GMDC mines small projects for big returns

Virendra Pandit Ahmedabad | Updated on May 27, 2011

With major proposed projects having longer gestation periods and yielding returns on investments quite late, the State-promoted Gujarat Mineral Development Corporation Ltd (GMDC) has now come up with at least four smaller projects as value-additions that it expects would return three-to-four times on its investments than the major ones

The new projects on the anvil will be implemented by the special purpose vehicles (SPVs) with three of them being green-field and the fourth one a renovation project of GMDC itself, Mr V. S. Gadhvi, Managing Director, told Business Line here.

Quick-buck projects

All these quick-buck projects are expected to commence production this year. They will also pave the way for larger projects.

Asked why the BSE-listed company is now going small, he said the corporation's proposed major projects had longer gestation periods and took even longer time for returns.


Moreover, GMDC was not getting better returns in mining, its main activity. “Our returns depended on the London Metal Exchange's fluctuations as also the volatility of international price of bauxite.

That is why we decided to enter into production of finished products, though at small level at present, rather than just marketing raw minerals.”

GMDC, which sold five lakh tonnes of non-plant grade bauxite to Vedanta Resources and another five lakh tonnes to Ashapura Group early this year, still has two-three lakh tonnes of stock. Besides, it also produces six-seven lakh tonnes of bauxite annually.

In order to use this stock to some extent and generate revenue, GMDC is now setting up a joint-venture plant in Kutch with Gujarat-based Reminco Resources Ltd at an investment of Rs 75 crore in which the PSU will have an equity of Rs 6.5 crore (26 per cent). Its initial manufacturing capacity will be 10,000 tonnes annually. It will manufacture zeolite which is primarily used in detergent industry and has a good market demand and potential.

Joint ventures

Besides, GMDC is also setting up a 12,000-tonne special aluminum chemical plant in a joint venture with Aluminum Refinery Pvt Ltd, also in Kutch. With an investment of Rs 30 crore, GMDC will be shelling out Rs 2.34 crore as its 26 per cent equity share. GMDC's third venture likely to be set up soon will be with Gujarat Fluorochemicals Ltd and Navin Florin International Ltd, at Chhota Udepur, near Vadodara. This fluorspar project will have GMDC's equity at 50 per cent, while the two other partners will have 25 per cent each. This will involve renovating a loss-making GMDC plant, in which the corporation will invest Rs 6 crore as its equity share in the Rs 40-crore project.

The fourth project GMDC is working on is a silica sand beneficiation plant to manufacture glass using surplus silica sand stock. The Rs 15-crore project will have GMDC's equity at 26 per cent. It will be a joint venture with Mumbai-based Asahi India Glass Ltd, and the plant would be set up at Dediapada in Rajpipla district of South Gujarat.

Published on May 27, 2011

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