NMDC Limited
Know the Company
NMDC Ltd (NMDC), formerly known as the National Mineral Development Corporation, is a ‘Navratna’ public sector enterprises of India, operating under the Ministry of Steel. Founded in 1958 and headquartered in Hyderabad, Telangana, NMDC is the largest producer of iron ore in domestic market. The Company plays a crucial role in the country’s mineral sector, contributing significantly to domestic and global steel industries.
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NMDC Limited operates three highly mechanized iron ore mining complexes in Chhattisgarh and Karnataka. In Chhattisgarh, two major complexes are situated in Dantewada—Kirandul and Bacheli—with a combined production capacity of 37.8 MTPA. The third complex, located in Bellary, Karnataka, is the Donimalai Iron Ore Complex, which produces 15.62 MTPA through two pits, Kumaraswamy and Donimalai. Additionally, NMDC operates a 1.2 MTPA pellet plant at Donimalai to add value to its operations. NMDC also manages the Diamond Mining Project in Panna, Madhya Pradesh—the only mechanized diamond mine in Asia. In addition to iron ore, NMDC’s portfolio includes other minerals such as copper, limestone, and diamonds.
NMDC Limited has subsidiaries, including a 1.2 MTPA pellet plant in Karnataka and a 3.0 MTPA integrated steel plant in Chhattisgarh, now demerged and listed on the stock exchanges as NMDC Steel Limited (NSL). Legacy Iron Ore, NMDC’s Australian subsidiary, been doing gold mining. Diversifying further, NMDC plans to commence operations at the Tokisud North coal mine in the FY25 and the Rohne coal block in the next 2-3 years.
Strengths
NMDC continues to set benchmarks in the mining industry with innovations in capacity expansion and contributing to India’s economic growth as well as maintaining its leadership in mineral production. The Company produces premium-quality iron ore with an Fe content of 64% which is one of the major strengths of the Company.
With over six decades of expertise, NMDC has successfully navigated market volatility and operational challenges while expanding its global presence. Its strategically located mines, close to key demand centers, and low-cost operations make NMDC highly competitive in the global iron ore market.
NMDC Limited is actively pursuing strategic acquisitions of lithium blocks in Australia and Africa, recognizing lithium’s importance in the global transition to clean energy. Known as “white gold,” lithium is essential for energy storage and batteries used in electric vehicles (EVs) and mobile phones. Beyond lithium, NMDC also expanding its portfolio to include metals and minerals such as bauxite, manganese, diamonds, and gold. The Company expects these new operations to become viable beyond FY2030. The company has already resumed diamond mining at Panna, Madhya Pradesh, and plans to begin production at its Tokisud North and Rohne coal blocks in Jharkhand soon. Internationally, NMDC has initiated gold mining at the Mount Celia project in Australia and is exploring additional opportunities across Africa, Southeast Asia, and South America.
NMDC Limited has allocated Rs 50,000 crore in capital expenditure (capex) to double its iron ore production to 100 million tonnes (MT) by the FY2030-31. This investment will support mine enhancements, new bids, acquisitions, deeper drilling, equipment upgrades, and the development of slurry pipelines and allied infrastructure. As part of this Capex plans, NMDC aims to invest \ Rs 2,200 crore in FY25 to set up slurry pipelines and processing plants, aligning with its long-term production goals. The company expects to produce 78 MT from existing mines and 14 MT from NCL, its joint venture with CMDC, while the remaining 8 MT will come from leases across Odisha, Karnataka, Chhattisgarh, and Jharkhand.
NMDC’s infrastructure expansion includes constructing a 12 MTPA screening plant, rapid wagon loading systems, and new crushing plants at Deposits 14 and 11C. Additionally, it is seeking Environmental Clearance approvals to increase production at Kirandul to 30 MT and Bacheli to 31 MT. To achieve its 100 MT goal, NMDC plans to enhance capacity at Donimalai to 17 MT and increase production from NCL mines, with 21 MT from Deposit 13 and 7 MT from Deposit. These investments will ensure NMDC meets the growing demands of the Indian steel sector and secures its position as a global mining leader.
