March 21 (Bloomberg) -- NMDC Ltd., India’s largest iron ore producer, plans to slash the funds set aside to buy overseas assets by 60 percent next year after spending 5 percent of the budget to buy companies.
The company may spend as much as $200 million in the year starting April 1, Finance Director Swaminathan Thiagarajan said in a telephone interview. NMDC had planned to spend $500 million in the 12 months to March 31.
Soaring valuations and competition hampered NMDC’s efforts to acquire iron ore and coking coal assets last year, former Chairman Rana Som said in November. The company is seeking to secure raw material supplies for its proposed 3 million metric ton steel plant that will start in 2014 in the eastern state of Chhattisgarh.
NMDC may decide on buying Minemakers Ltd.’s Wonarah rock phosphate mine in Australia within a month and is also looking to purchase a coking coal mine in Mozambique and an iron ore project in Brazil, Thiagarajan said, without giving details.
“Our team will visit the coal mine block in Mozambique shortly to take a call on its feasibility,” Thiagarajan said from his office in Hyderabad, where the company is based. “The biggest challenge that we have to overcome in most of these assets that we aim to buy is setting up of basic infrastructure, which has large cost implications.”
The shares fell as much as 2.1 percent to 160.25 rupees and traded at 161.70 rupees as of 11:05 a.m. in Mumbai. The stock has gained less than 0.5 percent this year, compared with a 12 percent increase in the benchmark Sensitive Index.
NMDC, which spent about $20 million buying a 50 percent stake in Australia’s Legacy Iron Ore Ltd. in December, plans to acquire a mine with 360 million tons of deposits in Mozambique’s Tete province, Chairman Narendra Kumar Nanda said on Jan. 5. The company is also considering buying a coal asset in Russia and an iron ore and manganese mine in Brazil’s Amapa province, he had said.
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