NMDC sinks to 52-week low on ore price cut

Shares of NMDC tumbled over 8 per cent to touch fresh 52-week low of Rs. 78.00 on Thursday after the company announced Rs. 200 per ton cut in iron ore lump and fines prices. This price cut raises concerns about lower demand for iron ore from the steel industry.

The state owned miner has fixed prices of lump ore (65.5 per cent, 6-40mm) at Rs. 2,900 per ton and fines (64 per cent, - 10mm) at Rs. 2,660 per ton with effect from August 20, 2019.

The market participants ignored the news that the Ministry of Mines’ revision authority on Wednesday put a stay on Karnataka government's decision to withdraw a 20 year extension of NMDC's Donimalai lease. The stay order would stop the state government to take any further action on the country’s largest iron ore miner regarding mining lease or initiate auction process of the Donimalai mine.

This decision is crucial for the company as the Donimalai mine has a capacity of 6 million tones per annum and once it is fully operational, it would boost its production by nearly 20 per cent.

NMDC had reported a 21 per cent jump in production of iron ore to 8.43 million tonne (mt) compared to 6.98 mt in Q1FY19. Sales of iron ore registered a growth of 28 per cent at 8.67 mt in Q1FY20 over 6.78 mt in Q1FY19.

NMDC shares extended its losses into fourth straight session and closed at Rs.78.65 on BSE. The stock opened at Rs. 86.25 and crashed nearly 9 per cent to hit an intraday low of Rs. 78.00. It had hit its 52-week high of Rs. 124.30 on the BSE.