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NMDC Ltd
Earnings Call Analysis
Q3-2024 Analysis
NMDC Ltd
The company has experienced a remarkable quarter, the best since its inception, with production increasing by 19%, sales by 24%, and turnover by around 25% during a 9-month period. The driving force behind this turnover growth has been purely volume-driven, with nearly no change in 9-month average realization. January's performance set a new high, and February is also progressing well with an upswing in prices. Looking ahead, expansions to increase production and distribution are key components of the company's commitment to maintaining extraordinary performance.
The company anticipates to nearly hit its production target, with a figure hovering around 47 million tonnes for the current year, though it's tightly linked to certain approvals. For the following year, a conservative guidance of 50 to 51 million tonnes has been set, potentially extending to 52 or 53 million tonnes subject to further project advances. Minor pricing adjustments may occur but the overall outlook appears stable and optimistic.
The company has requested an increase in mining capacity by about 10% from 5-star rated mines like Deposit-5, banking on rule allowances without the need for public hearings. This streamlining could push the next year's production to around 52 to 53 million tonnes, highlighting a proactive approach to seeking operational increments where feasible.
Progress on the slurry pipeline remains swift apart from minor hiccups in two villages. Meanwhile, Australia operations have begun with the first mine already in the production phase. Investments are planned to accelerate the exploration of other tenements with the hope to commence further mining activities within 18 to 24 months.
Beyond the current expansionary phases, the company does not foresee a significant volume growth until FY '28. This is attributable to the time required to execute major projects that are expected to offer substantial increases in volumes, thus preparing the company for a large-scale jump in production around FY '28 or '29.
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Ladies and gentlemen, good day, and welcome to National Mineral Development Corporation Limited Q3 FY '24 Earnings Conference Call hosted by ICICI Securities. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Amit Dixit from ICICI Securities. Thank you, and over to you, sir.
Thanks, Rhea. Good morning, everyone, and thanks for joining the call today. At the outset, I would like to thank the NMDC management for giving us an opportunity to host this call. From the management, we have today Mr. Amitava Mukherjee, Chairman cum Managing Director, Additional Charge, and Director Finance.
Without much ado, I would invite Mr. Mukherjee for opening remarks. Post which, we will open the floor for an interactive Q&A session. Over to you, sir.
Good morning, and thank you for joining. So it's been a good quarter for us, again, and best since inception quarter. Each ones have been best. And over a 9-month period, we have grown our production by 19%, sales by 24%. Our turnover has grown by around 25%. And the best thing about the growth and turnover is that it is completely volume-driven because if you see a 9-month realization of the -- average 9-month realization, it is almost the same. It is -- hardly, there's any change on that. So this entire 25% of turnover growth is volume-driven, which is rather encouraging. We have also been -- things also look pretty good in the days to come. January was the best ever, as you know, we have declared. We are doing well in February as well and the prices have also kept -- is on the -- there is a margin on prices, so that's good for us. So overall, I think the scenario is pretty encouraging.
Going forward, of course, as I have already said earlier also that we have huge plans for expansion in terms of both production growth and to achieve higher dispatches and distribution. So I think so as far as we are concerned, we are committed to deliver unmatched performance -- continue to deliver unmatched performance.
So with that, I would ask for the questions, please.
[Operator Instructions]
First question is from the line of Alok Deora from Motilal Oswal.
Congratulations on very good numbers. So just sir, on the -- our volumes have grown pretty well in terms of dispatches, particularly. So this year, we had earlier guided for around 47 million tonnes of volumes for the full year. So any change in that number or we would largely be meeting that number? Any comment on that? And also the volumes for next year, sir?
We will be very close to that volume. Whether we'll touch 46, 47 or not is a question, but we'll be very, very close to that. We might exceed it by a couple of tonnes. We might fail to reach it by a couple of tonnes. 46 plus is something that -- around 47, we are still targeting. The main problem is that the Kumaraswamy enhancements have still not come through. We are waiting every day, so it is -- even if it comes within the next 3 or 4 days, we should be able to do 1 million tonnes out of that, additional, and then 47 would be comfortable.
But if every day it gets delayed, I lose around 20,000, 30,000 of that because, as you know, Kumaraswamy is now closed because we have already touched 47 -- sorry, 7 million tonnes, and we can do no production from there. So if that comes, then 47 is a done thing. If that is delayed, then it will be a tough one, but then we are trying to get to 47 even without that. But that will be really tough one. We had actually captured in 2 million tonnes out of that. But now that it has not come, I think, at best what we can hope for is, even if it comes in the next 3, 4 days, it should do about 1 million tonnes out of that.
