NMDC In Talks With New Millennium Capital To Jointly Develop A $3.5 Bln Mega Iron Ore Project

Monday, the media reported that the Indian Government-owned National Mineral Development Corporation Ltd., or NMDC, the largest iron ore producer and exporter in India, is negotiating with Canadian-based New Millennium Capital Corp., or NML, to develop one of the world’s largest underdeveloped low-grade magnetite iron-ore deposits project, valued at $3.5 billion or Rs.14,000-crores.

Besides developing the deposits, the scope of project includes building a pellet plant and a 700-km slurry pipeline.

NMDC Chairman, Rana Som, while confirming the news, said that the company would submit its bid in mid-April. NMDC is one among the other companies competing for the project.

The report said that the Millennium Iron Ore Range has over 9 billion tones of reserves, compared to India’s proven reserves of 6 billion tones. NML holds a majority stake in the Millennium Iron Ore Range.

In the event of NMDC emerging as a successful bidder, the company stated that it could partner another company for the project. The company has already floated a global tender for a 50:50 joint venture to expand and develop facilities in current or new mineral properties overseas.

The project could help meeting the anticipated iron ore shortage, especially when India is targeting a steel capacity of 300 million tones by 2020. To achieve this steel capacity, around 14 billion of iron ore reserves are required over 30-year period. Moreover, 75% of India’s magnetite ore reserves are located in the ecologically sensitive Western Ghat region.

Som said though the gestation period for the Canadian project was five-and-a-half to six years, it could help to bridge the gap. He added that even if India’s reserves are exhausted, the Millennium Iron Ore Range could last another 40 to 50 years.

NMDC produces around 30 million tones of iron ore annually from its Bailadila deposit in Chhattisgarh and Donimalai in Karnataka and cater mostly to domestic steel companies that do not have captive mines like Essar Steel and Ispat Industries. The miner also meets the entire requirements of state-owned Vishakhapatnam Steel Plant.

NMDC reported a net profit of Rs.2,320 crores on total revenue of Rs.4,540 crores for the fiscal year ended March 31, 2007.

At the BSE, NMDC closed Monday’s trading at Rs.8,914.35, down by Rs.629.65 or 6.60% from the previous close.

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