Government-owned miner NMDC’s long-term iron ore export contracts with Japanese steel mills (JSMs) and South Korea’s POSCO, which were to be renewed on Mar’ 31, 2021, have been delayed. As a result, its export rakes’ movements from its Chhattisgarh mines, collated on a monthly basis, show nil in Apr’21.
When asked, an NMDC official said, “The miner’s long-term trade agreements with South Korea and Japan, which expired on Mar 31,’21, and which are done by the central government, have not been renewed. Thus, there have been were no export volumes in April.”
Japanese traders, who are party to these contracts, while affirming that these have not yet been signed, indicated that the same may take some more time. They did not specify any reason for the delay.
Last signed in 2018
These long-term agreements (LTAs) were last approved for renewal in 2018 for another three years from Apr 1, 2018 till Mar’ 31, 2021 by the Union Cabinet, at a meeting chaired by Prime Minister Narendra Modi.
The LTAS were inked for the supply of iron ore (lumps and fines) of grade Fe64%+ to Japanese steel mills and POSCO of South Korea. These exports happen through MMTC, the canalising agent for this particular grade of iron ore.
As per a government release, the volume of iron ore to be exported per annum under these LTAs shall range from 3.80 million tonnes (mn t) to 5.50 mn t per annum of both NMDC and non-NMDC-origin iron ore with quantitative ceilings on exports of Bailadila lumps at 1.81 mn t per annum and Bailadila fines at 2.71 mn t per annum.
For the Japanese steel mills, the volume of exports is pegged at 3-4.30 mn t and for South Korea’s POSCO, at 0.80-1.20 mn t.
The government release had also mentioned that the existing policy of a single-agency operation and exports through MMTC, with a trading margin of 2.8% of the FOB price, shall be continued.
MMTC reports to the Ministry of Commerce and NMDC to the Ministry of Steel.
NMDC’s iron ore exports
As per SteelMint’s data, NMDC’s iron ore exports were at 2.25 mn t in FY’21, an almost 9% drop year-on-year (y-o-y) from 2.47 mn t in FY20. In FY’19, the export volumes were at 1.10 mn t, a steep drop from 2.56 mn t in FY’18.
Benefits of LTAs
As per the government, exports of iron ore under the LTAs will help strengthen India’s bilateral ties with long-standing partner countries like Japan and South Korea and secure an export market that will result in inflow of foreign exchange.
Secondly, the agreement will enable India to secure international markets for its ores and ensure a stable economic ecosystem which provides direct and indirect employment in mining, logistics and related sectors.
The history of India’s iron ore exports to Japan is almost six decades-old and is a consistent component of India’s bilateral relations with Japan. MMTC has been supplying iron ore to JSMs since 1963 and to South Korea since 1973.
~ By Madhumita Mookerji
Leave a Reply