KIOCL bags its first O&M contract from NMDC

Company will operate and maintain a 1.2 mn tonne per annum pellet plant of NMDC at Donimalai in Bellary

State-owned KIOCL Limited, a steel ministry undertaking and 100% export oriented unit, has bagged an operation & maintenance (O&M) contract from another State-owned mining major NMDC Limited. Under the three-year deal, KIOCL will operate and maintain the pellet plant set up by NMDC at Donimalai in Bellary district.

NMDC has set up Beneficiation Plant with capacity of 1.89 million tonnes per annum and 1.2 million tonne per annum Pellet Plant at an investment of Rs 650 crore. Both these plants are likely to be commissioned during the third quarter of current fiscal.

"Board of directors of both NMDC and KIOCL have approved the proposed O&M contract and the final agreement will be signed very soon," sources close to the deal told Business Standard.

This is a first such deal bagged by KIOCL Limited, which recently set up a new operation and maintenance business vertical.

The company, which shut down its own 7.5 million tonne per annum beneficiation plant at Kudremukh amidst eco-sensitive Western Ghats in Chikmagalur district, possesses expertise in operating and maintaining beneficiation and pellet plants.

KIOCL also operates 3.5 million tonne per annum pellet plant at Mangalore and sources iron ore from NMDC?s Bacheli and Bailadila mines in Chhattisgarh through sea and rail route.

Pellets are value-added products made out of low-grade iron ore or waste ore and are used as feedstock in steel making.

KIOCL?s engineers are trained in operating a pellet plant with either hematite ore or magnetite ore. When the company?s mines were closed in 2006, following a Supreme Court order, KIOCL engineers developed an in-house technology and converted their machinery to make use of hematite iron ore from magnetite ore used earlier, the sources said.

NMDC proposes to utilise the unused slime material from their tailing dam and convert them into Pellets. It also operates mines in Donimalai and Kumaraswamy hill ranges in Bellary district.

O&M contract will help KIOCL to gainfully utilise its experienced manpower. The company will deploy 45 engineers and another 140 other technicians and officials headed by a general manager at NMDC's plant at Donimali to operate and maintain the plant.

Under the deal, KIOCL will get an annual commission of Rs 31 crore from NMDC, which will be utilised to pay the salaries and overhead costs of the staff deployed at the pellet plant, the sources said.

NMDC intends to use a mixture of both fines and slimes, with Fe content of 55-58% as feedstock at its beneficiation plant, which will be upgraded to 64-65% Fe, The entire production will be sold to domestic steel mills, sources said.

It is also setting up a 2 million tonne per annum pellet plant in Chhattisgarh.