MMTC's SA entry to benefit India

By setting up an office in South Africa, MMTC, India’s largest commodity trader has made a strong step to stretch its arm to the mineral hub of the world.

It will give a boost to MMTC’s vast international trade network spans almost in all countries in Asia, Europe, Africa, Oceania and Americas, which includes a wholly owned international subsidiary in Singapore ,giving MMTC global market coverage.

As the largest international trading company of India and the first Public Sector Enterprise to be accorded the status of "FIVE STAR EXPORT HOUSE, the new initiative will help MMTC to meet the countries growing metal demands.

India’s high commissioner to SA, Virendra Gupta, said to Business Day that MMTC would not become involved in the uranium market, which is specialised, but the Indian government is keen to source the energy mineral from SA, Namibia and Niger.

India is not a signatory of the Nuclear Nonproliferation Treaty — which makes it difficult for it to source uranium and nuclear power plants — but the country has secured exemptions and has struck deals with Russia, France and the US for peaceful applications of nuclear technology.

India is still heavily reliant on coal for power generation, sourcing the bulk of its thermal coal imports from Indonesia and, increasingly, SA.

By 2015, the estimate is for Indian imports to rise to 200-million tons of coal a year, something Indonesia will be unable to supply, making long-term off take agreements with South African suppliers critical, Gupta said. A third of SA’s 63-million tons of coal exports went to India last year and this figure is likely to rise.

Gupta raised the prospect of Indian companies helping set up power plants in counter trade agreements. The key constraint to increasing coal exports to India, however, is rail infrastructure.

He also said that the office should have been opened at least five years earlier but the decision to do so now had been triggered in part by a stated target by the Indian and South African governments of growing trade between the countries to $10bn annually.

He also made clear that the decision was not driven by China’s entry into Africa to source key commodities, often linking this strategy to infrastructural development.

"We are aware of what China is doing but our systems and requirements are different," Mr Gupta said. "We are not in catch up mode and we are doing things at our own pace."

MMTC Ltd. of India would like to buy 25 metric tons of gold from South Africa this year, Business Day said, citing SP Mann, a managing director at the company.

MMTC has already held talks with Germiston-based Rand Refinery, which processes gold from local producers and elsewhere, said a source at the refinery on Friday.

"The problem is India has foreign exchange control regulations that mean the gold has to be received before it can be paid for. "At Rand Refinery we want payment before we release the gold. It’s a catch-22 situation," said the source who declined to be named. MMTC has forms to fill in to establish it credentials. "It’s still early days and there’s a long way to go," the source said.

MMTC wants to import 200 tons of gold a year and up to 600 tons of silver to feed a joint venture precious metals refinery that will be commissioned by May this year, said SP Mann, MD of MMTC, which has an annual turnover of $10bn.

The refinery will produce 2,5-million gold and silver medallions a year for sale in the Indian market, the world’s largest source of gold demand.