Prices of iron ore as fixed by state-owned NMDC may act as the benchmark, with the government today asking all miners to enter into long term contracts with steel manufacturers based on the price band of the mining PSU.
"We do not want to suggest any price band. At present, our efforts are aimed at securing a long term contract (for iron ore supply) between miners and steel producers. They should follow it on the lines of NMDC," Steel Secretary P K Rastogi told reporters here today.
NMDC Ltd, country's largest iron ore company, has long term contracts with leading steel producers across the globe. It works out the price band on the basis of increase and decrease in exports and rupee/dollar parity.
The suggestion comes amidst talks the government is holding between iron ore producers and steel manufacturers to ensure long term agreement between the two to ensure raw material supply security at reasonable rates.
On NMDC seeking up to 97 per cent increase in iron ore prices from Japanese and South Korean Steel Mills on long term contracts, Rastogi said, "As far as revision of iron ore prices are concerned, NMDC has entered into long term contracts with Japanese steel makers for the period 2005-06 to 2011, but prices are fixed between them every year."
"We have made our point that high freight charges and ad- valorem export duty on iron ore are hitting our margins. It is now up to the government to decide whether we should seek higher price for our high quality iron ore from Japanese and Korean mills or not," NMDC Chairman Rana Som had said this month.
In a letter to Steel Ministry last month, NMDC said its finalisation of prices between Japanese steel mills and Posco has been guided by global price settlement of iron ore every year.