KIOCL makes headway in securing iron-ore for its pellet plants

KOLKATA (miningweekly.com) – Indian iron-ore pellet producer KIOCL, formerly Kudremukh Iron Ore Company Limited, is poised to strike key deals in securing new iron-ore sources across the country.

As a primarily iron-ore pellet producer without a captive iron-ore access source, new sources are key to its long-term survival and viability.

The government of Odisha is considering allocating substantial iron-ore and chrome assets to Industrial Development Corporation of Odisha’s (Idcol’s) steelmaking facilities, which makes it attractive for KIOCL to buy a majority interest in these plants.

KIOCL has thus submitted a proposal to buy 55% equity stakes in Idcol’s Kalinganagar Iron Works and Idcol Ferrochrome and Alloys.

A company official has said that KIOCL’s proposal to the Odisha government stipulates that the Idcol plants should “have sustainable raw material assets” and that the proposed equity purchase will be conditional on the provincial government ensuring the raw material supply.

According to the official, the Odisha government has already started an exercise to identify suitable iron-ore and chrome ore reserves, which could be provided to Idcol to sweeten the deal for KIOCL.

The Odisha government has also communicated to the Union Ministry of Steel to facilitate the divestment of its equity stake in Idcol in favour of KIOCL, saying that such a transaction will ensure strong production and managerial linkages between the two companies.

The Idcol assets will offer the raw material-starved KIOCL an opportunity to ramp up its production capacity, while the company would be able to contribute its extensive managerial expertise to operation of the plants.

Idcol’s Kalinganagar plant has the capacity to produce 180 000 t/y of pig iron and about 32 000 t/y of cast iron spun pipes.

Also in eastern India, the government of West Bengal has announced that one of its mining and mineral companies will enter into a joint venture (JV) wherein it will be allocated an iron-ore mine to develop ore for steel plants in the region.

However, details of the JV have not yet been announced, as the partnering companies’ boards still had to approve the plan, a local government official has said.

According to the KIOCL official, in the southern province of Karnataka where the company’s pelletisation plant is located, the government has assured the allocation of captive mines out of the Bellary iron-ore mines, but nothing has moved ahead since the assurance was given earlier this year.

The pelletisation plant uses merchant-bought ore.