Aim to produce 26-27mt of iron ore in FY13: NMDC

India's largest iron ore producer NMDC slashed price for its most common grade, the iron ore lumps by almost 6 percent this month. The January price for iron ore lump is at Rs 5,060 per tonne against Rs 5,380 per tonne in December 2012. However, the price of iron ore fine for January remains unchanged at Rs 2,610 per tonne.

CS Verma, Chairman, NMDC told CNBC-TV18, decision to reduce lump price was based on demand conditions. Iron ore lumps constitute roughly 25% of NMDC's sales mix. Global iron ore price is hovering around USD 140-145 per tonne. For the next few months international iron ore price are expected to remain stable.

Meanwhile, the company is hopeful of achieving production target of 25-26 million tonne in this fiscal.

Shares of NMDC, which produces about 15 percent of the iron ore mined in India, fell more than 3 percent after the price cut. Today, at 10:59 hrs NMDC was quoting at Rs 165.00, up Rs 2.45, or 1.51%.

Below is the edited transcript of CS Verma's interview with CNBC-TV18

Q: Why did you need to cut prices by around 5-6 percent in some grades? Can you take us through the logic behind that?

A: Out of the total production of iron ore in NMDC, about 70-75 percent is production of iron ore fine and remaining 25 percent is iron ore lump. There is no cut in price of iron ore fine. Iron ore fines price for January also remains at same as it was in December. i.e Rs 2,610 per tonne. In case of lump there has been a reduction of Rs 320 per tonne in January.

Our January price for iron ore lump is Rs 5,060 per tonne against Rs 5,380 per tonne in December 2012. Looking at the demand and supply scenario, there has to be a gap which market can absorb between fine and lump prices.

Taking the view of larger market, the prevailing market prices in domestic market and other issues affecting production, investor, we took a decision to reduce price of lump by Rs 320 per tonne in January.

Q: What should one expect with the price of fines going forward over the next three-four months, any major changes you expect there?

A: Historically, in April 2011 iron ore price in the international market were to the level of about USD 180-190 per tonne. In April 2012, it was at USD 150 per tonne and then it fell to a lower level of less than USD 100 per tonne in September 2012.

It is now hovering around USD 140-145 per tonne. In the next three-four months, I the price are expected to remain stable. I am not expecting any sharp increase or decrease in iron ore prices.

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