KIOCL Ltd, a 100% export-oriented unit under the ministry of steel and mines, which is looking at close to 20% increase in pellet production in 2019-20, is embarking on a modernisation and diversification programme at Mangaluru.
The company currently operates a 3.5 million tonne per annum coast-based pellet plant. It plans to set up a coke oven and ductile iron spun pipe (DISP) manufacturing plants at Mangaluru at an initial investment of Rs 850 crore, a top company official said.
“We are currently conducting an environmental impact assessment study, which will be completed by September. Later, the ministry of environment and forests will be approached for the approval,” M V Subba Rao, Chairman-cum-Managing Director, KIOCL told DH.
He said the company is also upgrading the pellet plant by installing pressure filters in the place of vacuum filters which will help reduce the cost of production and improve quality of its pellets. The upgradation of the pellet plant will require Rs 150 crore investment, he said adding that the company has already issued work orders for installing reclaimers and metal handling facilities.
The DISP plant will have an annual capacity of 2 lakh metric tons. The funding will be met by the internal accruals of KIOCL, Rao said adding the company presently has a cash reserve of Rs 1,800 crore.
Ductile iron spun pipes are used across the world because of its superiority over cast iron spun pipes. In India, there is a huge demand for spun pipes from various state governments and urban development bodies. They are used in irrigation projects, drinking water supply and sewerage projects, and other large infrastructure projects.
During the just concluded financial year (2018-19), KIOCL produced 2.24 million tonnes of pellets against the target of 2.17 million tonnes at its Mangaluru plant, thereby achieving “excellent” rating from the ministry of steel. It plans to produce 2.6 million tonnes for 2019-20 and 3 million tonnes in 2020-21. During the last fiscal, KIOCL expanded its presence in new markets such as the United Kingdom and West Asia. In 2019-20, it aims to expand into Brazil and Canada.
“We have signed a memorandum of understanding with steel mills in Japan, and West Asia for long-term supply contracts. We have sent one consignment to Japanese mills already and soon enter into contracts with companies in West Asia,” Subba Rao said.
KIOCL, which manufactures high-grade iron pellets with low alumina and low-phosphorus commands $5-10 extra premium in the international market. Currently, it earns $116 per tonne (on FoB basis) for its pellets compared to $105 per tonne charged by companies in Odisha. Its traditional markets include Japan, South Korea and China.
