Indian Govt Renews Iron Ore Export Contract to Japan & South Korea

Indian Government today approved NMDC’s long term trade agreement for supply of iron ore to South Korea & Japan through MMTC.

The Union Cabinet chaired by Prime Minister Shri Narendra Modi has approved the renewal of Long Term Agreements (LTAs) for supply of iron ore (lumps and fines) of grade Fe 64% to Japanese Steel Mills (JSMs) and POSCO, South Korea for another five years (i.e. 01 Apr’18 to 31 Mar’23) through MMTC Limited.

The range of quantity of iron ore to be exported under LTA per annum shall be 3.80 MnT per annum to 5.50 MnT per annum of both NMDC and non-NMDC origin iron ore with quantitative ceilings for export of Bailadila Lumps at 1.81 MnT per annum and Bailadila Fines at 2.71 MnT per annum.

The quantity of iron ore exported to Japanese steel mills will be in the range of 3-4.3 MnT and that to POSCO, South Korea will be 0.8-1.2 MnT.

The existing policy of single agency operation and exports through MMTC, with trading margin of 2.8% of FOB price, shall be continued.

Prior to this, Indian govt. renewed the LTA in 2015 for a period of 3 years which ended on 31 Mar’18.

How will the renewal of LTA benefit Indian industry ?

Export of iron ore under the LTAs would help to strengthen India’s bilateral ties with long-standing partner countries, Japan and South Korea secure an export market and result in inflow of foreign exchange. The agreement will enable India to secure international market for its ores and ensure stable economic ecosystem which provides direct and indirect employment in mining, logistics and related sectors.

Indian iron ore exports at 15.64 MnT in FY18

According to customs data maintained with SteelMint, Indian iron ore exports summed up to 15.64 MnT in FY18. MMTC which exports on behalf of NMDC exported 2.56 MnT and stood 2nd largest exporter after Vedanta. Japan and Korea remained 2nd and 3rd largest destinations after China.