Iron Ore Pellets Project Feasibility Study in Orissa

1
Project Report on
Feasibility study of setting up an Iron Ore Pellets
project in Orissa
Submitted by:
S. Saatvik
Summer Intern
Sara International Ltd.
Guided by:
Mr. Tushar Singh
Director, Strategy
Sara International Ltd.

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TABLE OF CONTENTS
1.0 ACKNOWLEDGEMENT................................................................................ 3
2.0 EXECUTIVE SUMMARY ............................................................................... 4
3.0 IRON ORE – A COMMODITY PROFILE IN INDIAN CONTEXT ...... 5
4.0 SARA GROUP – A SNAPSHOT................................................................... 9
5.0 SARA INTERNATIONAL LIMITED – IRON ORE DIVISION .......... 10
6.0 A SNAPSHOT OF ORISSA FROM IRON ORE PERSPECTIVE......... 13
6.1 PORTS IN ORISSA…………………....................................................14
7.0 GLOBAL PELLET INDUSTRY - AN OVERVIEW.................................. 15
7.1 INDIAN SCENARIO…………………………………………………..15
8.0 ORISSA - A CASE FOR PELLETS.............................................................. 17
8.1 WHY ORISSA………………………………………………………….17
8.2 WHY PELLETS - UNDERSTANDING PELLETIZATION……….....18
8.3 PELLETS - BENEFITS……………………………………………….. 22
8.4 EXISTING PROJECTS………………………………………………...22
9.0 RECOMMENDATION - PELLETS PROJECT FOR SIL ........................ 24
9.1 SIL - 360◦ CAPABILITY……………………………………………....24
9.2 COST MATRIX………………………………………………………...25
9.3 BARBIL - SUPPLIER AVAILABILITY ……………….……………..26
9.4 GOPALPUR - PORT INFRASTRUCTURE …………..………………28
9.5 FINANCIAL CALCULATIONS - SIL………………………………...30
9.6 KEY CONSIDERATIONS………………...…………………………...32
10.0 ANNEXURE..................................................................................................... 33
10.1 MINES IN ORISSA………………………………………………….....33
10.2 COMPARISON BETWEEN PELLETS AND SIZED ORE………….. 35
10.3 FIGURE - IRON ORE DEPOSITS OF INDIA ……...….……………..36
10.4 MINES IN BARBIL SECTOR………………..………..………………37
10.5 SPONGE IRON MANUFACTURERS…....…………………………...38
11.0 REFERENCES.................................................................................................. 43

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1.0 ACKNOWLEDGEMENT
The success of any project depends largely on the encouragement and guidelines of many
others. I take this opportunity to express my gratitude to the people who have been
instrumental in helping me complete this project report.
I would like to show my greatest appreciation to Mr. Tushar Singh. I can’t say thank you
enough for his tremendous support and help. I feel motivated and encouraged every time I
attend his meeting. Without his encouragement and guidance this project would not have
materialized.
I am highly indebted to Mr. Gitesh Singh for his guidance and supervision as well as for
providing necessary information regarding the project & also for his support in completing
the project. I would like to express my gratitude towards the team at Sara International
Ltd.’s Barbil office for their kind co-operation and encouragement which helped me in
completion of this project.
I would like to express my special gratitude and thanks to industry persons especially Mr.
BM Pattnaik from Mitra SK and Mr. CS Patial from East India Minerals Ltd., for giving me
attention and time.
My thanks and appreciations also go to Mr. Subho Mukherjee and Mr. Debendra Pati for
sharing valuable information for the project.
Finally, a special thanks to Mr. Pranay Prakash, Mr. Sanjay Ahuja and Mr. Preetpal Singh
from SIL’s Noida office for their constant support and help.

