NMDC Ltd Management Discussions.

NMDC, incorporated in 1958, is one of the top profit-making Navratna public sector companies in the country.

690%

Average dividend payment in the last 5 years

1. NMDC: AN OVERVIEW

1.1 Introduction

NMDC, incorporated in 1958, is the largest iron ore mining company in India. With iron-ore production of around 32.36 million tonnes in FY 2018-19, it has a market share of about 22% domestically (excluding captive iron ore production). Average grade of iron ore of NMDC sold in the market is ~64% Fe, which is one of the best globally. NMDC has completed its 60 years of excellence in mining sector in Nov2018.

With a Profit (before tax) of Rs. 7,199 crores in FY 201819, it is one of the top profit-making Navratna public sector companies in the country. It has a net worth of Rs. 25,952 crores (as on 31st March, 2019). It has a strong history of rewarding investors with an average dividend payment of about 690% in the last 5 years.

NMDC continues to pursue policies and programmes to deliver long term value to all its stakeholders.

NMDC has also invested substantially in the socioeconomic development of the local communities, especially near its mining projects.

1.2 Operating Projects

NMDC is operating three highly-mechanised iron ore mine complexes. Two mine complexes are located in Dantewada (Chhattisgarh) namely Bailadila Iron Ore Mine, Kirandul Complex & Bailadiala Iron Ore Mine, Bacheli Complex with yearly production of around 23 MT. One mine complex located in Bellary (Karnataka) namely, Donimalai Iron Ore Mine produces 12 MT per annum. NMDC has total iron ore production capacity of 43 MTPA from all the existing mines.

NMDC is also operating a diamond mine namely Diamond Mining Project, Panna (M.P.), which is the only mechanized diamond mine in Asia, with yearly production of around 38,000 carats (FY19). NMDC also has a sponge iron unit of 200 TPD, at Paloncha (Telangana).

Apart from the above, NMDC has wide presence across the country as shown in the map.

1.3 Global Presence

• Spreading its footprint globally, NMDC has a majority stake of 78.56% in Legacy Iron Ore limited, Australia which has iron ore (magnetite), gold, nickel, base metal and tungsten interests (21 tenements) in Western Australia.

• ICVL acquired a coking / thermal coal mine in Mozambique in 2014 and operation of the same was taken over by ICVL. ICVL undertook strategic review of Benga operations and re-started the mining operations with new contracts from Nov2017. Benga Mine has produced 1 MT coking coal in FY2019.

• NMDC is in the process of making detailed exploration and setting up of a pilot-scale processing plant for gold in its mining lease in Tanzania.

1.4 Growth plan

• NMDC has made a comprehensive plan to enhance iron ore production capacity to 67 MTPA in the near future to meet the growing requirements of iron ore of the Indian Steel sector. The strategy focuses on growth largely through brown field expansion of existing mines and improving evacuation along with it.

• MDO has been appointed for development of a green- field mines (Deposit 13) by Joint Venture company of NMDC Limited & Chhattisgarh Mineral Development Corporation.

• NMDC is in the process of setting up a slurry pipeline in phases for evacuation of iron ore at economical cost to such locations from where the pellets /ore are made available to industry. Land acquisition for the slurry pipeline is in process. Increase of evacuation capacity through doubling of Kirandul-Kothavalasa (KK) line is also in full swing and few completed sections have been opened for traffic.

• NMDC has developed an intermediate iron ore stockyard at Kumarmaranga in Chhattisgarh for uninterrupted supplies to customers, which will start operation in FY2020.

• For further expansion in capacity, NMDC is pursuing allocation of new iron ore deposits both through participation in auction and reservation through government dispensation route (section 17A(2A) of the revised MMDR Act, 2015). NMDC emerged as preferred bidder for Chigargunta- Bisanatham gold block through auction in July19.