So next year guidance would definitely be 50 because Kumaraswamy would definitely be there for 2 or 2 plus -- additional 2 from what we do. Let us say, we are doing around 47, so Kumaraswamy itself will give us 2 and then RWLS, which enhanced dispatch from Kirandul will ensure that we can do 1 or 2 extra there. And we have got fifth line also now commissioned at Bacheli, so that, for an entire year, should give us, too. So we should be able to do at least 3 or 4 extra from what we do this year. So 50, 51 should be our next year's guidance. If things go right, if one more project comes around, then it should be around 53. But 50, 51 should be comfortable ask next year.
Sure. And we have taken price hikes in this quarter, so how do you see the pricing ahead now for iron ore?
I think, we have been -- in terms of pricing hike, in terms of prices, we're fairly comfortable. There could be minor adjustment this side or that, a little on the upside, a little on the downside. But largely, I think prices look fairly stable. A minor adjustment on the downside or on the upside could be there. A couple of hundred this side, that side for us, a few products, not all, but it looked fairly stable and fairly optimistic right now.
Next question is from the line of Kirtan Mehta from BOB Capital Markets.
Thank you, sir, for the great set of numbers. In terms of -- previously, you had mentioned that we have a constraint in terms of the EC limit around 52 million tonnes, but you mentioned that if one more project can come through, then we can go to 53 MT. So do we have some flexibility in the EC limit?
We have applied -- now the rules allow you for around, I think, 10% increase if we apply without public hearing. So we have applied for Deposit-5, also Deposit-7 also. We have applied for many of these deposits to have an enhanced capacity. So if they -- some of them come through, then we should be able to produce. This is only for 5-star mines. And in any case, our Deposit-5 and most of our mines are 5-star mines, that was around for a 10% enhancement on application basis. So we've made through the applications.
How long does this process take for the enhancement without the public hearing?
Around 6 months.
Technically, we can go up to 55 million tonnes or so with this 10% enhancement?
Not all the mines because we have applied for certain mines even more than that, so that there will be a public hearing. For example, Deposit-14 and in 11C, we have applied for an increase by more than 5 million tonnes, so that will have a public hearing just about a year's time. But Deposit-5, where we don't have -- we have not applied for a bigger enhancement. We have applied for a normal 10% enhancement. So it's a mix and match for all sorts of things. So to that extent factoring that in, I'm saying if the things go right, we should be doing 53 next year -- 52, 53 next year.
Understood, sir. And in terms of sort of the -- could you also elaborate on the project progress on the earlier projects like slurry pipeline, coal block as well as our new international mines venture?
Yes, let's talk about the slurry pipeline first. Of course, slurry pipeline is progressing, the pipe laying has been progressing fairly at a faster pace. Most of the [ write-off players ] where there was a problem has been solved except for 2 villages. Out of 131 kilometers, except for 2 villages, I think, all these approvals, et cetera, are there and the work is progressing.
On the pellet plant at the tail end, obviously, we had actually -- we were trying to redesign the pellet plant by making -- we wanted -- instead of a 2 million tonnes per plant, it should be extendable to 6 million tonnes. And so there is some common sizing being done. So that is almost -- that part of the decision is almost done. So we should see a very smooth progress in the pellet plant at the tail end very fast. And similarly, at the head end, you have this beneficiation plant, which, again, has been -- we were going slow for again common sizing it to 6 million tonnes, enhanceable to 6 million tonnes and enhance common sizing of equipments.
So that exercise is also almost over. So next year, we should see a huge progress in both these beneficiation plant and machinery and the pellet plant at Nagarnar move along and try to come with the slurry pipe. So we hope by '25 end, we will be able to get that commissioned fully. So that's our current outlook, '25 end, I think. Financial year, '25, we should be hopefully almost there.
Regarding the coal block, we had requested the ministry for -- grant us to acquire land on the CBA route, the Coal Bearing Act route. So apparently, there are some apprehensions that it cannot be done. But I'm very, very hopeful that the necessary approvals will come under the CBA Act, which will drastically reduce our time for execution. If it comes through CBA Act, then we should be good to go by early FY '26. In around 16 to 18 months' time, we should be able to start mining in Tokisud. And of course, the Rohne also we are pursuing. Rohne, there is no problem of CBA approval, Coal Bearing Act approval, so that would be expedited once the PFR is made available.
Our Australia operations, as you know, have already started. We have started mining. And through Legacy gold mines there, we have started. This is our first mine. Then gaining experience, we plan to invest more money to get the exploration in the other tenements at a faster rate so that we are able to mine the other, if possible, within the next 18 to 24 months.