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2.0 EXECUTIVE SUMMARY
Feasibility study of setting up an Iron Ore Pellets project in Orissa
The Union of India budget of 2011 has made many Iron ore exporters to realign their
strategic goals to be more in sync with the turbulent times ahead.
Consequently, this project is aimed at exploring the option of entering the Iron Ore Pellets
business for Sara International Limited.
This project endeavors to assess the Iron Ore Trading and Export business in India. The
potential growth in the Iron Ore Segment especially in the beneficiated Ore in the form of
Pellets is explored along with the rationale for SIL to venture in to the business.
The intent of this project is to understand the Supplier network for securing raw material
[Iron Ore Fines] availability for the Iron Ore pellets project; the feasibility of having an
establishment near the customer base, also leveraging on the existing infrastructure
advantage that SIL enjoys by its captive port at Gopalpur, Orissa. It also attempts to give
an overview of the technologies that would make the best and cost effective option for such
a project.
An analysis of current financial status of SIL is undertaken and various modes of
investments required to fund the project are outlined.
To understand the intricacies involved and to gain a first-hand experience, this project
included a field visit to Barbil, a town and municipality in the Keonjhar district of the state
of Orissa, India with the region around Barbil having the fifth largest deposit of Iron Ore
and Manganese Ore in the World.

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3.0 IRON ORE – A COMMODITY PROFILE IN INDIAN CONTEXT
India is the fourth-largest producer of iron ore, possessing the richest iron ore deposits.
Accessible and high grade iron ore reserves – free from impurities like phosphorous and
sulphur and considered good for smelting – account for almost two thirds of the total iron
ore reserves in the country.
Reserves: India possesses 6% of global iron ore reserves and ranks fifth in the world in iron
ore reserve ownership. The Indian Bureau of Mines estimated the country’s total iron ore
reserves at 25.2 billion tonnes. The principal iron ores are hematite (70% iron) and
magnetite (72% iron). Hematite accounts for 58% of the total iron ore reserves, mainly in
Orissa (33%), Jharkhand (28%), Chhattisgarh (19%), Karnataka (11%) and Goa (5%).
Magnetite accounts for 42% of the total iron ore reserves, mainly located in Karnataka
(74%), Andhra Pradesh (14%), Rajasthan (5%) and Tamil Nadu (4%). The remaining 3% is
accounted for by Kerala, Assam, Jharkhand, Nagaland, Bihar and Maharashtra. At the
current domestic production levels of 230 million tonnes of ore in 2009-10, the country’s
available reserves are expected to last around 90 years. Fines and concentrates make up
about 90% of iron ore exports.
Demand: The demand for Indian iron ore is increasing; through 2006 to 2009, China
imported 74.78 MT, 79.53 MT, 91.04 MT and 107 MT ores from India, marking annual
increases of 9.08%, 6.36%, 14.47% and 18.08%. Although India’s iron ore exports are
increasing, India’s share of total Chinese iron ore imports declined from 22.92% in 2006 to
20.73% in 2007 to 20.51% in 2008 and to 17.71% in 2009, indicating that India’s iron ore
appetite is increasing (Source: steelorbis.com, 09 April 2010) consequent to an increasing
steel output of 42.78 MT, 53.08 MT, 55.05 MT and 54.6 MT through 2006-09. Since low-
quality grades accounted for about 70% of the 2008-09 ore output of 222 million tonnes, a
number of miners invested in pellet plants to use lower grade powdery iron ore fines to
make higher grade nodules, ideal for feeding blast furnaces in steel mills leading to
improved downstream input-output efficiency (Source: Reuters, 11th March 2010).
Production: India’s iron ore production grew at a CAGR of 11.12% over the five financial
years up to 2008-09 to reach 222 million tonnes (Source: Indian Infrastructure, March 2010).
In 2009-10, the country produced 230 million tonnes of iron ore and exported close to 106
million tonnes of iron ore to China. About 90% of its exports are to China in the form of
fines, while the remaining s10% is iron ore lumps transported to countries like Korea and
Japan (Source: Business Standard, 28 April, 2010). Moreover, the Steel Ministry set a steel
production target of 124 million tonnes per annum by 2012-13, more than double the

