BL reported that National Mineral Development Corporation has asked its contracted buyers to lift at least 90% of their contracted ore agreed under the Long Term Agreements, failing which it would review the LTAs that it has entered with them.

Mr Rana Som CMD of NMDC said that “LTAs are entered into between two parties to insulate both against market fluctuations. There have been some instances where buyers, especially steelmakers have not carried out adequate offtake of iron ore agreed under the LTA and this is not justified.”

Mr Som said that “Even though the per capita lifting of ore may be less due to the over all recession, if we expand our customer base and offer material to those who were requesting supply but could not get it because of the LTAs it will be helping some steel plants and also helping NMDC sell its product in the market.”

He said that this is the second action taken on by the company to help beat the recession in the steel sector. It had earlier, on December 4th cut prices across the board by 25%.

He added that they have invited applications from domestic primary and secondary steelmakers to lift material depending on the availability. Mr Som said that “Based on their performance, when we finalize the list of long term customers for next year we shall consider them. It will, however, depend on the availability of material to induct new long term customers and performance and potential that has been exhibited by them.”

According to the Government data, off take of NMDC’s iron ore dipped 30% in October to November. It is, however, still not clear if the production cut would be immediate. NMDC currently produces around 30 million tonne of iron ore annually it exports around 3.5 million tonne, while the rest is sold to domestic steel producers such as RINL, Essar, JSW and Ispat Industries.

(Sourced from Business Line)