Just one more question. In terms of the NMDC Steel plant as well, would you sort of highlight the current progress and time it will take to stabilize operations?
If you see the production of January of about 1 lakh tonne is exactly -- we did around 97,000 or 98,000 of HR coil, which is almost 50%, 60% higher than our previous month of around 65,000, 66,000, so we are in the process of stabilizing it.
So we are -- in the first 4 months, we had done around 2 lakh tonnes of HR coil, which in January itself, we did 1 lakh. So that procedure -- that is being done. So once we are able to roll around 5,000 or one part, we have touched the 1 lakh mark. Once we touch the 1.5 lakh, 1.6 lakh mark, I think, the company will turn profitable by that time. All we have to do is ensure that the production goes up to 100 -- from the current 1 lakh tonnes that we achieved in January to around 1.5 lakh tonnes, 1.6 lakh tonnes. So that would be around 66%, 70%, and we will breakeven by that time. Of course, we'll have to wrap it up even higher. But yes, there are constraints in terms of rate movement. The white line is not ready. So -- and there are other services, but that's enough to just solve each of them as we go ahead.
Next question is from the line of Siddharth Gadekar from Equirus Securities.
Sir, in a recent interview, you had highlighted that beyond 53 million tonnes, it will take 3, 4 years for the incremental volumes to come in. So beyond FY '25, then we would not see any volume growth till FY '28. Is that a fair understanding?
Yes, because most of these are major project based. Let us take, for example -- why do I say that because if you see, let us take Deposit-11C and -- Deposit-14 and 11C. So we expect another 5 million tonnes coming from that, right? So that is dependent on the project that is being now currently being tendered. So that will take around 3 years to get executed. So there are a lot of projects, which have similar sort of an execution time, which will give us major volume growth.
Of course, 1 million tonnes, 2 million tonnes here and there, we can obviously go up to 52, 53, maybe even 55 by sort of debottlenecking and flogging the existing system, subject to getting the enhanced EC limits. But the major things will come in when the projects that we are planning now are executed. So they will give us quantum jumps of 5 million tonnes, 10 million tonnes each. So that is why I say that the gain add, it will be up one time sudden big jump around '28, '29. If we are able to avoid all the projects this financial -- in the next financial year, another 3 years to execute. That is the time line that I see.
Sir, it is fair to assume that '26 to '29 -- '28 at least, there will be very minimal volume growth and then '29, we will see a very sharp jump in volumes?
Yes.
Next question is from the line of Pallav Agarwal from Antique Stockbroking Limited.
Sir, you mentioned on the ramp-up of NMDC Steel, so in terms of the coil production. So is the blast furnace also production in sync with the HR coils or the blast furnace is taking more time?
No, the blast furnace is perfectly okay. I can run it to 10,000 tomorrow. There's absolutely no problem. We have run the blast furnace to 7,000, 8,000 on a particular day on a few days. There's absolutely no problem with the blast furnace. Probably -- see, doing the -- if I can roll the coils to around 5,000 to 6,000 tonnes a day, which is around 160,000 to 180,000 a month, then I can back to back -- 6,000 of coil means around -- another 1,000 for pig -- 2,000 for pig casting, so it's 8,000 of hot metal [Foreign Language] I can take it out. I can take with blast furnace up to 12,000. Blast furnace is not a problem.
Okay. So we don't intend to produce pig iron and sell it externally. It's like going to be consumed internally only?
We are selling pig iron and we will have to sell pig iron because the more the capacity the blast furnace runs, the lesser is the cost of hot metal. So if you are running it at 8,000, 10,000, your cost of hot metal comes down. So naturally, even if I have to do 2,000 of pig, I think, that makes sense when the blast furnace [indiscernible]. And that will all depend on the coil cooling capacity that we have.
Sure, sir. So I mean, our iron ore sales at [ arm's length ] to NMDC Steel, so that would keep increasing with the blast furnace production, right? So how much of the additional volumes, let's say, as in this quarter, probably would have come from sales to NMDC Steel?
NMDC Steel, we reported the sales dispatch at it's around INR 300 crores. Over the last 4 months, I think we have sold INR 500-something crores, last 4, 4.5 months up to January end. December end, we have sold INR 555 crores, I think, the [ round ] figures.
Okay. Sir, have we received any more of the refund from that Supreme Court order on that Karnataka...
No, we have discussions in Supreme Court. Out of INR 2,000 crores, we've got INR 1,000 crores and INR 1,000 crores is still due. INR 1,800 crores is still due out of INR 2,000 crores?
