NMDC expects 40% hike in ironore rates supplied to Jap mills

State-owned NMDC today said it expects a 40 per cent hike in the prices of iron ore supplied to Japanese steel mills under a long-term pact in next fiscal ahead of preliminary talks with the foreign manufacturers scheduled for Wednesday.

"I am expecting a 40 per cent hike in the rates of iron ore we supply to Japanese steel firms under the long-term contract for 2010-11. Preliminary discussions with them will start day after tomorrow," NMDC CMD Rana Som told reporters here.

Under the long-term arrangements with Japanese mills, Som said he expects prices of iron ore lumps and fines to settle at $110 per-tonne level and around $85 a tonne, respectively.

At present, NMDC supplies iron ore lumps to Japanese mills at around $71 a tonne and iron fines at $61 a tonne.

Iron ore prices had almost halved during the global economic slowdown.

On response of investors to its recently concluded Further Public Offer (FPO) he said, "It is very good...Selling about 33 crore shares in three days is overambitious...Retail investors bought equity worth around Rs 800 crore."

When asked if public sector institutions like LIC have bailed out NMDC FPO, he said, "It is a wrong perception. LIC is an institution which participates in both public and private sector offerings. It is wrong to say it has bailed out NMDC."

"Retail investors filed around 1.70 lakh application for buying 2.52 crore equity in NMDC, which is substantially more than NTPC and REC combined together in terms of attracting retail investors," he said to a query whether the FPO was met with poor response when compared with that of NTPC and REC.

The $2 billion FPO of the Navratna firm was subscribed 1.25 times, backed mainly by state run financial institution LIC.

The firm today said it has fixed the issue price of its further public offer of 33.22 crore equity shares at the lower end of the price band at Rs 300 a piece.

The mining giant's public offer in the price band of Rs 300-350 per piece was open between March 10 and March 12 and was the third one in 2010 by the UPA government under its divestment plan.

The government is divesting 8.38 per cent of its 98.38 per cent holding in NMDC through the FPO.

Power producer NTPCs' follow-on offer was subscribed 1.29 times, while the REC's issue was subscribed over three times.