• Besides, as a part of its diversification and forward integration plan, it is setting up a 3.0 MTPA green

field Steel Plant at Nagarnar in Chhattisgarh, which is in advanced stage of construction and expected to start operation in FY2020. It also has forayed in pellet-making with a 1.2 MTPA pellet plant at Donimalai. Another 2 MTPA pellet plant is in the process of being set up at Nagarnar, Chattisgarh as a part of slurry pipeline project in Phase-I.

1.5 Exploration and Reserve Estimation:

NMDC has a dedicated exploration wing at Raipur, which is fully equipped to undertake mineral exploration works. NMDC has done more than 16000 mts of core drilling in FY19, at existing mines. Besides, it also has a well-equipped Centre for Geostatistics. A remote sensing lab at Corporate Office, Hyderabad has been set up. NMDC has full- fledged mine planning wings at Corporate office as well as at project sites for ore body modelling and reserve estimation, with advance softwares like Surpac, Whittle and Mineshed.

1.6 Research & Development:

NMDC operates a state-of-the-art R&D centre at Hyderabad, which is declared as a "Centre of Excellence" by UNIDO. Recently, R&D center has also recognised by Department of Scientific and Industrial Research (DSIR), which is valid up to 31- 03-2022. R&D undertakes various projects related to the operational problems of the units of NMDC, and provide solutions in terms of improvement in the system or change in technology, to achieve continual improvement in its processes and operations. R&D centre also provides solutions to the external agencies.

2. MARKET ENVIRONMENT:

2.1 Economy:

2.1.1 Global:

• Following a broad-based upswing in cyclical growth that lasted nearly two years, the global economic expansion decelerated in the second half of 2018. Activity softened amid an increase in trade tensions and tariff hikes between the United States and China, macroeconomic stress in Argentina and Turkey, disruptions to the auto sector in Germany, tighter credit policies in China, a decline in business confidence, a tightening of financial conditions, and higher policy uncertainty across many economies.

• After peaking at close to 4 percent in 2017, global growth remained strong, at 3.8 percent in the first half of 2018, but dropped to 3.2 percent in the second half of the year. One year ago, the global economy was projected to grow at 3.9 percent

in 2018 and 2019. But due to weakening global expansion, expected to persist into the first half of 2019, global growth is projected to slowdown from 3.6 percent in 2018 to 3.3 percent in 2019,

before returning to 3.6 percent in 2020. Beyond 2020 growth will stabilise at around 3.5 percent, bolstered mainly by growth in China and India.

• While 2019 started out on a weak footing, a pickup is expected in the second half of the year. This pickup is supported by significant policy accommodation by major economies, made possible by the absence of inflationary pressures despite closing output gaps. The US Federal Reserve, in response to rising global risks, paused interest rate increases and signaled no increases for the rest of the year. The European Central Bank, the Bank of Japan, and the Bank of England have all shifted to a more accommodative stance. China has ramped up its fiscal and monetary stimulus to counter the negative effect of trade tariffs.

• Global trade, investment, and output remain under threat from ongoing trade tensions. The November 30, 2018, signing of the US-Mexico- Canada Agreement to replace the North American Free Trade Agreement; the extension past March 1,2019, of the truce between the United States and China on tariff increases; and the announced reduction in Chinese tariffs on US car imports are steps in the right direction to reduce trade tension. However, final outcomes remain subject to a negotiation process in the case of the US-China dispute and domestic ratification processes for the US-Mexico-Canada Agreement.

2.2 Industry structure and developments: Steel and Iron Ore

2.2.1 Global:

• Steel prices tumbled sharply in Q1 2019, even more than expected, which looks unsustainable and will recover particularly in China and the US, where government stimuli are now laying the

Despite slowing global economic growth, steel demand forecast projects still sizeable, even robust growth in the near term - 2019 and 2020. This growth is powered mostly by government stimuli in China, India, the US and Southeast Asia.

foundations for better demand. However, looking at 2019 and 2020 on an average annual basis, price cycle will follow a descending trend leading to fall of price year-on-year. However, as demand in China shows unexpected resilience, steelmaking raw- material prices remain higher than assumed in the steelmaking costs supporting steel-price forecast. Prices will remain low over the medium term and will stabilise in long term making it viable steel industry.