INR 1,800 crores, you still have to receive, sir?
Yes. Out of INR 2,900 crores, we have received about a INR 1,000 crores, another INR 1,800 crores we have to receive.
Yes, and this will be excluding the INR 2,200 crores that we have advanced to NMDC Steel, so that also probably at some point of time, once the company turns profitable...
Yes, that's around -- that's centered around 20 years, 2004, so that obviously will come back to us.
Next question is from the line of Shweta Dikshit from Systematix Group.
Hello?
Yes, please.
Sir, could you guide to CapEx number for the next 2 years, FY '25 and '26. And what is the net debt level as of December? And lastly, what is the CWIP currently?
So the net debt level is obviously for NMDC, it is nil, where we have not taken any debt in the financial year. So that's one thing. The current year guidance is, of course, we'll do around INR 1,750 to INR 1,800 crores for NMDC, and we are on target. We have already spent around INR 1,500 crores by end of January. Another INR 200 crores, INR 300 crores to go, so we should be able to do that. Next year would also be around the same INR 2,000 crores, INR 2,100 crores mark. And then going forward, there will be some major jumps. Next year, basically, we have the existing project sanctions. So next year, I think, it will be around another INR 2,000 crores. And the current CWIP is at around INR 2,900 crores, that's [ INR 2,880 crores, ] so that's around INR 2,900 crores.
Next question is from the line of [ Ashish Sreekumar, ] an individual investor.
Congratulations on great set of numbers. I have 2 questions. And one is, you had mentioned about the expansion plans, so if you could just elaborate slightly on that. And the last question would be on what is your current capacity at which we are functioning in the Deposit-5 range?
I beg your pardon. I didn't understand the last part of your question.
The last question I had asked was what is the capacity we are functioning at the moment in the Bacheli mines, Deposit-5?
Deposit-5, I think, it is 10 million tonnes. I'll just check. I think it is 10 million tonnes and we are doing 10 million tonnes. So if it goes by -- we have applied for 12 million tonnes EC. I think if we get that, that will be great. I just have from the numbers of that -- but I think if my memory serves right, that is what we have done. We are now almost -- the current EC is, of course, 51, and we have reached around 46, 47. But we are restrained by the plant capacity. So obviously, first time we had the plant refurbished, our new plant in there, so Kirandul itself is expected to do around 16.5 to 17 million tonnes. And so is Bacheli. It is expected to do around 16.6 to 17 million tonnes, so that is what we are hoping that we will achieve.
Okay. And EC clearance technically takes 6 months that you had already mentioned.
If there is no public hearing. If there is no public hearing. So -- but there are some, where we are asking for a huge increase. Bacheli -- sorry, Kirandul is supposed to go up to from the current 15, 16 million tonnes of EC to, we have asked for, I think, up to 30 million tonnes, all the mines taken together. So that is the process that includes -- that needs public hearing. And that needs huge CapEx, too. And Deposit-5, as you said is, the EC [indiscernible], and we also produced 10 million tonnes.
Okay. And then the first question on the plans of expansion, if you could just elaborate on that.
Yes, well, Kirandul from the current 19, we'd love to go up to 30, 35. So the plans are being made. In 2 of the mines, I think, we have tendered out the project of new crushing plant and all those things. So that should give us another 5 million to 6 million tonnes. The SP3, that is the screening plant third, which is muted by ramping. It's slightly delayed, but that has a capacity of around 12 million tonnes.
So Kirandul, by another 4, 5 years, we should be able to do 30 to 35 million tonnes of Kirandul. And from Bacheli also, we have not tendered out anything much, except that we have just completed the additional 2 million tonnes screening line around a month back, which is, I don't know, on the stabilization now. So even in Bacheli, from the current 18.8 million tonnes of EC, we would expect to go up to 30, 35. Most of the production enhancement projects are being designed right now for Bacheli. They've not been tendered out. But for Kirandul, most of them -- at least 2 of them have been tendered out and one of them is under execution.
Next question is from the line of Ashish Kejriwal from Nuvama Wealth Management.
Sir, my question is on Karnataka mine. One of your competitors, obviously, they used to export also and earning much more than what they are -- what they can sell in the domestic market. So any thought process that we can also start exporting at least from Karnataka?
Because we mostly sell above 60%, 58%, so the export would attract the duty of 30%. And because of that, we have seen that our net domestic realization is generally more than the, what you call it -- generally more than our export realization.
