* For other news from the Reuters Global Mining and Steel Summit, click: here
* Supply contracts with Japan, S.Korea up for renewal
* South African Sasol may get 10 pct equity in new project
By Ratnajyoti Dutta and Krittivas Mukherjee
NEW DELHI, March 22 (Reuters) - India's top iron ore miner NMDC Ltd expects to renew soon a five-year iron ore contract with Japanese customers which expires at the end of March, the company's top executive said.
"India and Japan will have to renew the contract which they had for the last five years. I am sure there will be an agreement signing," state-run NMDC Chairman Rana Som told the Reuters Global Mining and Steel Summit.
NMDC supplies to a consortium of Japanese steels companies called Japan Steel Mills and to POSCO in South Korea.
He added that despite power shortages from the earthquake and tsunami that crippled production at several steel mills and other industrial units, Japan had not asked for supplies to be halted.
"It could be that the Japanese are trying to see a situation (where) they would like to manage some supply and bring it back to the stock so that whenever they start production, they will not have to wait for the stocks to come.
"I believe at least so far as contract negotiations are concerned, they will try to maintain the continuity not withstanding the fact that the physical lifting will be affected by their economic condition."
NMDC's contract with South Korean importers is also up for review and Som said he was confident that a deal would be signed.
NMDC's contract with Japan Steel Mills was on an annual basis for the first four years. The buyers had agreed to switch to a quarterly price mechanism in line with other firms such as BHP Billiton for the 2010/11 fiscal year.
The current price agreement for the January-March period with Japanese steelmakers and South Korea's POSCO has been fixed at about $140 per tonne for iron ore fines and about $158 for lump variety on free on board (FOB) basis.
Global iron ore prices will bottom out at about $140 per tonne because of reduced demand from disaster-hit Japan, but the trend could reverse in six months, Som said.
Spot iron ore prices .IO62-CNI=SI had lost about 14 percent since touching record highs near $200 a tonne in mid-February as slow Chinese steel demand turned off buyers and worries emerged lower Japanese steel output could hit its iron ore imports.
Som said iron ore prices may continue to fall over the next six months, before a demand-driven rebound drives prices to "beyond $170" per tonne.
"Once the Japanese steel mills start their production, they will have to build more stock, so therefore this phenomenon of falling prices of iron ore and lack of demand from Japanese steelmaking could be a short-term phenomenon," Som said.
"I am expecting in about six months or so the whole situation will have a different trend. What will happen is that Japan will start the reconstruction in a big way so their production will pick up and it will pick up at the pre-recession level."
Indian prices generally follow the global market, dominated by Australian and Brazilian miners, with China buying on spot basis for its low-grade ore needs.
India, the world's third-largest supplier of iron ore, produced 226 million tonnes in 2009/10 and exported 117.37 million tonnes, most of it to China and about two percent of it to Japan.
NMDC produced about 25 million tonnes of iron ore in 2010/11, mostly for local sales -- slightly below recent averages of 29 million tonnes. Som said the company was expected to up production by two million tonnes in 2011/12 on improved mining activities.
"We are keeping a provision of three million tonnes (for exports) and balance 28 million tonnes for domestic market," Som said.
Iron ore exports from India are likely to fall 35 percent to about 58 million tonnes in the next fiscal year, weighed by environmental curbs, a four-fold rise in export tax and a continuing ban on exports from a major producer state.
Som said though NMDC had a comfortable reserve of iron ore, it was hoping to achieve "long-term raw material security" for Asia's third-largest economy through overseas acquisition of mines, including two assets in Australia over the next two months.
"So NMDC's approach in iron ore has been that it will join hands with junior miners for developing the mines, exploring it and developing it and then mining it."
He said the mines could start production in about 30 months.
The output from the two Australian mines will be over and above the company's production target of 50 million tonnes by 2014/15. Som did not say how much the two mines could produce.
NMDC has signed a deal with state-run Coal India and the eastern state of West Bengal to develop a two billion tonnes coal block. The project is awaiting clearance from the federal government.
South Africa's Sasol has evinced an interest in acquiring a minority stake in the project to produce liquid fuel from coal. Sasol signed a deal with India's Tata Group last year to invest $10 billion in a similar coal-to-liquid project in eastern Orissa state.
"They (Sasol) want equity partnership of about 10 percent. It is absolutely fine," Som said.
"Coal India and we get the major equity and some equity will also go to the West Bengal government."
India, growing at more than eight percent a year, will need to keep burning cheaper fossil fuel to expand the reach of electricity to the half of its one-billion-plus population without power. India imports more than a third of its oil needs.
(Writing by Krittivas Mukherjee)