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current production capacity of around 54 million tonnes per annum in 2009 (Source:
Business Line, 28 April, 2010), widening the market for iron ore.
Exports: India is the world’s third largest iron ore exporter after Australia and Brazil, with
most of its exports to China, the world’s largest steel industry hub. India’s iron ore export
in 2009-10 was around 106 million tonnes as against 105 million tonnes in 2008-09 (Source:
Business Line, 23
April, 2010). To curb ore exports and ensure adequate material for the country’s steel
industry, the Indian government raised the export duty on iron ore lumps from 5% to 10%
and imposed a 5% duty on fines (bulk of iron ore exports) in 2010. The Indian Railways
also increased freight on iron ore exports by `300 a tonne from March 2010. It is expected
that iron ore exports will be around 100 million tonnes in 2010-11.
Outlook: India’s iron ore demand outlook is optimistic as India’s steel production –
growing at a compounded annual growth rate of more than 8.2% from 38.7 MT to around
60 MT from fiscal 2005 to fiscal 2010 – is expected to sustain. The supply scenario appears
optimistic owing to growing mine commercialisation and investments.
0
20000000
40000000
60000000
80000000
10000000
1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
Industry-wise Consumption of Iron Ore
All Industries

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A brief history of Iron Ore trading in India will elucidate the fact that iron ore trade in
India is heavily affected by governmental regulations and norms.
Following is a chronological snapshot of the changes:
2008
- December - India cut
duty on lumps to 5
percent, zero on fines as
exports started tapering
sharply after the end of
the Olympic Games in
biggest consumer
China.
- November - Imposed a
duty of 8 percent on
iron ore fines to cushion
the impact of the flat
rate earlier.
- October - It set a flat
rate of 200 rupees ($4)
per tonne on fines to
separate them from
high duty on higher
grade ores.
- June - It imposed a
duty of 15 percent on
exports of both lumps
and fines as part of
measures to curb
inflation.
2009
- December - Increased
duty on iron ore lumps
to 10 percent and
imposed a 5 percent
duty on fines as prices
rallied and moved
above a psychologically
key level of $100 a
tonne.
2010
- January - Raises duty
on iron ore lumps to 15
percent.

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4.0 SARA GROUP – A SNAPSHOT
Sara Group is India’s leading business conglomerate with interests in commodities, textiles,
infrastructure development and ports. With a dedicated team of over 1500 employees and
offices in Beijing, Dubai, Zagreb, Belgrade, Cleveland and Johannesburg, the company is
continually identifying new business opportunities in India and the world over.
Over the years the group has built on its strengths and transformed itself into a powerful
commodities trader. Today specialized and professional teams manage its portfolio
ranging from ores and minerals, steel and metals, coal and energy to agriculture.
Having had a sizeable presence in the textiles business for over 15 years, it is today one of
the top three terry towel producers in India. Under Sara Textiles Limited, the group is a
dominant exporter of home furnishings to Eastern Europe, making it one of the group’s
key markets.
Infrastructure is one of the core areas of growth for the group as it is for India, and it plans
to be a key driver in the industry through the development of world-class ports and rail
infrastructure. Under a special purpose vehicle (SPV) namely Gopalpur Ports Limited, the
group is modernizing, expanding and operating Gopalpur Port on the Eastern coast of
India.
The Group has its roots firmly planted in India but has always aspired to take Indian
expertise to take Indian expertise to the world; and bringing the best in class products and
services back home. It is organized in to three verticals, given below:
Commodities Infrastructure Textile

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5.0 SARA INTERNATIONAL LIMITED – IRON ORE DIVISION
Sara Groups commodities business operates under the flagship company Sara International
Limited (SIL) and is structured into four verticals namely
SIL is one of India’s premium non-mining iron-ore suppliers. With year-on-year growth
topping 25 percent, ores and minerals is its fastest growing vertical.
In 2005, it ventured into chrome-ore trading, sourcing chrome from Turkey and Albania to
sell to its customers in China. It has now established enduring links with its Turkish
partners to achieve long-term targets of moving cargo volumes.
In 2007 SIL forayed into the bauxite and Lumenite industry, sourcing from Indian miners,
consolidating the cargo and exporting in bulk to China.
SIL also manages a successful ore logistics division. The company has two railway rakes
leased from the Indian under the WIS [Wagon Investment Scheme] which run exclusively
for its own business between the mine head and the port, allowing the movement of much
larger tonnages of iron-ore compared with other industry participants. This not only gives
a competitive edge to the group’s pricing capability but also greater speed at which it is
able to move cargo.
Ores and
Minerals
Coal and
Energy
Steel and
metals
Agriculture

