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.