The country's largest iron ore producer National Mineral Development Corporation (NMDC) Limited is likely to reduce the prices of ore during this week. A decision to this effect is expected to be taken by the board of the state-owned minor which is scheduled to meet in Chennai on Thursday.
NMDC sources, however, told Business Standard that the drop in prices would not be "much". According to them, there could be "some reduction" in the price of fines ( Fe grade) but "very marginal" drop in the price of iron ore lumps which have a good demand in the domestic market.
They said that even though there was no case for a drop in the price of lumps, the public sector undertaking might consider a slight reduction in price in the light of a significant drop in international prices of ore. IN August prices were around $180 per tonne, which are now quoted at $145 per tonne with short term bias towards going up.
Ten days ago, NMDC's in-charge chairman and managing director, N K Nanda, had said that the price drop was still being examined by the company.
Currently, NMDC is selling lumps at around Rs 5,000 and Fe grade ore at Rs 3,300 a tonne. On the other hand, the price of lumps in the international market is hovering around Rs 7,000 a tonne, about Rs 1,500 less than the price prevailed during the second quarter of this financial year.
On the export front, the reduction international prices of ore do not have any impact on NMDC as it is not exporting any ore this year. It's agreement pertaining to the export of ore to the Japanese market has been expired and it is yet to be revived by the Union Cabinet.
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NMDC accounts for 25 per cent of the total iron ore consumption in the country. In 2010-11, the Navaratna company had sold 23.75 million tonnes of ore, while the total requirement of domestic industries stood at around 100 million tonnes.
In Karnataka last year, the Supreme Court allowed NMDC alone to operate its mines to the extent of providing 1 million tonnes per month to the domestic steel industry. The order of the apex court had made it possible for the company to restart its Kumaraswamy mines also ( apart from Donamalai mines) where mining was stopped for quite some time due to Karnataka High Court order.