NEW DELHI, May 9: Listed Indian iron ore exporter, Sesa Goa Ltd. said on Friday that talks are at an advanced stage for a supply contract with Pakistan Steel Mills Ltd.

“This is going to be a profitable deal as it will offer us a ready buyer for our iron ore for a long period,” Sesa Goa’s Chief Financial Officer P.K. Mukherjee told Dow Jones Newswires. “The discussions with Pakistan Steel are at a very advanced stage.”

The talks between the two companies were started before the governments of Indian and Pakistan initiated this week a series of measures to improve bilateral relations.

“If political ties improve, the logic of profit margins will dictate the flow of trade,” said Mukherjee, adding that the talks are aimed at securing a five-year supply contract.

Sesa’s Mukherjee, who didn’t disclose the contract’s value, said he hoped such deals with Pakistan would encourage other companies from both counties to forge closer business ties.

Sesa Goa operates iron ore mines in the western Indian state of Goa and exports around 5.3 million metric tons of ore annually.

Mukherjee said lower freight costs are a persuasive reason for Pakistan Steel to look to India for iron ore supplies rather than other producers, such as Australia.—Dow Jones Newswires