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NMDC to enter coal mining

Bs Reporter  |  Chennai/ Hyderabad 

To invest Rs 9,000 crore in various projects.
 
The National Mineral Development Corporation (NMDC) has drawn up plans to invest about Rs 9,000 crore in various projects, including a 2- million tonne integrated steel plant, which it has proposed to set up at either Jagadalpur or Bailadilla in Chhattisgarh as part of its diversification efforts.
 
In a significant development, the corporation has also decided to enter coal mining by joining other public sector companies already identified by the Centre for overseas coal block acquisition.
 
Disclosing this here on Saturday, B Ramesh Kumar, chairman & managing director of NMDC, said the feasibility report for the proposed steel plant, estimated to cost close to Rs 4,000 crore, was ready and the corporation was in the process of appointing a consultant to work out the project details.
 
Though the corporation has proposed a joint venture with Steel Authority of India Limited (SAIL), it is yet to receive a response from SAIL in this regard. "It could be because they have been busy with their own expansion plans till now," Ramesh Kumar told the media.
 
The other proposals in the pipeline include a two-lakh tonne sponge iron project along with a 10-Mw power plant at Bailadilla for which the investment details are being worked out.
 
Besides, the corporation proposes to invest Rs 300 crore on a pellet plant being jointly set up with Rashtriya Ispat Nigam Limited (Vizag Steel), Rs 300 crore on Kumaraswamy iron ore deposits in Karnataka, Rs 640 crore on Bailadilla 11 block and Rs 300 crore on Bailadilla 11B block, and Rs 110 crore on wind mill units. These are part of the corporation's Rs 18,000 crore investment plans up to the year 2014-15, according to Ramesh Kumar.
 
The company during the year 2006-07 could increase its total turnover to Rs 4,150 crore from Rs 3,711 crore in the previous year by improving overall sales by 3 per cent and enhancing the production by 13 per cent to 27.7 million tonnes even while exports, though form a fraction of its total sales, came down by close to 50 per cent during the same period. Profit before tax increased 23 per cent at Rs 3,400 crore, compared with Rs 2,770 crore in the previous year.
 
Giving reasons for the proposed foray into coal mining and steel production, the chairman said the demand for coking coal would go up as new capacity additions were expected to even go beyond 110 million tonne of steel production, and the NMDC wants to cater to this demand.
 
Secondly, when the private players entering steel production were being provided with captive mines, the corporation with a strong expertise in iron ore mining could go for steel production by bidding for captive iron ore blocks, he said. However, the captive mining by the steel companies would not affect the iron ore business of NMDC as it can always look for overseas markets in case there was any decrease in demand in the domestic market, he said.
 
NMDC is planning to form JV with SAIL, NTPC and RINL for acquiring coal mines outside the country, an initiative that could see a combined investment of over Rs 4000 crore, he added.
 
The chairman said the corporation would lose over Rs 100 crore on account of increased duties on iron ore exports considering the 3.5 million tonne exports the corporation plans to handle during the current financial year.
 
He said except denting the profit margins, the government's move would not affect its export plans. Owing to the government's policy, the corporation had reduced its iron ore exports to 31.33 lakh tonne during the year 2006-07 from 60.46 lakh tonne in 2005-06.

 
 

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