NMDC-KIOCL merger on cards, awaits clearances from ministries, regulators

The Union government is planning to merge Kudremukh Iron Ore Company Ltd (KIOCL) with India’s largest iron ore merchant miner, NMDC—a Central Public Sector Enterprise (CPSE) soon, according to a senior steel ministry official. 

This follows KIOCL’s challenges in commencing mining operations at Devadari in Karnataka, the official said. Detailed proposals, currently being prepared, will assess whether NMDC needs to make any payments to the steel ministry or the Centre in relation to the merger, it is learnt. The report will also evaluate the viability of the merger. The merger or amalgamation will require additional clearances from several ministries, including finance, as well as from regulatory bodies, sources pointed out. 

NMDC continues to meet the country’s iron ore demands, achieving a turnover of Rs 21,294 crore in financial year 2023-24. The company reported a profit before tax of Rs 8,012 crore and a profit after tax of Rs 5,632 crore, with annual sales reaching 44.48 million tonnes. 

KIOCL is a Miniratna I CPSE, while NMDC is a Navaratna. The Karnataka-based company has facilities to operate a 3.5 MTPA (million tonnes per annum) iron-oxide pellet plant and a blast furnace unit that manufactures 216,000 tonnes per annum of pig iron in Mangaluru. 

“If the pellet plants lie unused for a long time, it becomes difficult to re-start operations. So in order to keep the plants afloat and also keep the company running, KIOCL has leased out a pellet plant to NMDC. If NMDC takes over the plant, then it also makes sense since the miner will be using its own iron ore and cost of operations for the plant will be lower,” the steel ministry official said. 

“This development has come as a breath of fresh air for KIOCL, which currently has no captive iron ore mine to operate its pelletisation and pig iron plants in Mangalore. The company will benefit from the government's proposal to convert it into a subsidiary of NMDC,” according to the official.

 

The merger or amalgamation will necessitate further approvals from various ministries, including finance, as well as from regulatory bodies, sources indicate.