Resource-rich Miner

NMDC Ltd., a government-owned enterprise, is India’s single largest producer of iron ore. This navaratna company is fully under the administrative control of the Ministry of Steel. Its principal operations include the running of three iron-ore mines at Kirandul and Bacheli in Chhattisgarh, Donimalai in Karnataka; and one diamond mine at Panna. Sources of moat Large reserves of high-grade iron ore. The company has access to large proven and probable reserves of high grade iron-ore, consisting principally of hematite ore with a ferrous content greater than 64 per cent. Greater the ferrous content of iron-ore, the more sought after it is in steel manufacturing. Its high grade ore quality gives NMDC a strong competitive advantage and helps it command premium pricing and strong customer loyalty. India’s largest iron ore producer. NMDC is the largest producer of iron ore by volume, producing around 13 per cent of the country’s iron ore output. It produced 2.38 crore tonnes of iron ore in FY10. Being such a large producer puts it in a strong negotiating position vis-à-vis buyers. Low-cost producer. The company’s cost of production compares favourably with that of the world’s leading iron ore producers. It is seeking to further lower its costs across all its operations. Some of the factors that contribute to the company’s low cost of production include the mechanisation of its mines, continuous focus on reducing cost of mining, seeking improvements in operational efficiency, including logistics, and its access to a large and inexpensive pool of labour and talent in India. In-house exploration capability. The company possesse

This article was originally published on September 13, 2011.