India’s NMDC ups Reserves by 50%, signs Deal with Russians .

KOLKATA (miningweekly.com) - India’s largest iron-ore miner, NMDC has reported a 50% increase in iron-ore reserves, based on intensive exploration undertaken over the last 18 months.

At the end of April last year, NMDC had proven reserves under its control of around 1.4-billion tons, which increased to more than 1.5-billion tons by March 2011, and has subsequently been revised upwards to more than 2.1-billion tons, based on fresh findings of reserves from its exploration activities.

The new iron-ore reserves would enable the company to achieve a total production of 32-million tons, about four-million tons higher than target, during March/April 2011/12, and to ramp it up further to 50-million tons by 2013.

“The new findings of iron-ore reserves will be a major relief to the Indian steel industry which was worried at high quality ore getting exhausted,” NMDC chairperson Rana Som said.

The company sells some 85% of its total iron-ore product to Indian steel producers and the balance is exported, primarily to China. NMDC has initiated a capital expenditure of $500.34-million to achieve a production target of 50-million tons, which included development of the Kumaraswami iron-ore reserves in the southern Indian province of Karnataka to allow the extraction of seven-million tons a year.

This project had originally been conceived as a replacement for the company’s operational mine at neighboring Donimalai, where reserves were nearing depletion.

However, the new discoveries included an additional 20-million tons of iron-ore in close proximity to Donimalai, which Som said would enable NMDC to extend the life of the Donimalai mines by three to four years.

The additional iron-ore comes at a critical juncture for NMDC, which was close to finalising its own steelmaking facilities that would entail a large part of production going into captive consumption and a reduction of ore available for exports.

Indian Steel Minister Beni Prasad Verma and Som would be in Russia on November 9 for the formal signing of a memorandum of understanding between Severstal and NMDC for the construction of a two-million-ton-a-year steel mill, which would entail an investment of $5-billion in the first phase.

The plant would be based on the sourcing of iron-ore from NMDC mines and coking coal from Severstal’s assets in Russia.

Keeping in view the severe shortage of iron-ore faced by Indian steel companies in the wake of the Supreme Court ban on mining across the Bellary district in Karnataka, as well as projected captive consumption, NMDC has revised its export strategy to reduce overseas shipments from the current 15% of production to 6% of production over the next two years.

Company officials said that in the current year the company’s export of iron-ore could slump 61% to around just one-million tons since the Indian government had not yet issued formal notification permitting exports of the resource.

The delay in permission to export was a reflection of the divisions within the Indian government on whether or not to implement a complete ban on overseas shipment of natural resources. The Indian Steel Ministry favors such a ban while the Commerce Ministry was stalling a decision.

The Supreme Court, which is monitoring iron-ore mining in the wake of allegations of widespread illegal mining and a partial ban in several parts of the country, including Bellary, has sought details of ore requirements of Indian steel producers, the current level of exports and opinion from the Forest and Environment Ministry.

However, irrespective of the government decision to ban or allow iron-ore exports, NMDC’s primary focus would continue to be to meet domestic demand for iron-ore and hence the new discoveries would contribute towards increasing domestic supplies and future captive consumption, senior company officials said.

Source : miningweekly.com