Following the latter’s failure to begin mining operations at Devadari in Karnataka, India’s largest iron-ore merchant miner, NMDC, a Central Public Sector Enterprise (CPSE) under the Steel Ministry, is considering a potential merger or acquisition of Kudremukh Iron Ore Company Ltd (KIOCL), another CPSE under the Ministry.
In-depth proposals are now being developed and will shortly be submitted for approval.
The Mini Ratna company, KIOCL was set up in 1976 for iron-ore mining and beneficiation at Kudremukh. For FY24, its pellet production was at 1.90 million tonnes while revenue from operations was ₹1,854 crore. However, the company reported a net loss of over ₹83 crore for the year. Last fiscal its borrowings were at ₹64 crore while lease liabilities were approximately Rs 116 crore. Its average net worth was pegged at ₹1,960 crore and earnings per share was – 1.37 (because of the losses).
According to an official, the specific proposals that are presently being developed would establish whether NMDC is required to pay the Center or the Steel Ministry for this merger. This report will also address the merger’s viability.
According to insiders, additional approvals for the merger or amalgamation will be needed from regulatory agencies as well as other Ministries like Finance.
Alternatively, it contracted with NMDC to operate one of its pellet factories.
Since KIOCL was unable to secure approval from the Congress-run Karnataka state government, their ₹1,500 crore mining project in Devadari was put on hold. Amid objections from environmentalists, the state government ordered officials in June of this year to halt the transfer of forest land in Bellary’s Sandur taluk to KIOCL for mining operations.
Only a few days after Kumaraswamy signed the document to operationalize the iron ore mining project—his maiden project as a Union Minister—the authorization was withdrawn.
A notice to reserve 470.40 hectares (Ha) for the CPSE was released by the Karnataka state government in January 2017. A change in land use pattern brought about by the lowering of the mining lease area after forest clearance demanded a redesigned mining plan. For 388 Ha, approval was given.
A 2 MTPA captive iron ore mine and a 2 MTPA beneficiation facility are to be established as part of the project.
According to the planned timetable, Devadiri was expected to be up and running by December 1, 2024, the business stated in its Annual Report.
