NMDC Likely to Start Commercial Operations of Pellet Plant in Jun’15

NMDC may start commercial operations of its Bellary (Karnataka) based Pellet plant in June’15.

Trial production from the 1.2 MnT Pellet plant has begun, for which, NMDC purchased Iron ore fines for the first time ever in Karnataka e-auctions.

On 26 May’15, the company procured 20,000 MT of Fe 61% fines at INR 1,564/MT (basic price), floor price of which was INR 1,554/MT.

Though a leading supplier of Iron ore in Karnataka e-auctions, NMDC shall now continue to procure the raw material for Pellet making. It mines about 9 MnT pa Iron ore from Donimalai and Kumarswamy mines against its limit of 12 MnT pa.

Once the Pellet plant achieves trial production successfully, the commercial operations shall immediately start.

The total capacity of merchant Pellet plants in Karnataka is 10.3 MnT (including NMDC) currently; JSW Steel has a 9.2 MnT Pellet plant for in house consumption.

Pellet Plants in Karnataka

Capacity in MnT pa
*Captive consumption
Source: SteelMint

Pellet market in South is not so encouraging because of low buying interest from Sponge iron units, increase in competition and drop in prices, which are currently at INR 5,500/MT (basic) for Fe 62% Pellets.

To some extent, we expect competition among South based Pellet plants may not be strong. On one hand, KIOCL has received consent from Modi-led central government for exporting Pellets to Iran under Rupee trade mechanism between both the countries. The company operates a 3.5 MnT pa Pellet plant at Mangalore. While on the other, NMDC is anticipated to start selling Pellets in domestic market next month.