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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 .
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