New Delhi: The Union government on Thursday gave the nod for state-owned MMTC to extend its long-term agreements for supply of iron ore to Japanese Steel Mills (JSMs), South Korean steel giant Posco and Chinese steel mills for three years till 2014.

The proposal to permit MMTC to renew the long-term agreements for supply of iron ore was approved by the Union Cabinet, Information and Broadcasting Minister Ambika Soni told reporters here after the Cabinet meeting.

The long-term agreements (LTAs) for supply of iron ore for five years (2006-11) expired on March 31, 2011, and the Japanese steel mills had formally requested MMTC to renew the agreements with effect from April 1, 2011.

Under the agreement, MMTC is supplying iron ore (lumps and fines) of grade (plus) 64 Fe, or high grade content, to Japanese, Korean and Chinese steel mills.

Earlier this year, strong differences had emerged between MMTC and the largest domestic iron ore miner, National Mineral Development Corporation (NMDC), over the LTAs, as the latter was opposed to the idea of allowing MMTC to be the canalizing agency, saying it is getting a raw deal.

NMDC had contended that by allowing exports through MMTC, the money from the sale proceeds from JSM/Posco get shared among various government agencies like the ports, railways, customs and state governments, besides MMTC, and it does not get its proper share.

It had also written to the Steel Ministry expressing its unwillingness to renew the LTAs with the Japanese steel mills and Posco and had sought the government's permission to export them directly.

However, the Commerce Ministry overruled the objections of the state-owned iron ore mine in a Cabinet Note, saying that a limited quantity of iron ore exports are allowed under the Long-Term Agreements and only one agency, in this case, MMTC, should be allowed to negotiate such agreements.

The Ministry said that as a state trading company, under the canalization regime, MMTC has been doing proper due diligence on a year-to-year basis while ensuring that evacuation of high grade iron ore from NMDC's Bailadila mines does not exceed the ceiling.

(Agencies)