NMDC targets 75 mt iron ore production by 2018-19

India’s biggest iron ore miner NMDC has its task cut out. It faces a tough challenge ahead, with the Government revising its production targets and deadlines to 75 million tonnes by 2018-19 and 100 million tonnes by 2022. Having added just about five million tonnes of new production in the last five years to reach the current capacity of 34 million tonnes, the PSU under the Ministry of Steel indeed faces a daunting task. It will have to go all out to open up new mines to meet the target.

NMDC’s chairman and managing director Narendra Kothari feels that the targets are achievable.  “We have the resources and the money to support the expansion plans,” he told Business Line in an exclusive interview.

India is estimated to have iron ore reserves of about 2,150 million tonnes, out of which Bailadila, where NMDC has its mines, accounts for almost 1,850 million tonnes.

The company is coming out with a detailed corporate and investment plan-Vision 2025 next month which will chalk out the roadmap to achieve the 75 million tonne target by 2019.

The excerpts:

Q. You are targeting iron ore production of 75 million tonnes by 2018-19.  What is the strategy to the expansion?

A.  We plan to expand our capacity every year starting from 2015-16 fiscal by opening new mines. Our two new mines at Bailadila (11B) and Kumarswamy will start production from next fiscal, although it will take two to three years to reach full capacity of seven million tonnes each.  We have spent Rs 600 crore each on them so far. Next step is to go in for tapping two more deposits (13 and 4) in Bailadila, which will again give us another 14 million tonnes together. This will require a slightly higher investment. Apart from this, we are looking at mines in Orissa, Jharkhand and Karnataka and partnering with the state governments to take up new mining activities. We are looking at five to six mines in these states.

Q.  How much of the targeted 75 mt will come from overseas?

A.  Not much, but it (overseas supplies) will be more for our production target of 100 mt.  We now have majority stake in Legacy Iron Ore in Australia, which has some properties near Mt Bevan with a joint venture partner—we will be shortly taking up exploration activities.  It will take about two to three years to develop this property, which is predominantly magnetite reserves. We are looking at properties in Africa and Brazil too.

Q.  How much capacity will you be adding next fiscal?

A.  This year we will do about 30 million tonnes, the same as last fiscal.  In fact, it could have been slightly more, but for the impact of the Hudhud cyclone, which took away many production days. Next fiscal, we plan to touch 35-36 million tonnes and the increase will mostly be from our two new mines.

The Union budget is also expected to provide the stimulus for the recovery and growth of infrastructure. This in turn will lead to a spurt in demand for Steel as construction activity will grow. We expect to see the rise in demand from the April quarter itself.

Q.  But will getting new mining licenses be a problem? Will you be participating in auctions?

A.  We will try to get as many licenses as possible.  When there is auction, we will certainly participate in them to get new mining areas.  See, India has the resources and all we need to do is open up as many assets as possible. Will prefer joint ventures with State Mineral Development Corporations. No private company can match NMDC in efficiencies in India.

Q.  What about finances?

A.  One thing I can tell you is that funding will not be an issue to reach the 75 million tonne target.  We are a debt free company and sitting on a surplus of Rs 20,000 crore, which will give us adequate room to raise the required funds.  We have already appointed an independent agency to chalk out a detailed corporate and investment plan, which we will unveil in April.

Q. Will evacuation of ore pose a problem, given your new targets?

A.  For this, we are planning to take the slurry pipeline route.  Essar operates a six million tonne slurry pipeline from Bailadila to Visakhapatnam.  We are planning to take up a 15 million tonne pipeline project From Kirandul to Jagdalpur and Visakhapatnam in joint venture with Rashtriya Ispat Nigam Ltd and another partner, which we are still to finalise. We have appointed MECON as a consultant.  We propose a third pipeline, which will be taken up by a private party—we will have no stake in this, but we will provide assured supplies of the ore.

Q What is the progress at your 3 million tonne per annum Chattisgarh steel plant project?

A.  We are on track here and we expect to start trial production by December 2016.  Out of the proposed outlay of about Rs 15,000 crore, we have already spent about Rs 6,000 crore.

Q. NMDC was looking at gold prospects in Tanzania….

A. Yes, we are exploring for gold in Tanzania. We have obtained two leases. In fact, we recently sent our team there and deputed our officials there. We hope to set up a pilot plant soon and deploy improved exploration techniques.

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