India’s Ministry of Steel is working on a combination of a pricing mechanism and volume reservation to make iron ore available to domestic steel mills at “competitive rates”, a ministry official said on Friday, January 27.
The official said that the new framework to ensure iron ore at competitive pricing to the domestic steel industry would start off with the country’s largest miner, NMDC Limited, which is under the administrative control of the Ministry of Steel, and options would be considered to extend it to other mining companies.
The government is considering a cost-plus pricing mechanism for NMDC to supply the raw material to domestic steel mills, which would insulate the latter from spikes in prices, the official said.
At present, NMDC’s monthly sales price is benchmarked to the international price of raw materials, which the steel mills have been claiming does not enable the domestic industry to benefit from the country’s large reserves and domestic production of steelmaking raw materials.
The government is also considering the viability and option of earmarking a portion of incremental iron ore production for domestic supplies to Indian steel companies, the official added.