India's government has turned down a request from state-owned iron ore miner NMDC
Ltd to export its ore to China, the world's
largest iron ore consumer, three sources with direct knowledge said.
The government has instead asked NMDC, India's
largest state-owned iron ore miner, to focus on domestic sales, said the sources who didn't wish to be named as they were not
authorised to talk to the media.
China accounts for around 80% of India's overall
iron ore shipments. India primarily exports low-grade iron ore - with iron
content below 58% - and most of India's shipments go to China.
In 2023, China's iron ore imports hit a record
high of 1.18 billion metric tons as demand surged and steel exports picked up.
Despite China's buoyant demand, India's
government has asked NMDC to focus only on the domestic market where demand for steel is
strong, the sources said.
Finished steel consumption hit a five-year high
between April and October as construction activity picked up and the automobile
sector showed robust demand.
NMDC did not respond to a Reuters request for comment.
Although the Indian government has stopped NMDC
from directly selling its ore to China, the company continues to auction its
ore locally, with private exporters selling the ore to China.
Bilateral ties between China and India have been
strained, especially since 2020, when 20 Indian soldiers and four Chinese
soldiers were killed during a border clash.
Indian and Chinese soldiers again clashed at
least two times in 2022 along their Himalayan frontier, Reuters reported on
Wednesday.
NMDC has already discontinued its long-term
agreements with Japan and Korea for exports.
During the 2022/23 fiscal year, India produced
257 million metric tons of iron ore, imported 1.8 million tons and exported
21.6 million tons, according to an industry estimate.
The sources said NMDC does not plan to bid at
the ongoing auction of critical minerals in the country but the
government-backed company is keen to secure a block as a nominee of the
government.
"We cannot compete with aggressive bidding
from private players at auctions," one of the sources said.
But NMDC is in talks with the southern state
Karnataka for a license to explore and mine lithium, one of the sources said.