Mumbai: National Mineral Development Corp. (NMDC), India’s biggest state-run iron-ore producer, said it will spend Rs13,500 crore to raise output, build steel and iron plants and invest in coal mines overseas.
The company, based in Hyderabad, will invest Rs3,500 crore to boost iron-ore production, chairman B. Ramesh Kumar said in an email.
A further Rs9,000 crore will be spent on iron, steel and power plants, while Rs1,000 crore would be earmarked for a special purpose vehicle, to be set up with four other state-run companies, including NTPC Ltd, to bid for coal mines abroad.
Indian iron-ore miners and steel makers are boosting output to feed rising demand as the nation uses more of the metal in buildings, cars and appliances. NMDC will use its own funds to expand, Kumar added, in a telephone interview. The company had reserves of Rs7,000 crore at the end of the last fiscal and is debt-free, he said. “We have enough money to fund these expansion plans and may borrow if necessary,” Kumar said.
Tata Power Co., the nation’s second-biggest utility by sales, agreed on 31 March to pay $1.3 billion (Rs5,590 crore) for a 30% stake in two coal mining units in Indonesia.
NMDC currently produces about 27 million tonnes (mt) of iron ore a year, which would rise to 50mt by 2015, the company said. The company also plans to set up a 2mt steel plant, two pellet plants and a sponge-iron plant in Chhattisgarh, and a 300MW power plant in Karnataka.
“We are in discussions with companies such as Steel Authority and Rashtriya Ispat Nigam to partner us for the steel plant,” Kumar said. “We have received approval for all these projects.” NMDC may report a 23% increase in annual profit to Rs3,400 crore. Annual iron ore output rose 18% to 27.1mt. Local sales comprised 76% of its total sales of 25.6mt.
The shares of the company last traded unchanged at Rs1,900 on the Bombay Stock Exchange, valuing it at $5.8 billion. The government owns 98% of the company. As few as 173 shares, on an average, have changed hands daily in the past six months.