NMDC’s iron ore output down almost 22 percent in April-September

India’s state-owned and largest iron ore miner National Mineral Development Corporation (NMDC) has announced September iron ore production of 2.36 million mt, down 4.5 percent compared to the same month last year. NMDC produced 12.21 million mt in the six-month period of April through September compared to 15.65 million mt in the same period the previous year, down 21.9 percent.

The fall in production, down 25 percent, and sales in the first five months in FY 2019 was attributed to a dispute with steelmakers over its high prices. Several steelmakers requested that NMDC reduce its prices citing poor iron ore grades for the price level. Despite the dispute with buyers, which resulted in reduced buying commitments, NMDC has announced four price increases since April, the latest in early September. The miner also noted the high price of iron ore pellets – the highest in three years achieved in August – and sponge iron as the rationale for the iron ore price increase.

NMDC has an iron ore mining capacity of 48 million mt annually with a plan to expand to 67 million mt (40 percent) by FY 2022. Its production target for FY 2019 is 38 million mt, up 7 percent compared to 35.5 million the previous year. In FY 2018, a large percentage was procured by JSW Steel, and JSW Steel has recently announced operational improvements with better quality material from other regions including imports.

To achieve the fiscal year target, NMDC would need to produce 25.79 million mt in the next six months, or more than double the production of the first six months. Some analysts question the feasibility as steelmakers are purchasing better quality ore from other smaller miners and NMDC reduced production also due to a high level of inventory buildup. NMDC is expected to continue pursuing export options.