Sir, do you think that even at $130, $135 per tonne, our net domestic realization is higher than export realization?
Yes. Yes, it has been even at $200 because when you do a net back, you also have to pay port charges, you also have to factor in the royalty and DMF, which accounts for almost 20%, 21%. And then you have to account for freight, which is again INR 1,400, INR 1,500. So if you do a net back, if you do a net back, very few times, there is an economic justification of export. Yes, there is a strategic area of export because when you go to 100 million tonnes, you would require to have access to international markets as well, for which, of course, to be present on a long-term basis. You cannot be a fly-by-night operator there. But that is an asset that we are looking at in terms of our expansion plan, not in terms of an immediate sort of thing.
Okay. So that means at least for next 2 years, we are not looking export as an option?
We are sort of exploring the market to see if there is a strategic tie-up as possible with something. Then it's a different case, but if there's no economic case we'll have to take a sort of margin hit to do that. But when should we start it, is the question that is being debated right now and we should have a -- of course, at 100 million tonnes, you deserve one. You have to have one, but when you start on...
And sir, secondly, is it possible to share cash and cash equivalent at third quarter?
Yes, cash was at -- I'll just give you. Net cash was around INR 11,500 crores.
Okay. Okay. And sir, lastly, about this lithium and other rare earth minerals, last time we discussed that if we get an opportunity, maybe we can look into it. So what's the status now? Are we going for any auction in that, in India.
I mean, we still not applied for the auction group. In fact, we are looking out lithium beyond the border, even Australia, some of the working mines were negotiated with them for some equity stake or some offtake agreement. Our port tenements of Mount Bevan lies between -- lies in a very lithium-rich area, where there are working mines just above our tenements and just below our tenements, so we are doing our PFS along with our partners. And we are looking at all the other countries that can offer us opportunity for lithium. So we are not close, we are exploring the international market for the right opportunity.
Sure. Last question is, if INR 252 crores, which we have to pay for this Donimalai iron ore mine, means, is it possible to elaborate it further why it happens because this mine has been there for long and what additional we have taken so that we have to pay at least penal charges and interest. What is on the account of that?
Yes, it's a very unfortunate thing that happened. You see we had built our facilities in 1977. There are a lot of plants and conveyers that were built in 1977. The Forest Act came into -- the Forest Act came into force 1980, right? So we built this before the Forest Act Came. And then everybody thought there was a violation of the Forest Act with retrospective effect. So now then we wanted something extra done, then it was found out about 3 years, 4 years back [Foreign Language] you don't have the forest clearance and all those things.
So naturally, we had to pay this penalty, but we could have done some of this. This was at 1980, the Forest Act came and we had to do this in 1977. So it was as -- because we wanted to add to the facility, it was known that we don't have -- our owner themselves are sort of private equity. And so if you see the actual amount of it, we paid only INR 30 crores, INR 31 crores, which has been capitalized. The rest is for basically penalty of around INR 60 crores, and INR 180 crores in interest of penalty. It's a very unfortunate thing and we have to take a massive hit in the Q3. Thankfully, our numbers are good enough to sort of absorb that. But we need to expand also. We need a repair, so in the long-term interest of the company, so this is done.
Next question is from the line of Raashi from Citigroup.
Sir, just on the -- on your volume breakdown, the 37 million tonnes that you have done until January. Could you just break it down from at least your top 3 or 4 clients or rough idea?
Yes, the standard is RINL, JSW and AMNS. So they account for around 70% to 72% of our sales. And that trend has remained.
So that is continuing?
AMNS, we have sold around 18 million tonnes; RINL, 15 -- sorry, the percentage is right now, JSW is 28%, RINL is 15%, and AMNS is around 18%.
15%, 18%, and 38%, you said, right?
28%. 18%, 15%, and 28%.
Okay. And then on NMDC Steel, anything around the plans to divest, the government divestment plans?
I have no visibility on that because we are just too concerned about ramping up the production right now. Of course, when it was being driven -- it is being driven by DIPAM and not by us. We were aware that there's a huge amount of interest in that. Very substantial interest and rightly so, this is a state-of-the-art plant. So once and as and when and if it is sold, so there will be naturally a huge amount of interest. There was a lot of interest, but then we have been completely bogged down with improving this. And in any case, DIPAM is running that process and, right now, we don't have much to discuss.
Got it. And just last question, I think you -- just a follow-up on one of the previous questions. So for next year, the volumes are expecting to be around 50 million, 51 million tonnes, and then kind of remaining sort of steady state for the course of the next 2, 3 years, until FY '28?
