NMDC to start trial production of pellets at Karnataka plant in March

Signs operation and maintenance contract with KIOCL for its pellet plant

Public sector mining company NMDC Limited is all set to start trial production at its new pellet plant at Donimalai in Bellary district of Karnataka by March this year. 

As part of its value addition and diversification plans, NMDC has set up a 1.2 million tonne per annum pellet plant at an investment of close to Rs 600 crore at Donimalai.

The company has also signed an Operation and Maintenance (O&M) contract with another public sector company KIOCL Limited, which has a considerable experience in operating pellet plants. Both the companies under the ministries of steel signed an agreement for O&M contract last week. 

"We have started deploying our engineers at Donimalai to take over the operation of the pellet plant. We will commence trial production in March this year and the full commercial production would begin in the next fiscal," KIOCL sources told Business Standard.

Pellet is a value-added form of low-grade iron ore and is used as a raw material in making steel. NMDC will produce blast furnace-grade pellets with 65% iron content in sizes between six and 16 mm.

Steel plants across the country have been using pellet as raw material due to shortage of raw material.

For KIOCL, which has operated its pellet plant for nearly four decades, it would be a new business opportunity.  The company had to shut down its iron ore mine in Chikkamagaluru district following the Supreme Court order in 2005. It recently it set up a new O&M vertical. 

"The contract will facilitate KIOCL to gainfully utilise its experienced manpower for operating the NMDC plants for mutual benefit of both the Central PSUs," Malay Chatterjee, Chairman and Managing Director of KIOCL said.

Besides operating the pellet plant, KIOCL will also manage the iron ore beneficiation plant of NMDC, which is also being commissioned this year at Donimalai.

NMDC, which was till now exporting and selling its low-grade ore, will feed it to the beneficiation plant and enrich it for use in its pellet plant. 

Apart from Karnataka, NMDC is also setting up a 2 million tonne per annum pellet plant at Bacheli in Chhattisgarh.

Currently, an estimated 60 million tonne per annum pellets are produced in the country and hardly any material is exported.

The government has levied a 5% export duty on iron ore pellets, which has discouraged many private sector players. However, KIOCL exports pellets from its Mangaluru plant to Iran.

NMDC is also setting up a 3 MTPA Steel Plant at Nagarnar in Chhattisgarh, for which most of the major packages have been finalized and awarded.

It is presently producing about 30 million tonne of iron ore from its Bailadila sector mines in Chhattisgarh and Donimalai sector mines in Karnataka.