Faced with stiff margins pressure in iron ore fines exports due to poor demand and higher transportation cost and taxes, most of the miners of the state are now planning to foray into pellet production to cater to the rising demand of the domestic steel industry for the commodity.
“Iron ore fines exports have come down to a level that is a fraction of what it used be a couple of years ago. Fines were being shipped out as the Indian steel industry did not have the technology to use it. But if the material is converted into pellets, then it can be used by the domestic industry and demand for the commodity is expected to rise in future,” pointed out a senior officer of a leading miner company here.
“Keeping this in view, many miners are intending to produce pellets from fines near their leasehold areas and have already sent proposals to the government in this regard,” he added.
On May 27 this year, after reviewing the status of various steel projects in the state, the government had said, it has received atleast 20 proposals to set up iron ore beneficiation plants and pellet units. Two weeks ago, Industrial Infrastructure Development Corporation of Odisha (Idco) gave administrative approval for acquisition of 21 acres land at Champadihil village under Jhumpura tehsil in Keonjhar district for establishment of an iron ore pellet plant having capacity of 300,000 tonne per annum (TPA). The plant will be set up by Keonjhar-based Kashvi International (Private) Limited, engaged in iron ore fines export since 2009.
Most of the pellet plants would take atleast five years to get completed due to bureaucratic procrastinations and other lengthy clearances process, but the amount of capacity addition would be huge, the mining company official said.
“As per our internal projection, Odisha will produce about 30 million tonne pellets every year by 2017,” he said.
Since last year, many players engaged in mining and export of the iron ore have expressed interest to set up pellet plants in the state, citing lull in the outbound shipment businesses with the imposition of heavy export duty amid poor international demand, especially from China.
Miners and mineral traders such as KJS Ahluwalia, MGM Minerals and Indrani Patnaik have proposed to set up pellet plants. Similarly, Brahmani River Pellet Ltd (BRPL), a unit of UK-based mineral trader Stemcor Group and Essar Steel are ready with their pellet-making units and are awaiting raw material linkages.
Iron ore pellets are formed out of powdery iron ore fines, and are used as an alternative to lumpy iron ore, which can be directly fed to blast furnaces. So far, the fines were mainly exported to China in the absence of technology to use fines for steel making.
In 2011-12, fines exports from Odisha nearly halved to just 13 million tonne due to poor demand and transportation problems, and as a result, huge dumps of fines were stacked at mining sites, affecting the production of lumps. Hence, steel plants resorted to pellet imports.
In past couple of months, Bhushan Steel imported about 80,000 tonne of iron ore pellet from Brazil. Similarly between February and July, Steel Authority of India (SAIL) ordered 179,000 tonne of iron ore pellet from Managlore plant of Kudremukh Iron Ore Company Ltd (KIOCL) for its Bokaro plant. In 2012-13 budget, indicating the government's intention to encourage utilsation of low quality iron ore in the country, the then Finance Minister Pranab Mukherjee had announced to reduce import duties on pellet plant equipment. The minister had proposed to slash basic customs duty on plant and machinery imported for setting up of iron ore pellet plants from 7.5 per cent to 2.5 per cent.