Hereof, if we give that, I would make it around 53, 55. Absolute stability on that 53, 55 per annum. And as and when the projects come in, then there will be a point of...
Next question is from the line of [ Mohammed Farooq ] from Pearl Capital.
Congratulations for the good results. My question is, China produces 60% of world's steel and consumes almost 50% of both steel and iron ore. Now with China's largest real estate firm declaring bankruptcy, do you anticipate significant headwinds ahead? And do you expect China to flood global market with steel products? In this case, how do you justify thousands of crores spent on capital expenditure in this scenario?
China -- Chinese imports, at times, have been a cause of concern in India. That's obviously there. But then our producers have survived and I think the -- if you see the Indian consumption scenario, it is very, very, very encouraging. So we are right now at around what, 275 kg, 280 kg per person consumption, up from 168 around a few years back. Right now, we are at around 180. We are supposed to go to 262 in the next 5, 7 years. So a huge demand and infrastructure is going to drive it, and you have such a very pinpointed infrastructure like Har Ghar Nal and -- which is all consumption of steel. Then we have the road infrastructure, the SagarMala and -- which in the next 5 years, only these flagship ones, including the Prime Minister's, what you call, Awas Yojana, which is almost 3 crore houses.
So if you name the flagships, 17 flagships that itself is going to consume around 100 million tonnes in the next 5 to 6 years. So I don't think from the consumption point that there's going to be any lack of demand in India. Obviously, the Chinese imports have been a cause of concern, but most of it has not lasted for more than sometime.
Okay. What do you think about like China can dump in the world market the steel products, that part?
So that part, we will be thinking about passing on the bridge when we get to the river. Right now it's a hypothetical question because there have been times where even anti-dumping duties have been imposed. Whether it is a case now or in the future, that's like you'll have to think about passing the bridge when you get to the river, not now.
Got it. Sir, second question on the steel. Could you please provide information on the average price realization per tonne in the current market? And what level you expect in the near future, the steel?
The current realization per tonne of HRC has been around -- if I correctly say, it's around INR 51,000, something. INR 51,000, something, if I remember it correctly. Just a second. It's around INR 51,200 -- INR 51,150. This is obviously for HRC and around INR 36,500 for pig iron. Now in the HRC, it is a little -- we have to -- so our realization, average realization is lesser than our peers because of poor results, number one, that we have a price -- we have a logistics cost disadvantage of around INR 2,000 a tonne as compared to our peers.
So that's something that needs to settle. Also the price doesn't produces a lot of -- leaving the experimental thing, we have been producing a lot of things that are not readily marketable. So 10748, we produced around 13,000 tonnes, which had to be sold at a little bit of discount. It was [indiscernible], but we had to produce it because for testing ourself. So right now, a lot of -- which are not readily saleable in the market, so we have to liquidate it with some amount of financial incentive. But going forward, when the mill stabilizes, I think, our realization will be higher than our peers.
How much do you expect, sir, realization in the near future.
Sir, sorry to interrupt. Could you please return to the question queue as there are several participants waiting. Next question is from the line of Bhavesh Patel from Patel Investments.
Congratulations on great set of numbers and wonderful performance. My question is regarding our CapEx plan for upcoming -- will that come out of our cash balance and the money we make? Or do we have any fundraising plans? And that will have any impact on the dividend policies?
No, I think, right now, we have more than adequate cash balance to fund our CapEx for the next 2, 3 years. So I don't think there is any plans to raise capital from the market, as of now. We have around INR 11,600 crores of cash. Next year, our CapEx is around INR 2,200 crores -- expected to be around INR 2,200 crores. It will raise to around -- even if I want to invest INR 30,000 crores in over the course of 5 years. So an average spend of around INR 5,000 crores to INR 6,000 crores a year. I think that's the amount of CapEx, we'll be able to service through our own internal accounts.
Sure. And again, that will have any impact on the dividend we announced?
No, I don't -- even today, we are sitting at -- announced a dividend of INR 5.75. The payout is around INR 1,680 crores. So we have been consistently paying dividend above 40% every year. So that has been -- that is cost of INR 2,000 crores, INR 2,200 crores even in future. So I don't think, even with the CapEx of INR 6,000 crores to INR 8,000 crores and a dividend of -- if we keep our dividend at the current level of 40%, 45%, I don't think cash would be an issue.
All the very best for the executions for upcoming large plants.
Thank you.
Next question is from the line of Ritesh Shah from Investec.
Sir, just one question. This is more from a policy standpoint. We were hearing a lot of things around National Mineral Index. Sir, any progress over here?
