The iron ore mining ban in Karnataka, high railway freight fares and limited domestic pellet market has become a challenge for mining company KIOCL’s existence, said Mr K. Ranganath, Chairman and Managing Director, KIOCL Ltd.
Formerly Kudremukh Iron Ore Company Ltd, the 100 per cent public sector company also exports iron ore pellets.
Speaking at the 36th Annual General Meeting of the company, Mr Ranganath said Supreme Court’s ban on iron ore mining in Karnataka has resulted in limited availability of ore.
Levy of distance-based charge by the Railways over and above normal freight on iron ore transported through railway network for manufacture of pellets has rendered the export business unviable.
Mr Ranganath said, “This deterred the company from export of pellets, which is its main market, through most part of the year.”
The company has also challenged it in the Karnataka High Court on the ground of infringement of Article 14 of Constitution of India.
“We also have been impacted as pellet sales are concentrated only on domestic market where the demand is limited,” he said.
Due to depletion of quality iron ore reserves, pellets are an alternative to meet the demands of steel industry and an effort to increase its usage should be encouraged.
Pellet production capacity is likely to touch 70 million tonnes (mt) this year and 90 mt by 2014. The country is witnessing a growth in additional pellet capacity creation both in green field and brown field projects undertaken by existing pellet plants and integrated steel plants.
Talking about global pellet production, he said pellet production last year was around 400 mt and in 2010, it was 388 mt.
The company is laying thrust on cost reduction and improvement in techno-economic parameters.
“In this direction, I would like to share with you that, apart from making internal modifications on plant side, several technical committees are constituted to study the consumption pattern of various inputs in pellet production compared to other plants and suggest improvements,” said Mr Ranganath.
On the company’s pellet production, Mr Ranganath said in 2011-12 against a target of three mt of production and sale of pellets, the company produced and sold 1.710 mt and 1.716 mt of pellets, respectively.
Mr Ranganath said the company has identified growth through backward and forward integration.
“During the previous Five Year Plan (2007-2012), the company had drawn up various schemes under expansion and diversification programme. Some of the schemes could be materialised,” he said.
“Due to various factors some have spilled over to ongoing Five Year Plan (2012-17). The company will make earnest efforts to implement the same during the current plan period,” he added.