India's largest iron ore miner NMDC says it is set on becoming far more than a mining company. The government-owned company is not in a hurry to tap the capital market, despite embarking upon a Rs 26,000-crore expansion and diversification programme. RANA SOM, chairman and managing director, speaks to Ch Prashanth Reddy. Edited excerpts:
Why do you want to mould NMDC into a multi-faceted organisation?
NMDC has been basically a single-dimension company. It has been doing well as a mining company. But, if you confine yourself to a single area of operation, you get stuck in your own system and structures and can't come out of it. So, our vision is to mould the company into a multi-faceted organisation, with mining being its core activity. Fortunately, we have the financial resources and a good management system to do this.
What steps are you taking to achieve this goal?
Besides investing more in exploration, we will go for forward and horizontal integration. In forward integration, we have taken up a number of initiatives. The first is setting up a steel plant in Karnataka, where the state government has allotted 3,500 acres for the project. We are also setting up an integrated steel plant at Nagarnur in Chhattisgarh, two pellet plants and a beneficiation plant for extraction of high-grade iron ore concentrates.
The merger of Sponge Iron India Ltd with NMDC is in an advanced stage and its yearly capacity will be expanded from 60,000 tonnes to 2,60,000 tonnes.
On the horizontal front, we are trying to acquire new mines. Our Tanzania project is already moving ahead. We have agreed to sign an MoU and finally enter into a joint venture with a South African firm so that we can acquire some mining fields.
At what stage are your plans to enter the coal sector?
We are trying for a public-private partnership (PPP) in the coal sector. NMDC had already signed an MoU with the West Bengal Mineral Development and Trading Corporation to develop two million tonnes of coal blocks. Efforts are being made to acquire more. The acquisition of coal properties in countries like Australia, Mozambique, Canada, Indonesia and USA are being pursued. NMDC is also one of the partners in International Coal Ventures Ltd (ICVL is a special purpose vehicle formed by SAIL, NTPC, Coal India, NMDC and RINL).
Are you going to pursue the PPP route even in the power sector?
We are not really planning to enter the power sector on our own. We feel the automatic expansion of the coal sector is the power sector. So, what is being done in coal will be done in power. However, while NMDC will be lead manager in the mining sector, it will not be a leader in the power sector.
What is the cost of your programme and how are you going to fund it?
The total expansion cost in the next five years is Rs 26,000 crore. Of this, we already have Rs 12,000 crore in our kitty. For additional funds, we have got two options — to take loans or tap the capital market. We will be weighing both options at an appropriate time. So, you have not yet decided about tapping the capital market?
At present, we have funds which exceed our immediate requirements. Besides, before taking any such decision, we have to evaluate how much money we have to keep for reserves, how much for expansion, how much we should take as loan and how much to raise from the public. It is not a healthy sign to raise money from the public and keep it idle. We will wait for some more time for taking any decision in this regard. It could be more than a year. First, our outflow of money should start and the projects should be cleared.
