Secondary steel makers irked by NMDC pricing policy

By : BS Reporter
Last Updated: Mon, Apr 19, 2010 20:10 hrs

The secondary steel makers in Chhattisgarh will launch a campaign against state-run National Mineral Development Corporation (NMDC) for its alleged un-favourable pricing policy for the domestic steel producers.

"The pricing policy of NMDC is not favorable to the domestic steel producers as it is fixing price as per international competitive price for export and the same price is being imposed on domestic producers," Chhattisgarh Sponge Iron Manufacturers Association President Anil Nachrani said.

The main difference in NMDC's export price and domestic price is that it charges about 10 per cent extra as royalty from domestic producers but exempt the same from export, Nachrani added.

The domestic producers also have to bear the transportation cost which is free up to the port for export.

The royalty has the double effect on the cost of production because for producing one million tonne of steel, iron ore is required at double the rate for consumption, he said, adding that on royalty there is also no MODVAT credit available.

Iron ore has no contribution in value addition while the domestic consumers add value to the raw material by which government gets around Rs 2500 per tonne by way of excise duty and around Rs 1000 by Value Added Tax (VAT), Nachrani said.

The steel makers had a meeting with the NMDC officials last week here, but failed to find any solution over pricing. "We will meet senior officials of the steel ministry on April 22 to urge supplying iron ore at concessional rate to the secondary steel producers," Nachrani added. If the steel makers fail to get justice, they will plan the next course of action to launch a campaign against NMDC.

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