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NMDC price hike gets Paswan's support
NMDCNew Delhi,
August 18:
Making out a case for state-run mining giant National Mineral Development Corporation (NMDC) increasing its prices, the Steel Ministry has argued that its most profitable PSU cannot remain insular to market forces and is open to do what is best in its interest and it does not intend to intervene on this issue.NMDC is seeking up to 97 per cent increase in iron ore prices from foreign steel makers and enhance domestic ore prices from April this year.--I am not saying that NMDC should increase prices, but how can I say that it should not do so especially in view of the fact that the PSU cannot remain oblivious to market forces and is open to do what is best in its interests. As of now we have no plans to intervene on this issue,-- steel minister Ram Vilas Paswan told The Indian Express.This assertion is likely to cause anxiety among domestic steel makers especially those who do not have captive mines and are squarely dependent on the mining giant for sourcing iron ore for firing their blast furnaces. NMDC has told the Steel Ministry that it intends to review the prices of ore for its domestic consumers with effect from April this year instead of November last year.The PSU is trying to re-negotiate Long Term Agreement (LTA) prices with Japanese Steel Mills (JSM) and Posco arguing that its costs have escalated following imposition of export duty and hike in railway freight.Ahead of an Indian delegation's visit to Japan and Korea to settle long-term contract prices with the steel mills there, NMDC has informed steel ministry, seeking nearly 80 per cent increase in prices of iron ore fines and over 96 per cent on lumps from the international clients.This is pertinent for the local steel utilities, as domestic iron ore prices are determined on the basis of percentage increase accepted by Japanese steel mills for NMDC's products duly adjusted to rupee-dollar parity.Today the PSU formally entered into a MoU with global mining giant Rio Tinto for jointly scouting and exploring iron ore properties within India and abroad. Both the companies have decided to form a Joint Working Group and formally put in place a JV company soon wherein both the companies would have 50:50 equity, NMDC CMD Rana Som said....Report it Rate Reply19 Aug 2008 08:26NMDC may get export duty refundNMDCPosted by : DNitinView full thread (1 messages)Tracked by: 0 BoarderGovernment may refund export duty on iron ore to NMDCNEW DELHI: In a major policy shift, the government may reimburse public sector major NMDC the duty paid on exports to Japan and Korea. This, along with the proposed reimbursement of the special freight surcharge, will help NMDC to offer ore to customers in these countries at a preferential price.The move is aimed at striking strategic bilateral ties with Japan and Korea, important partners in India's civil nuclear plans.--The commerce ministry has moved a Cabinet note suggesting special fiscal incentives for NMDC over its iron ore trade with Korean and Japanese steel mills. The proposal is to either reimburse additional levies to the PSU or withdraw the duties applicable on its long-term trade with the two countries. It is expected that the government would soon take a decision on the matter after considering the views of all the stakeholders,-- an official source said.Out of its total production of over 30 million tonne (mt) of iron ore, NMDC exports about 3.5 mt of high-grade ore lumps and fines to Japan and Korea under long-term agreements. The price under this arrangements work out around -67 per tonne (Rs 2,000-3,000 per tonne) while the market price of ore of the same grade varies between Rs 5,500-7000 per tonne. The 15% export duty (about Rs 800 per tonne) and additional railway surcharge of Rs 1,000 per tonne leave very little for NMDC on its overseas deals.Due to this wide disparity in pricing, NMDC wants to re-negotiate higher prices with Japanese and Korean mills for its 2008-09 contracts. The government fears this could seriously jack up the prices for the two bilateral partners. Moreover, as NMDC's domestic long-term contracts are also based on long-term benchmark prices accepted by Japanese mills, it could substantially increase domestic ore prices having an adverse impact on inflation.Though the draft Cabinet note has proposed a reduction in export duty from the present 15% per cent ad-valorem to the previous level of Rs 300 a tonne for long-term agreement, it is expected that the proposal may be changed in favour of complete waiver of duty in the final note, the source said. In its reply to the note, NMDC has also made it clear that partial reimbursement or waiver of the duties would not be adequate to restore financial viability of ore exports.The whole exercise is based on the anticipation that NMDC may seek over 95% hike in iron ore prices for foreign steel makers when negotiations in this regard begin later this year. This is based on international benchmarks arrived after the recent price settlement by mining majors Rio Tinto and BHP Billiton with Chinese buyers. Rio Tinto and Bao Steel had agreed for price increase of about 80% on iron ore fines and 96% on lumps....
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