 "NMDC to up iron ore production by 8 million tonne")
“We propose to increase our production to 35-38 million tonne from 30.44 million tonne last year. We expect to see a demand growth from the steel sector. Coupled with certain anti-dumping duties and taxes expected to be levied by the government, we hope the iron ore prices to increase to around $ 60-$70 per tonne going forward,” Narendra Kothari, chairman cum managing director of NMDC, said here today.
The company’s performance, both on physical and financial fronts during the last financial year, remained flat compared to the previous year, particularly by the poor show in the fourth quarter ending March 2015, partly owing to lower prices.
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The company has reported a 31.35 per cent decline in net profit to Rs 1,347 crore for the quarter under review, as compared with Rs 1,962 crore in the corresponding quarter last year. Revenues declined 27.16 per cent to Rs 2,829 core, from Rs 3,884 core in the year ago period.
While the domestic iron ore prices had recovered a bit to a level of around $ 60 per tonne from under $ 50 in the recent months, still there was almost a 50 per cent price erosion in the global iron ore prices compared to $114 a tonne in April 2014, and this has impacted the earnings of the company, according to Kothari.
“Especially, towards the end the third quarter, the production was hit due to the Hud Hud cyclone among other factors resulting in a rather weak numbers in the fourth quarter,” he said.
On the pricing pressures, he further said that apart from the lower demand, the iron ore dumping from Russia and other parts of the world into India had also added to the pricing pressures and claimed that certain duties and taxes to arrest these practices were very much in the offing.
Further, justifying the board's decision to enhance the production by almost 25 per cent in the current year, Kothari said with so much reserves at hand, the country last year had to import 14 million tonne of iron ore out of the total consumption of around 125 million tonne of iron ore by the country’s steel industry. “As a state-owned iron ore miner, we do not want to let the domestic industry import iron ore at high cost,” he said.
For this, the company is readying for trial production in the 7 million-tonne capacity Kumara Swamy mine in Karnataka state in the second quarter itself. However, the company will not undertake mining in the Legacy Iron Ore asset in Australia until the global prices firm up, according to him.
Responding to a question, Kothari said the company was likely to complete the acquisition of a phosphate mine in Russia by the end of this year if the ongoing due diligence ends on a positive note.
The ongoing projects, including the integrated steel project and the pellet plant, were on track and the former will be ready by March 2016 while the later was to commence the pilot production in a couple of months, he said.
Apart from the work on the two special purpose vehicles (SPVs), which were recently formed for two mega steel projects, the company is also looking at investing in a new railway line between Bailadilla and Raigarh in Madhya Pradesh to increase the iron ore movement along with the Steel Authority of India Limited (SAIL), he said.
For the full year ending March 2014, NMDC reported a net profit of Rs 6,422 crore, as compared with Rs 6,420 crore in the previous year. The turnover stood at Rs 12,356 crore in a marginal increase over Rs 12,058 crore it had earned in the previous year.