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New Office at Barbil was inaugurated on 14 Dec 2010.
SIL is also following a strategy of two or more parcels a month with a mix of traded and
self cargoes.
Iron ores are rocks and minerals from which metallic iron can be economically extracted.
About 98% of iron ore is used to make steel - one of the greatest inventions and most useful
materials ever created. The ores are usually rich in iron oxides and vary in color from dark
grey to rusty red. Iron ore is found /available in the form of lumps. It is crushed to produce
sized ore. During the crushing and formation of sized ore, fines are produced.

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Recent shipment from Sara International Limited from Paradeep are as follows:
EXPORT FROM PARADEEP(SARA INTERNATIONAL LTD)
YEAR QUANTITY EXPORTED (MT)
2006 - 2007 34,400.000
2007 - 2008 2,88,524.000
2008 - 2009 1,64,029.000
2009 - 2010 2,41,999.000
2010 - 2011 1,29,165.000

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6.0 A SNAPSHOT OF ORISSA FROM IRON ORE PERSPETIVE
Orissa is located on the north eastern part of the Indian peninsula, surrounded by the Bay
of Bengal on the east. Agriculture is the key occupation of almost 65% of the mineral rich
state’s total workforce, contributing almost 20% of the States Gross Domestic Product
during FY0911. The state is home to a several key minerals and ores such as iron ore,
bauxite, chromite and nickel ore.
Orissa accounts for about 32.9 per cent of all the iron-ore deposits in India [25.6 billion
tones], thus making it one of the favored investment destinations for domestic and
international iron and steel players.

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6.1 PORTS IN ORISSA
Orissa is endowed by many major and minor ports with Paradeep, Dhamra and Gopalpur
being the major ones.
Paradeep:
Paradeep Port is one of the Major Ports of India serving the Eastern and Central parts of
the country. Its hinterland extends to the states of Orissa, Jharkhand, Chattisgarh, West
Bengal, Madhya Pradesh and Bihar. The Port mainly deals with bulk cargo apart from
other clean cargoes. There is unprecedented growth in the traffic handled at this Port in
the last five years and the Port has got ambitious expansion program to double its
capacity to meet the ever increasing demand.
Dhamra:
The Dhamra Port Company Limited (DPCL) is a 50:50 joint venture of L&T and Tata
Steel. DPCL was awarded a concession by Government of Orissa to build and operate a
port north of the mouth of river Dhamra in Bhadrak district on BOOST (Build, Own,
Operate, Share and Transfer) basis. Situated between Haldia and Paradeep, the port at
Dhamra is slated to be one of the deepest ports of India with a depth of 18 meters,
which can accommodate super cape-size vessels up to 180,000 DWT. The master plan
provides for 13 berths, capable of handling more than 100 million MT per annum of dry
bulk, liquid bulk, break bulk, containerized and general cargo.
Gopalpur:
Gopalpur, a natural port of Orissa, is one of the ideally located and topographically
suited deep sea ports on the East Coast of India. The mammoth task of developing
Gopalpur has been awarded to Sara International Ltd. and Orissa Stevedores Ltd. by
the Government of Orissa. It was envisioned with capability of handling capesize
vessels. With 10 covered godowns and more than 200,000 sq. ft. of paved open space,
Gopalpur Port is capable of anchorage loading and onshore direct berthing operations
of capesize vessels. Gopalpur Port will be analyzed in greater detail further in the
report.