We were not -- we have not been asked to participate, so we don't have any visibility of that. I'm the wrong person to give you an update on that.
Okay. Sir, let me put it the other way around. If the ministry had to do something, they would definitely seek your suggestions. So is that something that which has actually the inputs that we have given to the ministry?
Not as yet. Nobody has asked us if I -- nobody has asked us for any input.
[Operator Instructions]
Next question is from the line of Rajesh Bhandari from Nakoda Engineers.
Yes. Sir, we were talking about lithium mining and rare earth mining. In India also, we have at Degana and Kashmir. Can we get it on a nomination basis?
No. Let us be very clear that NMDC is not interested in rare earth. That's a separate volume altogether. It's a conscious decision that we have said, we are not...
And what about lithium, sir?
Yes, lithium is a thing of our -- it is something of our interest. But most -- obviously, as of now, I think, the government is keen on doing the auction route for lithium. So that is a little less in price...
[Foreign Language]
[Foreign Language]
[Foreign Language] continue [Foreign Language] because you have already paid the penalty?
[Foreign Language] we wanted to put in a few more -- increase a few more infrastructure assets there. [Foreign Language].
[Foreign Language] so why can't we apply for the sonar energy, sir?
[Foreign Language] that we'll have to take a call. The only spare land we have is in Paloncha. [Foreign Language]
[Foreign Language]
That is one of the options that we are...
Rajesh, sir, sorry to interrupt. Could you please return to the question queue for the followup question?
[Foreign Language] only 1 more minute. [Foreign Language]
No, that is a difficult thing because -- see that's -- that would depend on where we're situated. There are other things. Just because we have a conveyer gallery, it does not mean that it can be economically done at an industrial scale, so that's not feasible. We have a piece of land at Paloncha, a huge piece of land [Foreign Language]. One thing is those conveyers have regional discount...
Yes, I know, I know, sir. I know. I'm from McNally Bharat, so I know. We have done a lot of jobs there.
Next question is from the line of Saket Kapoor from Kapoor Company.
Sir, when we look at our consolidated numbers, there is an increase in other expenses, I think, so to the tune of INR 20-or-some odd crores. If you could explain the reason that lowered the profit by that equivalent amount and also on the pellet partner, we are losing money on the -- under the category of pellets with a run rate of now INR 30 crores, INR 35 crores. So...
[Foreign Language] you're asking about the increase in other expenditure of...
When we look at the consolidated numbers, general -- quarterly numbers. Shall I repeat, sir?
Quarterly numbers, I didn't get which? Yes, please.
[Foreign Language] stand-alone [Foreign Language] consolidated numbers [Foreign Language]. Other expenses [Foreign Language] numbers. INR 543 crores [Foreign Language]. There is an increase in -- when we take these...
So that is not Legacy. [Foreign Language] Australia [Foreign Language] mining [Foreign Language]. It is that expenditure.
It is expenditure pertaining to that.
[Foreign Language].
Okay. And there is no income as of now?
[Foreign Language].
[Foreign Language].
[Foreign Language] top layer [Foreign Language] over burden [Foreign Language]. When we over start [Foreign Language].
And sir, on the pellet [Foreign Language] what should we read into it? And how long will this losing trend continues? INR 30 crores, INR 34 crores quarterly loss [Foreign Language].
[Foreign Language] 9 months [Foreign Language] INR 17 crores loss [Foreign Language]. We have now increased our production up to 2 lakh tonnes. So...
Please correct me, sir, for 9 months, the losses in the pellet and other mineral services is to the tune of INR 104 crores. And quarterly run rate is INR 33 crores, INR 34 crores. So sir, [Foreign Language].
But if pellets only...
It is including, yes.
Is INR 36 crores. Panna diamond is INR 55 crores and Sponge Iron is INR 11 crores. The Panna diamond, as we know, that we have got the EC, we should be able to start it by the end of this month. SIU, we have to see that property, so there is no activity at Paloncha. Pellet plants, last 9 months, the losses have come down from INR 58 crores to INR 17 crores. The good thing -- the good news is that the penalty that we are paying for 50 -- sorry, INR 250 crores also covered the Tailings Dam at Donimalai. From where we could not extract the tailings to feed our pellet plant.
Now once we pay that, we will be able to feed the tailings to the pellet plant, and hence, the production were to go up. We are also contemplating having a partnership with private players to -- on O&M basis to run the pellet plant, so that on a revenue-sharing basis, we are exploring that revenue as well. So that should be finalized in another 3 to 6 months.
Okay. So you mentioned Panna diamond loss is at INR 50 crores?
