MEL plans to diversify into pellet production

Iron ore mining companies in Karnataka are set to diversify into value added products business. This follows the new mineral policy of the state that encourages companies to establish value added products.

Bangalore-based Mineral Enterprises Limited (MEL), a mining and infrastructure company, is diversifying into pellet production by setting up two new plants in Karnataka.

MEL has proposed to set up a 1.2 million tonne per annum (MTPA) pellet plant with 165 Mw captive power plant in Hassan district and 600,000 tonne per annum plant in Chitradurga district at a combined investment of Rs 2,000 crore.

“We have already received the approval from Karnataka government for the new venture. We signed a memorandum of understanding with them during the global investors’ meet in June 2010. We have 150 acres land in Chitradurga and looking for about 300 acres in Hassan district for the new plant,” Basant Poddar, managing director, MEL told Business Standard. The company has identified two villages in Hassan taluk and one village in Channarayapatna taluk for acquiring land and is in the process of obtaining consent letters from land owners.

 

The funding for the new plant would be either borrowed from the banks or raised through a public issue, he said.He said the company has engaged Mecon Limited, a, engineering consultancy organisation under the ministry of steel to prepare the detailed project report for the two new pellet plants. “The setting up of the pellet plant is the first step towards value addition in our business. At a later stage, we want to set up a steel plant,” he said.

MEL is planning to secure water linkage from the state government for its pellet plant. It plans to use a new technology that requires very less amount of water, he said. “Once the land acquisition is completed, we would approach the ministry of environment and forests for an approval. We are hopeful of securing all approvals by September 2012 and start the work on the construction of the plant,” Poddar said.

MEL has leases for iron ore, manganese ore and limestone at various locations in Karnataka. Its iron ore mines are located in Chitradurga and Tumkur districts. It also has strategic alliance and tie-ups in the Bellary-Hospet regions of Karnataka and in some parts of the Goa state.

The company would use 53 and 54 Fe grade iron ore for its pellet plant by enriching the low-grade iron ore. It is currently exporting low-grade iron ore fines to China.

The company has set up a testing laboratory at a cost of Rs 5 crore in Bangalore to test the quality of iron ore.

MEL, in the last four years, has experimented to upgrade various low-grade ores ranging from 48 - 52 grade for steel production and succeeded. It also plans to set up a beneficiation plant.