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7.0 GLOBAL PELLET INDUSTRY – AN OVERVIEW
The world Iron ore Pellets production has seen a steady rise during the past decade or so.
According to available data the production stood at 345 Million Metric tonnes in 2008 with
USA, Brazil and China spearheading the race.
7.1 INDIAN SCENARIO
At present the total installed capacity of Pellet plants in India is about 18 MT which
corresponds to a share of about 5% of world pellet capacity. India is placed at 7th
position.
USA maintains the leading position followed by Brazil and China. The plants installed in
India are mostly of bigger capacity and based on straight gate induration process. The
plants have been set-up by Lurgi and Davy international.
All the plants operate on Haematite ores with the exception of Mangalore Pellet Plant
which so far was using Magnetite ore concentrates for producing pellets.
In India, the operational Magnetite ore body is restricted to Kudremukh area only.
However, due to environmental problems, mining operations have been suspended by
Supreme court order and Mangalore Pellet plant has started operating on Haematite ore of
Bellary region.
0
50
100
150
200
250
300
350
1955 1975 1995 2000 2004 2008
World Iron Ore Pellets Production
Production in MT

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Managalore pellet plant is export oriented towards South-East Asian countries, whereas
Jindal South West (JSW), Torangallu is mostly consumed internally in their Blast furnaces
and COREX units.
Production from Hy-Grade Pellets Ltd., is partly consumed in their gas based DR units at
Hazira and partly exported to China and other Asian countries.

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8.0 ORISSA – A CASE FOR PELLETS
8.1 WHY ORISSA?
According to the figures obtained from the Indian Bureau of Mines, Orissa constitutes
about 36% of the Iron Ore fines production in India. Above figure is an illustration of the
same. Approximately 80% of the produce in Orissa is classified as Medium – High [Fe
+63%].
The below chart depicts an overall Indian Iron Ore Grade wise distribution:
0
20000
40000
60000
80000
100000
120000
140000
FY 2004 FY 2005 FY 2006 FY 2007
FY 2008 FY 2009 FY 2010
Selected State-wise Production of Iron Ore Fines
in India
Orissa
Karnataka
Jharkhand
Goa
Chattisgarh
Andhra Pradesh
19%
51%
28%
2%
Grade-wise distribution of Iron Ore in India
High (Fe +65%) Medium (Fe 62-65%) Low (Fe -65%) Others

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8.2 WHY PELLETS – UNDERSTANDING PELLETIZATION
Pelletizing is the process of compressing or molding a material into the shape of a pellet. A
wide range of different materials are pelletized including chemicals, iron ore, animal
compound feed, and more.
Pelletizing of iron ore:
Iron ore pellets are spheres of typically 8–18 mm (0.31–0.71 in) to be used as raw material
for blast furnaces. They typically contain 67%-72% Fe and various additional material
adjusting the chemical composition and the metallurgic properties of the pellets.
Typically, limestone, dolostone and olivine is added and Bentonite is used as binder.
The process of pelletizing combines mixing of the raw material, forming the pellet and a
thermal treatment baking the soft raw pellet to hard spheres. The raw materials is rolled
into a ball, then fired in a kiln to sinter the particles into a hard sphere.
The configuration of iron ore pellets as packed spheres in the blast furnace allows air to
flow between the pellets, decreasing the resistance to the air that flows up through the
layers of material during the same. The configuration of iron ore powder in a blast furnace
is more tightly-packed and restricts the air flow. This is the reason that iron ore is preferred
in the form of pellets rather than in the form of finer particle.
Preparation of raw materials:
Additional materials are added to the iron ore (pellet feed) to meet the requirements of the
final pellets. This is done by placing the mixture in the pelletizer, which can hold different
types of ores and additives, and mixing to adjust the chemical composition and the
metallurgic properties of the pellets. In general, the following stages are included in this
period of processing: concentration / separation, homogenization of the substance ratios,
milling, and classification, increasing thickness, homogenization of the pulp and filtering.

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Formation of the raw pellets:
The formation of raw iron ore pellets, also known as pelletizing, has the objective of
producing pellets in an appropriate band of sizes and with mechanical properties for
usefulness during the stresses of transference, transport, and use. Both mechanical force
and thermal processes are used to produce the correct pellet properties.
Thermal processing:
In order to confer to the pellets high resistance metallurgic mechanics and appropriate
characteristics, the pellets are subjected to thermal processing, which involves stages of
drying, daily pay burn, burn, after-burn and cooling (in a cooling tower). The duration of
each stage and the temperature that the pellets are subjected to have a strong influence on
the final product quality.

