State-run Rashtriya Ispat Nigam (RINL), National Mineral Development Corporation (NMDC) and MOIL (formerly Manganese Ore India Ltd) are reported to be looking for iron ore assets in Brazil, the world's second largest exporter of the steel-making raw material.
With domestic prices of iron ore rising to international levels, RINL and MOIL Limited are trying to get round the problem by entering into joint venture with NMDC to mine iron ore abroad.
While the plan may make iron ore cheaper for RINL, it will not improve the sourcing conditions for private sector steel makers that do not have captive mines.
Prices of iron ore auctioned by NMDC had increased sharply since mid-year to reach around Rs7,619 per tonne. NMDC is now charging import parity price for its e-auction platform.
RINL has no captive mine but plans to increase its steel-making capacity to 6.3 million tonnes per annum from 2.9 million tonnes.
With cheaper iron ore wiped out of the market with the progressive ban on mining of the ore in Karnataka, Goa and Orissa, companies are finding it hard to meet raw material requirements.
India produced only 6.4 million tonnes of steel in November 2012, just 6.6 per cent more than last year's production level. For the full year, India's steel production has risen by 4.2 per cent.