From sledgehammer blast mining for iron ore to precision mining with gold, NMDC eyes big critical minerals move
HYDERABAD: When India's largest iron ore miner, NMDC Ltd, made a strategic foray into gold mining in Australia in November 2023, the company's managers believed they had nothing new to learn.
After all, they were in the mining business for the past six decades.
What they didn't anticipate was that their traditional blast and grab operation was of no use in gold mining, and for the first time, they were forced to acquire new skills—the precision of a surgeon needed for vein mining. This new skill is also giving the Navratna PSU specialised knowledge needed for deep-seated critical minerals extraction.
Today, NMDC has not only mastered the art of vein mining but is also all set to rake in its first set of profits from mining this precious yellow metal through its Australian arm, Legacy Iron Ore Ltd, after the initial setbacks.
'The last two-three months we turned around and were cash positive. If things continue the way they are going right now, we should be in the green this year (2025-26),' Amitava Mukherjee, chairman & managing director, NMDC Ltd, told TOI in an exclusive chat recently.
Mukherjee said the diversification into gold mining has been a strategic learning curve for the company, with its Mt Celia gold mine in Australia, though relatively small in scale, serving as a crucial learning ground.
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"It was a very conscious forward point. In the last 60 years, we did bulk mining of iron ore, which is completely different from vein-type, deep-seated mining. When we went ahead with this project, we found we had no expertise in this type of mining," Mukherjee said. Explaining the unique challenges this type of mining poses, he said the gold deposits at Mt Celia have veins as thin as one to two meters, requiring precise extraction techniques.
This is in stark contrast to NMDC's traditional iron ore mining operations, where bulk extraction methods are employed.
"In iron ore mining, you would blast from left to right throughout. But in gold mining, blasting has to be absolutely controlled. It has to be precise because all you have is just two meters. The moment you dilute it, the grade drops from 2 gm to 1 gm per tonne," Mukherjee said. 'You have to spot it correctly; the size of the equipment has to be very correct.
Every aspect of vein mining and deep-seated minerals mining is completely different,' he added.
He said the decision to start small with Mt Celia, which has reserves of around 8,000 tonnes, was conscious. 'As a matter of strategic forward thinking, we started with a very small gold tenement at Mount Celia. So if we lose, we lose less money. Let's not start with a Rs 1000 crore sort of investment, we thought,' he explained.
The Mt Celia mine currently produces gold ore with grades ranging from 1.5 to 2.1 grams per tonne, which Mukherjee described as "pretty good in gold mining.
"
Having mastered precision vein-mining, NMDC is now looking to expand its gold mining portfolio, with several tenements adjacent to Mount Celia under consideration. "We have a lot of gold tenements which are pretty good for us. However, we decided to start with Mount Celia's Blue Peter and Kangaroo Bore pits to gain experience first," Mukherjee said.
Apart from Mt Celia, it also has Yilgangi, Yerilla, Patricia North, and Sunrise Bore in Australia.
While acknowledging the initial losses, he said NMDC remains confident about the long-term prospects of its gold mining operations. "I'm not really bothered about that Rs 150 crore or Rs 160 crore losses that we made. What we lost, we'll gain next year," Mukherjee stated, emphasising the strategic value over short-term financial results.
NMDC, which acquired a 50% stake in Legacy Iron Ore in 2011 and has been steadily hiking its stake, currently holds over 92.84% stake in the Australian company with plans to take this up to 100% over a period of time.
NMDC's experience in gold mining is expected to play a crucial role in its future diversification plans, particularly in mining other strategic minerals that require similar precision mining techniques, he indicated.
The company views this as a necessary evolution in its mining capabilities that will help it position itself for opportunities in various strategic critical minerals, Mukherjee said, pointing out that minerals like lithium require the same set of expertise.
Gold and lithium are among the 10 critical minerals that NMDC has decided to focus on. These also include copper, coking coal, nickel, manganese, dolomite, bauxite, and cobalt.
'As a company, we have been mandated by the board to focus on these 10 minerals, which includes our bread and butter iron ore and other critical minerals. We are very clear we are not going to do rare earth minerals,' he said.
This foray has also meant the setting up of new operational divisions and acquisition of specialised expertise in NMDC. The company has established a dedicated team for precision mining operations, marking a departure from its traditional bulk mining focus.
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