Iron Ore Miners In Fear After India Terror Attack

Extortion May Be Behind Deadly Attack

Iron ore miners in Chhattisgarh, India, are said to be in “terror” after the deadly Maoist attack Tuesday in the state's Dantewada district in Bastar region, described as the 'key to India's steel sector growth'.

India's largest iron ore producer, National Mineral Development Corporation (NMDC), produces nearly 80 percent of its annual iron ore output in the area.

“The NMDC production has been unaffected Tuesday in Dantewada but there is absolute panic,” S.P. Himanshu, company deputy general manager based in Dantewada, told the Indian news agency, IANS.

He said: “NMDC has been routinely suffering big losses as Maoists stop iron ore transportation from NMDC Bailadila mines to Visakhapatnam port in Andhra Pradesh at will”.

Raju Nehlani, a private iron ore miner, IANS: “This brutal attack has terrorised iron ore miners to a great extent. I always maintain that Bastar, which has nearly 20 percent of India's iron ore stocks, is fast slipping into Maoist hands and now it is up to the Indian government do something urgently.”

Mr Nehlani said although private miners were hardly ever targeted in Chhattisgarh by Maoists, they often burn mining equipment and transporting vehicles. Also, employees work under extreme tension.

Another private miner suggested that extortion may be behind the attack: “I pay Rs.42 per tonne to Maoists as extortion money and the rebels raise the sum annually by 20 percent”.

Ashok Surana, head of Mini Steel Plant Association, said “The growing activities of Maoists in Bastar are threatening iron ore mining in the sprawling forested region. The iron ore miners fear that the authorities will lose control over the area in the next five years and growth in the steel sector will suffer.”

Chhattisgarh Sponge Iron Production Hit

Iron Ore Supplies Disrupted To Almost Half Of Plants

Production at around 50 sponge iron manufacturing plants in the Chhattisgarh region on India has been hit after miners in Orissa stopped supplying iron ore.

"Chhattisgarh has 105 sponge iron units having an annual output of 8 million tonnes, but production has been stopped completely at nearly 50 percent of the units because Orissa-based private contractors have stopped supply since March 4," Anil Nachrani, president of the Chhattisgarh Sponge Iron Manufacturers Association, told reporters. Chhattisgarh accounts for about 30-35 percent of India's annual sponge iron production.

Mr Nachrani said the plants used about 12 million tonnes of iron ore each year, of which 9 million tonnes were supplied by private miners from Orissa's Keonjhar district with the National Mineral Development Corporation provided the remaining 3 million tonnes from its Bailadila mines in Chhattisgarh.

Iron ore supply was disrupted last month after the Orissa government began a crackdown on the alleged illegal mining of iron ore in the state. Supplies to a number of larger companies such as Monnet, Ispat and Sharda Energy have also been hit.

Manufacturers say more units will either suspend or cut production if supply was not restored.

India's NMDC Raises Iron Ore Price

Final Increase Could Be As Much As 75%

Indian state-owned iron ore miner, the National Mineral Development Corporation (NMDC), has hinted at a rise of between 34% and 56% in its base prices. The company has also suggested that prices will also rise substantially later on and any rise will be back-dated to 1 April. The company raised its prices by 16% in January.

NMDC supplies iron ore to India’s domestic steel producers that do not have their own captive iron ore supply.

Natural pellets will rise from Rs3258 to Rs5100 a tonne – a rise of 56% - but with an additional rise to come later, the increase is more likely to be in the order of around 75%. For iron ore fines the price will increase 34% to Rs2600 a tonne, and for calibrated lump ore, the price will rise 46% to Rs3800 a tonne.


NMDC’s long-term domestic pricing is based on recommendations by the Indian government’s Ganesan committee which has been used since 2006-07. The committee recommended that domestic prices should be calculated by taking into consideration the percentage change accepted by Japanese steel mills for NMDC’s product coupled with exchange variations on six-monthly forward rates on a yearly basis. As NMDC has yet to agree a contract with Japanese steel mills, the domestic increase is provisional. There are fears amongst Indian steelmakers that the domestic increase could increase by as much as 90% as Japanese steelmakers have accepted a price increase for the April-June quarter of 92%, to $106 a tonne.

