Experts cite dwindling steel demand for NMDC's sharp cut in iron ore prices

State-controlled mineral producer NMDC Ltd has cut down iron ore prices by about Rs 500 a tonne for both lumps and fines, effective April 4. Experts say that the move comes in the backdrop of falling steel prices brought on by lower offtake, They believe the price reduction may encourage buyers to pick up larger quantities of the mineral.

The lump ore prices have come down from Rs 3,150 per tonne to Rs 2,650 with the announcement, while fines prices has been reduced from Rs 2,860 per tonne to about Rs 2,360 a tonne. The previous price change was a downward revision of Rs 50 per tonne each in lumps and fines on March 16.

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The reduction is due to weak demand in the country and the decline in steel production and prices. This is also observed as a reaction by Odisha miners, who slashed lump prices. Steel production has declined by 60 per cent, they said. Sources said that the steel prices has come down by 15-20 per cent, to Rs 7,000-8,000 in the past two weeks.

With this, the offtake has also been lower and NMDC's action is expected to encourage buyers to pick up more iron ore in the near future

NMDC pledges Rs 150 crore to PM CARES FUND for war against Covid-19

State-run National Mineral Development Corporation (NMDC) would donate Rs 150 crore for fighting the novel coronavirus in the country.

“To deal with the difficult times arising out of COVID 19 in the Country, NMDC will be donating Rs 150 crore to PM CARES FUND,” NMDC Chairman-cum-Managing Director N Baijendra Kumar

said in a tweet. It is a small contribution from NMDC Limited for a National Cause on the appeal of Prime Minister Narendra Modi, he added.

The country’s largest iron-ore producer and exporter is learnt to be the biggest contributor so far among the public sector undertakings (PSUs) for fighting coronavirus.

Earlier, the NMDC had announced to give assistance of Rs 1,000 to all employees including contract employees, labourers, trainees, apprentices etc for additional expenses for preventing coronavirus. The assistance had been provided to mitigate the additional expenses for purchase of sanitization materials.

The NMDC management had written letter to all heads of projects and units in this connection. The additional payment may be disbursed along with current month salary.

K'taka govt holding extension of Donimalai mine lease unreasonable: NMDC

State-owned mining major NMDC on Monday said there were no valid reasons for the Karnataka government to keep on hold the extension of Donimalai mine lease.

The Donimalai mine, with a capacity of seven million tonnes per annum (MTPA), was mired in controversy over renewal resulting in the cancellation of lease last year, which subsequently suspended the production from the mine.

"Hope to get an opportunity soon to thank #karnataka govt too on Donimalai. If CG gove (Chhattisgarh government) can extend 29 MT (million tonnes) leases under the same act and rules, there are no valid reasons4Karnataka to keep it on hold during the possible disruption times. @CMofKarnataka @ChhattisgarhCMO @nmdclimited," NMDC Chairman-Cum-Managing Director N Baijendra Kumar said in a tweet.

The Chhattisgarh government had earlier extended leases of state-owned NMDC's four mines of Bailadila deposit in the state to avoid interruptions in iron ore supply to the steel sector.

"Thanks to #Chhattisgarh Govt. Thank you @bhupeshbaghel. @nmdclimited registered lease deed extension of Deposits 5,10,14,14NMZ of #Bailadila iron ore mines... for next 20 years. 29MT production capacity renewed.Uninterrupted ore supply ensured to our clients. @SteelMinIndia," he further tweeted.

The state-owned firm had earlier said that said production from its Donimalai mine will resume soon as discussions at the higher level were underway for extension of the mining lease.

The public sector mining major, which has been in the business of mining iron ore for over six decades, operates three iron-ore complexes in the country.

NMDC hits fresh 52-week high after govt approves mining expansion plan

Shares of NMDC hit a fresh 52-week high in otherwise subdued market, up 3 per cent at Rs 123 on the BSE on Thursday, after the state-owned company announced that the Indian Bureau of Mines (IBM) approved its mining plan to enhance the production of iron ore from Kumaraswamy iron ore mines in the state of Karnataka.

