India: Lloyds Metals posts stable iron ore production in Q2 despite monsoons

Lloyds Metals and Energy Limited (LMEL) produced 730,000 tonnes (t) of iron ore in Q2FY23 (July-September, 2022), a decrease of 4% compared to 760,000 t in the previous quarter, the company announced as part of its quarterly results.

LMEL’s production rate remained unchanged during the monsoon season, showing solid operational control amid sufficient infrastructure. The company installed a new crusher and increased crushing capacity from 1.2 million tonnes (mnt) to 2.4 mnt.

Iron ore sales rise 9% on-quarter

LMEL’s iron ore sales stood at 1.38 mnt in the quarter under review. The company reported a sharp 9% q-o-q increase in iron ore sales compared to 1.27 mnt in the previous quarter. Lower iron ore prices as a result of the government’s export duty announcement had an impact on performance, resulting in more supplies in the local market, thereby putting pressure on domestic prices.

DRI production, sales rise q-o-q

In Q2FY23, the company’s direct reduced iron (DRI) production stood at 47,280 t, up 2.8% q-o-q as against 46,000 t in Q1FY23. Higher raw material costs, such as that of coal, had an effect on DRI margins to an extent.

Sales, too, increased by 2.9% to 46,850 t compared to 45,520 t in Q1FY23. The company intends to enhance its production capacity in the Konsari Plant by setting up a DRI capacity of 75,000 tonnes per year in the near future.

EBIDTA up q-o-q

The company’s EBIDTA was recorded at INR 1,696 million (down 38.21% q-o-q) in Q2FY23 as against INR 2,745 million in the previous quarter.

Commenting on the performance of the Company Mr. Rajesh Gupta, Director, said: “This H1FY23 performance is quite satisfactory considering the headwinds the steel industry and, in particular, iron ore miners have been facing as of today. Post imposition of export duty on iron ore and pellets by the central government, the export market has become completely unviable and has led to the re-routing of those quantities in the domestic market. Combined with that, monsoons are generally the subdued quarter for mining companies. However, the company responded to the situation with agility and ramped up its dispatch volumes significantly.”