Value addition will bring more relevance to NMDC: Chairman Baijendra Kumar

Instead of going for divestment at a later stage, as tried in the case of Nagarnar plant, the company wants to go with a private partner for such projects in the initial stage itself

Having taken over as a full-time chairman-cum-managing director of public-sector iron ore mining company NMDC six months ago, N Baijendra Kumar seeks to redefine the role of the national miner in tune with the changed policy environment and market conditions.

A 1985 batch IAS officer from the Chhattisgarh cadre, Kumar tells B Dasarath Reddy in an interview that the company will actively pursue the bidding route to win new mining leases and forge private partnerships for value-addition projects. Edited excerpts:

The sale process for the 3-million-tonne Nagarnar steel plant project in Chhattisgarh hit a roadblock after local tribals and the government opposed the move last year. What is NMDC going to do about it?

The transaction advisors and the legal advisers engaged for this purpose have raised certain issues, like, for instance, whether it is possible to privatise the lease held by a public sector company in a scheduled area. Based on this feedback, the Inter Ministerial Group for Strategic Disinvestment has recommended to the government that the privatisation process may be deferred for the time being. So, we have deferred the process.

The execution of Nagarnar project has got delayed by 3-4 years though it is getting completed now. I have been trying to get all the issues resolved on a war footing as my immediate priority is to first complete the project. It will be completed and commissioned by the end of this year.

How the company performed in financial year 2017-18?

Despite disruptions caused by heavy rains, floods and Maoist activities during the year, we were able to achieve the highest ever production of 35.4 million tonnes. Our people worked overtime to mitigate the impact of these disruptions. And our sales reached 36 million tonnes during the year. Most of our mines in Bacheli, Kirandul (Chhattisgarh) and Donimalai (Karnataka) are rated first star, the maximum rating one can get, for all the parameters.

We also got permission for enhancement of production at Donimalai complex to 14 million tonnes for 2018-19 from the present 12 million tonnes. With all clearances in place we will soon be calling tenders for the construction of slurry pipe from Bailadilla to Nagarnar to Vizag.

We have been contributing to the national kitty in whatever way possible, and we have already given an interim dividend of over Rs 9 billion. Only because of our success in mining, we could do this.

The company was not so successful in winning the mining leases offered via bidding route. How do you see this?

We were the kings of mining as long as mines were given to us on a nomination basis. With the change in policy most of the mines are now being awarded through the bidding route. Our willingness to pursue the new route did not help us win the mining leases because we have been conservative in our approach to competition. We will go aggressive now. NMDC has got the knowledge, technical know-how, human resources as well as an organisational structure that can sustain any kind of pressure in the mining sector. So we will try to put all of that to use.

Is NMDC planning to invest in any new projects?

Besides mining, we also have investment plans in value addition, be it steel plants, slurry pipes or pellet plants. We feel that value addition is going to give more relevance to NMDC as captive mining is being aggressively pursued by the policy. If steel producers will acquire their own mines, then, the miner can also build a steel plant. Merchant mining is useful when there are purchasers. If purchasers are finding their own sources, I will conceive my own. The country needs 300 million tonnes of steel so I can chip in any way.

We already have land in Karnataka for a steel plant project and we have been finalising the land for a similar project in Jharkhand in association with JMDC.

Will NMDC be open to private collaboration in these value addition projects?

Instead of going for divestment at a later stage as we tried in case of Nagarnar plant, we want to go with a private partner for such projects in the initial stage itself. We are open to discuss with any party that is willing to either invest 100 percent or 26 percent. This is our thinking.

What is NMDC's outlook on iron ore demand and  prices this year? Steel producers often complain about NMDC's prices being out of sync with market realities.

International prices have been one of the important factors for Indian pricing of iron ore but it is not the sole determinant. Even when international prices were very high at $70 plus per tonne, Indian prices were at a different level. 

NMDC has been following a system of monthly revision of prices only to stay aligned with the market conditions. The per capita consumption of steel in the country is likely to increase in coming days and this will have a positive impact on iron ore demand, The iron ore prices have more or less stabilised at the current levels and I expect this to continue in the current year. We expect to have MoUs for supply of 36-37 million tonnes of iron ore this year.