Steel Ministry Proposes NMDC-KIOCL Merger, Awaits DPE Approval.

The Steel Ministry has proposed a merger between NMDC, India’s largest iron-ore merchant miner, and Kudremukh Iron Ore Company Ltd (KIOCL), citing KIOCL’s inability to commence mining operations at Devadiri in Karnataka. The proposal, submitted to the Department of Public Enterprises (DPE) under the Ministry of Finance about a month ago, aims to leverage KIOCL’s export-oriented infrastructure, a senior ministry official told businessline.

The merger would provide NMDC access to KIOCL’s 4 million tonnes per annum (mtpa) pellet plant, which has existing export clearances. “This move would save NMDC years in setting up a similar unit, enhancing its operational efficiency and export potential,” another official said.

KIOCL, established in 1976, operates as a Mini Ratna and is India’s only export-oriented iron ore company. However, its financial performance has been under pressure, with a net loss of ₹83 crore reported in FY24. Pellet production stood at 1.90 million tonnes, generating ₹1,854 crore in revenue. Despite having a net worth of ₹1,960 crore, the company has struggled with underutilization of its pellet plants due to delays in obtaining clearances for the ₹1,500 crore Devadiri mining project.

The Karnataka state government halted the Devadiri project earlier this year, citing environmental concerns and withdrawing forest land transfer approvals. This has forced KIOCL to procure iron ore from the market to keep its plants operational. Recently, one of KIOCL’s pellet plants was leased to NMDC, further aligning the two companies’ operations.

“If NMDC takes over the pellet plant, it could utilize its own iron ore, reducing operational costs significantly,” a ministry source added.

Detailed financial implications and transaction structures are still being worked out, with final approval pending from the Finance Ministry and subsequent regulatory clearances. NMDC has yet to comment on the merger proposal.

The potential merger underscores the Steel Ministry’s focus on strengthening public sector enterprises and optimizing resources to enhance India’s iron ore export capabilities.

HBL