Even as iron ore prices in the spot market touched the $100 mark, the government recommended going in for long-term contracts. Interestingly, the state-owned National Mineral Development Corporation (NMDC) also sells iron ore in the spot market to fetch more money compared with what it gets in long-term contracts. Thanks to the steel boom, spot prices of iron ore (high grade) have touched an all-time high of $100 per tonne. High grade lumps fetch can anything between Rs 1,700 to Rs 1,800 per tonne in long-term contracts, whereas the same grade can fetch Rs 4,000 per tonne in the spot market. Advocating long-term contracts, steel secretary R S Pandey said miners should go for such contracts as there would be assured buyers for iron ore.
Replying to a query as to why NMDC was tapping spot prices, Pandey said, ?It only sells low-grade iron ore in the spot market for which there are no buyers in the domestic market. Bulk of their raw material is traded through long term contracts.?
In long-term contracts, you get a fixed price for a bulk of iron ore and you are left with more time to explore more mines rather haggling for better prices in the spot market, Minerals and Metals Trading Corporation (MMTC) chairman Sanjiv Batra said.
When contacted, Federation of Indian Mineral Industries president Rahul N Baldota said, ?Why should we go for a lesser price when we can fetch a higher price in the spot market?? Baldota, however, maintained that miners were not keen on exports if they got a remunerative price from domestic buyers.
?(Travel for the story is sponsored by Fimi)