Mineral Enterprises to double iron ore output

With the demand for Indian iron ore slowly rising in the global market after a brief lull, Mineral Enterprises Ltd, a Karnataka-based mining company, plans to double iron ore production to 3 million tonnes this fiscal.

The Rs 400-crore firm has iron ore mining operations in Chitradurga and Tumkur districts.

At present, its production capacity is around 1.5 million tonnes. The company produces medium grade iron ore (containing less than 62 per cent ferrous content per tonne). While 80 per cent of the production is exported, the remaining stock is traded in the domestic market.

Inadequate transport infrastructure in Karnataka to supply iron ore from Chitradurga and Tumkur districts to the ports on the west coast had become a constraint for expansion.

"The Hassan-Mangalore broad gauge railwayline is almost operational. We expect this to provide connectivity to the ports from our mining areas. This railway link will facilitate our exports," Mineral Enterprises managing director Basant Poddar said.

The company underwrote the risks of the gauge conversion project by offering a minium freight guarantee of 3 million tonnes per annum. It is the only private equity holder in the project with 11 per cent stake.

The company has tied up with a Goan firm to increase the iron ore production. "Capital expenditure towards the enhancement of iron ore production will be minium. The Goan mining firm will deploy its machinery to enhance production. They have already commenced mining operations," he stated.

"Initially, Chinese steel mills avoided Indian iron ore when an export duty of Rs 300 per tonne was imposed in February. Now, we expect the market to open up as mining firms are absorbing the export duty. We plan to enhance production to 3 million tonnes by the end of the present fiscal," Poddar said.