NMDC and KIOCL Merger Under Consideration.

India's largest iron ore miner, NMDC, a Central Public Sector Enterprise (CPSE) under the Steel Ministry, is considering a merger or acquisition of Kudremukh Iron Ore Company Ltd (KIOCL), another CPSE under the Ministry, following KIOCL's stalled efforts to start mining operations at Devadari in Karnataka. Discussions and detailed proposals are being prepared for approval, a senior Steel Ministry official informed businessline.

"There are ongoing discussions on merging KIOCL with NMDC, and NMDC has shown interest," the official said, adding that the proposal would address potential financial implications for NMDC, including any payments due to the Steel Ministry or the central government.

The merger will require multiple approvals, including clearances from the Finance Ministry and regulatory bodies. NMDC has yet to respond to queries on the matter.

KIOCL, a Mini Ratna company established in 1976 for iron ore mining and beneficiation in Kudremukh, produced 1.90 million tonnes of pellets in FY24, generating ₹1,854 crore in revenue. However, it reported a net loss of ₹83 crore, partly due to ongoing challenges with mining permissions at Devadari. The company has turned to external iron ore sources to keep its pellet plants running, even leasing one of its plants to NMDC as an interim measure.

"If NMDC takes over KIOCL's pellet plant, it could reduce operational costs by using its own iron ore," noted the Ministry official.

KIOCL's stalled ₹1,500 crore Devadari project has faced regulatory and environmental hurdles. Although the Karnataka government initially reserved 470.40 hectares for KIOCL in 2017, the area was later reduced to 388 hectares, delaying the project’s December 2024 operational target.

HBL