Metals & Mining News

SC order set to boost NMDC’s March-quarter numbers

NMDC Ltd’s March-quarter performance may get a boost from a recent Supreme Court order, which is expected to result in a one-time gain of₹ 1,400 crore for the state-owned miner over the next two months, analysts said.

In an interim order on Thursday, the top court cut the sales proceeds that NMDC has to share with Karnataka Mining Environment Restoration Corporation (KMERC) to 10% from 20%, and asked the state government entity to return half of the money it had collected since 2019 to the mining company within two months.

The value of this component that KMERC has to return is pegged at around ₹1,400 crore, Edelweiss Securities said in a report.

KMERC is a special purpose vehicle set up by the Karnataka government and the funds collected are for projects to mitigate the damage done to the environment because of mining. It is currently unclear if KMERC would make the payment in the March quarter, since it has two months to do so.

NMDC has a total of around ₹2,900 crore outstanding with KMERC, and the court ruling can help the company “get a foot in the door” to possibly look at claiming the remaining ₹1,500 crore in the future, Edelweiss said.

NMDC, which operates the Donimalai and Kumaraswamy mines in Karnataka, gets about 30% of its output from Karnataka. It has produced 31.14 million tonnes of iron ore in the April-January period of the current fiscal year. Its production target for fiscal 2022-23 is 46 million tonnes.

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