KIOCL restarts pellet exports after 3 years

The first consignment of 48,309 dry metric tons exported to China

The State-owned KIOCL Ltd, the public sector company under the ministry of steel and mines and 100% export oriented unit, has restarted export of pellets after a gap of three years. The company, which last exported pellets in August 2011, has recommenced export of pellets with a shipment of 48,309 dry metric tons with 64% Fe grade to China.
The company has booked the shipment at $120 per tonne and the first shipment sailed from its captive berth at New Mangalore Port on August 25, the company said.

KIOCL had suspended pellets exports since August 2011 following the imposition of distance based charge (DBC) on exports by the Indian Railways. Also, the levy of 5% duty on export of pellets and high cost involved in sourcing raw material from Chhattisgarh had prompted KIOCL to discontinue exports.

However, lower demand for pellets in the domestic market prompted the company to explore export market once again. It recently bagged an export order from China-based Frost International Pte Ltd, the company’s chairman and managing director Malay Chatterjee said in a statement. KIOCL pellets are very popular in China and Japan.

“We are upbeat that the company, after a span of 3 years, has opened up the export with its first shipment of pellets to China. This will enable KIOCL to retain its 100% EOU status, continue to earn foreign exchange for the Nation. In turn it will enable the Company to minimise the fixed cost and in absence of diminishing domestic market”, Chatterjee said.

According to company sources, the chairman will be leading a delegation to China and Japan next month to explore long-term export contracts for its pellets. The delegation will include a senior official from the ministry of steel.

Earlier this year, the company held discussions with the Iranian ministerial delegation and discussed the possibility of importing iron ore from Iran, convert it into pellets and re-export to Iran. By doing this, the company wants to make use of its idle capacity at Mangalore pellet plant and earn whatever profit it could make, the CMD had said.

The company has an installed capacity of 3.5 million tonnes at its pellet plant at Mangalore.

KIOCL does not have captive mines as it stopped mining operations in the Kudremukh region of Karnataka in January 2006 following a Supreme Court order, as the mines are situated in an area declared as a national park.

It has been sourcing iron ore from NMDC’s mines in Chhattisgarh by paying a huge logistics cost. The ore it buys from NMDC travels 750 km by rail and 1,500 km by sea route and reaches Mangalore.

Recently, the CMD also met the Union Railway minister D V Sadananda Gowda and requested for withdrawal of distance based charge on iron ore for exports.