State-owned NMDC today said that it has concluded a pact with South Korean and Japanese steel mills to supply them iron ore at prices that are higher by as much as 99 per cent over the previous rate.
"We have concluded a pact with South Korean and Japanese steel mills for supplying iron ore in the present quarter. We have got a 94-99 per cent increase in rates over the previous contracted prices," NMDC CMD Rana Som told reporters on the sidelines of a steel conference here.
But Som, who led a team to both the countries last week, refused to give details of the negotiated price by saying, "It is still being worked out."
The company had, last year, entered a pact to supply iron ore lumps to these mills at around $71 a tonne and iron fines at $61 a tonne for the 2009-10 fiscal. Now, following the global trend, the company has signed a pact for supplying iron ore for the first quarter.
"As of now, we are working on the final details of the supply contract. And as per the agreement, I am bound to not give you details of the same," Som added.
It was learnt that NMDC may now supply both grades of iron ore to the steel mills at $121-138 a tonne.
The company sealed such a hike as global spot iron ore prices went up by as much as 100 per cent to about $180 a tonne than the year-ago period.
NMDC produced about 24 million tonnes of iron ore in the last fiscal. It exports about 3 million tonnes of its produce to these two countries annually.
Asked if the navratna firm would seek a similar hike from domestic steel makers like JSW Steel and Essar Steel, "The picture would become clear by the month-end. Our functional and independent directors would study a report and suggest a hike."
The company had said it would seek quarterly contracts with domestic firms as well.
The supply pact between NMDC and the mills in Japan and South Korea would act as a benchmark for similar arrangements between the miner and domestic steel firms.
However, domestic steel producers have been protesting before the Steel Ministry, stating that the increase in input costs, caused by a 90 per cent surge in iron ore prices to $160 a tonne and rise in coking coal prices by 50 per cent to $200 a tonne, was adversely affecting their business.
The steel firms are seeking successive hikes in iron ore export duty, taking the increased domestic availability into account, and the reining in of spiralling costs.