Economy, Business And Markets

India to Resume Pellet Exports to Iran

India to Resume Pellet Exports to IranIndia to Resume Pellet Exports to Iran

India’s Steel Ministry undertaking Kudremukh Iron Ore Company is all set to resume export of pellets to Iran after a gap of almost a decade.

To begin with, it will export 1 million tons per annum, Indian business newspaper Financial Express quoted a top company official as saying.

KIOCL is a Government of India enterprise with its head office in Bangalore. It has iron ore mines in the south Indian state of Karnataka and a pelletization plant in Mangalore.

Kudremukh Mine is one of the largest iron ore mines in the world.

KIOCL had to discontinue mining at its captive mines in Western Ghat region of Chikkamagaluru district in 2005 following a direction from the Supreme Court. Subsequently, it suspended exports to Iran and other countries. Iran has been KIOCL’s most important customer for pellets.

The company has reached an understanding with London-based Anglo American Plc for an initial import of 500,000 tons of 67.2% Fe grade iron ore from its Brazilian mines, which will be converted into pellets at its plant in Mangaluru on the West Coast.  

“We are offering our plant for Iranian buyers under the “Make in India” program. For the current financial year, we will import half a million ton iron ore with 67.2% Fe content from Anglo American. We will convert it into pellets at our Mangaluru plant and export to Iran,” said Malay Chatterjee, chairman and managing director, KIOCL.

For exports, the company is in final talks with Iranian Mines and Mining Industries Development and Renovation Organization. It will be exporting around 1 million tons of high-grade pellets (for use in gas-based DRI plants) per annum.

Recently, KIOCL received first shipment of 72,000 tons of iron ore from Brazil. On Tuesday, it charged its pellet plant at Mangaluru after successfully testing the iron ore for suitability. The plant had been shut down for more than six months due to decline in demand for pellets in the domestic market.

“We are in talks with six to seven producers of direct reduced iron (DRI) in West Asia, including Dubai, Saudi Arabia and Iran for supply of DR-grade or high-grade pellets with 66% Fe and above. Gas-based plants require very high-grade pellets and KIOCL has expertise in supplying this variety. We will ship around 70,000 tons of high-grade pellets to Iran in November,” MV Subba Rao, director for commercial affairs at KIOCL, said.

KIOCL operates a pellet plant with a capacity of 3.5 million tons per annum at Mangaluru in coastal Karnataka. The plant is strategically located and is in close proximity to West Asian and Iranian markets where steel production is growing.

“Eventually, we will export 1 million tons of pellets to Iran. We recently tested Brazilian ore at our pellet plant and found it suitable for our requirement. We will produce 66-67% Fe grade pellets for export to Iran,” Chatterjee said.

Many other steel mills in India had reportedly found Brazilian ore unfit for conversion into pellets. However, KIOCL, which is India’s first pellet-maker in the public sector, has considerable expertise in converting iron ore of various grades into pellets. It has capability to use both magnetite and hematite types of iron ore.  

The company will, however, continue to source iron ore from NMDC’s Chhattisgarh mines for domestic consumption. It recently sold over 100,000 tons of pellets to Essar Steel.

For KIOCL, the landed cost of iron ore at Mangaluru works out at $65 per ton, while the selling price of pellets is estimated at $99 per ton.