KIOCL plans iron ore processing plant in Hospet

To source low-cost raw material for its pellet plant in Mangalore.

State-owned KIOCL Ltd, that exports iron ore pellets, is looking at setting up an ore beneficiation plant at Hospet in the iron ore-rich Bellary district. The enriched ore will be used as raw material to run its pellet plant in Mangalore.

“We are looking at processing low-grade hematite iron ore having Fe content of 51-53 per cent with a capacity to produce close to two million tonnes per annum (MTPA) of iron ore concentrate. We will procure the low-grade ore from nearby sources in Bellary-Hospet region and enrich it to 63 per cent Fe content before transporting it to our pellet plant in Mangalore,” said K Ranganath, chairman and managing director, KIOCL.

He said the company will procure low-grade ore at a cheaper rate in Bellary district and use it for its pellet plant after enriching it at a much lower cost compared to the what it buys from NMDC. “By doing this, we will be able to reduce at least 15-20 per cent of our raw material costs.”

The beneficiation process involves removal of impurities in iron ore and enriching low-grade ore to high-grade for using it as a raw material in steel making.

The plant would be set up on 62 acres out of the 100 acres of land available with Tungabhadra Steel Products Limited (TSPL) in Hospet. “At present, we are in talks with the ministry of steels and ministry of heavy industries for the merger of TSPL with KIOCL Limited. We have appointed M N Dastur & Company (P) Limited to prepare the Techno Economic Feasibility Report (TEFR) to set up the plant. Once they submit the report, we will approach our board and the steel ministry for the final approval,” Ranganath told Business Standard.

The investment for setting up the beneficiation plant would be decided based on the TEFR, he said, adding, “Once both the ministries give their approval the proposal would go to the Cabinet committee on economic affairs for final approval. We expect to receive all approvals within six months.”

TSPL, a sick PSU engaged in structural fabrication, has a liability of Rs 325 crore and is currently waiting for the government to clean up its balance sheet. Post merger, KIOCL is ready to absorb all the employees of TSPL to run the beneficiation plant, he said.

At present, KIOCL sources around 2.25 MTPA iron ore from NMDC to run its pellet plant in Mangalore. The proposed iron ore beneficiation plant would help the company increase its capacity utilisation to 3.5 MTPA, said Ranganath.