Interview/ Amitava Mukherjee, chairman and managing director (additional charge), National Mineral Development Corporation
National Mineral Development Corporation, India’s largest iron ore producer, has transitioned itself into a much stronger entity in the recent times with a busy order book, robust results and a dream run on the stock markets. Amitava Mukherjee, NMDC’s chairman, is not only looking to diversify its portfolio by mining other minerals from overseas mines but also working towards supplying lithium in India. He shares NMDC’s vision, policies and strategy in an interview. Excerpts:
Q \ What are NMDC’s growth targets?
A \ This financial year, our guidance has been around 47 million metric tonnes to 49 million metric tonnes (iron ore production). Now with the delay in getting the approvals for the Kumaraswamy iron ore mine in Karnataka, realistically it would be lower. We were targeting 50. But there was also a delay in the commissioning of our fifth line in Bacheli. We were expecting it to be commissioned in August. In the next financial year, we should be able to do 53 million metric tonnes.
Q \ Between April and November 2023, your production of iron ore went up by 17 per cent.
A \ Two or three factors led to it. A major reason was the planning by our team. Second, we have made huge investments in machineries. Last year we bought 11 dumpers. We have a five-year equipment replacement policy. We are taking advance action by two years now, so anything that has to be replaced in 2026 will be ordered now because of the cycle time. In the earlier process, we would have placed the order only in 2026. Also, one of our major mines that was doing only two shifts is doing three now with the additional usage of dumpers.
Q \ The share price of NMDC has doubled since last August.
A \ I think our production and dispatch mechanisms were one of the major reasons. We have also been open to the market about our future plans―that we are completely reorienting our energy, overhauling our dispatch systems and our marketing strategies as well. In the long run, we do not wish to dispatch from the minehead because there are essential physical constraints there. So we want to make blending hubs and dispatch yards. The market can see how we are changing ourselves and now they are confident that we will be able to execute projects at projected timelines. We talk to investors and analysts every three months, so they are aware of what we plan to do in the next five or six years. Generally, the steel industry is upbeat, looking at the way capital expenditure is being planned and the way expansion is happening. Also, our customers are increasing.
Q \ Do you think the demerger from NMDC Steel has proven to be beneficial to NMDC?
A \ Yes. The value unlock of the NMDC share has happened. When the steel plants were in our books, we did not get any traction out of it in the share prices. So it was a free carry that way. The market was also complaining about that. Once the demerger happened, the value got released.
Q \ What are the developments in the field of coal and gold mining?
A \ We have decided to surrender the gold mine we had in India because the revenues did not justify the investments. It was a conscious decision to not start operations of the Chigargunta-Bisanatham gold mine. But that doesn’t mean we won’t do gold mining. In fact, of the seven or eight minerals that we want to diversify, gold is one. We are mining gold in Australia in a small mine because we wanted to gain some mining experience in that country. We have a lot of other gold mining terrains across the mine that we have started. Now we are making a plan for accelerated exploration of all those five or six other terrains. So if you get five to six mines to be explored fast and if we can hopefully make two or three operational, our portfolio of gold would be substantial. Right now it is minimal.
Coking coal is a matter of interest. We have a coking coal terrain which has been given to us on reservation. We are looking at coking coal even outside India. The demand for coking coal in India will last for at least another 60 to 200 years because of the blast furnaces that are coming back. We have looked at a mine in Indonesia. We do not want virgin mines and we want to invest in producing mines. If you take a virgin one, it takes around 12 years to develop it. As far as coking coal is concerned, because the requirement is immediate, wasting 12 years on exploration and development of the mine is illogical.
Q \ Is NMDC in the race to produce lithium?
A \ If things go right, and I am saying this with a big disclaimer, then I am sure that NMDC would be the first company to get lithium into India. We are talking to various people who have mines in Australia and Africa, trying to get into some sort of an understanding with them, some sort of an equity participation. It is the same coking coal route where you have to go in for some of the working mines or just about-to-start working mine. Take some stakes there, have some off-take agreement, and do some exploration in virgin terrains. We have a site in Australia where we are in a partnership with the very big mining company, Hancock Perspective. It is called handbrino. With them we have a magnetite project on the huge terrain, Mount Bevan, and traces of lithium might be from there. We are looking at Africa, too, but those are essentially virgin mines. So that is going to take some time. But in Australia, we are talking to a couple of miners who have either working mines or mines that can start to work and this will be our immediate target.
Q \ What are the employee-friendly measures being implemented by NMDC?
A \ We maintain regular communication with the workers and unions. When I speak to them, my standard line is that whatever we have done in the past 66 years, we need to do in six years. We have been telling our employees that we have reached from zero to 45 million tonnes in 66 years, and in another six years, we have to go from 50 to 100. Now, we are mining outside India. We are doing a lot of things that we have not done in 66 years. This message has gone to them and to motivate the employees, we have introduced awards to recognise their extraordinary work. We have made certain policy changes. For example, now dependent daughters and dependent sisters of employees are eligible to get medical benefits. We are also providing housing to them. I believe that the management is extremely worker-friendly and that is why our employees respond to our call.