India’s largest iron ore producer, NMDC, achieved its highest quarterly performance since inception in Q4 FY21, the company said while announcing its Q4 results recently.Key highlights of the investors’ conference call conducted are listed below:
Iron ore production up 8% in FY’21:The miner recorded output at34.15 mn t in FY’21 as against 31.49 mn t in FY20. For the last quarter, Q4 FY21, the output stood at 12.31 mn t, up by 30% y-o-y.
Iron ore sales up 6% in FY’21: NMDC’s total iron ore sales increased on a yearly basis to 33.25 mnt in FY’21, up 6% y-o-y as compared to 31.51 mn t in FY20. Major portion of the material was sold in the domestic market, comprising around 30.9 mn t and about 2.29 mn t was exported. For the quarter Q4 FY21, sales picked up by 29% to 11.09 mn t as against 8.62 mn t in Q4 FY’20.
NMDC’s iron ore production and sales
Qty in mn t
source: Company reports
Average domestic realisation up 27%: The average domestic realisation stood at INR 4,355/t for FY’21 as against INR 3,438/t in FY’20 on tighter availability in the merchant market. However, the total average sales realisationwas recorded at INR 4,581/t up 25% y-o-y.
EBIDTA up y-o-y: The company’s EBITDA was recorded at INR 9,146 crore for FY’21 as against INR 6,427 crore in FY’20.
Nagarnarplant demerger pushed back further: Commissioning and demerger of the 3-mn t integrated Nagarnar steel plant has been pushed back to Q3FY22 with planned capex of around INR 1,500 crore in FY’22. The steel plant is being set up by NMDC, in Bastar district, Chhattisgarh.
Lower pellet plant capacity utilisation: The pellet plant’s capacity utilisation remained on the lower side in FY’21. There were some technical issues in the pressure filter of the beneficiation plant which was revamped inend-March. The plant’s yearly capacity utilisation stood at about 7-8%.
Production outlook: The miner is targeting 44 mn t of iron ore production in FY’22, out of which 13 mn t is expected from Karnataka.
Capacity expansion: In the long term, the miner is planning to expand EC to 83 mntpa from current the 51.8 mn t. Iron ore Deposit 4 in Chhattisgarh is expected to be allocated to NMDC soon. However, for Deposit 13, there are no updates yet. The miner is looking for allocation of mines and is in talks with the state government and ministry regarding the allocation of mines which have already been auctioned but not started.
Long-term export contracts ceased: NMDC’s long-term iron ore export contracts with Japanese steel mills (JSMs) and South Korea’s POSCO will not be renewed, SteelMint has learnt from reliable market sources.
The reason is that the Government of India has withdrawn the two sops it had provided NMDC in offering these contracts. These comprised a reduced 10% export duty as against the normal 30% paid by private iron ore exporters.
Outlook mixed for prices: The arrival of monsoons is expected to keep long steel prices under pressure which may somehow exert some pressure on iron ore demand. However, tighter material availability in Odisha’s merchant market is a concern.
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