New Delhi: India’s largest iron ore miner NMDC Ltd is looking to close its next overseas acquisitions in Brazil and the US after buying a majority stake in Australia’s Legacy Iron Ore in September, its first overseas purchase.

“We are working on certain acquisitions. One of them is Greystone (Greystone Mineracao do Brasil in Bahia, Brazil)," Rana Som, chairman and managing director of the state-run NMDC, said on the sidelines of a conference. “Our scrutiny is on and little snags here and there are being sorted. In a few days there should be a decision on it."

Resource hunt: Rana Som. Photo: Pradeep Gaur/Mint

The other target is a coking coal mine in the US, for which NMDC wants to make phased payments, Som said.

Both the acquisitions are for 100% ownership and will be funded through internal accruals, Som said. Another company executive said NMDC will use its cash reserve of Rs19,000 crore for the purchases.

Som said both the assets are small; the mine in the US has an annual production of less than half a million tonnes (mt).

NMDC acquired a 50% stake in Australia’s Legacy for A$18.89 million (around Rs90 crore), surprising sceptics and giving itself an avenue for growth as new mines are getting harder to develop at home owing to issues surrounding land acquisition, displacement of locals and environmental clearances.

Iron ore from Legacy will be sold in the international market or brought to India but not until several years of exploration and mine construction are through. It is still being hailed as an important step as plants race to secure resources worldwide and prices of coal and iron ore firm up.

NMDC mines less than 25 million tonnes (mt) of iron ore a year but wants to step it up to 40mt by 2014-15, for which it must look overseas for assets.

An analyst said NMDC’s small-budget, low-reserve acquisition strategy was neither bullish or bearish for the company’s earnings prospects.

“Good move or bad will depend on the price the company pays for the assets and how the company brings them around to production," said Bhavesh Chauhan, senior analyst at Angel Broking Ltd. “Whatever it is, at least the cash reserves are being put to good use."

Chauhan said NMDC may find it difficult to buy big assets overseas owing to competition and their limitations as a government company. Also, prices of prime assets will be high as coal and iron ore prices have been rising in the past two years.

Som said the US coking coal mine is already into production but the Australian iron ore mine needs to be developed.

“It is okay if iron ore is produced after four-five years when the shortages hit us, but we want coking coal now," he said.

India produces more than 200 mt of iron ore a year and about 550 mt of coal for its power, steel and cement plants, but the country’s ambitious growth projections mean it needs more of the two commodities.

While iron ore stocks are sufficient for now, a clampdown on illegal mining has hit supplies.

For coal, the situation is dire. The country needs to import at least 100 mt by 2012 to feed its coal-fired plants.