NMDC ramps up mining capacity, setting up new integrated steel plant

Government-owned NMDC Limited is ramping up its iron ore mining capacity and is planning to set up a new integrated steel manufacturing plant at a cost of 2.2 billion dollars (about Rs 15,335 crore).

The steel plant is likely to be commissioned during the second half of 2019-20 (October 2019 to March 2020), it said in an investor presentation.

"At 100 per cent capacity, the steel plant will contribute 1.7 billion dollars (about 11,750 crore) to the company's top line with earnings before interest, tax, depreciation and amortisation (EBITDA) of 25 per cent," said the public sector navratna.

It will produce flat products like hot rolled plates, sheets, coils, automotive steel and API grade steel to the tune of 2.7 million tonnes.

India's steel consumption is expected to grow at a compound annual growth rate of 7.4 per cent over the next 12 years.

The per capita steel consumption is 75 kg against the world's 225 kg, which shows that the industry has opportunity for growth in terms of consumption.

NMDC's other value addition project is a slurry pipeline at a cost of 415 million dollars (about Rs 2,870 crore) for the first phase. The system is intended for transportation of pellet feed concentrate from Bailadila to Jagadalpur.

The initiative is likely to be commissioned during the first half of 2021-22 (April 2021 to September 2022) and will reduce cost of evacuation from Bailadila sector to Vizag port by about 55 per cent.

On the other hand, NMDC is looking to enhance its mining capacity to 67 million tonnes per annum (MTPA) by fiscal 2022 from the current 43 MTPA.

The firm's strategic plan to drive growth includes increasing focus on increasing iron ore mining capacity, value addition and global presence. The additional capacity will come from its brownfield and greenfield expansions.

NMDC (previously known as National Mineral Development Corporation) reported revenues of 16.6 billion dollars in 2017-18 (about Rs 1.14 lakh crore).