The short-term outlook for iron ore market is “not encouraging” because of geo-political reasons and Covid led disruptions in China - the largest consuming market, Sumit Deb, Chairman and Managing Director, NMDC Ltd, said.

Accoring to him, NMDC is looking at a 10 per cent y-o-y increase in production at 46 million tonnes in FY23, following the expansion of Bacheli mine in Chhattisgarh and post the renewal of lease by the Karnataka government for Kumaraswamy mines.

Addressing shareholders in its annual report, Deb maintained that the Russia-Ukraine conflict and continued impact of Covid-19 in China have been “dampening the demand for steel in 2022”. And as a result, demand for iron ore has been declining and prices have been volatile with a downward bias in June and July. NMDC had been taking price cuts over the last few months too.

The long-term demand for iron ore, is however expected to be positive.

Production Outlook

According to him, the fifth line of screening and downhill conveyor augmentation at Bacheli mine was delayed post a problem with the consultant. However, the company has appointed a new consultant and the project work has resumed.

“We expect these facilities to be ready in FY23 and add about 25 lakh tonnes of production,” he said.

Lease for Kumaraswamy mines was renewed in June. The mine will have an annual capacity of 7 million tonnes. NMDC also operates the Donimalai mines in the State.

“We (are) targetting production of 46 million tonne of iron ore in FY23. This volume is about 10 per cent higher than in FY22 and would provide a cushion against possible pressure on pricing and we hope to maintain and surpass the top line again in FY23. Dismantling the e-auctions through Monitoring Committee in Karnataka would be an additive to both the topline and bottom line,” Deb said.

In Q1 FY23, NMDC reported a 54 per cent decline in PAT at ₹1,469 crore, while sales and average per tonne sales realisation dipped by 17 and 11 per cent y-o-y respectively because of weak demand from steel-makers”. Sales stood at 7.8 mt for the quarter. Decline in sales and a fall in iron ore prices saw NMDC’s Q1 revenues fall 27 per cent y-o-y.

Other projects

Other projects taken up by the miner include setting up a JV company (NMDC 60 per cent and JSMDC 40 per cent) which has been granted a prospecting licence for iron ore and manganese in Sasangada area for three years. Detailed geological mapping and topographical survey have been completed.

Proposals have also been submitted for mining other minerals including nickel, copper, cobalt and molybdenum mineral.

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