NMDC slashes iron-ore production target by one third

KOLKATA (miningweekly.com) – India’s largest iron-ore miner, NMDC, has pruned its production target for 2018/19 from 75-million tons to 50-million tons.

According to the company’s annual report, the lower production expectation is in response to an anticipated global downturn.

In the longer term, NMDC has lowered its production target for 2021/22 to 67-million tons from 100-million tons set earlier. During 2016/17, the miner produced 34-million tons and sold 35.6-million tons.

The lower target is in sharp contrast to the long-term strategic management plan, called Vision 2025, which NMDC drew up in 2015.

Since the framing of the strategic management plan, the business environment for commodities and iron-ore has suffered a severe downturn, which necessitated a re-look at the ambitious targets, the annual report states.

It notes that prices of steel products and iron-ore have come down significantly and a global surplus scenario is likely to prevail in the foreseeable future for the steel and iron-ore industries globally.

On the market outlook, NMDC says the iron-ore mining industry is expected to witness enhanced competition over the next few years even as domestic iron-ore production is on the rise, with production increasing by over 20% in the last two financial years.

Domestic iron-ore production, including captive production, came in at 190-million tons in 2016/17, compared with 155-million tons in 2015/16. This trend is likely to continue in the near term.

On the other hand, the threat of higher iron-ore imports looms large, especially on the west coast, with lower global prices and lower seaborne freight rates.

Further, with domestic steelmakers now having the option to integrate backwards with the acquisition of iron-ore mines through the auction route, the market for merchant miners may be affected adversely in the medium to long term, the report states.