NMDC for third party in pipeline, pellet plant JV with RINL

Two state-run firms had in May last year singed an MoU for venture to make it a win-win for both

Iron-ore miner NMDC is in favour of inducting a third partner with operational expertise in its Rs 2,200-crore joint venture with Rashtriya Ispat Nigam (RINL) for setting up a 450-km slurry pipeline and a pellet plant. The slurry pipeline will be used to transport iron ore.

“NMDC wants to induct a third partner in the venture that proposes setting up a 450-km slurry pipeline from Jagadalpur in Chhattisgarh to Visakhapatnam in Andhra Pradesh and a ten million tonnes per annum pellet plant,” a source told PTI.

The two state-run firms, under the administrative control of the Steel Ministry, had signed an MoU for the venture in May, last year. Officials at both RINL and NMDC could not be reached for comments. However, sources said NMDC wants to induct a third partner which could be entrusted with the job of operating the project and give it some equity stake.

The issue of the induction of a new partner would require the approval of the Steel Ministry. While NMDC has written to the Ministry expressing its intention, RINL might take the matter to its next Board meeting for further deliberations.      

Out of the total investment, Rs 1,200 crore would be used to lay the pipeline having a capacity of 10 mtpa and the rest Rs 1,000 crore for setting up the pellet plant.

The pipeline, which will pass through Chhattisgarh, Odisha and Andhra Pradesh, would be operational by 2015-16 and save a lot of transport costs for the two firms. The 450-km pipeline could have been shorter by 150-km and required Rs 600 crore less investment had the line passed through the forest areas, which is not apparently possible in view of the insurgency problem in the area.

The pipeline will be routed through the national highways to avoid insurgency problems. RINL has a long-term agreement with NMDC for its iron ore requirement, which is being met from NMDC’s mines in Bailadila, which are transported mainly through railways. The pipeline would ease RINL’s expenditure on transport and at the same time, increase NMDC’s evacuation capacity. NMDC has plans to increase its production capacity from the Bailadila sector from current 25 mtpa to 50 mtpa.