In response to Prime Minister Manmohan Singh’s latest drive at boosting economic growth by fast-tracking infrastructure investments, state-owned mining company NMDC has prepared an elaborate plan to venture into newer territories, including power generation and coal mining, and advance investments plans for the next financial year, beginning April.
The company will brief the PM’s Office next week on the revamped strategy. The latter had recently asked all cash-rich public sector undertakings (PSUs) in key infrastructure sectors like coal, fertiliser, steel, power, highways and ports to advance their investments for 2012-13, with a report in three weeks.
NMDC has a cash reserve exceeding Rs 18,000 crore. The traditional and largest iron ore mining company was, thus, one of the PSUs identified by the PMO whose cash surplus could be utilised to improve spending, with an eye on narrowing the country’s fiscal deficit. The Navratna PSU is likely to brief the PMO about its strategy to bring forward a detailed Rs 4,655-crore investment plan and to diversify into as many as five newer areas of business.
“A report will be given to the PMO within a week on our diversification and investment plans. This includes our foray into power generation, coal mining, pelletisation, mining of fertiliser minerals like rock phosphate and manganese mining, apart from the already planned steel project,” chairman N K Nanda said.
He added the chief reason for the company’s major diversification drive, apart from the PMO’s latest directive, was the slow pace of award of new mines in its core area of operation of iron ore.
“We have a lot of unutilised mining capacity, as there is a slowdown in getting new mines. Also, power generation plants will aid our steel-making capacity, apart from building a green profile through renewable energy,” he said.
“We plan to commission new iron ore mines of seven million tonnes (mt) capacity at a cost of Rs 1,000 crore over the next few years. This will require investing Rs 300 crore every year. Also, Rs 200 crore will be spent in new acquisitions in Australia. We are looking at acquiring phosphate mines there,” he said.
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The plan includes bidding for solar power projects during the next round under the National Solar Mission.
The company has a current iron ore mining capacity of 30 million tonnes from three mechanised mines, two in Bailadila in Chhattisgarh and one in Donimalai in Karnataka. The company produced 25 mt of the mineral last year. The annual investments are set to jump from Rs 3,399 crore in the current financial year to Rs 4,655 crore in 2012-13.
This year’s investments have been directed primarily at expanding the capacity of the Bailadila mines and the Kumaraswamy mining project. A major chunk of the new investments — Rs 3,500 crore — will go into setting up a three-mtpa steel plant at Nagarnar in Chhattisgarh. Part of the company’s forward integration plan, it will require an overall investment of Rs 15,000 crore and be commissioned over the next four years.
NMDC’s attempts at bagging solar projects to boost its green portfolio had not met success in the recently concluded bidding round. In addition, the company is setting up a 1.2 mt pellet plant at Donimalai.
NMDC posted a 42 per cent jump in net profit to Rs 1,963 crore for the second quarter ended September. Total income rose 31 per cent to Rs 3,565 crore. The share price at the Bombay Stock Exchange on Wednesday closed at Rs 183.85, up 3.69 per cent against the previous close.