India’s largest iron ore producer – NMDC announced its Q2 FY’21 results recently. Key highlights of the investor conference call conducted are listed below:
Iron ore output in Q2 down 15% q-o-q amid monsoons – Iron ore production for the second quarter FY21 (July-Sep’20) was recorded at 5.64 mn t, down 15% against 6.61 mn t in Q1 FY21. The output fell amid high rainfall affecting the Bailadila region for most of the quarter. On a yearly basis, output picked up by 13% for the quarter against 5 mn t in Q2 FY20.
Iron ore sales up 5% – The total iron ore sales depicted a 5% rise on quarterly basis to 6.6 mn t for the quarter as compared to 6.28 mn t in Q1 FY21. Out of the total 6.6 mn t sold in the quarter:
1. Domestic sales contributed major chunk at 6.2 mn t, up 3% against 6 mn t in Q1 FY21
2. Export sales stood at 0.43 mn t, up sharply against Q1 FY21 sales at 0.3 mn t.
Average domestic realization up 9%: The average domestic realization stood at INR 3,114/t for Q2 FY21 as against INR 2,845/t in previous quarter (Q1). The average sales realization recorded at INR 3,320/t up 8% q-o-q.
EBIDTA up q-o-q : The company’s EBITDA was recorded at INR 1,118 Cr for the quarter Q2 FY21 as against INR 826 Cr in Q1 FY21.
Resumption of operations at Donimalai mines expected soon, approvals awaited- After almost 2 years of operation halt at Donimalai mines, the resumption in operations is expected soon however approvals from Cabinet are under process. NMDC may restart Donimalai mines by starting to pay 22.5% additional premium. Donimalai mines of NMDC came up for renewal in Nov’18. The mine has the capacity of 7mntpa.
Further uptick in Indian iron ore prices expected – In view of resumption of operations at Odisha’s major iron ore auctioned mines, iron ore prices in the domestic market to further witness an uptick, officials highlighted in concall. There could be some amount of import volumes coming in specially the western coast based mills. Imports of pellets and concentrate may be seen coming in.
Expect iron ore output to pick up in H2 FY21 – With modifications made in mining equipment and withdrawal of monsoons, NMDC is hopeful of improving production in H2 FY’21. The company expects iron ore production to be around 32 mn t in FY’21.
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