First of its kind, KIOCL, the state-owned pellet producer, had issued a tender to purchase around 150,000 DMT high grade iron ore fines (Fe 63.5%) from domestic market. The tender was awarded on 03th Oct’16.
Iron ore procured will be used at Mangalore-based pellet plant and the respective supplier has to procure an equivalent quantity of pellet manufactured by the above-mentioned iron ore fines. Since KIOCL is a 100% export oriented unit, it has to fulfill the export obligations and the successful bidder has to export the pellet produced by KIOCL as a Third Party Exporter.
As per sources, Kaypee Enterprises has been awarded with the tender. The company will supply around 150,000 MT Fe 64% +/- iron ore fines to KIOCL at around INR 3,600/MT, FOR basis and the pellet maker will supply back Fe 64% +/- grade pellets at around INR 5,100/MT at New Mangalore Port basis. The conversion cost will come around INR 1,500/MT for KIOCL.
The delivery of the pellets is scheduled for Nov-Dec’16. Kaypee Enterprises will supply iron ore fines and the material will ship to KIOCL via Gopalpur Port. In return, the pellet maker will supply the respective pellets via New Mangalore Port.
According to the tender document, the highest bid was evaluated based on the differential value of the offer price received for the purchase of pellets and offer price received for the supply of Iron Ore Fines (IOF). The highest differential bid received will be awarded the contract for supply of iron ore fines as well as sale contract for pellets.
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