State-owned mining giant National Mineral Development Corporation (NMDC) may cut production if the domestic demand for iron ore continues to decline, Steel Secretary P K Rastogi said today.
"The offtake of NMDC's iron ore dipped by up to 30 per cent in October-November and if it declines further, the PSU may lower output from its mines," Rastogi told reporters on the sidelines of a coal conference here.
Though not confirming any immediate cut in production by the Navratna PSU, the secretary said it would all depend on the demand scenario.
"NMDC will continue to produce as per its capacity, but if the offtake keeps declining, it will not have sufficient space to store the raw material and may have to lower the output," he said.
Of its 30 million tonnes of annual iron ore production, NMDC exports around 3.5 million tonnes, while the rest is consumed by domestic steel producers like RINL, Essar, JSW and Ispat Industries.
Since the demand for steel has declined by over 30 per cent in the last few months due to the global economic slowdown, most of the domestic steel companies have resorted to production cuts and reduced offtake of iron ore, a vital raw material for steel-making, from NMDC.
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To boost demand for iron ore, the Indian miner slashed its long-term prices by a flat 25 per cent from December 1. The steel companies, however, want the PSU to cut the rates with effect from April 1 when it had revised the prices upwards by up to 40 per cent.
Asked if NMDC could accept the steel industry's demand, Rastogi said it was not being considered at the moment.