“The company has received approval for modified mining plan of Kumaraswamy iron ore mines of NMDC from 7MTPA (million tonnes per annum) to 10 MTPA from the Indian Bureau of Mines (IBM), Ministry of Mines, Government of India,” NMDC said in a regulatory filing on Wednesday after market hours. The effective date of approval is for 2020-21 and 2021-22, it added.

This is another big boost to NMDC immediately after obtaining the extension of four mining leases of NMDC in Chhattisgarh.

In a statement on Tuesday, the company said the Mineral Resources Department, Government of Chhattisgarh, has extended the four mining leases in Bailadila in South Bastar, Dantewada district for a further period of 20 years.

The leases of Bailadila Deposit No.5, Deposit No.10, Deposit No.14, and Bailadila Deposit No.14NMZ have been extended for a period of 20 years ending September 2035, it said.

That apart, NMDC also announced that it has received the allocation of Rohne Coal Block in Jharkhand.

This allocation would ensure the coking coal requirement of NMDC's upcoming steel plant at Nagarnar, Chattisgarh to some extent. This is an important step for raw material security for the steel plant and also to some extent reduce the import of coking coal, it added.

In the past seven trading days, NMDC has outperformed the market by surging 12 per cent, as compared to a 3 per cent rise in the S&P BSE Sensex.

Extension of Chhattisgarh mining leases for 20 yrs to boost NMDC's topline

Public sector miner NMDC will close 2020 on a cheerful note with the Chhattisgarh government, extending mining leases of NMDC Limited's Bailadila Iron Ore Projects for 20 years i.e. upto September 2035. The extension was crucial for the company's survival. With this development, the company's topline would increase by around Rs 2,500-3,000 crore, going by the realisation in the first half of the current fiscal, say experts.

Company's stock closed at Rs 119.90, up 2.35 per cent, on Wednesday.

Analysts said that the extension of the leases was crucial for the company’s survival as the Donimalai complex in Karnataka is not operational since the last year due to a dispute over the payment of premium with the state.

Of NMDC’s 33-million tonnes per annum (MTPA) total production, Chhattisgarh’s two complexes in Bacheli and Kirandul under Bailadila projects contributed about 24 MTPA (in 2018-19).

In Chhattisgarh, out of the five mines in the Bailadila Sector, the lease of four mines with an installed capacity of over 29 MTPA has been extended. One mining lease was extended in 2017.

In 2018-19, company's overall production was around 33 million tonnes, including around 2.5 million tonnes (during five months of operational period) from Donimalai, which stopped production due to dispute, and increased capacities from Chhattisgarh.

NMDC expects to close 2019-20 with production of around 33-34 million tonnes and is expected to increase it further to 34-35 million, despite no production from Donimalai.

If Donimalai comes in, an additional 6 million tonnes will be added, and it would take the production to 40 million tonnes.

Moreover, there was a restriction on the Kumaraswamy iron ore mine, which is adjacent to Donimalai, and could only produce 7 million tonnes. Now, NMDC has got a clearance from the Indian Bureau of Mines to go up to 10 million tonnes. Analysts said, at around 32.5 million tonne production, its turnover was around Rs 12,000 crore. For 40 million tonnes, that will grow to around Rs 15,000 crore in the next fiscal at prevailing rates during the first half of 2019-20.

In an another development, the government of Andhra Pradesh has entered into a Memorandum of Understanding (MoU) with the NMDC for supplying iron ore to the proposed Kadapa Steel Plant. Recently, the State cabinet approved a proposal for the construction of the Rs 18,000-crore steel plant. The plant, spread over 3,000 acres of land, is expected to come up in Jammalamadugu mandal of the district.

Chhattisgarh extends NMDC's iron ore mining leasing in Bailadila Sector

Chhattisgarh Government has extended Mining Leases of Bailadila Iron Ore Projects NMDC Limited.

The deposits have been extended for the period of 20 years i.e. upto September 2035.

