New Delhi: State-run miner NMDC expects to produce 28-29 million tonnes of iron ore in 2011-12, its chairman said on Tuesday, slightly down from an earlier estimate because of mining hurdles such as stricter green laws.
NMDC, which produces about 15% of India’s iron ore and mainly supplies the domestic market, had in March set an output target of 31 million tonnes. In 2010/11, NMDC’s production was 25 million tonnes.
Lower output could boost domestic prices with India’s overall production already caught up in a slew of hurdles from Maoist threats to court curbs.
NMDC head Rana Som said the firm’s 2011-12 exports to its top clients in Japan and South Korea are seen at 1.4 million tonnes, almost half of what it supplied in the previous year.
The drop from 2.56 million tonnes exported last year was primarily because of slowing demand from Japan. Almost all of NMDC’s overseas sales are through long-term contracts with only only a small amount sold in the Chinese spot market.
Global iron ore prices are facing upward pressure as supplies are already tight and demand is firm from top consumer China.
Iron ore shipment from India has suffered following stoppage of exports from the southern Karnataka state, which accounts for about a quarter of supplies from the world’s No.3 producer after Australia and Brazil.
Karnataka banned iron ore shipments in July last year to curb illegal mining and has yet to issue export permits, despite an order from India’s Supreme Court to lift the ban in April.
Given the export hurdles, iron ore exports from India are likely to fall by more than a quarter to their lowest level in eight years because of higher costs and slow efforts by Karnataka to resume shipments, a Reuters poll showed.
On top of that, the Supreme Court last week imposed an interim ban on mining in an iron-ore rich region in Karnataka on concerns of environment degradation. The case comes up for hearing on 5 August.
“We are hopeful that the court will allow mining to resume in (Karnataka’s) Bellary in a phased manner after the hearing on 5 August,” Som said.
On NMDC’s plans for overseas acquisitions, Som said the company was looking at projects in the United States, Russia, Australia and Mozambique.
“We are hopeful of finalising two projects within 100 days,” he said.
NMDC, which holds about a billion tonnes of proven iron ore reserves, has been scouting for iron ore mines overseas to cater to the needs of international buyers. In May, it struck a deal with Australian miner Legacy Iron Ore to buy a 50% stake.