NMDC, Nippon in talks to set up Rs 10,000 crore plant in Karnataka

NMDC, Nippon in talks to set up Rs 10,000 crore plant in Karnataka

"We are talking to the Japanese steel mills for a joint venture project in Karnataka (including Nippon Steel). It is not that the joint venture will be with Nippon Steel per se; it could be with any steel company," NMDC chairman and managing director Rana Som told reporters here.

Som said the the state-owned miner had a meeting with Japanese steel firms last week for the proposed 2-million tonne per annum (mtpa) steel plant in the iron ore-rich Bellary-Hospet region of Karnataka for which it has already signed an MoU with the state. "The Karantaka project will be a joint venture at a likely cost of Rs 10,000 crore," Som added.

Also, the company is talking to another Japanese firm Kobe Steel for a joint venture project to produce iron nuggets in Andhra Pradesh at the premises of Sponge Iron India (SIIL). NMDC-SIIL merger got regulatory approval on July 1.

"We are also talking to Kobe for a project to produce iron nuggets. We think it will be a better business than increasing SIIL capacity," Som said. Low grade iron ore are processed as nuggets which have about 96 per cent iron content and is used for making steel. SIIL has an annual capacity of 60,000 tonne.

NMDC will be the second steel PSU, after SAIL, to be in talks with Japanese companies. SAIL is in talks with Posco to set up an estimated Rs 15,000-crore steel plants in Jharkhand and Maharashtra.

Besides these JVs, NMDC said it will start placing equipment order for its upcoming 3-mtpa steel plant in Chhattisgarh in October. "We plan to complete construction of our integrated steel project in Chhattisgarh in the next 40 months from the date of placing orders," Som said.

Apart from the diversification plans into the steel sector, Som said NMDC will invest Rs 3,000 crore to set up a 12-mtpa pipeline between Bailadila in Chhattisgarh to Visakhapatnam in Andhra, covering 424 km. The proposed pipeline will also supply iron ore to the proposed Karnataka plant, the chaiman said.

NMDC aid it plans to place orders for the pipeline by October and commission it by 2012. "The pipeline will help us in evacuating our increasing production of iron ore to our domestic customers like RINL and Essar Steel," he said.

Som said the company saw evacuation of iron ore coming down after the existing 274-km-long iron ore supply pipeline of Essar Steel was damaged allegedly by Maoists in 2009. The pipeline is yet to be repaired.

NMDC is investing Rs 3,400 crore to augment its annual iron ore production to about 41 million tonne from around 22 million tonne at present.

"Out of this Rs 3,400 ceore, we have already invested Rs 2,000 crore and will commission the Bailadila-11/B mines by the end of this financial year and the other will be commissioned after this," the chairman Som said. The company said it expects to achieve sales of around Rs 2,400 crore in the first quarter of this fiscal.  "We expect our profit to rise by 80 percent for the first quarter. Total income is expected to rise by around 90 percent and sales volume to go up by 20 percent in the first quarter compared to the same period last year," Som said.

NMDC posted 4.34 percent growth in net profit at Rs 1,065.59 crore in the January-March quarter up from Rs 1,021.19 crore in the the year-ago period. With the rise in iron ore production in next few years it will hike its focus on the domestic market and "is gradually scaling down exports." NMDC exports about 3mt of its produce to Japanese and South Korean steel mills.

On the company's global plans, Som said, the company is looking for acquiring coal assets abroad independently, as well as through International Coal Ventures--the consortium of five leading PSUs like SAIL, NTPC, RINL. The company is looking at partnering with Coal India in a coal block with an estimated reserves of 2 billion tonne in Birbhum district of West Bengal.

NMDC last week also had a talk with ArcelorMittal for the joint venture for the steel behemoth's iron ore project in Senegal in Africa. The firms are doing a feasibility study for developing the Faleme iron ore mines for which ArcelorMittal had entered into a pact with Senegal in 2007. The mines have estimated reserves of 750 million tonne of iron ore. "The Senegal property is not the best property in the world but it is not unattractive either," Som said.

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