Steel PSU Neelachal Ispat Nigam Ltd (NINL) has bagged the environment clearance for its Koida iron ore mines spread across Keonjhar and Sundargarh districts. The green nod for the mine with 102 MnT deposits, was granted by the Union ministry of environment, forest & climate change.
The ministry has provided the green clearance with a production capacity of two MnT per annum (mtpa). The proposal was cleared at the recent meeting of the reconstituted expert appraisal committee for environment appraisal of mining projects. Forest clearance for the mining project is expected to be cleared by the end of this month.
NINL is the biggest producer and exporter of pig iron in the country. Operating captive mines can potentially save up to INR 250 crore per year for NINL. Presently, MMTC Ltd, the biggest equity holder in NINL was selling iron ore to the unit at Duburi in Jajpur district and charged a commission of three per cent. The NINL plant has a capacity to produce 0.5 MnT of basic pig iron, 0.3 MnT of steel billets and also, 0.3 MnT of steel wire rods per annum. Instead of exports, NINL is selling more of its pig iron in the domestic market and is able to recover cost of production and stay EBITDA (earnings before interest, taxes, depreciation and amortization) positive.
NINL has chalked out a plan to achieve steel output of five mtpa in two phases. Full capacity expansion estimated to cost INR 25,000-30,000 crore, is slated to be achieved by 2025.
Already, INR 3600 crore has been invested on the NINL steel plant at Kalinganagar. Investment banker SBI Caps had projected that NINL would turn profitable in 2016-17 with stabilization of its steel melting shop (SMS) and commissioning of its captive iron ore mines at Koida.
As per the rough estimates of Mecon, the fund for NINL’s first phase expansion has been worked out at INR 5600 crore. Out of this, the promoters’ contribution comes to nearly INR 1000 crore. MMTC’s share would be in the range of INR 400-500 crore and the rest equity would come from other promoters.
Apart from MMTC (that has a controlling stake of 49.9 per cent), two state government entities – Odisha Mining Corporation (OMC) and Industrial Promotion and Investment Corporation of Odisha Ltd (LPICOL) own stakes in NINL. Central PSUs like National Mineral Development Corporation (NMDC), Bhel Ltd and Mecon have minor equity participation.
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