India: NMDC floats EOI for iron ore exports

• Both high-grade iron ore and slimes to be exported
  
  
• Material to be sourced from company's Chhattisgarh, Karnataka mines
  
  
• NMDC's exports to Japan, S. Korea stopped after Mar'21
  
  

India's top iron ore miner, State-owned National Mineral Development Corporation (NMDC), has issued a notification inviting expressions of interest (EOIs) for empanelment of overseas buyers - including both traders and end-users - for sourcing iron ore from the company's Bailadila complex in Chhattisgarh and Donimalai complex in Karnataka.

The miner had previously hinted that the case for exports was strong, as global iron ore prices recovered fast since the start of 2023 with the Chinese economy expected to rebound post lifting of Covid lockdowns.

Product details

The product specifications include both fines and lump ore. From the company's Chhattisgarh mines fines (Fe64%, -10mm) and lump (Fe65.5%, 6-40mm) would be offered for exports. Interestingly, iron ore slimes (Fe56%) would also be offered.

From the Donimalai mining complex in Karnataka, both fines (Fe64%, -10mm), and lump ore (both Fe64.5% and Fe65%, 6-30mm) would be shipped to empanelled importers on FOB port basis.

The necessary qualifications for all interested companies are minimum net worth of $10 million on the closing date of the last completed financial year and average annual turnover of minimum $100 million during the last three fiscals.

Backdrop

Iron ore exports by NMDC stopped after March 2021, with the government not renewing long-term agreements (LTAs) for supply to Japanese steel mills and South Korean steel major Posco in view of the uncertainty over investment plans of steel mills from those countries in India.

NMDC used to export ore at a concessional rate in lieu of reduced export duty at 10% against 30% for private iron ore exporters and some railway freight concessions. PSU MMTC was the canalising agency.

NMDC had been a regular exporter to Japanese steel mills since 1963 and Posco since 1973. In the last renewal in 2018, a total of 5.5 mnt/year of high-grade iron ore exports had been allowed.

Shortage of the key raw material for steelmaking in India during the transition period following the 2020 mineral auctions was also seen as a key reason behind the decision.

Production target

Notably, NMDC's iron ore production in FY'21 increased by 9% to 34.16 mnt from 31.33 mnt in FY'20 but the company's iron ore exports decreased by 9% to 2.25 mnt in FY'21 from 2.47 mnt in FY'20.

At present, the PSU miner produces around 42 mnt of iron ore from mines situated in Chhattisgarh and Karnataka. In FY'24, it has set a target of producing 50 mnt - about 36 mnt from Chhattisgarh and 14 mnt from Karnataka.