Govind D Belgaumkar/The Hindu

• The company plans to restart operations in a week
• China scales down its requirement from 500 million tonnes to 350 million tonnes
• There is no place to stock iron ore pellets

Mangalore, Dec 5: The Mangalore plant of the Kudremukh Iron Ore Company Limited (KIOCL) has temporarily closed down production from the first week of November owing to global meltdown.

The company produces iron ore pellets which is supplied to the domestic market and exported to China and Japan.

According to company sources, the two-lakh tonne capacity godown of KIOCL here was full and there was no place to stock more pellets if production continued.

The plant, producing about 8,000 tonnes of pellets a day, had to stop receiving iron ore from Bellary. The company is planning to restart operations in a week’s time.

The sources, however, said that the company was using the closure period to complete its annual maintenance. For practical purposes, halting of production would mean advancing the company’s month-long annual closure, which is usually in December.

The company’s decision to start production in a week comes in the wake of improvement in the situation, sources said.

Consignment to China

A consignment of 60,000 tonnes was shipped to China on Tuesday and another consignment is expected to leave the New Mangalore Port in a day or two.

Sources said on condition of anonymity that the global meltdown and sudden fall in the prices of iron ore pellets in China had affected the sales of the company severely. China had scaled down its annual requirement from 500 million tonnes to 350 million tonnes, sources said. Consequently, the rate of pellets fell from $250 to $75 a tonne. The sources admitted that this had come as a “jolt” to the KIOCL.

Sources said that the consignments were being shipped to China at reduced rates and this was expected to affect the company’s profits. The company will take steps to cut costs in view of the impact on the global meltdown.

The company earned a revenue of Rs. 37.33 crore in the first quarter of the current financial year as against Rs. 13.94 crore in the corresponding period last year. For the whole of the last fiscal, revenue from pellets was Rs. 117.38 crore, according to statistics furnished on the company’s website.

The company is producing pellets at the Mangalore plant using iron ore slurry pumped from its mines in Kudremukh, which is 110 km from here.

The activities in Kudremukh came to a halt at the end of 2005 when the Supreme Court confirmed the status of the mine area as a National Park. The pellet plant runs with the iron ore procured from the mines in Bellary.