• Despite slowing global economic growth, steel demand forecast projects still sizeable, even robust growth in the near term - 2019 and 2020. This growth is powered mostly by government stimuli in China, India, the US and Southeast Asia. However, after 2020, it is expected that Chinese demand to start falling in absolute terms. India continues to show the most promising demand.

• Indeed, capacity has already started to shift away from East Asia, which closed more than 130 Mtpa between 2015 and 2018 - mostly in China. In contrast, South Asia accounted for the largest gains - mostly India -, Southeast Asia and the Middle East. Over the coming two years, the same trend of stabilisation, update and consolidation in China and expansion in India, Southeast Asia and the Middle East will continue. High steel prices in 2017 and 2018 have spurred investment everywhere, with additional capacity expected to come online in most regions, including the United States and the EU.

• On other hand, uncertainty over the scale and duration of Brazilian production cuts in the aftermath of the Brumadinho tailings dam failure has changed the entire psyche of the iron ore market. Prior to the January 2019 dam failure, the widely held view was for iron ore to enter a period of cyclical and structural weakness that would drive prices towards $60/t CFR over the next 2-3 years. But that view has now been pushed out by between 1-5 years, depending on revised assumptions for Brazilian supply, Chinese demand, and the extent to which other seaborne suppliers can offset the forecast shortfall from Vale.

Production forecast for Vale, pegging 2019 output at 310 Mt , which is 75 Mt below reported production in 2018. The Brazilian tailings dam decommissioning process is not a one-year fix, with smaller scale production cuts likely to persist through 2022.

• Overall, global prices trended down slightly in 2018, but Chinas steel restructuring programme and rising environmental standards have transformed pricing and demand for iron ore.

Prices for higher grade iron ore products increased. Wider price spreads based on grade and quality are symptomatic of these structural changes and will remain an important feature of the market for years to come. Increased pressure on steel producers around the world to increase efficiency, reduce energy consumption, and meet environmental benchmarks continued the slow decline in use of low-grade iron ore and spurred investment in the production of iron metallics and high-grade iron ore products, such as pellets.

• Global iron ore production increased to 2.50 billion tonnes (usable ore basis) in 2018, up from 2.43 billion tonnes in 2017. Australia remained the highest producer with an estimated production

of 900 million tonnes in 2018. India was the fourth largest iron ore producer.

Top-5 iron ore producing countries (usable ore basis)
2017 2018
Australia 883 900
Brazil 425 490
China 360 340
India 202 200
Russia 95 95
World Total 2,430 2,500
(rounded)

Source: USGS

Price of Iron ore was averaged at $83/t CFR in Q1-19, leading to forecast price for CY 2019 to $82/t CFR, whereas price forecast for 2020 is about $75/t CFR.

India:

• Production of Iron Ore in India at 210 MT in FY2019 was 4.5% higher than FY2018. Exports from the country was approx. 13 MT during the year FY2019, Most of the export from India was low grade ore (<= 58% Fe), which has lower export duty of 10%.

• Indian iron ore production is likely to grow in line with domestic steel production, which has been envisaged to 300 MTPA steel capacity by FY31. In short term, domestic supplies are likely to grow substantially till 2020 as non-captive miners maximising production, with their leases expiring by 2020 (as per MMDR Amendment Act, 2015). Production of Iron Ore is likely to hamper due to delay in auction of iron ore lease after March, 2020.

• Indias Iron Ore reserves and resource

Reserves/Resource Reserves (MT) % of total Remaining Resource (MT) % of total Total (MT)
Hematite (01.04.2015) 5422 24.11% 17065 75.89% 22487
Magnetite (--do--) 53 0.49% 10713 99.51% 10789
5475 27801 33276

Source IBM

NMDC is bullish on the growth prospects of Indias steel industry with its competitive advantages and the impetus being given by the government to the steel sector. National Steel Policy 2017 aims to achieve a steel production capacity of 300 mtpa by 2030-31, on the back of envisaged growth in domestic steel demand in all key sectors, such as, infrastructure, housing, automobile, amongst others. Also, increase in demand of high grade ore and price of iron ore globally will also help NMDC in improving its performance it terms of quantity as well as EBITDA margins.

