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NEW DELHI
Merchant iron-ore miner, NMDC, has raised concerns about Maoist activities in Bailadila in Chhattisgarh having a possible impact on its operations. A majority of the PSU’s iron ore production comes from this region.
“One of the major risks that NMDC is facing is disturbances due to Maoist activities in Bailadila region,” the company’s directors said in its annual report for FY24 adding that NMDC is “in contact with the Government agencies at all levels for support and protection of its employees and installations.”
Almost a decade ago, NMDC had suffered set-backs in the region with Naxalites causing harm to its plant and machinery. This had delayed capex plans leading to slowing down of mine expansion projects.
Capex Plans
Bailadila continues to be amongst the major iron-ore producing regions for NMDC. The mines are spread across two complexes – Kirandul and Bacheli – both in Chhattisgarh. The mining leases are issued as Bailadila Deposit 11 (A, B, C); Bailadila Deposit 14, Bailadila Deposit – 14 NMZ, Bailadila Deposit 5 and Bailadila Deposit – 10. This apart, NMDC has iron ore mines in Donimalai and Kumaraswamy in Karnataka.
In FY24, the company’s annual iron ore production stood at 45 million tonnes, and its current capacity stands at 51 mt. There are plans to take it up to 67 mt in another 2-3 years, and to around 100 mt in 2030.
The company said it was “undertaking substantial capital expenditure projects to enhance ore production, improve product mix and expand mining capacities.”
“While incremental growth is expected in the near-term, expansion efforts are geared towards achieving significant production increase over the next 5-6 years, ultimately aiming for a total capacity of 100 mt, by the end of the decade,” it said.
Market Fluctuations
However, the company management said NMDC is “exposed to sharp fluctuations in demand” and price volatility.
Falling prices of iron ore, especially in the international market, will lead to imports by steel players and exert pressure on domestic supply and prices, it said. A phenomenon India is witnessing at present.
“Introduction of auction rule has increased risks (for NMDC) as major customers have acquired captive mines in mineral-rich States, mainly JSW & AM-NS. Both JSW & AM-NS have already started production from newly acquired mines and plan to increase it further in the near future,” the annual report said.
New tranches of auction are likely to add further iron ore capacity to steel players and other merchant miners, thereby having an adverse impact for NMDC over the medium to long term.
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