Ironore major National Mineral Development Corporation (NMDC) is planning to increase iron ore prices by 5.22% in the domestic market. A two-day board meeting of the directors was convened in Hyderabad to work out strategies on price revision, appointment of an independent director besides other core issues which are being planned for the next year.
According to S Tyagarajan, director, finance, the hike would be effective from January 1, 2011. Talking to FE, he said the ironore prices in the international market have increased by 7.6%. ?Following the international price hike, we have decided to increase the domestic prices by 5.22%,? he said. For fine ore, the raise would be from Rs 3,199 to Rs 3,366 per tonne, and for lump, it would be from Rs 4,137 to Rs 4,353 per tonne, he said. NMDC follows the global market for pricing which are dominated by the Australian and Brazilian miners with China buying on spot basis for low-grade ore needs. Incidentally, Rana Som, CMD, had earlier clarified that the entire burden would not be passed on to the consumer, but a part of it would be absorbed by NMDC.
The current capacity at NMDC is about 30 million tonne of iron ore per annum from three fully mechanised mines which are , Bailadila Deposit-14/11C, Bailadila Deposit-5, 10/11A in Chhattisgarh and Donimalai iron ore mines in Karnataka. The company’s total iron ore reserves stand at around 1.25 billion tonne. The demand for steel will continue to grow in the years to come and this, in turn, would call for an increased demand for iron ore. NMDC is gearing itself to meet the expected increase in demand by enhancing production capabilities of existing mines and opening up new mines – Deposit -11B in Bailadila sector and Kumaraswamy in Donimalai sector. The production capability would increase to around 50 million tonne per year by 2014-15.
NMDC plans to move up the value chain by building pellet plants in Chhattisgarh and Karnataka to process iron ore fines. It is making a foray into steel making with two million tpa steel plant at Karnataka through a a joint venture with Russian steel producer, Severstal. An Angel Broking firm report had said that considering the additional capacity coming on stream, the management has planned to invest Rs 3,500 crore in building a 10 million tonne slurry pipeline from Bacheli to the Vizag port.