State-owned mining major NMDC Ltd is optimistic about the iron ore mining and steel industry, and says the tough business cycle it is currently going through will end shortly.
Expressing concern about the low prices ruling globally and slackened demand in the steel sector, Narendra Kothari, NMDC Chairman and Managing Director, said: “Yet we are on track to achieving the targeted output of 35 million tonnes (mt) and sales of 38 mt this financial year even though the market has been tough.”
On the sidelines of a conference here, Kothari told
“This is due to two major concerns — one, there is lower demand for steel and the iron ore required for its production from steel plants, and two, the lower demand has also brought down prices to unprecedented levels.”
Also, the country is witness to rampant dumping of steel from markets such as China, Korea and Japan, adding to the domestic industry’s woes.
With the demand coming down, the pricing power is also missing in the market. The price of iron ore has dropped from $110 last year to around $50 per tonne.
This means the overall revenues are down and the margins too have been impacted, he said.
However, Kothari is optimistic for the industry. The Centre is making efforts to boost various sectors, which would help the mining sector, too, he reasoned.
Production targetThe NMDC chief added that his company is committed to the production target and will ensure adequate supplies to various customers.
“We are also exploring some potential venture with Mishra Dhatu Nigam Ltd and see how our expertise in mining could work together in developing specialised products. It is still in the exploratory stage and we are in discussions,” he explained.
Asked about the steel plant coming up at Nagarnar in Chhattisgarh, Kothari said the erection of the 3-million tonne per annum steel project will be completed by December 2016 and production started soon thereafter. The plant is part of an expansion project taken up with an outlay of over ₹15,500 crore.