Indian steel makers have already begun to increase their prices, especially as coking coal prices have risen sharply. Japan’s JFE has already agreed a coking coal deal for the April-June quarter of $200 a tonne, a rise of 55 per cent.

NMDC Expects 40 Per Cent Rise In Iron Ore for Japan

Indian state-owned iron ore miner, NMDC said on Monday that it expects a 40 per cent rise in the price of iron ore it supplies to Japanese steel mills in the next year. Preliminary talks with the mills begin on Wednesday.

NMDC has long-term agreements with a number of Japanese steel firms and the company says that it expects prices of iron ore lumps to rise from $85 a tonne to around $110 a tonne, while iron ore fines will be rise from $61 to $85 a tonne.

Losses Narrow At Atlas Iron

Australian iron ore junior, Atlas Iron, narrowed its first half loss in the six-months to December after a sharp rise revenue.
Net loss for the six months to December 31 was $24.4 million, down from $42.2 million for the same period in 2008 while revenue leapt to $41.7 million, from $3.5 million previously.

Mine development costs for the first half were $38.9 million, up from $25.4 million in the previous year.
Atlas shipped 1.08 million tonnes of iron ore from its Pardoo mine in Western Australia's Pilbara region, to steel makers in China between December 2008 when production commenced and December 2009. The company expects to increase production to 2.4 million tonnes per year by the middle of 2010.

Atlas has also commenced construction at its Wodgina mine in the Pilbara. Production is expected to commence in April or May of this year.

Atlas’s shares were suspended on Tuesday pending a price-sensitive announcement. It was reported earlier in the week that India’s NMDC was leading a bid to take a stake of up to 70 per cent in the Pardoo project.

NMDC In Australian Iron Ore Bid

India’s NMDC is to join forces with ABS Consulting of Saudi Arabia and Boulder Steel of Australia to make a $230 million bid for a stake in the Ridley iron ore project in Western Australia.


A non-binding offer has been made to the project’s owner, Atlas Iron Ltd, for a 70 percent stage, according to India’s Economic Times newspaper. Atlas said in January that it wants to sell a stake in the project and had lined up candidates from China, India, Korea and Japan.

NMDC said last year that it has been looking at buying iron ore assets outside India.

NMDC Looking At 40-50 Per Cent Price Hike

India’s National Mineral Development Corporation (NMDC) is to raise long-term contract prices of iron ore by 40-50 per cent, effective April 1, 2010.

The company raised its iron ore prices on January 1, by Rs 270 per tonne across all grades, or 6-15 per cent depending on the iron content.

NMDC is negotiating with its domestic and overseas buyers in a bid to convince them to accept the increase, citing the significant rise in prices of the steel-making raw material in the spot market.

Chairman Rana Som said that even if a consensus is reached after 1 April that will still be the date of the price revision.

Around 15 per cent of NMDC’s output of 30 million tonnes per year is exported, mainly to mills in China, Korea and Japan; the rest is sold domestically.

Ferrous Resources Looking at London Listing

Brazilian iron ore miner Ferrous Resources is rumoured to be planning a London listing which will value the company at £3.2 billion.

London newspaper, the Daily Mail, reported on Thursday that Ferrous has appointed JP Morgan Cazenove and Deutsche Bank ahead of the flotation. Ferrous’ directors collectively own a total stake in the company of 20 per cent.

The news follows comes after a number of high-profile proposed London listings were pulled, including fashion retailer New Look which was pulled a matter of days after being announced.

Ferrous operates in the Iron Quadrangle region of Minas Gerais in south-eastern Brazil. The company’s target is to produce in excess of 50 million tonnes per annum of saleable iron ore products.

According to the company’s own figures measured, indicated and inferred iron mineral resources are 2,958 Mt grading 35.6% Fe at a cut-off grade of 25% Fe. In addition, the company’s properties contain an estimated target potential of a further 1,592Mt (± 30%) in areas where there has been insufficient sampling to date to define a mineral resource.

