KIOCL plans to ramp up pellet capacity 4-fold

Firm to enter several joint ventures with other Central and State PSUs in Karnataka, Seemandhra and Odisha

Public sector steel company Kudremukh Iron Ore Company Ltd (KIOCL) plans to ramp up its pellet capacity four times from the present 3.5 million tonnes (mt) to 14 mt, through a series of joint ventures with other central and state public sector units in Karnataka, Seemandhra and Odisha.

The company, which now operates only one pellet plant at Mangalore, has tied up with National Mineral Development Corporation (NMDC) for operation and maintenance (O&M) of latter’s 1.2 mt pellet plant coming up at Donimalai in Karnakata.  The Rs 900-crore plant will be operational by August this year and the arrangement with KIOCL to run the unit has been approved by the NMDC board last week, says Malay Chatterjee, CMD, KIOCL.

Similarly, the Bangalore-based resource company intends to enter into a joint venture (JV) with Steel Authority of India Ltd (SAIL) soon for setting up a 1.2-mt pellet plant at Rourkela with an estimated cost of Rs 1,200 crore.

While KIOCL fund the project from its own resources, Sail, which would buy the entire production, would supply iron ore to the plant from its mines in Barbil and Sundergarh in Odisha. The KIOCL has calculated its return on investment (RoI) from this project at 19 per cent.

KIOCL has also approached the Odisha government with a proposal to set up another pellet plant in collaboration with state-owned Odisha Mining Corporation (OMC). The proposed plant with 1.2 mt per annum capacity will cost about Rs 1,000 crore. The central PSU wants to take up a majority stake in the project, which will supply the pellets produced there to various steel plants coming up in Odisha.

KIOCL has recently entered into an agreement with NMDC and Rashtriya Ispat Nigam Ltd (RINL) for establishment of a six mt per annum pellet plant at Vishakhapatnam in Seemandhra. While KIOCL will hold 48 per cent stake in the project, estimated to cost Rs 3,500 crore, the rest of the equity component will be equally shared by NMDC and RINL at 26 per cent each. Out of the total production of the plant, two mt each will be supplied to NMDC’s Nagarnar steel plant in Chhattishgarh and Vizag steel plant of RINL. The rest two mt is meant for merchant sale, Chatterjee pointed out.

Following a memorandum of understanding with Andhra Pradesh Mineral Development Corporation (APMDC) in June, 2013, KIOCL had taken up iron ore exploration work in Ananthapur district of Seemandhra. The Bangalore-based company now wants to set up ore beneficiation and pelletisation plants of 1.2 mt capacity each there after the completion of a techno-feasibility study on the project.

If all these projects fructify, the pelletisation capacity of KIOCL would shoot up fourfold to 14 mt in a couple of years.

Implementing all these projects simultaneously will be not an issue, as KIOCL has both the expertise and resources to ground them. “First, we plan to implement the projects in JVs with partners who have adequate iron ore resources. Second, KIOCL has a positive net worth of Rs 2,300 crore with cash reserve of Rs 2,000 crore. This gives us enough handle to source funds to invest in the projects,” Chatterjee said.