India’s steel ministry is proposing a merger between state-run pellet producer KIOCL Limited and state-run iron ore miner NMDC Limited, government sources said on Tuesday, January 7.
Miner NMDC Limited will aim to export pellets produced by KIOCL Limited, the sources said.
The merger proposal has been placed with the Department of Public Enterprises (DPE), under the Ministry of Finance, and detailed proposals are being worked out, including the financial implications or transactional value if at all, the sources said.
KIOCL has not yet got permission to restart iron ore mining at Devadari, and its 3 million mt per year pellet plants are lying under-utilised or unutilised. The company has been buying iron ore from the market but its purchases are the bare minimum required to keep the pellet plants running.
Access to the iron ore mines of NMDC Limited will ensure raw material security for the KIOCL plants, the sources added.
“If the pellet plants lie unused for a long time, it becomes difficult to restart 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 pellet plant, then it also makes sense since the miner will be using its own iron ore and the cost of operations for the plant will be lower,” one of the sources said.