Ferrous is also developing a private sea port in Brazil to export its iron ore products. The mines are located 300 km from the sea, close to the nation’s capital, Brasilia.

Last week it was reported that Indian state-owned miner NMDC is looking at taking a 50 per cent stake in Ferrous’ Brazilian operations, which will be diluted to 40 per cent on flotation.

Ferrous’ executive chairman is Gordon Toll, who has a background with both Rio Tinto and BHP Billiton and was previously chairman of Australian iron ore miner, Fortescue.

NMDC To Take 50 Per Cent Stake In Brazilian Firm

Indian state-owned miner, NMDC has signed a non-disclosure agreement with the Ferrous group, a multinational consolidator of iron ore, to buy a 50% stake in its Brazilian operations for $2.5 billion.

The Ferrous group will issue fresh shares worth $2.5 billion to NMDC over the next few years. The funds will be used for developing mines and building infrastructure.

The partners will divest a 20% stake in the joint venture to raise another $1 billion and there are plans to list the venture on the London Stock Exchange. This will have the effect of diluting NMDC’s down to 40%.

The Brazilian venture has around 3 billion tonne iron ores reserves with 35.6% grade Fe content, plus an estimated 1.6 billion tonnes in reserves of 30% Fe mines. Once operational, the mines could produce about 25 million tonne of iron ore initially that could be converted into 10 million tonne of high 67% Fe grade ore concentrate through beneficiation.

The group is developing a private sea port in Brazil to export its iron ore products. The mines are located 300 km from the sea, close to the nation’s capital, Brasilia.

A senior official with NMDC said the company is not looking at taking complete control of any foreign firm. “Joining hands with existing partners help in mitigating the risk,” he said. NMDC is also exploring joint mining opportunities with ArcelorMittal in Africa and is collaborating with Rio Tinto on exploration activities.

NMDC To Produce Iron Ore From Hematite Rocks

National Mineral Development Corporation (NMDC) is all set to break new grounds in iron ore mining.

The country’s largest iron ore miner will shortly be giving India a new technology for commercial extraction of iron ore from banded hematite jasper (BHJ) and banded hematite quartzite (BHQ) rocks, which are naturally mined along with the ore during normal mining operations.

Huge layers of these rocks thus pile up at the mine sites, which now will be put to commercial use.

“We are close to developing the technology — in another six months we should be ready with the technology viability report, which we are preparing with a consultant,” Mr Rana Som, Chairman and Managing Director, told Business Line.

The company, which produces about 30 million tonne of iron ore, plans to set up the first beneficiation plant with a capacity of three lakh tonnes a year at an estimated cost of Rs 100 crore, which will actually demonstrate the commercial viability of the technology.

This forms part of the company’s efforts to optimise iron ore production to meet the anticipated spurt in domestic demand. It has lined up a capital expenditure programme of Rs 2,500 crore to increase the capacity of its ore production to 50 million tonne by 2014, out of which about 85% will be for the domestic steel industry.

BHJ and BHQ rocks contain lesser quantities of iron ore and hence cannot be directly used in steel making. BHJ rocks, for example, contain about 40% iron ore and only if they are purified and enriched to 65% they can be charged in a pellet plant.

“Roughly, 100 kg of BHJ rock can yield 30 kg (30%) of iron ore if enriched to 65% level, which is what our technology is about,” said a senior official of NMDC’s R&D Department, which is actually developing the technology.

Although the company had explored different beneficiation methods, it ultimately zeroed in on spiral separation method to transform the rocks into useable iron ore.

As far as availability of this resource is concerned, the company faces no problems. As of now, some 12-14 million tonne of these two banded rocks are piled up as huge mountains of mineral wealth at its Donamalai mine site.

NMDC’s R&D unit, which operates as a separate profit centre, spent Rs 20 crore last fiscal. Its technology development projects include a pilot plant facility for production of carbon free sponge iron powder from blue dust, another mineral that is naturally mined along with iron ore operations.

