KIOCL might partner NMDC for pellet plant

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KIOCL, a steel ministry undertaking facing severe shortage of iron ore for its pellet plant in Mangalore, is planning to partner public sector mining giant NMDC for a pellet plant in Karnataka.

"Currently, NMDC is setting up its pellet plant at Donimalai in Bellary district. This would be commissioned by December. Our concrete proposal for a partnership is with NMDC. We have proposed to operate and maintain their plant, as we have considerable expertise in this field. The NMDC board has also approved this proposal and we are waiting to finalise the deal," Malay Chatterjee, chairman and managing director, KIOCL, told Business Standard.

NMDC is setting up a 1.8-million-tonne-per-annum (mtpa) beneficiation plant and a 1.2-mtpa pellet plant at an investment of Rs 650 crore. KIOCL would run these two plants, Chatterjee said.

"Both NMDC and KIOCL are central PSUs (public sector undertakings), under the same ministry, and there is no need for forming a separate joint venture company to run the plant. NMDC is setting up the pellet plant for the first time. KIOCL has expertise in running pellet plants. It is a win-win situation for both companies," Chatterjee said.

KIOCL has experience of about 25 years in pellet-making. Currently, it operates a 3.5-mtpa pellet plant in Mangalore. "We have our mines at Donimalai. There is enough stock of iron ore fines and slimes. We will use a mixture of both fines and slimes, with Fe content of 55-58 per cent as feedstock for our beneficiation plant. We will upgrade it to 64-65 per cent Fe," said a senior NMDC official. NMDC plans to sell the entire production of pellets to domestic steel mills.

Chatterjee said KIOCL was considering expanding outside Karnataka. For this, it has signed a memorandum of understanding with Andhra Pradesh Mineral Development Corporation and Rashtriya Ispat Nigam Limited (RINL) to set up a beneficiation-cum-pellet plant in Ananthpur district of Andhra Pradesh, at a cost of Rs 1,000 crore. KIOCL would hold 49 per cent stake in the joint venture, which would be registered within six months. The joint venture company would invest Rs 300 crore to explore iron ore resources in Nemakal and Hiradahalu villages. KIOCL would set up a 1.2-mtpa beneficiation-cum-pellet plant at an investment of Rs 700 crore. The plant would start operations by mid-2016, Chatterjee said.

Once pellet production starts, KIOCL would sell 50 per cent of the production to RINL, while for the remaining 50 per cent, RINL would have the first right of refusal. Thus, the pellets would be sold to domestic steel mills, Chatterjee said.