State owned mining major, NMDC operates open cast mines at Kirandul(three mines) and Bacheli(two mines) in the Bailadila sector of the Dantewada district in Chhattisgarh and two mines-Donimalai and Kumaraswamy in the Bellary district of Karnataka. On December 17, the Chhattisgarh government has extended the mining lease of four out of five mines of the Bailadila iron ore complex for the next 20 years until 2035 with effect from September 2015, which were due for extension in March 2020. One mining lease received an extension in 2017 itself. The four mines have an installed capacity of 29 MTPA.
Of the 33 million tonnes per annum (MTPA) production, two complexes in Chhattisgarh in Bacheli and Kirandul under Bailadila projects had contributed 24 MTPA in 2018-19 and thus the renewal of leases for these mines ahead of time was of paramount importance for the miner.
It has come at a time when the company is stuck with the renewal of the lease for Donimalai mines which has contributed to about 20 % to the total ore production in NMDC in past few years. Operations were suspended after the company’s lease right expired in November 2018. The license renewal or extension of these mines did not materialize as the company did not agree to the state government’s condition for the renewal to pay a premium of 80 percent on the sale value of the ore extracted from the mines.
The Union Coal Ministry allocated two coal blocks — the Rohne and Tokisud North both located in the Hazaribagh district of Jharkhand to the State-owned mining company, NMDC. The allocation of the coal mines with extractable coal reserves of 191 million tonnes at Rohne coal block and 52 mt of thermal coal at Tokisud, will enable the iron ore mining company to diversify into coal production as well. These will provide more security as far as the raw material requirement for the upcoming steel plant is concerned and at the same time lower the company’s power cost.
Last month, NMDC also signed up with the Andhra Pradesh government for the supply of iron ore for the proposed greenfield integrated steel plant in the YSR Kadapa district, where the supply-demand will be 5 MT of iron ore per annum in the first phase.
Improving prospects
After the amendment of Mineral Rules 2015, which made the renewal of mining leases of PSUs mandatory, the company expects a fast resolution of the Donimalai mining issue in Karnataka.
Commissioning of the Nagarnar plant is expected to be completed by mid-2020. Domestic iron ore prices currently at around 40% discount to the landed cost of imports at east/west coasts, allocation of coal blocks, and iron ore prices expected to go up from January 2020 are showing signs of positive future prospects for the company. Steel demand and prices have started showing uptrends in the last few months. World steel association expects the steel growth in India to return to 7% in 2020 from 5% growth estimated in 2019. These can provide an upward buoyancy to the iron ore demand which is a key raw material for the steelmaking process.