NMDC operates three iron-ore complexes in the country. Two of these are in Dantewada district of Chhattisgarh – contributing to a major portion of the company’s total output while one is located in Karnataka’s Donimalai.

Of NMDC’s 33-million tonnes per annum (MTPA) production, Chhattisgarh’s two complexes in Bacheli and Kirandul under Bailadila projects contributed about 24 MTPA in FY19.

At Chhattisgarh, of the five mines in Bailadila Sector, leases for four mines with an installed capacity of over 29 MTPA has been extended now. The lease for the remaining one had already been extended in 2017.

Company's stock price was up by 1.84 per cent on Wednesday morning to 119.30.

Distress in Karnataka, NMDC gets 'mining lease' breather in Chhattisgarh

State-run National Mineral Development Corporation (NMDC) Limited heaved a sigh of relief as the Chhattisgarh government decided to renew the lease of four mines that were at stake following development in Karnataka.

The public sector mining behemoth, which has been in the business of mining iron ore for over six decades, operates three iron-ore complexes in the country. While one is located in Karnataka’s Donimalai, two are in Dantewada district of Chhattisgarh — sharing major proportion of company’s total output.

Of the NMDC’s 33-million tonnes per annum (MTPA) production, Chhattisgarh’s two complexes in Bacheli and Kirandul under Bailadila project contribute 23.2 MTPA (in 2018-19). The Donimalai mine, with a capacity of 7 MTPA, was mired in controversy over renewal resulting in the cancellation of lease last year, which subsequently suspended the production. The company could not get the lease as of now despite intervention of Centre and mines tribunal.

Wary of Karnataka development, NMDC started the exercise to avoid any unfavourable precedence to be set that could jeopardise its lease renewals in other states especially Chhattisgarh. Of the fives mines under the Bailadila project, lease of four with an installed capacity of over 29 MTPA are expiring in March 2020.

NMDC Chairman-cum-Managing Director N Baijendra Kumar took the command and the exercise that continued for the last six months finally yielded the desired results. “We are grateful to Chhattisgarh Chief Minister Bhupesh Baghel and top officials for their support to the NMDC and granting extension of lease (for the four mines) for another 20 years,” Kumar told Business Standard.

What helped the NMDC in breaking the deadlock in Chhattisgarh was Kumar’s bureaucratic background. An IAS official of 1986-batch, he belonged to the Chhattisgarh cadre and was familiar with the working that helped in convincing the state authorities. Kumar is the first IAS official to head NMDC Limited.

A dilly-dally in Chhattisgarh over lease renewal would have been critical to keep NMDC alive.

Karnataka's Dept of Mines & Geology defers e-auction of Donimalai mine

Following the Mines Tribunal order staying the Karnataka Government's decision to cancel Donimalai mining lease to NMDC, the Department of Mines and Geology of Karnataka has decided to put its schedule e-auction of the said mine on hold.

On Thursday, the Mines Tribunal, Government of India, ordered a stay on the BJP-led Karnataka government's decision to cancel the lease given to NMDC for the Donimalai iron ore mine, till the next date of hearing. The order also prohibits Government of Karnataka from taking any further action on the mining lease or initiating an auction of Donimalai mine.

Following this, on Friday, a notice issued signed by Director of Department of Mines & Geology, Government of Karnataka said, "The schedule of the auction process for the said mine is hereby deferred until further notice."

On August 17, the Karnataka government had decided to cancel the lease and put the Donimalai mine under the hammer. Meanwhile, NMDC stated that even with no production at Donimalai, it will achieve its annual target, as output from other mines has gone up.

NMDC and the state administration got into legal tangle over Donimalai after the Congress-JDS-led state government levied a premium equal to 80 per cent on the iron ore extracted from Donimalai mine, as a precondition to extending the lease. NMDC did not agree, and stopped mining operations in November 2018. It also moved to the court against the decision, and received a favourable order. While the public sector miner was planning to start the operations, the new BJP-led Government decided to cancel the lease.

