NMDC production rises 37% in Q3 FY14; despatches up 40%

KOLKATA: NMDC, the country's largest iron ore miner, has said its production grew nearly 37% in Q3 FY14 at 7.3 million tonne against 5.33 million tonne in the previous corresponding period. It comes at a time when most steel companies are facing shortage of iron ore with only a few mines resuming operations in Karnataka, one of the largest iron ore producing states after the Supreme Court lifted the ban on illegal mining in April 2013.

In step with higher production, state-owned NMDC said its iron ore despatches during the third quarter (Oct-Dec 2013) also jumped to 7.43 million tonne, posting a growth of almost 40% over despatches of 5.31 million tonne in the previous corresponding period.

On a sequential basis too, iron ore production during the third quarter was up by nearly 23% over the second quarter of FY 2013-14. At the same time, NMDC’s iron ore despatches were 15% higher during the third quarter of FY14 compared to the second quarter. While NMDC said it registered an increase in physical production level based on “favourable market conditions.” Analysts tracking the sector added that a part of the rise can be attributed to improved weather conditions in the post monsoon period. C S Verma, CMD, NMDC observed that the company is geared up to not only to sustain the uptrend in production but also improve its performance further in fourth quarter (Jan-March ’14) to meet the steel industry’s rising demand.

However, even this may not be sufficient to take care of the steel industry’s woes. Iron ore is a key input for steel-making and some 1.5 tonne of it is used to produce every tonne of steel. With current steel capacity of around 90 million tonne, India needs at least 140 million tonnes iron ore to meet its need. However, from 213 mt in 2008-09, ore output has fallen sharply to 136 mt in 2012-13. During this period, demand for ore went up from 87.4 mt in 2008-09 to 124.8 mt in 2012-13. Iron ore output is estimated to fall short of demand in 2013-14 too, while the mining ban in Goa continues, there is reduced output in Odisha and only around 17 of the 115 mines private mines are back in operation in Karnataka.