Thursday, June 23,
India’s largest iron ore producer by volume, could leave product prices unchanged when it sets quarterly contracts with domestic and overseas steel mills for the July-September period, signaling more stable prices for a commodity that has nearly doubled in price over the past year, its chairman said. “Quarter-on-quarter, prices could remain static,” Rana Som told Dow Jones Newswires recently.
Som said he expects average global iron ore prices to hover around the current level of $170/ton-$175/ton through the financial year that began April 1. Global iron ore prices have been rising since late 2009, driven by increasing consumption in India and China as infrastructure building and industrial activity in the two countries has boosted demand for steel.
Som, however, said the company expects to continue its revenue and profit growth in the current financial year, despite a slower rise in prices. “We expect to keep growing on the back of higher sales volume,” Som said. “I can’t predict what would be our production in the financial year, but we expect sales to grow [14% from a year earlier] and touch 30 million tons in 2011-12.” NMDC posted sales of INR113.69 billion [$2.5 billion] in 2010-11. While NMDC has reaped the benefits of high global iron ore prices over the past year, it increasingly faces challenges in raising output as obtaining new mines in India is difficult. Som said the company is pursuing state governments to acquire iron ore mines, but the process is slow.
“Since NMDC is not getting new iron mines in India, we are deploying our enormous capacity in other businesses, such as steelmaking,” Som said. He added that while the company is seeking opportunities to buy overseas iron ore mines, it has no plans to ship iron ore to India. “Any ore mined overseas will be sold commercially in the global market,” he added. NMDC has turned to steelmaking to complement its iron ore business and is planning to set up two plants in India over the next few years.
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