The country's largest iron ore producer NMDC is getting a fresh financial viability study of SIIL done for its proposed INR 1,200 crore investment in the firm as world sponge iron prices have slumped.

Mr Rana Som chairman of NMDC and SIIL said that “There has been a drastic fall in sponge iron prices and as a prudent investor, NMDC will get the financial viability study re done before physical investment.”

Sponge iron prices globally have fallen more than 50% in the last 10 months and are hovering around INR 12,000 a tonne. Post-merger, NMDC is considering an investment of INR 1,200 crore in SIIL to increase its annual production capacity to 0.26 million tonnes from the existing 60,000 tonnes, besides diversifying into steel products manufacturing.

Mr Som said the investment will now depend on the financial viability study based on the current market scenario and projected price range of sponge iron. He said the report was expected by December-January when the merger of SIIL into NMDC is likely t o get completed.

The merger was earlier scheduled by October. It has been delayed due to various regulatory bottlenecks.

The government in May 2008 had cleared the NMDC-SIIL merger for the sponge iron firm's turnaround with financial support and an assured supply of iron ore.

(Sourced from PTI)