NMDC to buy two iron ore mines in Australia

State-owned miner NMDC will seal deals to acquire two iron ore assets in Australia next month.

Chairman and Managing Director Rana Som said the company would spend less than $100 million to acquire 51 per cent stake in the two mines. While not disclosinge the names of the companies and the exact amount involved, Som said the acquisition cost was not a big investment, it would become an asset of considerable importance in the long-term.

The company has also identified four more iron ore and coal mine assets for acquisition in Australia, Mozambique and Albania, for which it had received its board’s approval. It is re-evaluating its agreement of 2008 with global mining company Rio Tinto for jointly developing iron ore mines in Orissa and Tamil Nadu, besides Australia, Brazil and Africa. There has been no progress on this front in the last two years.

“We are waiting to resume more exhaustive deliberations with Rio Tinto to work together not only on iron ore but also on coal and other minerals,” he said. On the export front, he said a decision on continuation of exports to Japan would be finalised in a month or two.

Talking about the company’s huge reduction in iron ore exports in the last nine-month, Som said export rates on railway freight were three times more than domestic supplies even as huge demand for iron ore was coming from within the country.

“We are doubly careful before abandoning the Japanese market. At the same time, we are careful to make exports profitable,” he said.

NMDC expects iron ore prices to rise in the next financial year due to decrease in supply from Australia, which has been hit by floods. “Prices are supposed to go up due to pressure on supply while there would be a likely recovery as far as the steel markets in America, Europe and Japan are concerned,” Som said. Spot prices are higher and its impact will be seen on long-term prices starting April, he added.