The country’s largest iron ore producer, NMDC, is likely to cut prices this week. A decision to this effect is expected to be taken by the board of the state-owned mining company, which is scheduled to meet in Chennai, on Thursday.
NMDC sources, however, told Business Standard the decline in prices would not be ‘much’. According to them, there could be ‘some reduction’ in the price of fines (Fe grade), and ‘a marginal’ drop in the price of iron ore lumps which have a good demand in the domestic market.
Sources say the public sector undertaking might consider a slight reduction in the price in the light of a significant drop in international prices of ore. In August, prices were around $180 a tonne, which are now at $145 a tonne, with a short-term bias towards going up.
Ten days before, NMDC’s officiating chairman and managing director, N K Nanda, had said the price drop was still being considered.
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 around Rs 7,000 a tonne, about Rs 1,500 less than the price during the second quarter of this financial year.
The reduction in international prices of ore does not impact NMDC, as it is not exporting any ore this year. Its agreement pertaining to the export of ore to the Japanese market has expired and is yet to be revived by the Cabinet.
NMDC accounts for 25 per cent of the total iron ore supply in the country. In 2010-11, the Navaratna company had sold 23.75 million tonnes of ore, while the total requirement of domestic industries was 100 million tonnes.
In Karnataka last year, the Supreme Court allowed NMDC alone to operate its mines, to the extent of providing one million tonnes a month to the domestic steel industry. The order of the apex court had made it possible for the company to also restart its Kumaraswamy mines (apart from the Donamalai mines), where mining was stopped since some time due to a Karnataka High Court order.
