Domestic mining heavyweight National Mineral Development Corporation is investing Rs 19,869 crore by 2014 to raise its iron ore capacity to 50 million tonnes from 30 million tonnes. The investment also includes its plans to set up a 3-million-tonne steel plant in Chhattisgarh.
Under its joint venture with Chhattisgarh Mineral Development Corporation (CMDC), the company is acquiring iron ore blocks in the state besides initiating similar activities independently in Jharkhand and Karnataka. The company is the largest iron ore miner in the country with estimated reserves of around 200 million tonnes of the country's overall reserves of 23 billion tonnes.
"All the investments will be funded through internal generations and we will not raise any debt for this," said Rana Som, Chairman, NMDC. The company is investing Rs 14,000 crore towards setting up the plant.
On the issue of ore pricing, Som said that the company has not increased prices under existing long term agreements since
April and a decision on the same is expected shortly.
"Just like steel, price of iron ore in India is substantially lower than global prices and our (NMDC) price is also much
lower than the prevailing spot market prices," Som said. NMDC is selling its Iron ore lumps under LTAs at Rs 2,546 per tonne while the spot prices in the country for the same is around Rs 6,000 per tonne.
Steel secretary PK Rastogi said a decision on whether to allow NMDC to increase ore prices would be taken within this month.
"This is a problem that has not been sorted out and we are working expeditiously towards resolving it," he said. "Within this month we will decide whether NMDC can pass on the export duty and that will also determine increase in prices of the ore domestically."