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Govt mulls halting NMDC iron ore exports

The NDA government is likely to consider a proposal to curb iron ore exports by NMDC Limited to Japan and South Korea for the next three years in view of the ongoing scarcity of steel-making input, which has reportedly led to steel and sponge iron makers cutting down their capacities.

Acting on a proposal of industry body Assocham, the commerce ministry convened a meeting of an inter-ministerial group comprising top officials of steel and mines ministries and representatives of industry, to deliberate at length on a proposal to stop the country’s biggest miner, NMDC, from exporting 2.5 million tonne (MT) iron ore to these two nations.

It is learnt that the commerce ministry too agrees to the contention of Assocham that ore exports cannot be allowed at the cost of the raw material security of domestic integrated steel makers and sponge iron producers.

Assocham, which is spearheading the proposal, has argued that iron ore output has been adversely-affected since the mining ban imposed in Karnataka by the Supreme Court in 2011. Subsequently, the Orissa government also took several measures to control alleged illegal mining, which has also lessened the mineral’s output. It cited that ore production has drastically come down to 136 (MT) in FY14 against an output of 218 MT in FY10. This is likely to further slide to 100 MT in FY15. This paucity of the key steel making input has “forced sponge iron units and steel plants to reduce their capacity utilisation, which has come down to 81 per cent in FY13 against 88 per cent in FY11.

“The existing foreign trade policy recognises that the demand of iron ore by domestic steel industry has to be met first and any surplus left thereafter may be exported,” a senior commerce ministry official said.

Assocham has contended that at a juncture when the Indian steel companies are struggling due to paucity of iron ore, it is the moral duty of NMDC to support the industry. “NMDC should stop iron ore exports for the next 2-3 years, till the time iron ore scenario in the state normalises,” according to its proposal to be considered in the IMG meeting.

The PSU can meet its overseas obligations by mining iron ore from Australia and Brazil, which would also improve its sales realisation. Currently, NMDC’s exports realisation is far lower than domestic earnings, according to the official.

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