The country’s largest mining company NMDC posted a 34 per cent increase in net profit at `1,962 crore in the fourth quarter ended March 31, up from `1,465 crore a year ago. In an interview with Sunitha Natti, chairman-cum-managing director Narendra Kothari expresses enthusiasm about the company’s upcoming `15,000-crore Nagarnar steel plant in Chhattisgarh. He also says his company is firming up plans on its coal and iron ore assets in Indonesia, Mozambique and Russia. Excerpts:
Where are prices of iron ore and fines heading?
Price rise will depend on the demand and supply situation. There’s no shortage of demand but production has to keep pace. We expect prices to stay at the prevailing rate for now. Currently, fines and lumps are priced at `2,910 and `4,500 a tonne respectively. The lifting of the ban on iron ore mining in Goa by the Supreme Court will not impact the demand-supply situation or domestic price fluctuation as most of the commodity from Goa will be exported.
Will the company look at increasing exports?
The focus is to meet domestic demand. If we export more, there will be a shortage in the country. However, we have some long-term commitments that we have to honour. Though we sell based on international market prices, exports are not beneficial owing to the export duty of over 25 per cent. This leads to lower revenue. But since we have some inter-government relations to maintain, we will continue to export. Currently, we have long-term contracts with Japan and Korea and about 8-10 per cent of the total production is being exported. Whether this percentage will increase depends on the government’s policy decision.
What is the production and sales outlook for this fiscal?
We have, for the first time this year, crossed 30 million tonnes in production and sales. The production and sales of iron ore in the last financial year stood at 30.02 mt and 30.50 mt respectively. We aim to achieve 31 mt production and 32 mt sales this year. NMDC produces over 22 per cent of the country’s iron ore; it will be our endeavour to account for 50 per cent of the country’s production in the near future. We have set a target to increase our annual production to 50 mt by 2019-20 and this should increase our contribution to the country’s total production to at least 30-35 per cent.
How do you propose to reach the 50-mt target?
We have projects in the pipeline and two mines coming up in Chhattisgarh and Karnataka. While the Chhattisgarh mine will be ready soon, the Kumaraswamy mine in Karnataka will take a little more time.
What about NMDC’s cash pile of `18,000 crore?
We will use the cash to fund our `15,000-crore Nagarnar steel plant. We will not borrow funds but instead use the cash. We have already spent over `4,000 crore on the development of the steel plant and have placed orders for equipment worth `13,500 crore. Besides, our capital expenditure this fiscal will be about `3,495 crore, up from `2,518 crore.