GMDC Shares Continue Bull Run with 8.4% Surge
Shares of Gujarat Mineral Development Corporation (GMDC) extended their winning streak for the third consecutive day, climbing 8.4% to reach ₹569.80 per share. This impressive rally comes on the heels of a significant government announcement that has sent mineral and mining stocks soaring.
Cabinet Approves Massive ₹7,280 Crore Incentive Program
The Union Cabinet gave its approval on Wednesday for a ₹7,280 crore incentive program specifically designed for rare earth magnets. This ambitious initiative represents India's intensified push to build domestic manufacturing capacity and reduce the country's dependence on China for critical minerals.
India's Technology Minister Ashwini Vaishnaw revealed during a cabinet briefing in New Delhi that the program aims to address the critical shortage of magnets in the country. The government plans to create an annual production capacity of 6,000 metric tons through this scheme.
Minister Vaishnaw provided crucial insights about India's rare earth resources, noting that India possesses 6.9 million tonnes of rare earth deposits, placing it among the top three countries globally for such reserves. These deposits, known as 'placer deposits,' are typically found along beach areas.
Seven-Year Program with Integrated Manufacturing Focus
The newly approved program will run for seven years and concentrate on establishing integrated manufacturing facilities across the country. The government has set an ambitious target to establish five manufacturing units, each with a capacity of 1,200 tons per annum, within the next three years.
This strategic move comes at a crucial time when China, which currently processes approximately 90% of global rare earth output, implemented export restrictions in April. These restrictions emerged during Beijing's ongoing trade dispute with the United States, creating supply challenges for automakers worldwide.
Financial Incentives and Participant Selection
Union Heavy Industries and Steel Minister H.D. Kumaraswamy provided detailed information about the financial structure of the scheme. The government will provide ₹750 crore as capital subsidy to five selected participants. Additionally, these magnet manufacturers will receive ₹6,450 crore as sales-linked incentives over a five-year period following the establishment of their manufacturing units.
Both public and private sector companies will be eligible to participate in this program. Minister Kumaraswamy confirmed that companies from various sectors including electronics, automobiles, and steel have already shown significant interest. He emphasized that selection will be transparent and participating companies will have the freedom to decide their manufacturing plant locations.
GMDC's Remarkable Stock Performance
GMDC shares have demonstrated extraordinary performance since February, delivering multibagger returns of 150%. The stock recently hit a record high of ₹651 per share, reflecting strong investor confidence.
While the short-term performance has been impressive, the long-term trend appears even more promising. The stock has gained 300% over three years and an astonishing 1,100% over the last five years, establishing itself as one of the standout performers in the minerals sector.
As India's second-largest lignite-producing company and top merchant seller of lignite, GMDC plays a crucial role in the country's mineral landscape. The Gujarat State Public Undertaking mines lignite from deposit-rich areas across the state and supplies it to various high-growth industries including textiles, chemicals, ceramics, bricks, and captive power generation.
