ore prices for domestic steel makers from the current level of about $140 a tonne for the April-June 2011 quarter in tandem with the rise in ore prices globally.

Mr Rana Som, Chairman and Managing Director, was, however, not willing to make any projections of the quantum of hike.

“Globally, ore prices will further rise from the beginning of next fiscal. We feel that in the later part of the year, the prices could stabilise. The major factor pushing up ore prices is the natural calamity that struck Australia,” he told press persons on the sidelines of a national convention here on Friday.

After marginally lowering prices of the raw material for the October-December 2010, the company had hiked them by about six to eight per cent for the current quarter.

“Even now spot prices of iron ore globally are about $35-40 more than the long-term contract prices,” Mr Som said.

The impending price hike for the next quarter could prompt Indian steel makers such as SAIL, Tata Steel, JSW and Essar to hike steel prices.

On exports, Mr Som said both the company and the Government were working on an ore export policy, taking into account factors such as high railway freight for ore export cargo.

“For ore export cargoes, the Railways charges three times the freight rate for domestic cargo. A decision on ore exports will emerge in the next two months,” he pointed out.

Overseas assets

NMDC is close to finalising deals with two Australian companies for taking over management control of two iron ore mines for exploration activities.

“We have already finalised our partner for one of the mines and shortly we will finalise the other partner. The deals would be concluded in the next two months. Our policy for overseas assets involves taking management control with at least 51 per cent stake in projects at the exploration stage, as immediate investments will not be that high,” Mr Som said.

Asked whether the investments on these two projects would be in the range of $100 million, he said “it will be much less than that”.

Four more projects

Apart from these two, NMDC is in talks for four more similar mining projects, including coal mines, in Australia, Mozambique and Albania.

The company is also negotiating with Anglo-Australian mining major Rio Tinto to renew the two-year MoU to work jointly on iron ore and coal mining assets in Australia and Africa.

“The new MoU will be more exhaustive and include coal projects. We have set up a working group to work out the new MoU,” Mr Som said.

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