Neelachal Ispat Nigam Ltd (NINL), the biggest producer and exporter of pig iron, is looking to expand output to take advantage of the prevailing weak rupee scenario.
The company, jointly promoted by MMTC Ltd and the Odisha government, recently sold 30,000 tonne pig iron at $390.20 (or Rs 22,400) per tonne at Paradip port, its first deal after it began billet production in May.
Even though the rates are lower than our last deal of $407 per tonne, rupee wise it does not make any difference. We might consider increasing pig iron output if conditions remain favourable for us, said S P Padhi, director (finance) of NINL.
The company, which used to produce 65,000 tonne pig iron every month, had recently slashed output to less than 50,000 per month as it was keeping some amount of hot metal for billet making. For 2013-14, it had announced to produce 400,000 tonne of pig iron and billet. In the subsequent years, pig iron production is likely to decline as the company intends to produce 1.1 million tonne billets.
We are getting good sales inquiries for our new product- billet. However, if we are able to get more iron ore, we will go for more pig iron production. We normally issue one tender every month, but for July, we might go for two tenders, added Padhi. NINL has been granted mining lease by the Odisha government over 872 hectares in Sundergarh and Keonjhar districts. The mines have an estimated reserve of 110 million tonne of iron ore and are yet to be excavated.
The company is currently depending upon MMTC and state-run Odisha Mining Corporation (OMC) for iron ore supply. NINL produces around 5.5 million tonne of pig iron every year. The company incurred about Rs 100 crore loss in the last fiscal due to poor demand for pig iron in both global and local markets. It mainly supplies pig iron to Southeast Asian countries.