LLOYDSME - Lloyds Metals and Energy Limited Share Price

Management Outlook and Key Highlights from Lloyds Metals Q3 FY25 Earnings Call:

1. Operational Outlook:

• Iron Ore Expansion: Management expects Environmental Clearance (EC) for ramping up iron ore production to 25 million tons by end-Q4 FY25 or early FY26. The public hearing process concluded, and approvals are anticipated within 60"“70 days. Post-EC, production will scale up, leveraging Thriveni's mining expertise for cost-efficient operations.
• Project Updates:
  • DRI & Pellet Plants in Ghugus are nearing completion (commissioning by Q4 FY25).
  • 1.2MTPA Steel Plant (Chandrapur): Land acquired, equipment ordered, EC applied for.
  • BHQ Beneficiation Plant: Pilot plant yields 66% Fe content with 37"“40% efficiency. Engineering finalized; equipment procurement underway.

2. Financial Performance (9M FY25):

• Revenue Growth: +11% YoY driven by higher iron ore/sponge iron volumes.
• EBITDA Growth: +31% YoY, led by improved realizations (iron ore up 8"“10% YoY) and captive raw material advantages.
• Capex: INR 2,700 crore spent in 9M FY25 (total INR 4,400 crore to date).

3. Strategic Initiatives:

• Thriveni MDO Integration: Expected to complete by April 2025, reducing iron ore mining costs by INR 400"“500/ton and boosting consolidated earnings.
• Cost Leadership: Focus on optimizing steelmaking costs through captive resources, renewable energy adoption (100MW planned), and coal substitution.

4. Market Positioning:

• Iron Ore: Targeting 25MTPA capacity (10MTPA DSO, 15MTPA beneficiated BHQ by FY28). Current dispatches at 7.8MT (9M FY25).
• Steel Expansion: Long-term vision to produce 4.5MTPA steel with low debt and cyclical resilience.

5. Risks & Mitigation:

• Volatility in sponge iron/power prices managed via captive ore and operational efficiency.
• EC delays and project timelines closely monitored but deemed manageable.

Management remains confident in growth targets (revenue ~INR 40,000 crore by FY29) and cost leadership in India's evolving steel sector.

Question 1: So, I have got actually a couple of questions. Sir, the first question pertains to the mine's EC. I believe there was a public hearing which was there yesterday on 28th. Is it possible to know the status? And what is the progress on it? And by when can we expect the EC to come in? And once the EC comes in, how long it takes for the expansion to actually kick in?
Answer: The public hearing concluded smoothly. The EC process is expected to take 60"“70 days post-hearing. Post-EC approval, mining can begin within 30 days. Evacuation logistics (via pipeline and existing routes) are prepped for 25 million tons/year capacity.

Question 2: Sir, my second question was that you have done, I think, about 7.8 million, 7.9 million ton kind of sales of iron ore in the first 9 months, right? So, can you give the guidance for remaining part?
Answer: Q4 FY25 iron ore dispatch guidance is ~2.2 million tons, aligning with the annual 10 million ton target.

Question 3: One place in the presentation you had mentioned that once the MDO business integration is completed, there'll be almost about, INR400 to INR500 of cost saving in the iron ore side of the business. So, can you throw some light on it?
Answer: The MDO integration (effective April 1, 2025) will consolidate Thriveni's mining operations, reducing costs via vertical integration. Savings will accrue from FY26 onward.

Question 4: Once the EC is in place, how long will it take to ramp up to 25 million tons?
Answer: Mining and evacuation infrastructure (machinery, pipeline) are ready. Full ramp-up to 25 million tons/year is achievable immediately post-EC, with no delays.

Question 5: DSO reserves seem limited. How do we ensure long-term mine life?
Answer: DSO reserves are 157 million tons (JORC-certified). Future plans include blending DSO with BHQ-derived ore (post-beneficiation) to extend reserves beyond 35 years.

Question 6: In terms of parity, how do we stand versus Karnataka or Odisha material and imported material-wise?
Answer: Maharashtra DSO is competitive due to lower auction premiums (vs. Karnataka's 110% premium). Logistics (door-to-door delivery, pipeline) further enhance cost efficiency.

Question 7: Are there plans to acquire Thriveni's pellet trading business?
Answer: Only Thriveni's MDO business is being acquired. Existing pellet partnerships (e.g., Mandovi) remain intact until Lloyds' 4-million-ton pellet plant (Q4 FY25) becomes operational.

Question 8: What is Thriveni's revenue contribution post-merger?
Answer: Thriveni's FY25 revenue is INR5,500 crores. Post-merger, Lloyds' share will be ~INR2,500 crores (FY26) due to expanded EC limits and integrated operations.

Question 9: Why did DRI sales decline 48% QoQ?
Answer: The drop was due to reduced production (shift to cost-efficient local coal) and a one-time industrial promotion subsidy (INR70 crores) recognized in Q2.

Question 10: What is the timeline for the BHQ beneficiation plant?
Answer: First phase (15 million tons/year) will commission by FY27. Subsequent phases (15 million tons each) will follow annually. Royalty on BHQ is INR65/ton.

Question 11: What is the capex outlook for FY25"“FY28?
Answer: FY25 capex is INR5,000 crores. FY26"“FY28 will see INR6,000"“6,500 crores/year for steel plants, pellet units, and BHQ beneficiation.

Question 12: How will renewable energy reduce costs?
Answer: Captive solar/wind projects (INR4.50"“4.75/unit) will replace grid power (INR8.50/unit), saving ~INR4/unit and boosting margins.

Question 13: What is the FY28 revenue target?
Answer: INR40,000 crores by FY29 via 25 million tons iron ore, 4.5 million tons steel, and Thriveni's MDO revenue (excluded from the target).

Question 14: What is the iron ore inventory as of Q3?
Answer: Closing inventory is 0.4 million tons.