NMDC, the country’s largest iron ore miner, has pushed back the commissioning date of its recently demerged steel plant-NMDC Steel-to June-end. The commissioning of the plant, at Nagarnar in Chhattisgarh and with an annual capacity of three million tonnes (mt), has already slipped a number of deadlines, with the last one set by the Steel Ministry being March 31.
NMDC’s investment in the steel plant is around ₹23,000 crore. The steel plant was listed separately on the bourses last fiscal.
According to Amitava Mukherjee, CMD (Additional Charge), NMDC, the company is “more than confident” of commissioning the steel plant by June-end since all ancillary units are already producing. The coke oven batteries, central plant, power blowing unit, oxygen plant, among others all have been commissioned.
“And the coke oven batteries are producing and selling coke,” he told analysts during a call.
“Blast furnace refurbishment is on. And we should be able to blow-in by June 15. Then we process the hot metal and should get hot rolled coils (HRCs) by June-end,” Mukherjee added.
NMDC Steel has a long-term procurement contract with the iron ore mining unit to the tune of 4 -5 mt per annum. Iron ore is a key steel-making raw material and to produce one tonne of steel, the Nagarnar unit would require 1.8 tonne of iron ore.
The country’s largest merchant miner and a CPSE under the Steel Ministry, has set a production and dispatch target of 46–50 mt (of iron ore) for FY24; with the capex target for the fiscal being ₹2,000 crore.
According to Mukherjee, nearly ₹7,000 crore worth of capex projects are in various stages of implementation, sanctioning, tendering and approval.
This apart, with a view to ramp up production and dispatch to 100 mt, various other projects are at a drawing board stage. Once cleared, these projects should go in for implementation around FY25 onwards.
“From FY25 we should look at an annual capex of ₹3,000 crore, every year, for at least the next few years, failing which it would be very difficult for us to ramp up production,” he said.
Major steel mills like JSW, AMNS India and RINL are the key buyers. The company is yet to start exports.
Exports, not economical
While NMDC has not ruled out the probability of exports, it “does not see an economic case” in going ahead currently.
In most cases, domestic realisations continue to be better, with higher margins over exports. Factoring in logistics costs, duties, and other charges, costs go up, Mukherjee said.
Current cost of iron ore has slipped to $103 per tonne, as per trade sources against $180 per tonne in the previous quarter-when the miner had mulled exports.
According to Mukherjee, exports could be “viable” at a cost of $130 plus, per tonne.
“We cannot rule out export. It is like a plan B that we have in case there is some unforeseen circumstance with our key buyers, and we need to up volumes. Then may be, we can tap exports even if they come at lower margins ,” he said.