Yes.
So that is an annual basis or going to -- for which -- for what period?
For the last 9 months.
9 months. And what steps are we taking to mitigate [Foreign Language] exploration -- madam, sir is only answering my previous question.
We are not the -- EC [Foreign Language]. It has been put up to the ministry. Once the approval comes in 3 or 4 days, we should be able to do it.
Will it cover the losses, sir. [Foreign Language] INR 50 crores, this will get covered post the mining...
Panna has never been very profitable for us, but [Foreign Language] waste mining [Foreign Language].
[Foreign Language]
Waste mining.
Waste mining [Foreign Language].
1 year, so we don't expect any diamond to be found because 1 year is waste mining. Panna has never been a very profitable venture for us, but it is our oldest mine, the only mine, so it is like the diamond on the crown. So it's something that more than...
It will continue posting losses?
But not to this extent. Initial, yes. When we do the waste filing, yes. But once it starts producing it will come on drastically, but it will not be a money spinner for us.
Next question is from the line of Reddeppa Gundluru from Financial Advisor Stock Analyst.
Congratulations for the wonderful figure in this quarter, sir. 62.6% jump and also dividend.
Thank you.
Wonderful performance, sir. Here my question is, sir, what is the progress of our Legacy, the Australian company, specific company, NMDC Limited. Sir, how much money is being given through Legacy Iron Ore by the way of the investment for the boosting of this company for operation? And my question is, when will we expect the profit from this company?
Well, the gold project that is already under mining is expected to give us 10 million tonnes, expected to give Legacy around 10 million tonnes to 11 million tonnes. And if we find more ore, it will only go higher, but 9 million tonnes to 10 million tonnes is -- but we'll have to invest more in exploration. So there are 5 other tenements there of gold close to us, so we can take a call of them simultaneously so that we get the economies of scale. Apart from that, our flagship Mount Bevan, we are tied up with, as you know, Hancock Prospecting, which is one of the largest mining companies of the world. And the PFS of the magnetite project is almost over. In another 2, 3 months, the PFS will be over. And the PFS of the lithium deposits would commence, I think, in another 2 to 3 months and should be completed in 12 to 18 months.
Sir, NMDC Steel Limited is taking very benefits from us, NMDC Limited. Sir, my question is, when will the money will be repaid, sir?
What?
We are giving the benefits to the NMDC Steel, sir. NMDC Steel is taking various benefits from us, NMDC Limited. So this -- all this is -- I mean, money, when will we expect it to be paid?
Once this breaks even. I think, we have already touched the level of 45%. We still need to go to 75%. And then the company will be able to generate cash profit, and then we'll be able to start repaying.
Next question is from the line of Mayur, an Individual Investor.
Yes, sir, I just wanted to ask regarding the mines, which we bought, I mean, we started a mine in -- gold mine in Australia, so has the production been started, regarding that?
That's exactly what I said, we have already started the mining. And right now, waste mining is being done. And in another month or 2, we should be able to hit the ore level. Right now, the waste mining level is being done. So obviously, when you start mining, we have to take off the top tier to reach the ore. So in another 1 or 2 months, I think, 2 months, we should be able to generate cash flows from iron ores. Australia is already working.
And last question is regarding NMDC Steel, so what is the production capacity to get breakeven?
Beg your pardon?
What will be the production capacity to get the breakeven and get the -- coming on net profits for NMDC Steel?
It should breakeven at 65%. That's around INR 5,000 tonnes of coils per day.
So can that be achievable in Q2 of FY '25?
Definitely, definitely. In fact, we have to achieve it by -- that should be achieved by Q1 of '25.
Thank you. Ladies and gentlemen, due to time constraint, that was the last question of the day. I now hand the conference over to Mr. Amit Dixit from ICICI Securities. Thank you, and over to you, sir.
Yes. Thanks, everyone, for attending the call this afternoon. I would like to thank the management for sparing their valuable time for interacting with us. I will now invite Mr. Mukherjee for closing remarks. Over to you, sir.
Thank you, Amit, and thank you all for listening in and for the great encouragement provided. We hope to continue our good performance not only to Q4, but also to -- in the coming year. We have major investment plans that we are lining up right now. They are being -- they are -- most of them are at drawing stage. So in times to come, NMDC and both also NSL would be an exciting thing to keep a watch on. And obviously, even we have great hope for our coal ventures at Jharkhand. If the CBA comes through, we should be able to do that fairly quickly. So overall, the future looks very bright and encouraging for NMDC. Thank you so much.
Thank you. On behalf of ICICI Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.