Kudremukh Iron Ore Company Ltd. (KIOCL), state owned pellet manufacturer with an annual capacity of 3.5 MnT per annum, is planning
to resume with its export of iron ore pellets by the end of 2013. KIOCL earlier
used to export its products but had to stop in September 2011 because of the
scarcity of iron ore and freight charges of the Indian Railways.
Malay Chatterjee, chairman and managing
director, KIOCL, said, “We are currently sourcing iron ore from
NMDC's Kirandul and Bacheli mines in Chhattisgarh at Rs 4,500/MT. The railways
have been charging distance-based charges over and above normal freight on iron
ore transported for manufacture of pellets meant for export. We are working out
how we can open up exports. Once, we sort out this issue with the railways, we
will restart exports.”
KIOCL has filed a petition in the state high
court against the railways policies. They are forced to pay Rs 1,600/MT due to
the differential freight rate charged by the railways. At present, they are
selling their iron ore pellets in the domestic market in spite of continuous
demand for their quality pellet in the global market. Their Direct Reduced
Grade pellet is in huge demand in the market, especially from the Chinese
market. It could easily be sold at US$ 25/MT which is higher than the price of
blast furnace pellet in the global market. As soon as the railways remove the
restrictions the company will commence with the exports.
A company official said, “Presently,
the pellets are priced at US$135/MT in the international market and it would
not be beneficial for us to export after paying distance-based tariff to
railways. We have to wait for the prices to go up or wait for the railways to
change their policy.”
Although industry experts see, that realization in domestic market is quite good. Exports will only be feasible if spot iron ore prices in Chinese market move up or domestic prices shown downward trend. Also Rupee will also play an important role.
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