3. NMDC - OPPORTUNITIES AND THREATS a) Opportunities

i) Envisaged growth in domestic steel production on account of factors mentioned below would lead to higher demand of Iron Ore in the country:

• Growth in steel intensive sectors such as housing, infrastructure, automotive, rail and road, consumer durables in the coming years.

• Growing urbanisation of the Indian economy, one of the best in world, coupled with rising income levels of the burgeoning Indian middle class.

• Government initiatives such as Make-in-India, Freight corridors, 100 Smart cities, Rural electrification and Housing for all by 2022.

• Increase in demand of high-grade ore worldwide considering environmental concerns.

• Continuous thrust by the government to use domestically manufactured iron and steel products in government procurement.

• Restrictions on steel imports in the country on account of measures being taken by Govt. of India such as anti- dumping duty, MIP amongst others. would also help domestic steel production to rise.

ii) Grow business through Special Purpose Vehicles (SPVs) envisaged in mineral rich states like Karnataka and Jharkhand. Play an important role in both the Steel and Mining SPVs being set up in these states.

iii) Acquisition of Strategic and critical mineral assets based on business potential and national interest.

iv) NMDC being one of the agencies nominated to undertake exploration activities is investing to intensify exploration for mapping of minerals across the country, which could open new avenues for the company to grow.

v) Closure of steel plants under effect of environmental concerns, especially in China, will open the avenues for Indian Steel sector to grow and increase its capacity which in-turn will increase the iron ore demand.

b) Threats

i) Backward integration by Steelmakers into iron ore mining through auction route will significantly shrink the market of the Company.

ii) Threat of non-renewal of iron ore leases or renewal with high premium or through auction will affect balance sheet of the miners.

iii) Indian iron ore industry will continue to be uncompetitive on a global level due to higher rates of royalty and other levies such as DMF, NMET, Export duty etc. as well as significantly higher logistic costs.

iv) Increasing regulatory pressure on environment, health and safety and sustainability.

v) Disturbances due to Maoist activities in Bailadila region from where majority of NMDCs production comes.

vi) NMDC may be affected by government actions, including the imposition of tariffs and duties, speculative trades, regulatory issues arising due to judicial verdicts, the development of products substitutes or replacements, recycling practices, an increase in capacity or an oversupply of the companys products in its main markets.

vii) Huge surplus steel capacity in most regions including China will continue to exert downward pressure on steel prices and thereby iron ore prices.

It would be pertinent to note that iron ore mining industry in India is expected to witness enhanced competition over the next few years. On the one hand, domestic iron ore production is on the rise, with production increasing by over 34% in the last three financial years (Iron ore production in India including captive: FY19- 210 MT; FY16-155 MT) and this trend is likely to continue in the near term. On the other hand, with domestic steelmakers acquiring mines through auction as the option to integrate backwards, the market for merchant miners may be affected adversely in the medium to long-term. Also, there is no clarity about allocation of mines or renewal of leases to government companies and applicability of premium for allocation, which may affect NMDC in future.

NMDCs business would continue to be affected by developments impacting the demand-supply scenario and price fluctuations of iron ore in both the global and domestic markets.

4. SEGMENT WISE OR PRODUCT WISE PERFORMANCE Physical and Financial performance

Physical Performance of NMDC

Details Production: 2014-15 2015-16 2016-17 2017-18 2018-19
Production of Iron Ore WMT (In lakh tonnes) 304.41 285.74 340.05 355.76 323.61
Production of Sponge Iron (tonnes) 28,993.96 6,614.26 5,474.11 NIL 2,475.37
Production of Diamonds (carats) 35,085.46 35,558.31 35,635.99 39,393.72 38,148.77
Sales:
Sale of Iron Ore (in lakh tonnes) 305.16 288.39 356.21 360.75 326.56
Sale of Sponge Iron (tonnes) 25,191.38 8,364.52 8,579.42 Nil 495.58
Sale of Diamonds (carats) 38,788.58 36,682.93 25,631.46 33,175.34 29,345.54

Financial Performance of NMDC

(Rs. in Cr.)

