We Plan To Develop The Metals Division At Par With Our Fossil Fuels Business: GMDC

Your capital outlay for FY25 stands at Rs 3,041 crore. Delineate where it will be deployed and how will it propel GMDC’s future?
Our ambition is to take this company, principally a lignite mining one, to have an annual production capacity of 40-50 million tonnes per annum from its present 8 million tonnes. Lignite and coal may have become slightly unfashionable in the eyes of the bankers, but it is a harsh reality that, for the coming two decades, both will have a significant role. We believe we have a solid record of monetising these minerals and can capture value here.

Second, while we will continue to make money from here, we realise that the world is changing, and the company has to be strengthened for the future. We plan to develop the metals division of our company, which does well but in percentage terms it is not very big. The idea is to make it as big as our fossil fuels business. So we believe that this outlay will usher in an era of innovation and industry leadership.

The capex outlay also gives a significant chunk to extracting and processing rare earth elements. What can we expect from GMDC in this space?
This topic concerns national security, and I will be more open as things evolve. However, GMDC is interested in critical minerals; we own a world-class underground copper mine. We could not work on it until now because it is underground, but in the coming 2-3 financial years, we will be developing it, and it is a very crucial transition metal.

Your last two quarters were muted. Tell us what happened here and what went wrong. What have been some of the learnings that make you project a positive outlook?
Yes, our last two quarters were muted, and this year will largely end on a muted note compared to the previous year.

We were in a ditch but got out of that in the last 4-5 months. Two years ago, we placed all our bets on making the Bhavnagar mine our flagship mine. The production capacity was to be increased to 5 million tonnes. However, the environment clearance didn’t come for more than two years, work contracts were not finalised, and there was a general lack of engagement. Now, all of these have been granted, and this project will fuel a lot of growth in the coming year.

Then, one of our cash cows, the Tadkeshwar project in Surat, had a massive slide. It lasted for a few months, but our entire team, through their efforts, were able to operationalise it.

Also, our Rajpardi mine in the Bharuch district became exhausted. We had to bear a fixed cost for months, but our team found certain places where we could still extract more value, and the mine is up again now.

So, we did some not-easy but early fixes, and the next year will be very good.

Any interesting developments in your power generation business?
There are two things I would like to highlight in our power generation business: there is a bleeding that we need to stop, and there is something new that we need to create.

There is a capacity to install 300 megawatts of renewable energy in our Kutch projects. It requires a concerted and focused effort, and we will work on it this year.

On the bleed side, our small power plant has been doing very poorly. We apprised the government that this plant needs to be infused with capital and should have some revisions in the PPA norms.

We have received a Rs 300 crore capex approval; works have been awarded and will be carried out next year. The PPA has been revised, so once the overhaul is complete, you should see better load factors and relationships.

You recently forayed into Odisha with the allotment of coal blocks there. As a mining company, how do you see the developments around the future of coal and the thrust on phasing it down?
There is no brainer on the fact that energy requirements will increase, renewables will grow, and conventional energy will also grow.

However, the growth in conventional energy will be much muted, but on the non-conventional side, it will be humongous. For your core base load, the requirement will come from conventional sources, so countries like India will make their coal plants less polluting and more sustainable to sustain the future decades while we build up our non-conventional resources. Coal will grow till 2035, then it will plateau, and finally, it will wind down.

How do you envision GMDC’s position in this space in the next five years as you diversify your portfolio?
After our foray into Odisha, we have become a national mining player from a state mining player. Hopefully, by the end of five years from now, GMDC may earn its place under the Sun as a state PSU but carry the weight of a central public sector enterprise. We intend to take the annual production capacity to 45 million tonnes per annum, which is the size of Coal India subsidiaries. We are on an inferior fuel but still generate value and sell to the MSME sector at competitive prices. With our strong traditions, we are serving them very efficiently.