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The hike in iron ore prices by NMDC, the country’s largest iron ore miner, has come as a rude shock to JSW Steel.
The rise in prices comes at a time when the country is facing a huge shortage of iron ore after the Supreme Court banned mining in Odisha.
Mining in Goa and Karnataka are limping to normalcy following the apex court easing the ban. NMDC has hiked prices by 9 per cent to ₹3,160 a tonne for iron ore fines, and by 7 per cent to ₹4,600 a tonne for lumps.
Seshagiri Rao, Joint Managing Director, JSW Steel, said it is quite shocking that NMDC has decided to mark up prices when the iron ore prices in the international market have fallen 20 per cent in the last one-and-a-half month.
Steel prices were lowered in the last two months in line with the international trend, and lower demand in the Indian markets. In this scenario, he said, it would be difficult for steel companies to pass on the incremental cost due to the iron ore price hike.
Import dutyRao added Indian steel companies would have to pay an import duty of 2.5 per cent for importing iron ore, the basic raw material, while steel could be imported by paying duty of just 1.9 per cent from Japan and South Korea, under a free trade agreement.
“This is an anomaly which needs to be corrected if the steel industry has to survive. The steel industry is being squeezed, with the cost of raw material rising and finished product being dumped by Japan and Korea on lower duty,” he said.
Besides availability, the quality of iron ore sold in the e-auction was poor, which inflates the cost further.
Iron ore production in the country is expected to fall 31 per cent this year to 90 million tones (mt) against 130 mt last year, after the Supreme Court banned mining in Odisha, Goa and Karnataka.
On the company’s plan to bid for mines in Karnataka, Rao said it was a long winding process to secure the raw material for the company. For this to happen, the State Government needs to first put the Category ‘C’ mines on auction and then take the requisite clearances from the Central Government and various agencies, he said.
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