Details 2014-15 2015-16 2016-17 2017-18 2018-19
Sale of Iron Ore 12,197.69 6,327.93 8,708.90 11,490.93 11,997.98
Sale of Diamonds 50.06 52.61 41.91 35.17 38.86
Sale of Wind Power 5.96 6.30 7.48 6.50 5.51
Sale of Sponge Iron 48.09 13.14 13.13 0.00 0.94
Sales- Pellet 0.00 0.00 0.00 25.40 76.52
Sales - Others 54.62 57.29 58.22 56.91 32.86
Turnover 12,356.41 6,457.27 8,829.64 11,614.91 12,152.67
EBITDA 9,930.07 4,374.21 4,509.86 6,472.13 7,518.91
PBT 9,767.84 4,092.76 4,293.68 6,179.66 7,199.06
PAT 6,421.86 2,712.22 2,589.14 3,805.88 4,642.11
Dividend 3,389.83 4,361.19 1,313.02 1,676.86 1,690.14
Dividend as % of PAT 53% 161% 51% 44% 36%

5. OUTLOOK FOR NMDC

NMDC proposes to augment its production capacity of iron ore to 67 million tonnes by 2021-22. It has also embarked on value addition projects by setting up pelletisation plants by utilising slimes and 3.0 MTPA integrated steel plant in Chhattisgarh. NMDC-CMDC Limited (NCL), a JV company of NMDC Limited and CMDC Limited, will also start production from Dep-13 through MDO in near future. NMDC has also developed an intermediate stock pile at Kumarmaranga near Jagdlapur to ensure uninterrupted supply of ore to the customers from highly affected Naxal area.

Government of India has charted a road map to augment Indias Steel production capacity to 300 Mtpa by 2030-31. To fulfill this vision, NMDC proposes to act as a facilitator and developer of green field steel plants by creating Special Purpose Vehicles (SPVs) in the mineral rich states of Jharkhand and Karnataka.

NMDC also proposes to invest in strategic and critical raw materials which are required by our nation for long term supply security. In line with this strategy, NMDC has created NMDC Global department and is scouting for rare earth minerals in India and abroad, along with IREL under MOU.

To diversify further its business, NMDC participated in auction of Gold mine and was declared as preferred bidder for Chigargunta-Bisanatham Gold Block in A.P. in July, 2018.

NMDC is committed to focus on maintaining cost competitiveness in global and domestic market in a scenario where prices are expected to remain subdued.

Along with robust strategic planning to support its growth agenda, NMDC continues to enhance organisational capabilities and other enablers to achieve its short-term and long-term objectives.

6. RISKS AND CONCERNS

NMDC is exposed to sharp fluctuations in demand for its products and volatility in prices. Weaker commodity price outlook would continue to impact NMDC over the next few years till the global and domestic markets recover.

MMDR Amendment Act 2015 poses increased risks for NMDC as its major customers now have the option to acquire captive mines in mineral rich states. Two of NMDCs major customers, JSW and ESSAR, have already acquired iron ore mines in the state of Odisha and Karnataka through auction route. JSW has already started production from newly acquired mines and planned to increase it further in near future. More auctions of iron ore mines are likely to come up in the near future for the end-users. This is likely to adversely impact the market for NMDC over the medium to long term.

