State-owned entities Rashtriya Ispat Nigam ltd (RINl), NMDC and Kudremukh Iron ore Company ltd (KIOCl) have come together to set up a 6 million tonnes per annum capacity pellet plant in Visakhapatnam, a move which is aimed at boosting production of the value-added product which is essential in steel making.
Official sources said that the three companies signed the MoU for setting up the pellet plant last month and it is expected to come up within two years. Along with it, an 8 million tonnes capacity filtering plant would also be set up at the same location to facilitate pellet production. RINl would be providing the infrastructure and land for the plant while KIOCl will be bringing in the technology partner.
KIOCl has 48 per cent stake in the plant, while RINl and NMDC have 26 per cent share each in it, sources further informed. NMDC will be supplying iron ore for the plant on a long term basis which will facilitate greater production of pellets.
Pellets are basically value-added products of leftover material or low grade iron ore and are used in steel-making. In recent times, they have emerged as a major product for iron and steel industry in the country due to scarcity of ore in some regions following mining bans in Karnataka and Goa.
Though the Supreme Court has now lifted the ban from iron ore mining in Goa, the significance of pellets will remain as the relaxation given by the Apex Court comes with conditions like the Mines Ministry needs to issue fresh leases to companies to allow them to extract iron ore, something which is going to take a considerable amount of time.
The setting up of the pellet plant at Visakhapatnam is a step towards further boosting pellet production in the country. According to industry estimates, India's pellet production capacity is currently at about 60 million tonnes and has risen manifold since 2010-11 as the Government at that time encouraged value addition of iron ore fines.
The joint venture partners would have the option of selling pellets produced from the upcoming plant in the outside market as well as for their own consumption, sources further informed.
They added that KIOCl will soon begin the process of scouting for the technology partner, while RINl on its part has already provided the land for the plant and will also be giving the infrastructure.
The MoU's validity is for two years and official sources informed that the three entities have been asked to set up the plant within that time frame.
The move to set up the pellet plant has incidentally come at a time when in January this year the Finance Ministry had imposed 5 per cent export duty on iron ore pellets. The Steel Ministry, which has always been of the view that in future when the country's steel production capacity will shoot up, then there should be adequate reserves of iron ore to meet the growing demand, had welcomed the move.
On the other hand the Mines Ministry which believes in greater exports of the natural resource (arguing that by doing so, not only will the Government generate greater revenues but this would also motivate Indian mining firms to dig deeper which would result in discovery of new minerals), had opposed the move.