HYDERABAD: Public sector giant National Mineral Development Corporation’s (NMDC) proposed $2.2 billion integrated steel manufacturing plant is undergoing a price revision. The 3 million tonne per annum (mtpa) plant at Nagarnar, Chhattisgarh, was first proposed in the financial year 2010-11 and has since seen cost escalation at least once.
NMDC, in its investor presentation, confirmed that investment for the plant was under revision. The plant, to be commissioned between October 2019 and March 2020, is expected to contribute $1.7 billion to the company’s top line.
“At 100 per cent capacity, the steel plant will contribute $1.7 billion (Rs 11,750 crore) to the company’s top line with earnings before interest, tax, depreciation and amortisation of 25 per cent,” NMDC noted.
The proposed plant, for which construction work is in advanced stages, will produce flat products like hot-rolled plates, sheets, coils, automotive steel and API grade steel.
“Targeted increase in steel capacity by more than double at 300 mtpa requires raw material of about 437 mtpa and provides fillip to iron ore industry.
NMDC with a current market share of 15-18% has great opportunity to ramp up its production,” NMDC said, adding that the company, being the largest iron ore player with integrated mining solutions, was better positioned to capitalise on the opportunities in iron and steel industry, which is expected to grow with 7.4 per cent CAGR.
Likewise, the company’s slurry pipeline plant being set up with a cost of $415 million is currently in the first phase and is intended for the transportation of pellet feed concentrate from Bailadila to Jagadalpur; it will likely be commissioned in the first half of FY22. “Cost of evacuation from Bailadila sector to Vizag port to reduce by about 55 per cent from current cost of $17 to $8,” it noted.
Meanwhile, NMDC is planning to enhance its mining capacity to 67 mtpa by FY22 from the current 43 mtpa. Much of the increase is from existing operational mines — Kirandul, Bacheli and Donimalai Kumarswamy — whose output will be increased to 52 mtpa from 43 mtpa.