An Indian steel producer has signed a major offtake agreement with NSL Consolidated for iron ore produced at its Kurnool dry separation plant in southeast India. After favourable testing of the Perth-based company’s product, the buyer will purchase up to 5000 tonnes of iron ore monthly for use as stockfeed at its steel plant.

The initial contract is for a three month period, with mutually agreed extensions likely. NSL says the contract is worth up to almost US$1.4 million based on current market prices.

Kurnool is on a 12 acre industrial site within the Indian state of Andhra Pradesh. It uses the nearby Mangal mine as an iron source as well as the adjacent existing Kuja iron mine, which is also owned by NSL.

NSL is the only foreign company to own and operate iron ore mines in India, and is ramping up capacity after a successful staged commissioning of Kurnool in June. The ramp-up is targeting annual capacity of 200,000 tonnes by the end of the year and 400,000 tonnes by mid-2013.

The company is also anticipating bringing its phase 2 wet beneficiation plant into operation by the end of the year. This stage is capable of annually producing up to 400,000 tonnes with final product grades of up to 62% iron.

NSL managing director Cedric Goode says, “During the quarter, material advancement has been made in improving the mechanical reliability of the plant, employment and training of local operators at the Kurnool dry separation iron ore plant. However, the ramp-up has been slower than anticipated due, in part, to the monsoon season which has seen consistent sporadic showers impacting plant operation and output. As a result, production tonnes are much lower than internal forecasts, impacting revenue from operations over the quarter.”

The company is cautiously optimistic about the continuing ramp-up in production and sales tonnages over the next few months, coinciding with the end of the monsoon season.

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