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| NMDC eyes two mines in Russia for Rs 1,881 cr |
| Ishita Ayan Dutt / Kolkata Jul 27, 2010, 00:25 IST |
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India’s largest iron ore producer and exporter, NMDC Ltd, is contemplating buying coking coal mines in Russia from Kolmar for $400 million (Rs 1,881 crore today).
“This is our biggest project. Our people have gone and seen it. It has an underground mine which produces 500,000 tonnes a year. Due diligence will start shortly,” said a top NMDC official. The reserves of the two mines stand at 353 million tonnes, having both soft and hard coking coal. The cost for developing the mines will be an additional sum equal to the cost of the acquisition.
At present, Intergeo holds 51 per cent in Kolmar. It is not clear whether NMDC would pick up the entire 51 per cent or most of it. Kolmar’s coking coal mines are located in Siberia’s Yakutia region.
If the deal with Kolmar materialises, it would mark NMDC’s foray into coking coal in which it lacks expertise. This could eventually lead to a tie-up. “Now we are talking alone,” said the official. The focus areas for the public sector company are iron ore, coal, rock phosphate and potash.
In Australia, NMDC plans to bid for Atlas Iron’s Ridley iron ore project, with Kobe.
As part of a consortium, NMDC and the other partners had submitted a non-binding bid for the project. ABS Consulting of Saudi Arabia would not go ahead with the binding bid.
NMDC now planned to bid jointly with Kobe. According to discussions, NMDC and Kobe could have an equal stake of 35 per cent each, depending on the valuation.
In the earlier arrangement, NMDC would have held a 10 per cent stake and 5 per cent sweat equity.
Resources from NMDC’s acquisitions could be used to feed its own steel plants as well as meeting raw material requirement of other steel majors, given that India is eyeing a steel capacity of 200 million tonnes from the existing level of 60 million tonnes. Two steel plants from the NMDC stable were on the anvil — one in Chhattisgarh and the other in Karnataka.
Out of the total production of 28 million tonnes of iron ore from its Bailadila mines in Chhattisgarh and Donimalai in Karnataka, NMDC exports around 3,000,000 tonnes to Japanese mills and 400,000 tonnes to Posco. The remaining stock is sold in the domestic market. NMDC accounts for 15 per cent of the country’s total iron ore production.
The public sector miner supplies to most domestic steel companies, like Essar Steel and Ispat Industries. The entire requirement of the state-owned Vishakhapatnam Steel Plant is also met by NMDC.
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