NMDC Limited Q3 FY24 Earnings Conference Call Insights

Key highlights from NMDC Limited (NMDC) Q3 FY24 Earnings Concall

• Volume Guidance
  • Original FY2023 volume guidance was 47 million tons.
  • Will come very close to 47 million guidance for FY2023.
  • Volume guidance for FY2024 is 50-53 million tons.
  • Additional capacity additions driving growth.
  • New line commissioned at Bacheli to add 2 million tons.
• Price Outlook
  • Iron ore price outlook is stable currently.
  • Could see minor fluctuations both up and down.
  • No major price changes expected.
• Capacity Expansion
  • Kumaraswamy mine expansion pending regulatory approvals.
  • Once approved can produce additional 1 million tons.
  • Further delays result in losing 20-30k tons per day.
  • Multiple capacity expansions underway.
  • RWLS to expand capacity at Kirandul by 1-2 million tons.
• Slurry Pipeline Update
  • Slurry pipeline construction progressing faster now.
  • Land acquisition completed except for two villages.
  • Redesigning pellet plant and beneficiation plant for more capacity.
  • Expect to commission full project by end of financial year 2025.
• Coal Block Update
  • Coal block awaiting approvals for land acquisition.
  • If secured, can begin mining in 16-18 months per guidance.
  • Timeline suggests start of mining in early FY2026.
  • Will reduce dependency on imported coal.
• Australia Mining Operations
  • First Australian mine commenced operation.
  • Gaining experience to inform exploration at other tenements.
  • Looking to start mining additional deposits in 18-24 months.
  • International expansion further enables growth.
  • Australia gold mining project currently in early stages.
  • Undertaking waste mining to access ore deposits.
  • Expect to hit ore deposits in the next 1-2 months.
• Expansion Plans
  • Plans underway to expand Kirandul capacity significantly.
  • Targeting increase from current 16-17 million tons to 30-35 million tons.
  • Additional crushing plants being tendered to add 5-6 million tons.
  • Screening Plant 3 execution delayed but will add 12 million tons.
  • Bacheli expansion plans being designed to also reach 30-35 million tons.
  • Expect to ultimately expand Bacheli to 30-35 million tons as well.
• Exports Update
  • Export currently uneconomical after duties and costs.
  • However, critical to access global markets at scale.
  • Reviewing options for potential strategic partnerships.
• Steel Demand Outlook/Realization
  • Concerns about impact of China overstated.
  • India has massive steel demand growth potential.
  • Per capita consumption expected to nearly double.
  • Flagship initiatives to drive 100 million tons demand.
  • Current HRC realization around INR51,000 per ton.
  • Below realizations of industry peers due to cost disadvantages on logistics.
• Cash Generation and Capex
  • Current cash balance exceeds INR11,000 crores.
  • Adequate to fund 2-3 years of capex requirements.
  • Capex expected at INR2,200 crores next fiscal year.
  • Can fund average INR5,000-6,000 crores per year.
  • No need seen for external fundraising currently.
• Pellet Plant Update
  • Pellet plant losses declined from INR58 crores to INR17 crores.
  • Recently increased production capacity to 200k tons.
  • Utilizing tailings from Donimalai to feed plant.
  • Exploring revenue sharing partnership to enhance operations to help drive profitability improvement.
• NMDC Steel
  • Significant financial support provided to NMDC Steel currently.
  • Will be in position to start repaying once profitable.
  • Targeting EBITDA breakeven when utilization reaches 65-75%.
  • NMDC Steel breakeven targeted at 5,000 tons coils/day.
  • Recently achieved production of 1 lakh tons in January .