India’s largest iron ore producer NMDC Ltd is banking on Perth-based Legacy Iron Ore to acquire more coal mines in different parts of the world.
The public sector miner bought 50 per cent stake in Legacy Iron Ore that is exploring and developing mineral projects in Western Australia and Queensland.
“Times are very good for acquisition. Through Legacy, we are looking at some other mines too. We have signed MoUs in Brazil and Africa,” C.S. Verma, Chairman and Managing Director of NMDC, told
Verma said that Legacy is being used as a vehicle to scout for assets globally. “Legacy itself is now in the process of carrying out a due diligence of acquiring several other mines,” he added.
The Australian company is engaged in mining of iron ore, manganese, coal, gold, and base metals. Currently, the firm has reserves of about 1.6 billion tonnes and have sealed MoUs in three-four places, Verma said.
However, the NMDC Chairman did not offer any comments on the timelines when these acquisitions may be completed. “I cannot say on the timelines. There is a very thin line between ‘yes or no.’ We want to put our money in overseas acquisition very cautiously,” Verma said.
The valuations of iron ore assets have not seen a downtrend like the coal mines. “The dip in the valuation of coal assets is sharper than iron ore assets. This is because coal prices have gone up to peak level of $350 for every tonne. Today, they are hovering around $150-160 a tonne. But, iron ore prices have clocked peak levels of $189-190 each tonne, which are today ranging around $125 per tonne,” Verma explained.
NMDC targets to increase its domestic output from current 32 million tonnes per annum to 48 million tonnes per annum in the next three-four years. A chunk of its planned capital expenditure of Rs 30,000 crore during the 12{+t}{+h} Five Year Plan would go towards enhancement of production, Verma said.
At this moment, NMDC has not decided on the bottomline impact because of overseas acquisition. It is also likely to sell most of its production in Australia to countries such as Japan rather than importing to India.
“Iron ore is plenty in the country. Domestic production is more than the demand and we are exporting it. We will have to see the economics if we need to bring them to India or sell as merchant in the international country. There are markets in the countries such as Japan,” Verma said.