India KIOCL to Construct 5 Million-Ton Steel Mill

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Researched by Industrial Info Resources (Sugar Land, Texas)--Indian government-owned KIOCL Limited (Bangalore, India), formerly known as Kudremukh Iron Ore Company Limited, will construct a 5 million-ton-per-year integrated steel mill in the southern state of Karnataka. In the first phase, a plant with an annual steel production capacity of 1.5 million tons per year will be established for an investment of approximately $2 billion.

Officials at KIOCL said that the greenfield project will be constructed with a joint venture partner, for which the selection process is currently under way. The choice of partner will be finalized within the next two months, and a separate company will be floated with the partner to implement the project.

The state government of Karnataka has granted KIOCL a 116.5-hectare iron ore mining lease in the Tumkur district of the state. Officials said that the company has obtained mining plan approval and environmental clearance for the project and is awaiting forest clearance to commence mining.

KIOCL was forced to stop all mining activities in the Kudremukh region of Karnataka in 2006 by the Supreme Court for the violation of environmental laws. KIOCL was founded in 1976 as an exclusively export-oriented iron ore concentrate unit, with a capacity of 7.5 million tons per year. The company mined 4.5 million tons of iron ore per year to produce 3.6 million tons of concentrate for export to Iran. However, the company's viability was severely eroded as a single-product, single-customer company.

KIOCL then established a manufacturing unit in Mangalore, Karnataka, which included a pellet plant with an annual capacity of 3.5 million tons, a blast furnace with an annual capacity of 210,000 tons of foundry-grade pig iron, a captive berth with mechanical ship loading, a captive power plant and a railway siding.

At the Mangalore plant, KIOCL is currently sourcing iron ore from NMDC Limited. But the Mangalore pelletization unit is designed to use magnetite as feedstock from the now defunct Kudremukh mines and has yet to stabilize production with the hematite ore sourced from NMDC.

Officials said that the new greenfield plant will enable KIOCL to achieve financial and operational stability, as exports from its pelletization plant have been falling. In 2009-10, the company exported 481,105 tons of pellets, constituting 33% of its total sales. However this was 45% lower than exports during the previous year. Exports are forecast to be further negatively impacted following the imposition of a 15% export duty levied on pellets by the Indian government. Officials said that a new integrated steel mill will be useful as a captive customer of the iron ore and iron ore pellets produced by KIOCL.

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