Hyderabad: India’s largest state-owned iron ore producer and exporter, National Mineral Development Corp. Ltd (NMDC), has set an ambitious target of becoming a global mining firm by acquiring iron ore, coal and gold mines across the globe. NMDC is also all set to invite expressions of interest from potential joint venture partners for a proposed Rs10,000 crore integrated steel plant in Karnataka. Chairman and managing director Rana Som talks about the company’s plans. Edited excerpts:
What is the strategy for NMDC going forward, with most of the mines allotted to you suffering from huge gestation periods, coupled with the problem of depleting reserves in your existing mines?
The gestation period in mining area has been very high. And we know that all our (domestic) natural resources will be exhausted one day. That is why the idea is to grab some natural resources elsewhere so that we can protect the national interests in the long run. Our effort has been that NMDC should have mines not just in India but also abroad, and NMDC should become a multinational mining company over a period of time. We should have (a) hold on natural resources so that in future our industrial development is not hindered for lack of natural resources.
Diverse growth: Som says NMDC’s steel and iron ore businesses will start giving the company equal turnover after five years or so. Bharath Sai / Mint
How has your overseas presence expanded so far?
We are present in Tanzania. So far as iron ore is concerned, our efforts in Armenia and Eritrea have not yielded results. But we will be going to Cambodia shortly to see whether gold and iron ore reserves are available there. We are interested in Australia, Indonesia, Cambodia and South Africa. Ultimately, our attempt (through acquiring assets overseas) would be to cater to China or (the) Indian market and others.
What are the reasons for inordinate delays in your iron ore and coal mine acquisition plans in Australia?
There are two types of mines that we are interested in Australia. One has been iron ore mines. For acquiring iron ore mines in Australia, we had some sort of (an) MoU (memorandum of understanding) with Rio Tinto. But as you know, Rio Tinto and BHP Billiton Australia have decided to join hands for undertaking all mining activities together. Therefore, there is no space left in Australia in mines which are either held by Rio Tinto or BHP Billiton. But then, we have approached the Australian government few days back. We are trying to get into an area which will be a virgin mining field for exploration by NMDC, in association with a local partner.
We are also interested in coal... The opportunities in coal are likely to be more now because there is no such joint agreement between Rio Tinto and BHP.
What prompted you to diversify into steel production?
If I have to survive and prosper as a mining company, it is necessary that I go into value addition through forward integration. And that will strengthen my role as a miner.
How much are you investing in the steel business?
The project is going to have an initial capacity of 2 million tonnes and ultimately 5 million tonnes a year. The thumb rule is Rs5,000 crore of investment per million tonnes capacity.
What kind of revenue are you expecting from the steel business?
I have a feeling that our steel and iron ore will start giving us equal turnover after five years or so.