NMDC 'ready' to raise iron ore supplies to meet demand

Seeking to allay fears of iron ore supply shortages, state-run miner NMDC today said it is willing to "substantially" increase the raw material availability in this quarter to meet the rising demand.

Moreover, the company will take a decision on Tuesday, in consultation with the Steel Ministry, on modalities of raising the mineral supplies to steel and allied industry, NMDC Chairman Rana Som said.

He indicated that preference may be given to customers having long-term contracts and that the company is looking at production of about 7 million tonnes of iron ore in this quarter, 15% more than April-June period.

The move of the state-run miner comes in the backdrop of an apex court order of Friday, which allowed mining of iron ore in Karnataka's Bellary region to NMDC only and fixed the quantity at one million tonnes per month.

"We are gearing up to meet the demand and will increase supplies substantially to meet the shortages. We will take a decision on modalities of supply on August 9, after consulting the Steel Ministry," Som said, adding that "long-term contracts have to be honoured but modalities have not been decided yet".

JSW Steel, Rashtriya Ispat Nigam, Essar Steel, Lanco Group are some of the companies having long-term contracts with the Navratna firm.

Following Supreme Court ban on the mineral mining late last month, the iron and steel industry in South India has gone for a toss and a large number of small steel mills and sponge iron ore manufacturers are on the verge of closure due to severe shortage of iron ore.

Even big producers like JSW Steel, which has a 10 million tonnes per annum steel plant in the region, has to cut its production by 30-35 per cent due to the shortages.

However, in a partial lifting of ban, the apex court on Friday allowed NMDC to produce one million tonnes of iron ore per month from Bellary to meet the supply shortages.

Still, the iron and steel industry said the move will not be "adequate" to meet the demand-supply mismatch.

"The Supreme Court order will bring immediate relief for the industry in the region but it will not be adequate. Steel and allied industries' total production is about 21 MTPA, which means 33 MTPA of iron ore or 2.75 MT iron ore per month is required," JSW Steel's Joint Managing Director MVS Seshagiri Rao said.

He added that of this, JSW's Vijaynagar plant requires 16.5 MTPA iron ore or 1.4 MT per month.

"We are talking to NMDC on sourcing of iron ore and will be able to give you the future guidance only after hearing from them," Rao said in reply to a question on whether the company will cut its production targets of 9 MTPA for this fiscal.