NMDC Limited Q2 FY24 Earnings Conference Call Insights

Key highlights from NMDC Limited (NMDC) Q2 FY24 Earnings Concall

• Production and Sales Growth
  • Q2 production 25% higher than last year.
  • Q2 sales 14% higher than last year.
  • Best ever production and sales in H1 and almost every month this year.
  • On track to achieve 50 million tonne production target.
  • New projects starting soon to add 4.2 million tonnes capacity.
• Capex Spending
  • 40% higher capex spending versus last year.
  • 80% higher than proportionate target for the year.
  • Capex of INR 1,008 crores in H1.
  • Will exceed INR 1,600 crore capex target set for the year. To end up with INR 1,800-2,000 crores capex this fiscal.
• Iron Ore Pricing and Realizations
  • Q2 average realization INR 4,146 per tonne, 7% higher year-on-year.
  • H1 average realization grew 8% to INR 4,928 per tonne.
  • Traditionally 40-45% discount to export parity price.
  • Factoring taxes and transportation, domestic realization higher than export netback.
  • No economic case currently for exporting iron ore.
• Iron Ore Production Target
  • Sticking to 47-49 million tonnes target for FY2024.
  • H1 production at 20 million tonnes.
  • If H2 production 10% higher than last year, can reach 46-47 million tonnes.
  • New projects adding 4.3 million tonnes capacity will help achieve target.
• NMDC Steel Divestment
  • No clarity currently on divestment progress.
  • Elections in Chhattisgarh caused delays after initial progress.
  • NMDC has provided all necessary approvals from its side.
• Ongoing Projects’ Status
  • Rapid wagon loading system to be commissioned soon, will double rake loading capacity to 4-5 rakes per day.
  • Screening Plant 3 delayed due to monsoon issues, to be completed by mid 2025 now.
  • Slurry pipeline project on track, pipeline laying over 70 kms done out of 113 kms.
  • Pellet plant capacity to be increased from 2 to 6 million tonnes, redesign underway.
  • Screening plant 2 tender to be awarded next month.
• Evacuation Infrastructure Capacity
  • Current single railway line itself has 28 million tonne capacity.
  • Doubling will take it to 35-36 million tonnes capacity.
  • Constraint is rake availability, not infrastructure capacity.
  • Rapid wagon loading to help increase evacuation by 2-3 million tonnes.
• Pellet Plant Capacity Expansion
  • Existing 1.2 million tonne pellet plant at Donimalai non-operational due to lack of iron ore fines feed.
  • Separate 2 million tonne pellet plant being set up near steel plant.
  • Now decided to expand capacity to 6 million tonnes in modular manner.
  • Will enable capacity expansion in future through plug-and-play modules.
• Production Growth outlook
  • Max capacity next year would be 51-53 million tonnes.
  • Need environment clearances for further expansion.
  • Next major ramp-up to happen only after 2 years.
  • FY2025 unlikely to see higher than 53 million tonnes.
• Capex Spending Outlook
  • Likely capex of INR 2,200-2,300 crores in FY2024.
  • Major projects planned: INR 1,400 crores new conveyor and crushing plant and INR 1,000 crores new screening plant at Donimalai.
• RINL Iron Ore Supply
  • Supplied 3 million tonnes iron ore in H1 FY2023, 10% higher than last year.
  • One of top 3 clients along with JSW Steel and AM/NS India.
  • Annual supply to RINL around 6-7 million tonnes.
• Australia Mining Projects
  • Currently operating small 1 tonne per year gold mine.
  • Have 6 other highly promising gold tenements for exploration.
  • Expect substantial gold presence in Australia in next 2 years.
• India Mining Opportunities
  • Not interested in atomic minerals recently de-notified.
  • Focus is on minerals like iron ore, gold, lithium, copper etc.
  • Have narrowed down to 6-8 minerals of interest.
  • Atomic minerals require complex processing, not core competence.