Steelmakers have alleged that the ore sold by NMDC in Karnataka is up to Rs 2,000 a ton higher than in other states
Alleging that steelmakers are trying to pressurise NMDC and other miners in Karnataka to reduce prices, the country's largest iron ore miner said that it otherwise "sees no reason for steel players to reduce offtake."
The miner said that is production from the Karnataka mine has decreased due to saturation of stock piles.
"During current fiscal year till date, only 25 percent of ore got sold through e-auction against the offered quantity. We are pursuing the matter with our customers to participate and to improve their off-take," the company said in a statement to Moneycontrol.
NMDC's comments come even as KISMA - which represents iron and steel makers in Karnataka - is said to approach the central government on Thursday with its side of the case. One of its members JSW Steel earlier told Moneycontrol that NMDC has been following a differential price policy, leading to a higher price of iron ore in Karnataka.
Officials from the industry added that NMDC's iron ore in Karnataka is priced Rs 700 per ton higher than the one in Chhattisgarh, and Rs 2,000 a ton higher than the rate in Odisha.
FIMI, the industry body representing miners, has already made up plans to take the issue to Supreme Court, and is also said to have approached the Central government. It has asked permission for its member to sell outside Karnataka, as presently they are not allowed to trade ore outside the state.
NMDC operates the Donimalai mines in Karnataka, one of its three mines in the country. It produces half of Karnataka's iron ore output of 25 million tons a year.
The company has refuted allegations on price differential and said that it reviews rates on a monthly basis based on market dynamics.
"Various parameters are considered to fix the prices including NMDC’s landed cost at Karnataka plants vis-à-vis other sources, viz. imports and Odisha," the company said.
Many of the steelmakers however claimed that they were forced to source iron ore from neighbouring states, or import from overseas, given the price differential.
NMDC countered that its prices in the Karnataka market were competitive." The company added:"As far as iron and steel markets are concerned, the market is performing well across all the regions. The demand for finished and semi-finished products have shown a positive trend during the last two months. So NMDC sees no reason for steel players to reduce off take..."