While taking up the matter legally, NMDC's Chairman and Managing Director met Karnataka B S Yediyurappa and discuss the issue two days back.

Amitava Mukherjee, director finance, NMDC said the company's basic precedence is renewal of teh Chattisgarh mine under the same Act and Rules without any premium. He said, the Chattisgarh Government renewed the licence for a 10-million tonne-mine named Deposit 11, for 20 years starting 2017.

While analysts say NMDC earnings and profits may take a hit in FY21, company says despite, loosing around 0.5 million tonnes every month from Donimalai mine, the public sector miner is expected to achieve its target of 31 million tonnes for 2019-20 as it has increased production at Bacheli Complex and Kirandul Complex at Bailadila Sector, Chhattisgarh.

During the first quarter, despite Donimalai lying idle, NMDC’s production of iron ore was 8.43 million tonne (mt) against 6.98 mt in Q1FY19, registering a growth of 21 per cent. Sales of iron ore increased to 8.67 mt in Q1FY20, reporting a growth of 28 per cent over 6.78 mt in Q1FY19. The company posted a 21 per cent rise net profit to Rs 1,179.28 crore in Q1FY20 from a net of Rs 975.27 crore in Q1FY19. Total income rose to Rs 3,386.56 crore in the quarter under review, up 33 per cent over Rs 2,547.13 crore a year ago.

Iron ore deposits in the Donimalai mine are estimated at 143 million tonnes and worth around Rs 40,000 crore. NMDC had leased the mine in 1968 for a period of 50 years. The lease expired on November 3, 2018.

Karnataka govt cancels NMDC lease for Donimalai mine, opts for auction

Karnataka government has decided to cancel the lease given to NMDC for the Donimalai iron ore mine and to put it under auction. This is contrary to the earlier expectation of the mine's resumption after the high court passed an order in favour of NMDC in July.

The court had allowed public sector miner NMDC to resume operations at the Donimalai mine in July after eight months. NMDC had closed the mine after the then Congress/JDS-led government in the state had imposed an 80 per cent premium on the average selling price of iron ore sold from the mine.

NMDC said that it has field revision application against Karnataka government's order with Ministry of Mines and the hearing is fixed on August 21, 2019. The company has also requested the state government to withdraw its letter and keep it in abeyance.

Analysts said that the development would not only impact NMDC's ouput from Donimalai, but also create uncertainty over the resumption of mining in Chhattisgarh where most of the mining leases are due for renewal in March 2020.

In a letter, a copy of which is available with Business Standard, to the director of the Department of Mines and Geology, Karnataka MSME & Mines secretary said that the government has withdrawn the approval letter, issued in November 2018, to extend the mining lease period of NMDC in the Donimalai Range with immediate effect and that it would auction the said block. The mine lease is spread over the 608 hectares of the Donimalai Range in Karnataka's Bellary district.

He added that the mining block would be put for e-auction. The letter further stated that bid documents and the technical committee constituted for the purpose would be placed before the State Empowered Committee for obtaining a post facto approval of the government to conduct the auction of the mining block, earlier held by the NMDC

NMDC and the state administration got into a legal battle over Donimalai after the state government decided to levy a premium on the iron ore extracted from the mine, while extending the lease. However, the NMDC stopped mining operations and moved the high court, which ruled in favour of NMDC.

Iron ore deposits in the Donimali mine are estimated at 143 million tonnes (MMT) and worth around Rs 40,000 crore. NMDC had leased the mine in 1968 for a period of 50 years. The lease expired on November 3, 2018.

"This event may completely change the profit dynamics of NMDC as it may have to compete with private producers and pay a huge premium to get its mines back" said an analyst.

He added, however, that uncertainty remains till clarity emerges on the renewal of Chhattisgarh mines. Even a loss of volume only from the Donimalai mine might hit NMDC's FY21 earnings and profits. However, it is difficult at present to put any target price to this uncertainty, said the analyst.

