India’s government-owned and -operated MMTC is planning to float a fully fledged trading company in South Africa to leverage the region’s mineral assets and offset falling iron-ore exports at home.

According to a strategic plan drawn up by the country’s largest trading house, the South African base will enable MMTC to expand its footprint across the continent and make up for the trading volumes that India lost in the international iron-ore trade business.

“MMTC already has an office in Johannesburg. We will now implement plans to upgrade that office into a fully fledged wholly owned subsidiary to expand our business in Africa, which offers immense potential in mineral trading,” MMTC chairperson Ved Prakash says.

Given the mineral potential of the continent, the new MMTC base will focus on expanding its trading volumes in coal, diamonds, chromium, cobalt, platinum and manganese.
According to Prakash, iron-ore export opportunities from the country have dried up, owing to several restrictions on mining and an adverse tariff regime, and MMTC needs to compensate for the lost turnover of 15-million to 16-million tonnes a year of iron-ore exports.

Coal trading will constitute a significant portfolio of MMTC’s new Johannesburg-headquartered company, considering that India’s import dependence on the dry fuel is expected to be on an upward curve despite government’s efforts to kick-start new projects.

Coal imports will continue to be robust for at least the next three years since companies will take time to start mining at coal blocks awarded to them through the auction route. From a level of about 70-million tonnes a year three years ago, coal imports have spurted to 150-million tonnes a year and production from Coal India Limited (CIL) has remained static, Prakash says.

Under the circumstances, imports to fill the demand-supply gap are imperative and MMTC will continue to fulfil its role as the nominated trading firm for inward shipment of coal and the South African subsidiary will have an important role to play in this merging opportunity, he concludes.