BANGALORE: The Centre has decided to allot iron ore from the Donimalai mines of the National Mineral Development Corporation (NMDC) to Kudremukh Iron Ore Company Ltd. (KIOCL) to run its pellet plant in Mangalore following the Supreme Court's order to stop mining at Kudremukh from December 31.

"We have decided to allot iron ore from the Donimalai mines to KIOCL," an official with the Union Ministry of Mines told The Hindu

KIOCL has sought 4 million tonnes of iron ore from the Donimalai mines from where the NMDC scoops out 4.5 million tonnes of ore annually. "We have asked 4 million tonnes of ore from the Donimalai mines," an official of the company said. KIOCL needs 3.5 million tonnes of ore annually to run its pellet plant.

The closure of mining operations at Kudremukh and sourcing of ore from elsewhere will hit the finances of the company. "Currently, iron ore is being pumped from Kudremukh through a pipeline to Mangalore which reaches the pellet plant in five hours. This facility will go when mining is stopped at Kudremukh. Iron ore will have to be moved by road from Donimalai to Mangalore incurring huge costs," the official said.

KIOCL earned a net profit of Rs. 650 crores last fiscal on a turnover of Rs. 1,850 crores made up of ore exports and sale of pellets. About 85 per cent of the ore from Kudremukh is converted into pellets and exported mainly to China. With the winding-up of mining operations, the company will have to bank on the sale of pellets. The company's woes have been compounded by the fall in global pellet prices in the spot market from $ 135 per tonne in February-March to $ 75 per tonne mainly due to China's decision to regulate import of iron ore and pellets.

"We hope to make a small margin from the sale of pellets this fiscal.We expect to make a profit of Rs. 300 crores this fiscal through the sale of pellets. This is likely to go down to Rs. 100 crores next fiscal," the official said.

Printer friendly page  
Send this article to Friends by E-Mail