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The Board of Directors of iron ore mining major NMDC Limited has accorded in-principle approval to the proposal to demerge NMDC Iron & Steel Plant (NISP) Nagarnar located in Chhattisgarh.
The State-owned mining company has been considering the proposal to unlock its value over the past couple of years by either roping in a strategic partner or potentially listing it separately by demerger. However, due to relative subdued market for the steel sector globally, it had put on hold various options.
The demerger of the steel unit from the core ore mining business of NMDC is aimed at value-creation for both the mining segment and the steel project.
The company, which has set up the steel plant with an outlay of about ₹20,000 crore and capacity of three million tonnes per annum, was a major forward integration project to become an integrated steel company with the capability of ore mining.
Given the long-term prospects of the steel sector, the mining company had taken to setting up the steel plant, which has seen significant delays in project execution.
According to sources, the mining company has been facing tough times in Chhattisgarh lately but various issues including mining leases are being sorted out.
The Chhattisgarh government is likely to consider taking up the issue with the Centre, against the proposed move, which it sees as an effort to later privatise it by roping in a strategic investor.
Shares of NMDC closed at ₹107.50 on Friday at the BSE, up 12 per cent over the previous day’s close.
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