It has also established lab scale technology for production of nano iron powder using blue dust in collaboration with Moscow State Institute of Steel and Alloys — the major applications of nano-structured iron powder are in electro-magnetic, automobile, computer, pain, coating, pharmaceutical and chemical industries.

Source: The Hindu Business Line

NMDC Sees Iron Ore Prices At $75 - 80 A Tonne

State-run NMDC Ltd, India's largest iron ore producer, expects spot prices to stablise at $75-$80 per tonne on a free-on-board basis in the near-term on renewed Chinese demand, Chairman Rana Som said.

"This price trend should continue due to project growth in the Chinese steel industry," Som told reporters on Monday, on the sidelines of an event, where the company signed a memorandum of understanding for developing a limestone mine with state-run Steel Authority of India (SAIL.BO). Iron-ore prices rose above $100 a tonne with freight this month for the first time since mid-August, though prices have remained weak for the most part of this calendar year.

Som said the prices have stabilised for now.

China, the world's largest steel maker, is expecting production to remain robust, which has improved the prospects for iron ore, the main ingredient in steel making.

NMDC sells most of its about 30 million tonne output to domestic steelmakers. Som said in the 2010/11 fiscal year, iron-ore prices may firm up from the current levels on the back of Chinese demand.

"Apart from China, Japan is also on the path of recovery, though Europe is not showing distinct signs of recovery," Som said. NMDC had asked the federal railways for some additional wagons to help transport iron-ore supplies to steel plants following damages to a 274 km-long pipeline in Chattisgarh state in central India in June.

Source: Reuters

NMDC Forms SPV For Andhra Pradesh Iron Ore Project

NMDC Ltd, the public sector mining company, is all set to test the iron ore potential in Andhra Pradesh. The miner is in the process of forming a special purpose vehicle with the Andhra Pradesh Mineral Development Corporation (APMDC) to explore the iron ore potential in the state.

"We are likely to finalise the terms for an SPV by November 30. Once that is done and we finalise a plan to start exploration; it would take at least 12 months to come to a conclusion on the available reserves in the state," NMDC chairman and managing director Rana Som told DNA Money.

Iron-ore mining in Andhra Pradesh has become a politically sensitive issue. Currently, the Congress-led government is in a fix over a lease granted to Obulapuram Mining Company (OMC) of Karnataka's BJP leader Gali Janardhan Reddy.

With the opposition political parties alleging that the former chief minister Y S Rajasekhara Reddy's son Y S Jaganmohan Reddy has an interest in OMC forcing the government to relax certain mining norms, the issue of iron ore mining has gained political significance.

"We spoke directly to the chief minister (K Rosaiah). As far as we are concerned, there is no politics involved in the issue of joining hands with APMDC," Som said.

"There are several locations in AP, which are unexplored. Except one or two where OMC is currently working, there are other locations that have never been touched. We are going to focus on them to begin with," he said.

OMC's mines are currently located on AP-Karnataka border in Anantapur. Studies have shown there was significant iron ore potential in other districts such as Kadapa, Kurnool and Chittoor.

Source: Daily News And Analysis, India

Note On NMDC Sale By Thursday

India's finance ministry has asked the steel ministry to give its views on the

"Department of disinvestment has recommended 15 per cent disinvestment in NMDC and sought steel ministry's response on it by November 5. If the steel ministry does not respond by then, it will be construed that they approve of disinvestment department's recommendation," a senior steel ministry official said.

The steel ministry is studying the proposal sent by the disinvestment department at present and will forward its suggestions, if any, before the stipulated time, he added.

Another official in the ministry ruled out a follow-on public offer (FPO) by the company along with the proposed disinvestment. But, he was non-committal when asked if the planned stake sale could happen in phases.

"NMDC does not need money at present, so a FPO is ruled out," he added.

Going by NMDC's present share price, the government could raise around Rs 18,000 crore through disinvestment, which may well be the largest stake sale in this financial year, in terms of revenue to the exchequer, and would aid in financing partly its social sector programmes.

