With limited production this year, we focused on aggressive cost reduction initiatives to reduce losses. As our mines return to production and domestic demand expands, we remain positive about the future.Kishore Kuma, CEO, Iron Ore
During the year we achived:
- Annual capacity of 2.29mtpa recommenced at Karnataka, with sales expected to resume Q1 FY2016.
- Production of pig iron ramped up to record production of 611kt.
- Increase in capacity at pig iron plant from 625kt to 700kt.
- Operating losses comfortably lower at US$(10.9) million.
At Karnataka, production recommenced at an annual capacity of 2.29mtpa on 28 February 2015, following receipt of all requisite clearances and approvals. About 0.3mt of saleable ore was produced during the quarter and the sales are expected to resume in Q1 FY2016 through the existing e-auction procedures managed by the Government.
During the quarter, the Ministry of Environment and Forests revoked its earlier order which had kept the environment clearances for iron ore mines in Goa in abeyance. We have been allocated an interim annual mining quantity of 5.5mt of saleable ore. Mining is expected to commence after the monsoon season, following the expected receipt of the remaining approvals from the Government.
With effect from 1 June 2015, the export duty on low grade iron ore (< 58% Fe) has been reduced from 30% to 10% and it will improve the prospects for Goan iron ore prices in this cycle of depressed iron ore prices.
Production of pig iron ramped up from 510kt in FY2014 to a record production of 611kt. In March 2015, further de-bottlenecking of the pig iron plant was completed resulting in an increase in capacity from 625kt to 700kt.
Iron ore spot prices averaged US$67.5 (FOB) for 62% Fe grade a tonne over FY2015 and price pressures intensified as the year progressed.
EBITDA in FY2015 increased to US$31.4 million, compared with a loss of US$(24.2) million in the previous year, due to higher volumes and improved margin from the pig iron business. In FY2015 operating losses were significantly lower at US$(10.9) million.
|Saleable ore (mt)||0.6||1.5||(59.0)%|
|Pig iron (kt)||611||510||19.8%|
|Iron ore (mt)||1.2||0.0||–|
|Pig iron (kt)||605||544||11.3%|
|(in US$ million, except as stated)|
|EBITDA margin (%)||9.6%||(9.1)%||–|
|Acquisition related amortisation||6.5||11.9||(45.5)%|
|Operating (loss) before special items||(10.9)||(70.0)||(84.4)%|
|Share in Group operating profit (%)||(0.6)%||(3.1)%||–|
Approval for commencing production at 5.5mt saleable ore capacity received and expect to resume operations post monsoons. An aggressive cost-reduction agenda is being implemented to effectively counter the current low price environment.
The pace of the Liberia project execution has been impacted by the Ebola virus situation for most of the year. The Company expects to progress exploration and commission a feasibility study in early FY2017.
- Ramping-up Karnataka mines to its capacity.
- Resuming mining operations in Goa and recommencing exports.
- Work with Government for removal of cap on mining capacity.
- Complete feasibility work at Western Cluster.