NMDC set to buy 2 Australian mines

State-run iron ore miner NMDC is likely to seal deals for two Australian iron ore mines in the first week of March, said Chairman and Managing Director Rana Som in Hyderabad on Friday.

"We are precisely targeting six assets, with primarily three iron ores and three for coal in Australia, Mozambique and Albania. We have already located and almost finalized acquisition of two such assets," said Som.

"Signing of the settlement is in the first week of March. Our board has also cleared the deal. Both are iron ores in Australia. The deal will be closed in the current financial year," he added.

The NMDC chief said this on the sidelines of the 6th national convention of the Indian chapter of the UN Global Compact Network.

He, however, refused to say how much investment will be expended on the acquisitions and said they are leveraging their ability to explore.

"Since we are leveraging our ability to explore, this may not be a big investment now in terms of money, but it will be a large investment in terms of developing. That is how we are trying to acquire it," said the NMDC chief.

Replying to question on iron ore prices, he said the prices may go up due to natural calamities in Australia, as well as a recovery in demand in America, Europe and Japan.

"It (ore prices) may go up, after that it will stabilize at certain acceptable levels. It is very difficult to comment on what percentage it will go up at this stage. But prices will go up and it all depends on the situation," said Som.

"Now that the spot prices are high, the impact of the high spot prices will be seen in long run from April onward," he added.

However, as Chinese steel production will stabilise at certain levels, this will also prevent iron ore prices from being hiked further.

In this regard, Som said that high railway freight tariffs have become a deterrent to signing a long-term agreement with Japan for the supply of iron ore.

According to him, the Indian Railways charges a three times higher freight rate for export consignments than domestic cargoes.

"So much of the gains we make in exports go to the railways. As a commercial organization, we will have to see how far, having paid three times more freight charges (on rail transit), we will be able to export. The exports are realistically not profitable for us," he said, adding that the ore - which is of high grade - has more demand in the domestic market.

"So for a short-time trouble like Railways, whether we should abandon the Japanese market... these factors are being weighed by various departments...," he said.

Nevertheless, exports have not been a priority area for NMDC, which ships just 9 to 10 per cent of total production overseas.

"We are not so keen that we should expand our exports. We are not exporting to the Chinese spot market, though the price is $35 to $40 higher," he said.

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