India plans long-term iron ore pact with China

India and China are in the process of negotiating a long-term iron ore supply agreement, said Mano Ranjan ,steel secretary,on Tuesday. The two Himalayan neighbours may also enter into a barter deal for sale of iron-ore and coking coal.

"A team of Indian officials will hold negotiations later this month with their Chinese counterparts," said Ranjan on the sidelines of an international steel conference.

If the deal goes through, this will be first time that the two countries will enter a long-term pact, under which India will export iron ore to China.

India, which has abundant deposits of good quality iron ore, is short on coking coal, another key input in the steel-making process.

India currently has long-term iron ore export agreements with South Korea and Japan. Bulk of the country's iron-ore exports are made to China, largely through spot sales.

"A long-term agreement with China will be beneficial for local iron ore producers who have to compete with exports from Brazil and Australia," said R K Sharma, secretary general, Federation of Indian Mineral Industries, the apex body of mining companies.

India's iron ore exports in 2006-07 (April-March) are projected at around 78 million tonne, 5-10 per cent lower than a year ago, Ranjan said.

The Union Cabinet recently decided to clamp down on exports of high-grade iron-ore from Bailadila Mines in Chhattisgarh in order to meet domestic demand.

According to industry estimates, India's iron-ore exports in 2005-06, the data for which is not official yet, is seen at around 90 million tonne as against the 160-million-tonne output.