MINISTER OF THE STATE IN THE MINISTRY OF COMMERCE AND INDUSTRY (SHRI JYOTIRADITYA M. SCINDIA)
(a) and (b): Yes, Madam. With the approval of the Government, MMTC has entered into Long Term Agreements
(LTAs) with Japanese, South Korean and Chinese Steel Mills for export of iron ore during 2006-11. The
objective of the Government is inter-alia, to maintain historical / good diplomatic relationships with
these countries which will enable technology transfers and investments, financial aid and soft loans for
the development of various infrastructure projects in India.
(c): Under the LTA’s for Japan and South Korea, prices are negotiated between mine-owners and steel mills
on the basis of an annual benchmark pricing system which has recently given way to quarterly contracts
which are index based on the basis of average spot market prices. A statement showing the prices applicable
for Japan and South Korea against the LTAs is annexed. As regards sale price to China, both sides have agreed
that prices will be finalized on spot price basis i.e. on transaction to transaction basis keeping in view
demand and supply patterns. The present price of iron ore of 65% Fe in the country is as follows:
Bailadila Lumps Rs.4320/- per ton (ex-mines).
Bailadila Fines Rs.3419/- per ton (ex-mines).
(d) and (e): No, Madam. The LTAs have no adverse impact on the supply of iron ore to domestic steel
mills in the country. Iron ore is exported only after meeting the requirements of the domestic steel
industry. In fact, even after domestic consumption and export of iron ore from India, there has always
been unutilized surpluses. Further, most big steel companies have their own captive mines. The LTAs
provide a commitment for supply of iron ore in the range of minimum and maximum quantities negotiable
on a year to year basis taking into account the quantitative ceilings. However, the LTAs have always
operated at the minimum of the range.
(f): Does not arise.