Company’s highest-ever capital expenditure of Rs. 2,066 crores were expended towards capacity building in FY24, which was 17% north of the capex target, Rs. 1,769 crores. The company also investing into digitalizing its processes and optimizing operations to improve efficiency, productivity, and performance. NMDC operates a dedicated exploration wing in Raipur, with expertise in core drilling, mineral exploration, and orebody modeling. In FY 2024, it achieved over 10,000 meters of core drilling.
India’s iron ore output grew over 7% year-over-year, increasing from 257 million tonnes in FY23 to 275 million tonnes in FY24. NMDC played a crucial role in this growth, securing a 16% market share. The company achieved record-breaking performance, producing 45.02 million tonnes and selling 44.48 million tonnes of iron ore, marking 10% production growth and 16% sales growth from FY23. Key milestones in the last financial year included resuming operations at Panna Diamond Mines and launching gold mining at Mount Celia, Australia, through its subsidiary, Legacy Iron Ore. Legacy also advanced strategic efforts with a joint venture for magnetite resources at Mount Bevan and lithium exploration in Australia.
Outlook
The growth of domestic steel production, supported by multiple factors, will drive higher demand for iron ore. In India, over 60% of steel consumption comes from the construction and infrastructure sectors. With the government’s initiatives to boost growth in construction, infrastructure development, automotive, and consumer durable industries, steel demand is expected to maintain its momentum. Increased focus on rural development, including large-scale infrastructure projects, will further fuel steel demand. Key developments include government policies promoting the use of domestically manufactured steel in public procurement, which will lead to capacity expansions by steel producers. The Production Linked Incentive (PLI) scheme, attracting investments worth Rs 40,000 crore, and the PM Gati Shakti plan, which enhances logistics, will also stimulate steel and, consequently, iron ore demand.
NMDC’s major iron ore mines – Kirandul and Bacheli in Chhattisgarh, and Donimalai in Karnataka delivered their highest-ever annual production in company’s history. NMDC aims to increase iron ore production to 67 million tonnes by FY26 and further to 100 million tonnes by FY30, focusing on volume-driven growth. With low-cost operations and high-grade reserves, NMDC is well-positioned to mitigate risks associated with market volatility and declining iron ore prices. Looking ahead, NMDC has set a target to produce 53.8 million tonnes in FY 2025 and aims to reach 100 million tonnes by 2030, backed by significant investments to expand infrastructure and mining capabilities.
Financials
NMDC reported a significant increase in sales and profit for the first quarter of the current financial year. The company’s consolidated net profit rose by 19% to Rs 1,971 crore fom Rs 1,652 crore in the year-ago period. However, revenue from operations was flat at Rs 5,414 crore. Iron ore sales were also flat (YoY) at Rs 5,342 crore but fell 17% from the previous quarter.
Concerns
Iron ore is a critical raw material for steel production, which is an inherently cyclical industry. Historically, iron ore prices have exhibited sharp fluctuations due to changes in demand and market volatility. Any decline in international iron ore prices could encourage domestic steel manufacturers to increase imports, will raise competitive pressure on iron ore pricing.
A recent Supreme Court ruling allowing states to retrospectively levy royalties on extracted minerals poses a challenge for mining companies. However, NMDC management believes the impact will be limited, as they expect to recover these costs from customers, most of whom are long-term partners.
Sector: Commodities
Market Price: Rs. 226.40 as on today
FV: Rs 1/-
Stock Name: NMDC Ltd
BSE Code: 526371, NSE Code: NMDC
Market Cap.: Rs 66800 Cr
Book Value: Rs. 87.7
Segment: Mining- Minerals
Incorporation: 1958
Headquarters: Hyderabad, Telangana
