Companies

NMDC plans ₹3,000 crore capex, targets 42 mt iron ore output next fiscal

V Rishi Kumar Hyderabad | Updated on March 25, 2021

NMDC has sewn up plans for a capital expenditure of about ₹3,000 crore next fiscal and is targeting iron ore out put of about 42 million tonnes, up from 34 mt this fiscal. Steering out a tough Covid pandemic year, where mining was adversely affected during the first quarter, the State-owned mining major, has managed to perform well over the past three quarters and its output has crossed that of last fiscal of 31. 49 mt. Sumit Deb, Chairman and Managing Director of NMDC, explained how NMDC is planning for the year ahead. Excerpts from the interaction with BusinessLine.

How has NMDC managed to handle the Covid pandemic period?

Just like most companies, the first quarter was a total wash out. In June quarter we had a production loss of 1.8 mt. However, following the Covid norms, we gradually ramped up output and in the second quarter we performed well registering 10 per cent growth. This was fallowed up with strong demand and good performance in third and fourth quarter of this fiscal at 13 per cent and about 15 per cent. We have already crossed last fiscal output with over 10 per cent growth.

What are your near term and long term plans and what is the capital expenditure for next fiscal?

We are targeting iron ore output of about 42 mt next financial year. This growth will be possible as we have begun mining from Donimalai mines in Karnataka. Our plan is to take this up to 67 mt by 2025 and 100 mt by 2030. However, we will have to add more mines. The immediate focus is on to add mining from Deposit 13 and Deposit 4 mines at Bailadilla, which we have in joint venture with the Chhattisgarh Mineral Development Corporation.

How is the demand for iron ore?

There has been growth in demand for iron ore from steel plants and also for steel from the infrastructure sector with the huge Government push. All this means, we will have to further ramp up production to meet the growing demand in the country. The prices have already firmed up. We do not see any immediate increase in prices at least now.

What are your capex plans?

We are looking at deploying a Capex of ₹3,000 crore in FY 2022, as against ₹1,800 crore in FY 2021. The capital expenditure will go in mainly for the slurry pipeline from Bailadilla to Jagdalpur, steel plant works at Nagarnar, Pellet Plant at Jagdalpur and the screening plants at Kirandul. The slurry pipeline is expected to be ready by 2023 in th first phase. In the next phase, we will take up works from Jagdalpur to Vizag. This may see total investment of about ₹6,000 crore, including ₹4,000 crore for the slurry pipeline.

In addition, the doubling of the Railway line now under construction from Vizag to Kirandul will also play a significant role in transporting ore and bring down transportation cost.

By when do you expect to divest the steel plant?

The Central Government has taken in principle decision to demerge and divest the 3 million tonnes per annum forward integration Nagarnar steel plant with the thinking that NMDC should continue to focus on its core competency of mining. The matter is with the Central Government and Department of Investment and Public Asset Management (DIPAM) and it is for them to decide how they plan to go ahead with the divestment plan.

Any progress in the coal mines?

We have been awarded two coal blocks in Jharkhand located at Tokisud and Rhone. We are planning the way forward. Some development works are going on at Tokisud.

Recently, NMDC held talks with visiting Australian team. What are your plans there?

We have Legacy Mine in Australia and have taken up exploratory works there. In addition, our discussions with the Australian delegation was centered around technological partnership as it is known to be a major mining country.

Published on March 25, 2021

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