Government approves KIOCL to source iron ore from Iran
Economic Times , 29 May 2015 13:38
(Minews) - The Modi government has given a go-ahead to KIOCL (formerly Kudremukh Iron Ore), for sourcing ore from Iran for manufacture of iron ore pellets in the country under the rupee trade mechanism between the two countries.These pellets will then be exported back to Iran to meet the demand from Iranian steel plants. The two countries have been engaged in a dialogue on this for nearly a year.
In a boost to the government's Make in India campaign, KIOCL, a PSU under steel ministry, has decided to request for exemption from paying 5% export duty on iron ore. This was decided at a top-level meeting of between officials from KIOCL, MMTC and the union steel & commerce ministries recently.The steel ministry has advised KIOCL to be aggressive in stitching up a long-term contract with Iran within the next two years.
A global slump in iron ore prices has led to idling of KIOCL's 7 million tonne pellet plant in Mangalore.KIOCL has been sourcing iron ore from NMDC to make pellets ever since it was forced to close down its captive mine in 2006 over environment concerns. "KIOCL has been looking for a market in Iran in the past one year. We would like to take advantage of the rupee trade mechanism and the demand for 10-15 million tonne of pellets from steel plants in Iran," Malay Chatterjee CMD of KIOCL, said. KIOCL proposes to do a tolling (or processing) arrangement with Iran which will be facilitated by the ministry of steel. Talks between the two countries are currently continuing on this. At the meeting held in Delhi last Friday (May 22), the commerce ministry representative said they have no objection for facilitating KIOCL for this arrangement and assured the company all support in this initiative. Earlier, export of pellets to Iran has been dealt with by the State Trading Corporation. However, PK Jain, di rector (marketing) of MMTC, said a the recent meeting that the compa ny has no objection to KIOCL's mo ve. He also added that MMTC has no objection in partnering KIOCL, wh ich will be the front end for facilitat ing the trade.
Since KIOCL will be dealing with the import and export directly, they will pitch for exemption from duties and instead request the governmen that duty be charged only on the toll ing arrangement.
KIOCL's 7.5 million tonne pelle plant at Mangalore is a 100% expor oriented unit. However, due to a fall in international prices and imposition of distance based charge (DBC) by Railways, KIOCL has stopped exporting pellets for many years and revived after an interval of 3 years with a consignment to China and another consisting of 55,000 tonnes of pellets to Iran recently.
However, with the falling ore prices, KIOCL discontinued exports.During the past two years, the plant has been surviving only through DTA market like Essar group, JSW Steel etc. KIOCL has been incurring a huge logistics cost to source NMDC ore from Bailadila sector under a long-term contract.
Story Code: 24770
News Link: http://www.minews.ir/en/doc/news/24770/government-approves-kiocl-to-source-iron-ore-from-iran