MOIL is India’s largest manganese ore producer and is
amongst the top 10 global producers, accounting for 42% of India’s production and 30% of proven reserves.
MOIL’s underperformance over the last two years has largely been due to
depressed manganese ore prices and the company’s inability to raise production.
Manganese ore production over the last two years has been stagnant as the
company was unable to speed up its capex plans. However, the completion of the
drilling at Gumgaon and Balaghat is expected to raise production marginally
over the next three years.
Manganese ore prices
bottomed out in FY12 but it has been inching upwards over the last six months led
by a decline in Chinese inventory and steady demand from India and China. The
strong recovery in prices have been driven by China and India and it is believed
that prices would continue to trend upwards as global steel production is
expected to rise gradually over the next two years. A depreciating rupee might also
aid MOIL to increase the price of manganese ore by 5-7% in the next quarter.
Sourced
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