NMDC pulls down metal index over reports of iron ore mine shutdown

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Mumbai | Updated: November 7, 2018 12:34:33 AM

The BSE Metal Index came under pressure on Tuesday, pulled down by share price of National Mineral Development Corporation (NMDC).

NMDC pulls down metal index over reports of iron ore mine shutdown

The BSE Metal Index came under pressure on Tuesday, pulled down by share price of National Mineral Development Corporation (NMDC). The stock price of the public sector enterprise fell sharply by 6.57% during intra-day trade after reports that one of its iron ore mines has shut down, but recovered slightly at the close.

The fall in the metals space happened after reports that NMDC’s Donimalai Mine in Karnataka has shut down after lease expiry, due to differences between the Karnataka government and the public sector enterprise over the royalty payable for renewal of the mine. The mine is said to contribute 20% to the company’s sales volumes.

However, later in the day, NMDC clarified that the lease for the mine has been renewed, post which the metal stocks stabilised. In a press release on the company’s website, the state-owned entity announced that the lease deed of Donimalai iron ore mine in Karnataka has been renewed for 20 years.

The BSE Metal index which opened at Rs 12,996.03 touched an intra-day low of Rs 12,800.57 on Tuesday and closed down 1.47% at Rs 12,899.04. NMDC, which was the biggest loser in Tuesday’s trade in metals space closed 3.37% down at `111.70 a piece, on the BSE. JSW Steel’s share price fell 1.54% in intra-day trade but recovered towards the close and closed down 0.78% at `350.60. Jindal Stainless share price fell 1.65% in intra-day trade and closed down 0.77% at `51.25, on the BSE, on Tuesday.

“Lease deed of Donimalai iron ore mine of NMDC expired on November 3….The Karnataka state government has already renewed the lease deed of Donimalai mine for 20 years,” the company said in a statement, adding that other formalities are in process.

NMDC is India’s single largest iron ore producer, presently producing about 30 million tonnes of iron ore from three fully mechanised mines which includes the Donimalai mine in Karnataka.

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