NMDC profit jumps 80%, sales 90% in Q1

NMDC Ltd, the country’s largest iron ore mining firm, witnessed a jump of 80 per cent in its first-quarter profit on the back of increased demand of iron ore from steel companies and a rise in prices. The company’s sales rose 90 per cent to Rs 2,400 crore in the first quarter of the current fiscal.

Steel consumption in the country rose by 12 per cent in May due to a strong demand from the automobile, consumer durables and infrastructure sectors, according to the latest data compiled by the ministry of steel.

The company’ margins rose during the quarter ended June 30 even as it saw a decline in evacuation of iron ore fines from the Bailadila mines to Vishakapatnam by about 7-8 million tonnes following a disruption in its pipelines due to Maoist attacks.

The Hyderabad-based mining firm is also in talks with Japan’s Nippon Steel, which is negotiating on behalf of the Japanese steel firms, to set up a 2 million metric ton capacity steel plant jointly in Karnataka with a cost of Rs.10,000 crore. It is also in talks with Kobe Steel Ltd. to produce iron ore nuggets from fines using Japanese technology. “It will be a joint venture with our recently acquired Sponge Iron India Ltd,” said S. Thiagarajan, finance director, NMDC.

The company is also building a three million tonnes per annum steel plant in Chhattisgarh, which is expected “to be completed by October 2012,” said Rana Som, chairman of NMDC. It will start placing orders for the new steel plant from October this year.

“The pipeline was an additional means of evacuation, constituting about one-third of our total evacuation from the Bailadila sector. Despite the absence of the pipeline we could increase our output by 20 per cent last fiscal,” Som, told a press conference here today.

The company would now be indigenously building a 12 million tonnes capacity pipeline at a cost of Rs.3,000 crore along the Vishakapatnam highway to be delivered in Chattisgarh. The new pipeline is expected to augment the production from the Bailadila sector to 40 million tonnes in the next 4-5 years from the present 23 million tonnes.

Som said NMDC is looking for opportunities in acquiring coal mines abroad. It is also seeking allocation for coal mining in West Bengal’s Birbhum district along with Coal India Ltd. It has already acquired a coal mine in Madhya Pradesh, which will soon be operational.

On May 31, the company had doubled its iron ore export prices supplied to the Japanese and South Korean mills at around $121-138 a tonne.