India-based miner NMDC’s Nagarnar steel plant or NMDC Iron and Steel Plant (NISP) is attracting undue attention as government’s divestment body DIPAM is pushing for the plant’s demerger even before it is commissioned.
Steel Ministry has shown its displeasure over the demerger as it will hamper the progress of the plant, which is scheduled to be commissioned by June 2020. In September, India’s Steel Minister Dharmendra Pradhan had directed NMDC to prioritise the execution and commissioning of NISP for timely completion of the project. Having a steel plant will cushion NMDC’s margin from the ever-fluctuating iron ore price. NMDC has also acquired Sponge Iron India and plans for expansion into billets production.
State-run NMDC has invested Rs159,370mn ($2,233.33mn) for the 3mn mt/yr capacity plant and is expected to spend another Rs7,230mn over the next 8-9 months. The Indian government holds 72.28pc stake in the entity which can be sold once it’s approved by the Cabinet Committee on Economic Affairs, according to DIPAM.
DIPAM’s argument for the sale is that post demerger NMDC can focus on its core mining business. NMDC plan to increase its iron ore capacity from current 43mn mt to 67mn mt by 2025.