NMDC to acquire 2 overseas mining assets soon

Country’s top iron ore miner NMDC today said it will clinch deals for two overseas mining assets within 100 days as talks are progressing fast.

The state-run giant, which has earmarked $500 million (about Rs 2,400 crore) for overseas acquisitions this fiscal is targeting four assets, including two coal and two iron ore, in Australia, the US, Russia and some countries in Africa.

“We are confident to acquire two mining properties overseas within next 100 days. We are looking at four-five assets in the US, Russia, Australia and Mozambique,” NMDC Chairman Mr Rana Som told reporters here today.

Sources said that the Navratna firm, which has inked a memorandum of understanding to acquire up to 50 per cent stake in Australian mineral exploration company Legacy Iron Ore, is likely to finalise a sales-purchase agreement by September.

Legacy has interests in gold and manganese besides iron ore, and the MoU gives access to NMDC to get into Australia.

The pact, after formal completion, will give Legacy the opportunity to source and secure additional resource projects for development and financing, with the backing of NMDC as the company’s biggest shareholder.

NMDC intends to use Legacy as a vehicle to acquire large-scale Australian bulk commodity projects such as coal and iron ore.

While NMDC produces about 30 million tonnes of iron ore, Legacy holds highly prospective iron ore tenements in both the central Yilgarn and Pilbara areas of Western Australia.

Besides the assets in Australia, the state-run firm is eyeing a coking coal mine in Mozambique.

The mining giant is eyeing acquisitions to expand its capacity and to ensure raw material security for its upcoming steel mills in Chandigarh and Karnataka.

NMDC has already forayed in to steel making and is setting up a 3 million tonne steel plant in Chhattisgarh. It plans to build the Rs 15,500-crore mill by 2014 for which it requires raw material security.

Besides, it has a joint venture with Russia’s Severstal to set up an initial two million tonne per annum (MTPA) steel plant in Karnataka at a likely investment of Rs 25,000 crore, which can further be expanded to 5 MTPA.

It aims to almost double the production to 50 MT by 2015 from 30 MT.

Meanwhile, the company said it was likely to see about 29 MT production this fiscal as against earlier planned 31 MT on account of delays in green nods and threats from extremists at its production sites. Its output last fiscal was 25 MT.

The NMDC Chairman Mr Som said the company exports this fiscal will also decline to about 1.4 MT from 2.56 MT last year due to a slowing demand in Japan and delays in formal note for exports.

The company had got the Cabinet nod to export 2.8 MT of iron ore to Japan and South Korea, but a formal note from Steel Ministry is yet to come even as four months of this fiscal have already lapsed.

COMMENT NOW