Kolkata: Orissa Minerals Development Co. Ltd, a resource-rich miner almost defunct for want of clearances, has obtained the environment ministry’s approval to extract 3 million tonnes (mt) of iron ore and 240,000 tonnes of manganese ore a year at its Kolha-Roida mines.
This will enable it to restart mining at all its six mines and ramp up iron ore production to 10mt and manganese production to 1mt in four years.
This is likely to yield at least Rs 500 crore in additional revenue by 2014-15, Chandra said. OMDC’s revenue in 2011-12 stood at Rs 2.47 crore compared with Rs 49.76 crore in 2010-11.
The approval to restart operations at the 255 hectare (ha) Kolha-Roida mine comes when the Union government is looking to sell a 10% stake in OMDC’s indirect parent, Rashtriya Ispat Nigam Ltd (RINL), through an initial public offering of shares to raise at least Rs 2,500 crore.
“The clearances being granted to OMDC to restart mining will certainly shore up RINL’s valuation,” said A.P. Choudhary, chairman of the Vizag-based public sector steel maker.
Through a restructuring of ownership concluded in early 2011, the government transferred to RINL a 51% stake in Eastern Investments Ltd (EIL) the holding company that owns 50.01% in both OMDC and Bisra Stone Lime Co. Ltd (BSLC).
BSLC, which has an estimated limestone and dolomite reserve of 650mt, is to be merged with OMDC. The government has given its nod for the merger, OMDC said in a regulatory filing on Wednesday. Going forward, EIL could be integrated with RINL, making the combined entity created by bringing together OMDC and BSLC a direct subsidy of RINL, according to Choudhary. “Such a scheme cannot definitely be ruled out,” he said.
OMDC’s iron ore reserves are estimated at 200mt and its manganese reserves at 40mt. Its mineral reserves are soon to be reassessed, said Chandra.
BSLC, which produces 1mt of limestone and dolomite, is awaiting clearances from the environment ministry to raise production to 5mt, Chandra said.
Chandra is also the managing director of all erstwhile Bird Group firms, which include EIL and BSLC, besides OMDC. Choudhary is the chairman of all companies of the group.
OMDC also said on Wednesday that it has obtained the government’s clearance to issue bonus shares. Chandra said the company management will at a board meeting in early August also consider subdivision of its shares. OMDC’s shares have a face value of Rs 10 each.
OMDC’s shares gained 11.95% on Thursday on BSE to close at Rs 40,723.35 apiece, while the benchmark Sensex fell 1.22%.
For years, OMDC’s shareholders have been demanding that it issue bonus shares and reduce the face value of its shares to increase liquidity. OMDC has a paid-up capital of Rs 60 lakh, of which 49.99%, or only about 300,000 shares, are widely held.
With mining set to restart, OMDC has revived plans to set up an iron ore beneficiation and pelletization plant, and the next board meeting will discuss a proposal to get into a three-way joint venture to build it, Chandra said.
manish.b@livemint.com
