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Tuesday, 17 Mar 2015
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The Iron Ore tumble: NMDC cuts prices


Global iron ore prices have dropped to their lowest since 2009 amidst a supply glut and softening demand from China, the top importer of the mineral. Domestically, this has forced NMDC to lower prices to remain competitive.


The-Iron-Ore-tumble:-NMDC-cuts-prices| ProjectsToday


Globally, iron ore prices have been falling drastically, going below $60 a tonne, under pressure from new capacities added by top miners like Rio Tinto, Vale and BHP Billiton. Chinese mills have also been stuck with high inventories of steel products amid low demand. The country’s anti-pollution fight has also led to several mills being shut, which has weighed on iron ore prices.


To align with the prevailing weak global rates, NMDC, India’s biggest iron ore miner, reduced lump prices by Rs 500 per tonne and a similar cut in fines, which contain less iron, for the month of March. Following the reduction, the price of lump ore now stands at Rs 3,250 a tonne, and fines Rs 2,460 a tonne for the current month.


NMDC Projects
Project Name Implementation Stage State
Iron Ore Pelletisation (Visakhapatnam) Planning Andhra
Kumaraswamy Iron Ore Mines Under Execution Karnataka
Iron Ore Pelletisation (Bacheli) Planning Chhattisgarh
Iron Ore Beneficiation (Donimalai) Under Execution Karnataka
Bailadila Iron Ore 11/B Under Execution Chhattisgarh
Iron Ore Crushing (Bailadila) Planning Chhattisgarh
Bailadila Iron Ore 14/11C - Expansion Nascent Chhattisgarh
Bailadila Iron Ore-4 Nascent Chhattisgarh
Iron Ore Benefication (Donimalai) Nascent Karnataka
Bailadila Iron Ore-10 - Expansion Nascent Chhattisgarh

Apart from the global scenario, the low demand for iron ore from the domestic steel industry, which is saddled with relatively higher inventory levels, prompted NMDC to cut prices in December, February and March.


The state-run miner is, however, optimistic about the coming months and thus sees no possibilities of further reduction in ore prices in April. In fact, Narendra Kothari, NMDC Chairman and Managing Director is confident of global prices moving upwards of $65 from the next month.


NMDC 's iron ore production between April 2014-February 2015 stood at 27.82 million tonne as compared to 26.42 million tonne in the same period of the previous year. The company targets to cross 30 million tonne in FY15 and 36 million tonne in FY16, with two new iron ore mines of seven million tonne each, namely, 11B mine at Bailadila in Chhattisgarh, and the Kumaraswamy mine in Karnataka, coming into production. They have spent Rs 600 crore each on them so far.


The company will also tap two more deposits (13 and four) in Bailadila, which will again give them an additional 14 million tonne per annum.


The public sector miner also owns 80 per cent stake in Australia’s Legacy Iron Ore, which is a one billion tonne property. The company has plans to explore and develop the mine over the next 2-3 years.


Overall, NMDC has 10 iron ore projects under implementation. The company has set a target of producing 75 million tonne iron ore by 2018-19 and 100 million tonne by 2022. It is also looking for development of five to six mines in the states of Odisha, Jharkhand and Karnataka.


For evacuation of the ore, the company is also planning to take up a 15 million tonne slurry pipeline project from Kirandul to Jagdalpur and Visakhapatnam in a joint venture with Rashtriya Ispat Nigam.


As for its upcoming three million tpa Chhattisgarh steel plant project, trial production is expected to start by December 2016. Out of the proposed outlay of about Rs 15,000 crore, NMDC has already spent about Rs 6,000 crore on the steel project.


Quote of the week:

  Narendra Kothari, Chairman and Managing Director, NMDC
"We will take up exploration activity and develop the mine over the next 2-3 years. By the time the iron ore market improves, we will be ready to mine the ore"
- Narendra Kothari, Chairman and Managing Director, NMDC


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