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 .