NMDC in talks to buy mines in Siberia

NMDC Ltd. | Mining & Minerals | Metals & Mining | BSE: 526371 | NSE: NMDC

08 Jul 2010 Evaluate

NMDC is seeking to buy four coking coal mines in Russia. It will take some time before NMDC decides on the reasonable price. The assets, called Kolmar mines, located in Siberia’s Yakutia region, are estimated to have reserves of 400 million tonnes. NMDC has been eyeing coal assets in India too as it entered into a MoU with Tata Power for exploring the possibility of pitching for coal assets jointly.

NMDC has been working to secure fuel for its upcoming steel mills — one being constructed in Chhattisgarh and slated to commence production sometime in 2014, and another 2 mtpa steel plant planned in Karnataka through a partnership for which Nippon Steel is negotiating.

NMDC’s expansion in the Bailadila region would increase from 22 mtpa to around 40 mtpa in next four to five years. The company is also presently undertaking studies for developing the Faleme iron ore mines for which ArcelorMittal had entered into a pact with the Senegal government in 2007. The mines have estimated reserves of 750 million tonne of iron ore.

Despite bottleneck in evacuation, NMDC would register net sales of Rs 2400 crore during the first quarter on back of hike in iron ore prices and a 20% increase in volume while profits would jump by massive 80% y-o-y. On pricing, Mr Som said that under the new system, price of ore for domestic consumers has increased by 14% from July 1, against 26% rise in prices for the second quarter globally.

The company is also talking to Kobe for an iron nugget project in Andhra Pradesh as a JV with recently acquired Sponge Iron India. NMDC will also set up a three-lakh tonne beneficiation plant using indigenous technology to enhance iron content in low grade ore (less than 30% iron content) to over 67%. crack crack