In August, the steel ministry had sent its proposal to sell 8.38 per cent of government equity in the country's largest iron ore miner, which has a market cap of about Rs 118,000 crore on the basis of Friday's closing.

With the disinvestment department recommending 15 per cent stake sale in NMDC, the government's equity in the company is set to fall from present 98.38 per cent to 83.38 per cent. Institutional investors hold 1.62 per cent stake in the firm at present.

"If everything goes on track, the matter regarding disinvestment in SAIL and NMDC — the top two PSUs under the steel ministry — the cabinet committee on economic affairs could be moved by the end of next month," the official added. The disinvestment department has already given its in-principle approval to a 20 per cent disinvestment plan in SAIL in two phases.

The steel ministry has also sent a proposal to the finance ministry for divesting 10 per cent stake in its other PSU, Manganese Ore (India).

Source: PTI

NMDC Defers Sponge Iron Investment Plans

India’s largest iron ore producer NMDC Ltd is deferring a Rs1,200 crore investment in the struggling Sponge Iron India Ltd because of a steep drop in global sponge iron prices.

NMDC, which will merge Sponge Iron India into itself by the year-end, had planned to expand the company’s production capacity fourfold and diversify its operations to include manufacturing of steel products for the construction sector.

“We are a little careful about the whole thing” because the prices of sponge iron are quite low now, said Rana Som, chairman and managing director of both NMDC and Sponge Iron India.

“Things are a little difficult and we have to redo our financial calculations,” Som added.

The Union government in May 2008 cleared the merger of NMDC with Sponge Iron India to turn around the sponge iron firm with financial support and an assured supply of iron ore.

Sponge Iron India has been facing an acute shortage of iron ore in the past few years as Indian producers shipped more overseas to take advantage of rising prices. As a result, it has not been able to use at least 75% of its production capacity of 60,000 tonnes a year at its plant in Andhra Pradesh’s Khammam district.

NMDC had firmed plans to enhance its capacity to 260,000 tonnes a year but has deferred the plan as the price of sponge iron in global markets has declined by about half to Rs13,500 per tonne, said Som. “If we invest Rs1,200 crore... we have to have an attractive (selling) price which can bear the interest and depreciation cost. Otherwise, the whole venture will be unproductive,” Som said.

Source: Livemint

NMDC Looks To Buy Australian Iron Ore Mine

Indian state-owned miner NMDC said on Sunday that it is in discussion with the Western Australian government to acquire an iron ore mine for the first time outside the country.

The company will be looking for an Australian joint venture partner for the project.

Company Chairman and Managing Director Rana Som met Western Australia's Minister for Regional Development Doug Cunningham in Delhi recently and expressed the company's intention to acquire an iron ore mine.


When contacted, Som said, "Talks are at an initial stage and I have requested the Minister that he has to help us out on various issues, like getting a right partner and so on".

Som said that NMDC would like to have a "hand-holding" partner, be it a public or private player, to invest in Western Australia as its experience comes handy on several matters.

Asked whether NMDC would like to have majority stake in the venture, Som said, "These issues are to be discussed later. So many things are so unknown today!".

"Investment in a greenfield project in western Australia could be around AUD one billion, but it could go up more depending upon the size and the reserves of the mine," a source close to the development said.

In 2007-08, iron ore was the largest export item for Western Australia estimated at AUD 20 billion or 29.1 percent of the total exports. Petroleum accounted for AUD 9.2 billion or 13.3 percent of the total exports for the year.

Total investment in the mining industry during the year was around AUD 17.1 billion, up by 27 percent from 2006-07.

Iron ore and petroleum together accounted for 68 percent of the total value of Western Australia's resources industry in 2007-08 which is pegged at AUD 58.6 billion.

NMDC had sold 26.47 million tonnes of iron ore in 2008-09 as compared to 28.18 million tonnes in the previous fiscal. Total exports was 38.74 lakh tonnes in FY'09, up by 2.54 percent over 2007-08 at 37.78 lakh tonnes.

