India: NMDC beats COVID Induced head winds to post impressive results

With Net profits soaring by 53% in Q3 FY'21 against the corresponding quarter of FY'20, Mr. Sumit Deb, CMD, NMDC exuded optimism about the future of the company. Officials of the Company were confident that raw material demand from the steel companies would continue to grow and NMDC would be in a position to cater to the rising demand and set new benchmarks.

NMDC Q3 FY'21 Highlights

Iron ore Production up by 12% in Q3 FY'21
India's largest iron ore producer, NMDC iron ore production for Q3 FY'21 was recorded at 9.6 mn t, up 12% against 8.58 mn t in Q3 FY'20. For the nine months (Apr'20-Dec'20) the total output witnessed a slight drop to 21.8 mn t against 22 mn t in CPLY.

Iron ore Sales up by 10% in Q3 FY'21
NMDC total iron ore sales for the quarter ending Dec'20 was 9.28 mn t, registering an increase of 10% as compared to 8.41 mn t in Q3 FY'20. Out of the total 9.28 mn t, about 8.54 mn t was sold in domestic market while 0.74 mn t was exported.

For the nine months FY'21 (Apr'20-Dec'20) total sales was recorded at 22.1 mn t, registering a drop of 3% against 22.9 mn t in CPLY. Out of the total sales for nine months, 20.6 mn t (down 2% y-o-y) were sold in domestic market and remaining 1.5 mn t (down 17% y-o-y) was exported.

NMDC iron ore production and sales



Qty in mn t
source: Company reports

Average sale price of iron ore up in the quarter Q3 FY'21
The average basic domestic sale price of iron ore stood at INR 3795/t, up against Q2 FY'21 price of INR 2,516/t. The average sale price picked on yearly basis as against INR 2,578/t in Q3 FY'20.

Do not foresee much revision in iron ore prices in Chhattisgarh
After the recent revision in iron ore prices as on 6th Feb'20 (of about INR 700/t) the miner expects to hold the price with no further revision expected. Post the revision in prices, the exports and domestic realization are almost at same levels.



NMDC Donimalai iron ore mines to resume shortly
NMDC Donimalai expected to resume soon with the Company agreeing to a premium of 22.5%. With all the clearances approved, the mine is expected to resume shortly and smoothly. Donimalai mines of NMDC (7 mn t pa) had come up for renewal in Nov'18.

NMDC Kumarswamy cap to increase by 3 mn t:
NMDC Kumarswamy cap is likely to be increased to 10 mn t from current cap of 7 mn t.

Production outlook
NMDC targets 40 mn t iron ore production in FY'22 and around 35 mn t in FY'21. The iron ore prices are likely to be stable with officials saying that they don't see sharp price corrections. NMDC is planning to hike its capacity to 100 mn t by 2030 by mining additional deposits in Chhattisgarh, Jharkhand & Odisha.

Increased sourcing from Western India
NMDC has witnessed an increase in sourcing from Western India - a trend which is expected to continue in the near term. It seems steel units are preferring iron ore over domestic pellets and imported scrap.

Nagarnar steel plant demerger expected to complete soon
Demerger of Nagarnar steel plant expected in about 5-6 months. Nagarnar steel plant is a 3 mn t pa integrated steel plant being set up by NMDC in Bastar district of Chhattisgarh.