August 7th (Steel Guru) – Money control.com reported that state owned mining firm NMDC is in talks with Rio Tinto for a 50:50 JV which would bid for global mining assets.

Mr Rana Som CMD of NMDC said that “We are in discussion for a 50:50 joint venture. Rio Tinto was one of the international parties to evince interest in establishing a joint venture when we floated a tender.”

Earlier this year, as many as 35 companies had expressed interest in NMDC’s global tender for floating a joint venture for mining activities. Out of which six were foreign companies.

A Rio Tinto spokesperson said that “Rio Tinto does not comment on market rumor or speculation.”

As per report, the JV besides acquisition of global assets, the partnership could be extended to new assets in the domestic market also. Industry sources said that the partnership could enhance the global mining giant Rio Tinto’s presence in the domestic market significantly.

Like Rio Tinto, NMDC is also involved in the exploration and mining of a wide range of minerals. Also, in the domestic market, NMDC has filed mining applications for iron ore and coal in almost all the mineral rich states. If the discussions with Rio Tinto get through, it would be the domestic miner’s second joint venture company.

Mr Som said that the two joint venture companies would bid for different assets in different countries. NMDC and the Spice Energy group have formed a joint working group, which is conducting due diligence of some assets, including two iron ore deposits in Armenia, which may require an investment of USD 500 million.

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July 30th (Steel Guru) – FE reported that the steel and commerce ministries are pitted against each other over National Mineral Development Corporation’s demand for upward revision of iron ore prices in its long term supply agreements with Japan Steel Mills and South Korea’s POSCO.

As per report, while the steel ministry has endorsed the state owned mining giant’s proposal to include rail freight and 15% export duty costs on top of a higher price for iron ore, the commerce ministry has opposed it saying India would risk jeopardizing its commercial relations with the 2 countries.

Mr RS Pandey steel secretary said that Australia and Brazil had already secured a much higher percentage hike compared with last year’s prices. Steel ministry is reported to have said that long term agreements were between business enterprises of the 2 countries not between the governments thus NMDC should take commercial decisions in its own interest.

On the other hand the commerce ministry observed that revenues from rail freight and export duty accrue to the government only and hence should not be built into the export price. It also asked the PSU not to insist on getting reimbursements in view of the larger public interest and Indo Japan relations.

July 29th (Steel Guru) – BL reported that the JV between NMDC and Chhattisgarh Mineral Development Corporation has decided to speed up work on Deposit Number 13 of the Bailadila mines in Chhattisgarh.

According to the report, the deposit has around 300 million tonnes per annum of high grade iron ore and the quantity of minable ore is expected to increase as the exploration starts. Around INR 1,500 crore will be invested in the next three years and the debt equity ratio for the proposed investment will be 2:1.

As per the report the project will have an annual capacity of 10 million tonnes per annum and the production is expected to start within three years.

July 24th (Steel Guru) – According to the East Coast Railway sources heavy rains have badly affected loading and movement of iron ore rakes in Chhattisgarh, Andhra Pradesh and Orissa.

As per report the iron ore loading at National Mineral Development Corporation’s mines in Chhattisgarh has been badly hit, as a result fewer rakes than normal are being moved on the 450 kilometers long Kirandul Kottavalasa line. Right now, on an average, 8 to 10 rakes are being loaded and moved on the route against 15 to 16 in normal situation.

According to the ECoR sources, iron ore loading in Daitari Banspani area and transportation of it to Paradip port for exports has also been hit as rains have affected normal operation in the mines as well as the port. As many as 13 rakes, earlier loaded with iron ore for exports, have been detained at various points on the route from the mines to the port. The iron ore rakes already in the port are discharging cargo slowly because of the rain. This has also slowed down back loading of imported coal as the same rakes, which carry iron ore to the port for exports, are used for back loading of imported coal.

The loading of thermal coal at Talcher mines, after having remained suspended for several days due to strained industrial relations problems, resumed recently and on an average 24 rakes were being loaded per day. Only concern of ECoR is that BOBR rakes, the dedicated rakes used for transportation of thermal coal to Paradip for coastal shipments, do not get detained at the port due to bad weather.