International Coal Ventures Ltd, a special purpose vehicle in which NMDC is a party along with other leading metal and mining public sector units, is also pursuing acquisition of coal properties in Australia, Mozambique, Canada, Indonesia and the US.

Source: Zee

Iron Ore Spot Prices "May Fall To $70 A Tonne" - NMDC

Cash iron ore prices may fall to about $70 a metric ton in the “near term” as China, the world’s biggest buyer, cuts purchases, said Rana Som, chairman of NMDC Ltd., India’s top producer of the steelmaking material.

“This could happen in a few days,” Som said in a phone interview from the southern city of Hyderabad, where NMDC is based. The forecast is 26 percent lower than this year’s peak rate of $95 without freight earlier this month, according to Macquarie Securities Ltd.

China’s stockpiles of iron ore to make steel are at 75 million tons, just 0.6 percent below levels last September, when they rose to the highest since at least 2006. The cash price for Australian iron ore delivered to China slumped 9.3 percent on Aug. 21 after Chinese steel prices declined.

Ore prices have likely “topped out” this year as steel prices fell, Liberum Capital analysts said on Aug. 17. The Baltic Dry Index, a measure of commodity-shipping costs, fell 27 percent this month on concern demand may be slowing.

Iron ore swaps for settlement this month traded at $98.31 a ton yesterday, according to SGX AsiaClear over-the-counter prices from Singapore Exchange Ltd. They indicate prices may drop to $87 by December.

Demand in India remains strong even as global sales slide, Som said. NMDC’s sales will rise more than 13 percent this financial year because of demand from local steelmakers, he said last month.

India’s steel production climbed 4 percent to 18.7 million tons in the four months ended July 31, Steel Secretary Pramod Rastogi said on Aug. 6.

NMDC shares, which more than doubled this year because of the government’s plan to sell a stake in the company, rose as much as 1.9 percent to 366.60 rupees and traded at 364.60 rupees, up 1.3 percent, as of 1:17 p.m. local time.

Source: Bloomberg

NMDC To Take Stake In Kudremukh Iron

India's state-owned miner NMDC Ltd will acquire a majority stake in Kudremukh Iron Ore Co Ltd (KIOCL), federal steel minister Virbhadra Singh said on Wednesday.
"This partnership acquisition will ensure a continuous supply of iron ore to KIOCL from NMDC," he told reporters at a press conference.

KIOCL will also acquire a stake in NMDC, he said.

Source: Reuters

JSW Steel To Import 5mn Tonnes Of Coking Coal

JSW Steel Ltd will import 5 million tonnes of coking coal in FY10 at an average price of $100 a tonne, a top official said on Tuesday.

"We will import 5 million tonnes of coking coal... the average (price) is about $100," Managing Director Sajjan Jindal told reporters on the sidelines of a conference.

Last year the company imported 3 million tonnes of coking coal, he said.

It also expects iron ore purchases from NMDC to be 33 percent cheaper this fiscal, he said.

JSW Steel, India's No. 3 producer, which has an annual capacity of 7.8 million tonnes, expects production to rise 72 percent this fiscal.

Source: Reuters

NMDC Sees Fall In Iron Ore Production In 2008/09

India's biggest iron ore miner, NMDC Ltd, expects iron ore production for 2008/09 to be down from last year, its chairman said at a news conference on Thursday.

The company produced 29.8 million tonnes of iron ore in 2007/08 but chairman Rana Som told reporters that it production for 2008/09 may be in the region of 27.5-28.5 million tonnes.

NMDC Production To Surge In Fourth Quarter

India`s largest iron ore producer, NMDC, expects fourth quarter production to surge by over 25% to 8.5 million tons due to an improved demand for the mineral from the domestic steel sector.

The group`s principal activity is to explore a wide range of minerals including iron ore, copper, rock phosphate, lime stone, dolomite, gypsum, bentonite, magnesite, diamond, tin, tungsten, graphite and beach sands.

Source: Myiris