Suspension of operation from Donimalai Mine from 03.11.2018 onwards, due to high premium (80%) demand while renewal of lease, is also affecting the production of NMDC badly. Donimalai mine has capacity of 7 MTPA, but it could achieve only 2.1 MT of iron ore production in FY19 due to suspension of operation. The Division Bench of the Honble High Court of Karnataka, Bangalore pronounced the judgement on 10.07.2019. The operative portion of the Order is as under:-

Quote

i) Writ Petition is allowed;

ii) The condition imposed to levy premium equivalent to 80% of average sale price of iron ore published by the Indian Burea of Mines while extending the period of lease vide Communication / Order No.CI 78 MMM 2016 dated 02.11.2018 passed by the Secretary

Department of Commerce & Industries, Govt. of Karnataka as amended by Corrigendum No.CI 78MMM 2016 dated 15.11.2018 and intimating the same through the letter No.DMG/MLS/ML-2396/ 2018-19/6360 dated 23.11.2018 passed by the Director, Department of Mines and Geology,

Bengaluru is set aside.

No Costs.

Unquote

On the other hand, all the leases of Bailadila Sector except Dep-11 ML (i.e. Dep-11A, 11B & 11C) are due for renewal in March 2020. NMDC is pursuing with government for timely renewal of leases to avoid any loss of production.

One of the major risks that NMDC is facing is the disturbances due to Maoist activities in Bailadila region. The Company is in contact with the Government agencies at all levels for support and protection of its employees and installations.

Timely enhancement of evacuation capacity in line with production plans also remains a potential risk. This could impact production and inventory levels for NMDC.

7. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

NMDC has put in place all the necessary internal control system. Necessary disclosure in respect of Internal Control Systems and their adequacy has been made in Annexure-C to the Independent Auditors Report dated 28.05.2018 which forms part of the Annual Report.

8. DISCUSSIONS ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

During the year under review, the Companys revenue from operations increased by 4.63% from Rs. 11,615 crores to Rs. 12,153 crores mainly on account of:

• Decrease in Sales quantity by 10.31% from 360.75 Lakh Tons to 323.57 Lakh Tons.

• Realisation was higher by 16.42% during this period from Rs. 3,185/- per ton to Rs. 3,708/- per ton.

• Details on financial performance with respect to operational performance are given in detail in the Directors Report.

9. MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/ INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED.

Human capital of NMDC has been its key driving factor and its greatest asset. The company has made concerted efforts in keeping the workforce highly engaged and motivated. On one hand, continuous improvement is made to improve the quality of life at the townships with investments in parks, community halls, upgradation/construction of new quarters, clubs, gymnasium, facilities for different sports such as tennis, badminton, table-tennis, cricket, amongst others. On the other hand, training and skill upgradation forms an important area where first assessment is made to understand employee needs and concerns and then, appropriate training programmes are organised throughout the year. NMDC has also started culture building initiative by imparting specific training through workshop on work culture and happiness. As a result of the all-round measures being taken by the company, attrition from NMDC has been marginal, in spite of remote locations of the NMDC mines.

It is worth highlighting that industrial relations have been cordial all along during the year. Any difference is sorted out through bipartite discussions at appropriate fora. The cooperation and support of workmen represented by All India NMDC Workers Federation (AINMDCWF) in this regard is praiseworthy. Pay revision of workmen w.e.f. 01.01.2017 has been also completed and implemented successfully in FY19.

Keeping in view the various diversification projects viz.

Steel Plant and Pellet Plant, and expansion of existing projects, the company has taken initiative to train /retrain its existing manpower and also to go for fresh induction. About 639 workmen, 23 executives 55 Junior Officers have been recruited in FY19, apart from contract workforce at

Nagarnar Steel Plant. All were provided on-the- job and off-the-job training in order to prepare them for taking up the challenges of working in NMDCs production projects, upcoming Steel Plant as well as any new venture that Company may like to take up. Further recruitment process is in progress for upcoming projects.

During the last five years, the number of people on rolls as on 31st March is as follows:

2014-15 : 5,490
2015-16 : 5,773
2016-17 : 5,572
2017-18 : 5,382
2018-19 : 5,887

The company has made concerted efforts in keeping the workforce highly engaged and motivated. As a result of the all-round measures being taken by the company, attrition from NMDC has been marginal, in spite of remote locations of the NMDC mines.

10. DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS :

Details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios :

(i) Debtors Turnover There is no significant change in the ratio
(ii) Inventory Turnover There is no significant change in the ratio
(iii) Interest Coverage Ratio There is no significant change in the ratio
(iv) Current Ratio There is no significant change in the ratio
(v) Debt Equity Ratio There is no significant change in the ratio
(vi) Operating Profit Margin

(%)

There is no significant change in the ratio
(vii) Net Profit Margin (%) There is no significant change in the ratio
or sector-specific equivalent ratios, as applicable. NIL

11 DETAILS OF ANY CHANGE IN RETURN ON NET WORTH AS COMPARED TO THE IMMEDIATELY PREVIOUS FINANCIAL YEAR ALONG WITH A DETAILED EXPLANATION THEREOF." (FOR STANDALONE BASIS)

2018-19 2017-18 (% Change)
Net Worth 25,952 24,354 6.56%
(Rs. In Crore)
PAT 4,642 3,806 22.00%
Return on Net 17.89 15.63 14.46 %
Worth:

Buy back during the current year of 10.20 cr share @ Rs. 98/= per share, for total consideration of Rs. 1006.73 crore (inclusive of Buyback Exp)

• Interim Dividend paid during the current year Rs. 5.52 per share, total consideration of Rs.2037.55 crore (Including DDT Rs. 347.41 crore)

12. SUSTAINABILITY

NMDC has invested in Sustainability right since its inception. It is on this account that NMDC has been able to create a favourable business environment in the areas it operates and has developed a strong local understanding of community concerns and local sensitivities. NMDC takes numerous steps to protect & enrich the environment. NMDCs efforts in sustainability have been rewarded with 5-star rating to five of its mechanised mines.

NMDC has also published its 2nd sustainability report for 2017-18, prepared based on Global Reporting Initiative (GRI) standards, steering in a new determination in the organisation to take Sustainable Development to greater heights by leveraging the decades of relentless efforts undertaken. NMDC Ltd. has bagged Certificate of Merit in Challengers Category at Frost & Sullivan-TERI Sustainability 4.0 Awards, which was held on 12.06.2019 at Mumbai.

The four major pillars of Sustainability on which NMDC focuses on are environment, health, safety, and society.

13. ENVIRONMENT PROTECTION AND CONSERVATION

• The environmental monitoring studies are conducted through recognised laboratories of MoEFCC/ CPCB, covering all environmental parameters. Based on the results of monitoring studies, it is concluded that all environmental parameters are well within the limits during FY 18-19. A total of six Continuous Ambient Air Quality Monitoring Stations (CAAQMS) have been installed at Bacheli project (2 nos), Kirandul project (2 nos) and Donimalai Project (2 nos) for recording of Ambient air quality parameters such as PM10, PM2.5, SO2, NOx and CO in real time.

• Carbon footprint studies are conducted annually for the production projects and the Green-House Gas emissions are disclosed in Carbon disclosure project.

• Sustainable Mining Initiatives (SMI) audit was done at all Iron Ore Mining projects of NMDC and recommendation are being implemented to obtain 5-star rating for all mines. 5 mines during the year 2018 received the 5-star rating given by IBM, Ministry of Mines, GoI.

• Indian Council of Forest Research and Education (ICFRE, Dehradun) was engaged for preparation of Environmental Management and Reclamation & Rehabilitation Plan for Deposit 14 ML and 11 ML of BIOM, Kirandul Complex, South Bastar, Dantewada District, Chhattisgarh.

• Water Audit is conducted at regular intervals at all projects of NMDC and recommendations of audit are being implemented to conserve water and to improve the efficiency of motors / pumps, arrest leakages, etc.

• The environmental pollution control works are undertaken such as de-silting of check dams / check bunds, tailing dams, construction of buttress walls at toe of waste dumps and geo-coir matting for stabilisation of waste rock dumps.

• About 90 wells are being monitored at NMDC projects to monitor underground water level, which also covers the quality analysis in all 4-seasons of the year. Studies are revealed that there has been an increasing trend in the ground water due to hydraulic loading by the existing check dams and check bunds. Limited usage of ground water and continuous recharge has also helped in the process.

