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  Leasing Iron Mines  

 


How to become a Billionaire ?

Start a Steel Plant in India !

Iron Ore mines are National Property. The Government continues to gift them

 

Steel Secretary on CNBC TV 18 on 16-7-2009

Ad Valorem Duty, at a higher rate, is likely to be charges on Iron Mines. What were they doing ? Doing what I do daily for 8 hours - sleeping

 

Arcelor Mittal Investment - an example to illustrate the Gift
  ND TV Profit - 19th or 20th November 2007
   
  They are planning to invest 20 Billion Dollars - 20,000 Million Dollars - or 80000 Crores Rupees to produce 24 Million Tons steel. 

In return, the iron ore demanded is only 500 Million tons to last over 20 years. 

 

The likely benefit is over 85 Billions
   
  What is the current market value of 500 Million Tons of Iron Ore ?

500 x Million = 0.5 Billion; 0.5 Billion x 170 per ton, market price of iron ore = 85 Billion

Let us knock Bill Gates out forever. If 20 Billions Dollar investment can fetch a potential benefit of 85 Billions in hidden benefits, Mittal will easily become the richest person in the World - India will continue to be a land of have nots to produce the richest man 

 

Cost of Ore and Selling Price of Steel
   
  Government is now charging Rs 25 per ton as the lease charges for the iron ore mines. They plan / threaten to raise it and you can bet that they would, to perhaps Rs 50 per ton, after Sail, Posco, Sesa Goa, Mittal, Jindal and Tisco have been awarded the lease at throwaway prices - when you and I apply for iron ore leases, we may be denied

Sail, NMDC, Sesa Goa and others export the iron ore.

 

Government's company making a Profit ! is it true ? yes
 

NMDC is the largest exporter of Iron Ore from India
  Financial results of 2007 and 2008, advertised by NMDC: Business Standard 19-5-2008
   
  Sales have gone up from 4186 Crores to 5711 Crores - 40% increase in Sales. Profit before Tax increased from 3498 Crores to 4947 Crores. 
   
  For 2008, Profit after Tax is 3251 Crores on total sales, including other income, of 6381 Crores - just 50.9%. The earnings per share on Rs 10 Book Value share is only Rs. 246
   
  Iron Ore Sales and exports is 5705 Crores and other minerals account for 6 Crores. Sesa Goa, when I checked last, had 52% Profit after tax results

If a Government of India undertaking makes this much profit and issues bonus shares also, you have to study the contents below and think of all things - even rake off

                 

Baseless justification for the loot and or the share
   
  The Chinese buy the Indian ore at around 170 Dollars per ton. China is the biggest producer and exporter of Steel - despite paying 270 times more for the ore compared to the Indian Steel makers

As of January 2009, the Government has imposed anti dumping duty on import of Steel from China. How do they sell steel at 90% of Indian market prices !
 
Gifts like the Iron Ore pricing are aplenty, if persons like Arun Shourie will  probe and expose others
   
  In 2006, I came across one company, which was going into or incurring loss and wanted some assistance to tide over. They had 250 plus employees. The total assistance they got from the Government through additional finance at nil interest, waived sales tax and other taxes for years - past and future, and some more. It was over 50% of the total planned expenditure for restructuring. Company, with its astute managerial skill, recovered within 18 months [ why the hell did it go bad in the first place ? was I the manager ? ] 

The poor and the needy, who needs such assistance, never get them. The rich beggars are showered with gifts that spills over 

 

Important Note: 
   
  1] Sesa Goa - how do they make profit ? , I went into their Profit and Loss Account - was shocked by their dependable and increasing operating margin - just iron ore mining and exporting the ore. Then I found the Hidden Treasure - ore for only 2.5 paise per kg

2] Recently, NMDC, a Government of India concern gave 2 Bonus shares for each one share held. As on 7th August 2008, while Government is presurrising the Steel and Cement companies to hold the price, NMDC is asking for only 92% price rise for its Iron Ore ? No comments needed

3. Some poor people would routinely visit the steel / scrap iron companies, separate the iron from the sand with a magnet, pick useless iron bits and pieces and eke out a living, selling them. They do not get that for 2 or 3 paise per kg. The Steel barons do !

 

 
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Main / original content:  2001: Last minor modifications: June 12, 2010:     Personal website of R. Ranganathan M.Sc., [ MBA - IIMA]