KOLKATA (miningweekly.com) - India’s Steel Ministry has proposed that KIOC, formerly Kudremukh Iron Ore Company Limited, should ally with other government-owned mineral and metal companies to bid for iron-ore resources.

According to an official in the Steel Ministry, having been unsuccessful in securing captive iron-ore reserves and the government’s inability to allot one through government dispensation under changed legislative environment, KIOCL would need to enter into an alliance to bag a captive mine through the mandatory auction route.

The Ministry has proposed that government mines and mineral companies like iron-ore miner NMDC Limited and steel producer Rashtriya Ispat Nigam Limited (RINL) could be suitable partners for KIOCL, the official added.

It was pointed out that KIOCL had already initiated moves toward striking alliances with NMDC and RINL in various mineral and steel making business verticals and participating at the auctions would be a logical progression these such collaborations, he added.

In fact, a government proposal for a merger between KIOCL and NMDC was still a work in progress with PricewaterhouseCoopers (PwC) mandated to prepare a report on the proposed KIOCL-NMDC merger.

PwC has recommended in favour of a merger of the two to achieve greater synergies and to add NMDC financial muscle to the merged entity. NMDC for its its part, has appointed Deloitte Touche Tohamatsu to prepare an independent report on the merger proposal.

Simultaneously, KOCL has inked an agreement with RINL to collaborate in various mining and steel production facilities across the southern and eastern Indian provinces of Andhra Pradesh and Orissa.

Moves to nudge KIOCL into an iron-ore alliance gathered momentum earlier this month when the provincial government of Karnataka, where KIOCL’s operations were located, pleaded an inability to offer raw material resources in view of changed federal government laws that had made auction mandatory for allocation of all mineral assets like iron ore, bauxite and limestone.

As part of its efforts to diversify and expand its business portfolio leveraging its experience in iron-ore pelletisation and beneficiation, KIOCL has established a new business of operation and maintenance in conjunction with NMDC.

NMDC was establishing a beneficiation plant with capacity of 1.89-million tonnes a year and a pellet plant of 1.2-million tonnes a year at its mining site in Chattisgarh in central India, which was slated to go into production later this year. NMDC was proposing to use unused slime from tailing dams for conversion into pellets.