NMDC plans special purpose vehicles with state govts to set up steel plants

Going by the annual reports of the public sector mining major, National Mineral Development Corporation, NMDC will set up Special Purpose Vehicles (SPVs) with the governments of Jharkhand and Karnataka to set up steel factories.

Its SPV in Jharkhand has already selected the site and applied for allocation of land, water and power. In Karnataka, NMDC says, it has acquired around 2,800 acres.

NMDC has also sought (from the Union government) iron ore allocation in Jharkhand and Karnataka for this purpose. After land acquisition, water and power allocation and iron ore linkage, the SPV will invite a strategic partner to develop and construct the steel plant.

As part of a value addition project, NMDC is already setting up a pelletisation unit and an integrated steel plant of three million tonnes annual capacity (mtpa) in Chhattisgarh. This plant is close to completion.

On the mining side, to meet steel sector demand, NMDC plans to augment its production capacity of iron ore to 67 mtpa, from 43 mtpa now. A joint venture (JV) company with CMDC is also expected to start production in the near future. The JV is planning to develop 15 mtpa in mines.

The backdrop is the Union government thrust on more spending for infrastructure, auguring well for the steel industry and, thereby, the iron ore sector. Persistent demand should help NMDC improve its sales volume and operating earnings margin. Coupled with growing urbanisation, rising income levels of the burgeoning middle class, state initiatives such as Make-in-India, freight corridors, 100 smart cities, rural electrification and housing for all by 2022, NMDC sees a bright future for the mining and steel industry, says the company.

Shekhar Ghosh is consulting editor, Indoasiancommodities.com. He has edited and written for publications like Business India, Business Standard, Business Today, Outlook and many other international publications. He can be reached at shekhar.ghosh@indoasiancommodities.in.

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