Despite withdrawal of duty waiver, iron ore exports to Japan will continue: NMDC

Even as the government chose not to renew decades-old long-term agreements (LTAs) for supplying iron ore to Japanese steel mills and South Korean major Posco upon their March expiry, state-run miner NMDC, which used to supply the ore, said it would continue to export to Japan provided it proved to be economically viable.

“For the current fiscal, the government will not be providing export duty relief it was providing earlier. But there is no bar on us to export iron ore. The only thing is that we have to pay 30% export duty like others and not 10% as earlier. We are indeed looking for exports,” NMDC’s chairman-cum-managing director Sumit Deb told Financial Express.

To start with, NMDC will look at Japan as its export destination because it has certain level of comfort with the Japanese mills. Subsequently, however, the company would also look at the feasibility of exporting to South Korea and other destinations, Deb said.

Iron ore supply agreements with Korea and Japan have been in existence for around six decades; these got renewed uninterruptedly as New Delhi’s goodwill gesture to the two Asian countries. The union cabinet last renewed the contract on April 25, 2018; the contract was effective till March 31, 2021.

The government did not renew LTAs apparently in view of the uncertainty over investment plans of steel mills from these countries in India. Shortage of the key raw material for steel-making in India is also seen to be a reason for the decision.

In 2019-20, NMDC exported 2.44 million tonnes (MT) iron ore, but it came down by around 6% to around 2.3 (MT) in 2020-21. There have been no exports so far in the current fiscal. However, for 2020-21, NMDC has set 2-2.5 MT export target.

NMDC operates mines in Chhattisgarh and Karnataka. NMDC is expected to produce around 44 MT iron ore in the current fiscal, up from 33.25 MT in 2020-21. The additional production is set to come from its Karnataka mines which have been closed for a little over three years till February this year. The mine has an annualised capacity of 7 MT per annum. It has set 42 MT sales target, up from 34.15 MT in the last fiscal.

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