NMDC readying ground for a quantum jump by 2029

As NMDC accelerates growth amid rising demand for iron ore, how does the road ahead look?

We are proud of our legacy as that is the springboard for the future. But, NMDC historically has been under-performing given its growth prospects. Thus, whatever we did in 66 years has to be done in the next six years, by 2030. From a miner’s perspective you have a huge canvas to paint.  We have shortlisted 6-7 minerals [for foray]. They are lithium, gold, copper, aluminium, coking coal and iron ore. Also, debating our international policy on where to and how to go. We also realise that lot of investments need to be made to scale up [capacity] from 50-100 MT. We have created a new vertical to plan and execute projects.  Last year, iron ore production was about 40 MT, this year it will be 40-46 MT and next year 52 MT. Thereafter, we will stagnate for three-four years because our environment capacity is 53 MT. When the new projects fructify around 2029, the company will see a quantum jump with our production going up from 53 MT to 79-80 MT at our existing mines and 20 MT from non-generic growth. Some of the new plants we are investing in will come on line in 3-4 years and since we are cash rich, pursuing a big bang theory on investments. Some of the projects are in tendering and execution stage, but most of them are in drawing stage. I see opportunity in all the challenges, lets take greening of the economy, it is a challenge for any miner and that’s why we have changed our tagline to ‘Responsible Mining’... responsible towards everybody. We have not done a lot of things in the last 66 years, for example not mined coal, not mined outside the country.. thus there are new things to do.  

What investments do you foresee in each of the forays?

We do not have any investments done mineral-wise. In India, where it is an auction regime, we do not hope to get too many reservations. If we can get our permissions right, we should get 80 MT from our existing mines. Another 20 MT has to come from abroad or different minerals. For coal we already have two mines and is likely to be 10-11 MT. In Australia we just started a gold mine. We are looking substantially at foreign assets. The draft proposal is that we want 5-10% of our revenues coming from abroad by 2030. Our portfolio will be a combination of exploratory mines, some in pre-production stage and some producing mines for which we will consider different agreements such as off-take agreement, equity participation and buyout depending on the opportunities. We are looking at opportunities all over the world, be it Western Africa or Australia. We have not looked at South America but that is something we will be looking into. Whatever we do, we need to be aggressive.  

Could you elaborate on the plans for lithium mining?

We are pursuing 3-4 strategies. In Australia, we are partnering with Hancock. That partnership initially was for magnetite and modified subsequently to include lithium exploration, which is likely to start any time now. With the strike zone right between our tenement we hope there will be lithium. The initial exploration process will take about 18-24 months, and then will be PFS (pre-feasibility study). And then if you are successful the BFS [bankable feasibility study] will take 36 more months and then the mining construction. We are very hopeful because there are working lithium mines nearby. Besides that we are negotiating with several companies which are in different stages, some PFS, some pre-mining stages. We are exploring options such as equity participation, off-take rights. While not much space is available in lithium, as whatever comes to the table is taken immediately, we have a few advantages. NMDC being government owned we are treated with lot of respect, second we have been in Australia for 10 years and the way we have supported [iron ore subsidiary] Legacy, people know our background and are keen to work with us. Being a government company we are a natural ally for people looking beyond China in the lithium space. The problem would be lithium refining which is now 99% in China, so you will have to develop lithium refining in India.  

 Are you looking at the value chain?

Yes, but not battery making, because in these minerals, the value release is at the processing end. We are there [in Australia] not to be a miner to a Chinese refiner. That’s not our intention. Thus we need a refinery. It may be not 100% owned by us, but a joint venture. Visakhapatnam is one of the probable locations, we are trying to buy land from RINL if it [the plan] fructifies. Don’t known when it will happen, whether east or west coast... but it is very natural for an Indian company like us to have a pie of the refining capacity as well.  

What will the strategy be for other minerals?

We are looking at Western Africa, had gone to Ghana... prima facie looks like a promising area. Chinese fatigue does appear to be very apparent. The plans are at a preliminary stage. Also looked at Senegal for iron ore, at Indonesian coking coal... interested in looking at everything.

 How do you intend financing future growth plans?

While most can be done internally, as Director Finance I would like to de-risk investment from our side and look at banks and other options. That is where ESG ratings and responsible mining also comes in very importantly. They are going to look at your track record to finance something there. For lithium, it is fairly easy to get a bank finance; I wouldn’t risk it in a foreign shore with a new mineral with 100% homegrown money. Rather, have it leveraged from investors as well. That’s my personal thinking of it, at what level of leveraging and at what methods of leveraging that can be debated. When banks start studying [your business model] that makes you even more better. It is not the money that I am looking after. It is independent third party scrutiny, I might have skipped some questions. So when somebody comes and keeps on asking, you only better yourself.

How far away are you in seeking approvals for ramping up production once you touch the existing limit?

There is no short-cutting of the procedure. It is a long-drawn process. The good thing is that we have started the ball rolling. About 30% of them are at various stages, for example to increase the size of mine I need to go wider and dump more waste... I require 1,100 hectare in Bailadila [for those] applications have been made and out of the four, one has already gone to Delhi. In some places public hearing has been completed, other locations are going to be held... at different stages. Since 3-6 years is a long time, we will parallelly go ahead with other work so that once the approval comes the other aspects are in place to save on time.

Is there an update on steel project that NMDC implemented in Nagarnar, Chhattisgarh and will the company continue to hold a stake?

Personally, it was very satisfying as I don’t think anybody is going to implement a greenfield steel project. Professionally, a great learning experience. It was an honour to have Prime Minister Narendra Modi dedicate it to the nation. The fact we did it with the same team, same contractors and same laws was very satisfying. Now, we are done and dusted with it, we cannot live with glory of yesterday. We have to make it profitable, the plant needs to stabilise and we should be able to do that in 2-3 months. On the stake part, I am not in a position to answer.. our mandate was to commission the plant and sale was handled by DIPAM. Of course we are assisting them and I am aware there was considerable interest in buying the plant. I am not aware of the latest status as we are busy with our own ramping up.

Are State governments in India becoming more assertive on issues concerning mining?

Yes, there are challenges that’s part of the environment. We are operating in Australia, I don’t think the systems are any easier, it took us 13 months to get the native title agreement done. Mining per se is not perceived to be a welcome activity to do. You are doing a “dirty job” at a difficult place. Worldwide, it is the same problem, but then we cannot have any development without mining. You can’t have a mobile, car or house without mining.

With NMDC’s growth propelled by the demand for iron ore, do you expect the trend to continue?

Yes, most of my customers have huge expansion plans. I don’t see any lack of demand, but the challenge how do I evacuate. That’s one area where we have put in all the experts to ensure how evacuation is to be handled as 40 MT and 100 MT are different ball games. In principle, sale from ex-mines is not feasible any more for those huge quantities. Everybody sells from stock yards and blending yards, and we have to create those facilities. We have created one... exploring whether we need to go for more such small ones or one big one in Visakhapatnam. Going forward we cannot evacuate 100 MT from mine heads. Thus, by 2030 we will need blending yards and stock yards. Such facilities will also help me customise products to customers. 

Would you look at export at some point?

Right now it does not make economic sense because my net realisation in domestic market is more despite the high prices in international markets. There, however, is a strategic case for exports. You need a presence in the export market and hence we may consider a small presence to keep some channel open. A 40-50 MT company can manage without exports but a zero presence for a 100 MT company is not advisable.