• To enhance the green cover in the region, NMDC has contributed Rs.5 Cr during 2018-19 for Hariyar Kosh for undertaking plantation in the state of Chhattisgarh. Since 2010 NMDC has contributed an amount of Rs.98 Cr towards plantation.

• NMDC has set-up Sewage Treatment Plant (STP) with advanced treatment technology (Sequential Batch Reactor) at Bacheli (2 MLD) for treatment of domestic waste water. STP works are in progress at Kirandul (3 MLD) and Donimalai (3 MLD) townships. The treated water will be reused for green belt development.

• A total of 1,13,650 saplings planted in the FY 2018-19 in and around the boundary of all the NMDC projects. Since inception of Mining activities in Bailadila, more than 20 Lakh trees have been planted in and around leases of NMDC Limited.

14. HEALTH AND SAFETY

Health and Safety continue to be our priority with employees and contractual workmen at our projects adhering to the SOPs and safety norms. NMDC appreciate that safety is a journey and is committed to continually improve its performance and set high standards.

Safety Committees, including representation from workmen, have been constituted in every operating mine and pit safety meetings are held every month discussing the safety matters and corrective actions related to work atmosphere

Mine Level Tripartite Safety Committee Meetings have been conducted in each of the operating mines. This meeting is conducted once in a year at project level with senior officials, Union Representatives and DGMS Officials in which Safety Performance and its appraisal are made and the recommendations are implemented. Corporate Level Tripartite Safety Committee Meetings are being held regularly once in a year at Head Office and the recommendations are implemented.

NMDC provides extensive safety training programmes, including simulator training on dumper and shovels, to inculcate safety habits and mindset at work to its employees. Behavioral based safety trainings are also given to the employees.

In order to ensure that safety systems are up to date and also comply with the latest safety regulations, a cross-project internal safety audit has been started in NMDC. Safety Management system has been implemented in all our mines. Risk Assessment studies are being conducted regularly.

Severity Rate for the year 2018-19 is 7.04.

(Severity Rate=Mandays lost per 1000 Mandays worked).

OHS Activities:

Occupational Health Services have been provided with adequate manpower and infrastructure and are functioning in full-fledged manner at all the projects, headed by Qualified Doctors trained in OHS at Central Labour Institute, Mumbai. Periodical Medical Examination under statute is carried out regularly in all the projects.

NMDC strives to ensure that workers are not exposed to occupational hazards that negatively affect their health. NMDC also has well equipped hospitals with capable medical teams available 24/7 to support the health and well being of the workers and the surrounding community.

Technological conservation, Renewable energy developments, Foreign Exchange conservation

May kindly refer Directors Report and its Annexures.

15. CORPORATE SOCIAL RESPONSIBILITY

• NMDCs CSR programmes are carried out in areas which are remote, backward and face serious law and order problems due to left-wing extremism. The area is among the most backward regions of India and inhabited predominantly by Scheduled Tribes and Scheduled caste population who are poor, underprivileged, deprived, suffer malnutrition and devoid of support for their socio-economic needs. It is only because of its strong focus on social responsibility programmes aiming at enhancing the quality of life of the local communities that NMDC has been successfully mining in these areas.

• NMDC is the model PSE in the field of CSR and its model of stakeholder consultation mechanism for implementation of its CSR has been recommended by Department of Public Enterprises, Government of India for emulation by all other CPSEs.

• The Company is investing substantially in promoting education, development of physical infrastructure, providing healthcare services and clean drinking water along with imparting technical skill sets aimed at enhancing employability and income generation etc. among other initiatives primarily in surrounding areas of its operations.

• On 17th May, 2018, CMD, NMDC received the prestigious S&P Platts Global Metal Award 2018 under CSR category, organised by Platts at London

• Annual Report on CSR activities as required in terms of Companies Act, 2013 is annexed to the Directors Report.

NMDC also has well equipped hospitals with capable medical teams available to support the health and well being of the workers and the surrounding community.