New Delhi, Aug 8: Sesa Goa slumped as reports that the Centre is considering a proposal to bring iron ore under price control in an attempt to check steel prices came flickering in.
In a move aimed at checking volatility in the spot market, the government is planning to make it mandatory for miners to sign long-term supply contracts with steel companies instead of selling at high spot prices. Reports suggested that iron ore is the basic raw material for producing steel and accounts for almost 25 pc of the cost of steel-making. Any increase in ore prices affects the cost structure of steel companies and generally leads to higher steel prices. Higher ore prices, coupled with a 200 pc increase in coking coal prices are among the reasons cited by steel manufacturers to raise steel prices.
Sesa Goa reported 442.4 pc surge in net profit to Rs 644.72 on 180.3 pc increase in net sales to Rs 1273.04 crore in Q1 June 2008 over Q1 June 2007.
Sesa Goa, an iron ore mining company of the Vedanta group, has been involved in iron ore mining, beneficiation and exports besides. It is also into the manufacture of pig iron and metallurgical coke.