Public sector mining major NMDC Ltd said that the new integrated steel plant can contribute nearly $1.7 billion to topline. The company is also implementing a pipeline project to transport iron ore. The project will reduce the logistics cost by nearly 55 per cent. On the other hand, NMDC is looking to enhance its mining capacity to 64 million tonnes per annum (MTPA) from 43 MTPA.

The firm's strategic plan to drive growth includes increasing focus on increasing iron ore mining capacity, value addition and global presence.

Capacity enhancement

NMDC's mining capacity currently is around 43 MTPA and it plans to increase it to 67 MTPA by fiscal 2022. The additional capacity will come from its brownfield and greenfield expansions.

Capacity of NMDC's existing operational mines - Kirandul, Bacheli and Donimalai Kumarswamy will be increased to 52 MTPA from 43 MTPA. Its greenfield mine, that has been formed in a joint-venture with Chhattisgarh Mineral Development Corporation (CMDC), will add 15 MTPA thus taking NDMC's total mining capacity to 64 MTPA.

NDMC's iron ore production in financial year 2019 was around 32 metric tonne (MT) as against production of over 35 MT in financial year 2018, which translates to 18 per cent market share.

While Karnataka mines' contribution to the total production slumped to 28 per cent from 34 per cent, Chhattisgarh mines' share rose to 72 per cent from 66 per cent.

In Karanataka, NDMC's local offtake has taken a hit due to high import duties. Its offtake in domestic market was 31.21 MT in comparison to 33.48 MT, while export dropped to 1.18 MT from 2.60 MT.

While offtake has been low, the average sales realisation increased. Sales of lump in domestic market has increased to $62 per MT in 2018-18 (upto December 2018) from $50 per MT in 2017-18. Sale of fines has increased to $50 per MT from $41 per MT. As far as export concerned, price of lump exports have increased to $76 per MT from $71 per MT and for fines it has dropped to $54 per MT from $56 per MT.

Value addition

As a part of value addition project, NMDC is setting up an integrated steel manufacturing plant at an estimated cost of $2.22 billion. The plant is expected to go on stream in the second half of FY2019-20. It will produce flat Products like HR plates, HR Sheets, HR Coils, automotive steel and API Grade Steel to the tune of 2.7 MT.

At 100 per cent capacity, the steel plant will contribute $1.7 billion to the topline of the company with EBITDA of 25 per cent. The other value addition project is slurry pipeline at a cost of $415 million, for phase-I. The system is intended for transportation of Pellet Feed Concentrate from Bailadlla to Jagadalpur.