Mr K Raghuramaiah chairman of Paradip Port Trust said that the rains have not stopped operation of the port, but have only slowed it down. Despite a plethora of problems thrown up by the inclement weather, about 4 to 6 iron ore rakes are being loaded and that many rakes are being used for loading imported coal, observed Mr Raghuramaiah, adding that as far as the BOBR rakes are concerned, there is no problem.

July 24th (Business Standard) – Country’s largest iron ore producer NMDC is seeking up to 97 per cent increase in iron ore prices from foreign steel makers, a move that could have similar repercussions on the domestic market, which may result in higher steel prices.

Other than sponge iron makers, steel players like Essar, Ispat and RINL have long-term contracts with NMDC for iron ore supply.     

 

Ahead of an Indian delegation’s visit to Japan and Korea to settle long-term contract prices with the steel mills there, NMDC has informed Steel Ministry, seeking nearly 80 per cent increase in prices of iron ore fines and over 96 per cent on lumps from the international clients.     

 

This is significant for steel industry here, as domestic iron ore prices are determined on the basis of the percentage increase accepted by Japanese steel mills for NMDC’s products duly adjusted to rupee-dollar parity.     

 

“If iron ore prices shoot up by 100 per cent, it will substantially add to our input costs, which may ultimately have a reflection on steel prices,” an industry official said.     

 

Of its total 30 million tonnes annual production, NMDC exports around 3.5 million tonnes to Japanese steel mills and South Korea’s steel giant Posco under long-term contracts.     

 

In a letter to Steel Ministry, NMDC said its finalisation of prices between Japanese steel mills and Posco has been guided by global price settlement of iron ore every year.     

 

NMDC plans to go by the recent price-settlement by mining majors Rio Tinto and BHP Billiton with Chinese buyers.     

 

Rio Tinto and Bao Steel had on June 25 agreed for price increase of 79.88 per cent on iron ore fines and 96.5 per cent on lumps.

 

Subsequently, BHP Billition settled its prices at the same level with Chinese buyers on July 4.

July 20th (Sify) – Kudremukh Iron Ore Company Ltd (KIOCL) is negotiating with NMDC, Ispat Industries, JSW Ltd and Mysore Minerals Ltd (MML) to secure conversion jobs to utilise spare capacity of its pellets plant. According to the proposal, the company will receive ore from the contracted parties for conversion into pellets.

The company also plans to appoint an internationally reputed agency to prepare a detailed report on the possibility of resuming mining operations at the closed Kudremukh mine without disturbing the ecology. The process to appoint the consultant may begin in the next two months. The mine was closed in January 2006 following a Supreme Court order on environmental concerns.

July 12th (Steel Guru) – BL reported that National Mineral Development Corporation will push for a better price for its iron ore with Japanese steel mills & South Korean steelmaker POSCO during negotiations scheduled for the end of the month 2008.

Mr Rana Som C MD of NMDC said that “Though the dates have not yet been finalized, officials have said that the meeting could be either on July 26th or 28th with Japanese steelmakers followed by meeting with officials of POSCO.”

He said that “This time the negotiations are going to be totally different. On previous occasions there were no talks, but a standard increase as applicable to everybody was effected. This time since the price of the ore is being decided depending on the country of origin and because our ore is of very good quality we are hopeful of getting a good deal.”

Mr Som said that “We expect the increase to be similar to what the Australian companies have got because of the good quality of ore that we mine.”

He said that the negotiations would also be a benchmark for determining the price rise for iron ore that is supplied to the domestic steel companies such as Essar Steel, Rashtriya Ispat Nigam Limited & Ispat Industries.

National Mineral Development Corporation sells high grade fines at INR 1,783 a tonne and lumps at INR 2,500. In comparison, the price private miners demand is determined by the price prevailing in the spot market, which is at INR 4,500 to 6,000 a tonne.