NMDC terminates contract with BHEL for delay in Rs 1,395 cr project

The National Mineral Development Corporation (NMDC) has invoked termination clause against Bharat Heavy Electricals Limited (BHEL) for failing to complete a contract awarded for its Nagarnar steel project in Chhattisgarh’s Bastar district.

The state-run miner is setting up a 3 million tonne per annum (mtpa) greenfield integrated steel plant in Nagarnar -- about 16 kms from Bastar’s divisional headquarters at Jagdalpur. The project is part of NMDC’s diversification, value addition and forward integration programme.

The company plans to feed raw material to the plant from its iron-ore complexes located in Bastar division. NMDC manages two fully mechanised mines with a capacity of 25 mtpa in Dantewada district of Bastar.

The Nagarnar steel plan was conceived by the NMDC in 2009-10 and the contract to build raw material handling system was awarded to BHEL on August 1, 2011. The estimated cost of the project was Rs 1,395 crore and was stipulated to be completed by February 28, 2014.

The state-run engineering enterprise failed to expedite the contract. Even after continuous follow up at corporation and ministry level, BHEL did not accelerate the progress of the project, resulting in a delay of over five years.

Even after the huge delay, the project is far from completion. BHEL officials could not be contacted for comments.

NMDC Chairman-cum-Managing Director N Baijendra Kumar told Business Standard that the company had invoked the termination clause against BHEL by serving notice on June 25, 2019. The company will take steps for completion of the project through new route, he added.

Iron-ore production resumes in NMDC as tribals end strike in Chhattisgarh

Production in two major facilities of state-run National Mineral Development Corporation (NMDC) in Chhattisgarh resumed after six days as tribals agitating against a mine allotted to the company called off their strike Thursday morning.

Of the three fully mechanized mines of NMDC, country largest iron-ore producer and exporter, two are located in Chhattisgarh's Dantewada district. The company operates two complexes namely Bacheli and Kirandul.

The capacity of two complexes is 25 million tonnes per annum (mtpa). It shares about 80 per cent of NMDC's total iron-ore output.

The mining in the two complexes had come to a halt on Friday as tribals resorted to indefinite strike. They blocked the check post that prevented employees to enter the mines.

The tribals have been protesting against the Bailadila Deposit-13 that was allotted to NMDC. They claimed that the hill had religious significance for them as it houses their deity. The tribals were adamant that they would not allow developing the mine at any cost.

The local police authorities claimed that Maoists were involved in instigating the villagers and forced them to reach Bacheli-Kirandul from interior areas. Many travelled even 50 kms to reach the spot. The pamphlets recovered by the police underlined that Maoists were opposing the mine allotted to private party.

Adani Enterprises Limited (AEL) had been appointed as the mining contractor. The mining lease for the deposit was issued to NCL, a joint venture of NMDC and Chhattisgarh Mineral Development Corporation (CMDC).

The state government on Tuesday issued an order to immediate halt actions related to project for now. It constituted a three-member committee to probe alleged illegal felling of trees. The government also assured to examine the gram sabha held in 2014 that villagers’ claimed fake. The authorities say the gram sabha had given consent for developing the 10-mtpa mine.

The Samyukta Panchayat Samiti rejected the government offer and demanded that probe be completed in three days. The government had set the deadline of 15 days. As the situation was slipping out of control, state government decided to crackdown.

On Wednesday night, NMDC Chairman-cum-Managing Director N Baijendra Kumar met Chief Minister Bhupesh Baghel. The strike was against a new mine but it had severely affected the operation of existing mine.

Last night, the Sub Divisional Magistrate of Kirandul issued an order asking the agitators to vacant the place by mid-night or face strict action. The authorities had planned to evict the tribals. Fearing stringent action, most of the villages had dispersed in the night.

On Thursday morning, they returned. The administrative officials also reached the spot and talked to the leaders heading the campaign. The officials told them they would be left with no option then to use force. Finally, the strike was called off.

The tribals who travelled kilometers bare foot to reach the spot were boarded on trucks for their native place.