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From equipment point of view there two alternatives for industrial production of iron ore
pellets: drum and pelletizing disk.
The Traveling Grate process for larger capacities:
The Traveling Grate process, chieﬂy developed by Lurgi (now owned by Outokumpu
Technology) accounts for two thirds of the world’s installed pelletizing processes.
It comprises three steps:
Raw material preparation:
Prior to the formation of green pellets, water is added to the fine iron ore to adjust the
moisture content to approximately 9 % and the ore is mixed with small amounts of binding
agents such as bentonite (approximately 0.5 %) and fluxes such as limestone, lime olivine
and dolomite (1–5 %). These give the pellets the proper physical and metallurgical
properties needed in further processing. Mixing takes place in continuously operating
drum or pan-type mixers with a capacity of 450–700 t/h.
Green pelletizing:
On an industrial scale, green pellets are formed either in pelletizing discs or drums, drums
usually being connected to roller screens used for separating undersized pellets (150–250
%) which are returned to the drum. This high level of circulation makes pelletizing drums
less sensitive to variations in feed material properties. Pelletizing discs need only a single
process step to form pellets, their classifying effect discharging the pellets from the disc rim

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within a very narrow size range. Green pellet size can be precisely adjusted by varying the
disc inclination, circumferential speed, feed rate or water addition.
Pellet hardening:
This step involves the elimination of big thickeners and of the entire filtration section,
hugely simplifying the grinding circuits. In green-field projects or plant expansions high-
pressure roller presses can be combined with conventional ball mills. Such roller press
comminution offers much lower capital and operating costs as regards civil engineering,
structural steels and engineering as well
Advanced Steel Belt Sintering for smaller capacities:
Since traveling grate plants are most efﬁcient with 3–7 mt/a production capacities, a
smaller alternative is the steel belt technology for production of 80,000–1,000,000 t/a. This
innovation is designed for the cost-effective agglomeration of smaller quantities of chrome
ore, iron ore, manganese ore or niobium ore as well as for steel plant residues.
Steel belt plants differ from traveling grate plants in terms of the lighter design of their
indurating machines and process gas systems. Green pellets are transported through the
indurating machine by a perforated steel belt instead of pellet cars, while heat is generated
by the combustion of carbon inside the pellets and by auxiliary burners in the gas duct
between the cooling and ﬁring compartments.

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8.3 PELLETS - BENEFITS
Stable Blast Furnace operation Less Handling losses
Superior permeability due to size uniformity Less specific consumption of coal
High Blast Furnace productivity Increased campaign life
Lower coke rate of Blast Furnace Low Refractory repairing cost
Better Sponge Iron Quality Overall lower cost of production
Less fines generation in sponge iron kiln Better environmental conditions
Following table depicts the comparison between the Iron Ore Pellets and Fines:
Standardization Uniform size range, generally within a
range of 9–16 mm
Purity 63–68 % iron, mainly Fe
Cost-effectiveness virtually no loss on ignition while a high
and uniform porosity of 25–30 % allows fast
reduction and high metallization rates
Strength high and uniform mechanical strength even
under thermal stress in reducing
atmospheres
Transportable low degradation under abrasive inﬂuences
8.4 EXISTING PROJECTS
Brahmani River Pellets Project:
Brahmani River Pellets Ltd (BRPL), a wholly owned Stemcor project, has been envisaged to
take low grade fines and convert them to high grade pellets for consumption within Indian
and for export to China and other markets. BRPL has commenced construction of a
beneficiation plant located at Barbil in the iron ore belt of Orissa, India, which will take
fines from various mines, including AMTC and MISL, and refine them using grinding and
magnetic separation processes. The beneficiation plant will be connected by a 220 km
underground slurry pipeline to a 4 million tonnes per annum pellet plant under
construction at Kalinga Nagar in the district of Jajpur, close to both industrial development
and port facilities, where the ore slurry will be balled and fired into pellets, the highest

23
grade iron ore product used in steel production. The project is progressing well and under
current planning is expected to be commissioned by late 2011. With a range of feed grades
available, BRPL will be able to tailor the cost and grade of pellet to meet market demand.
Essar’s Paradeep Pellets project:
Essar Steel, the flagship company of the Rs. 20,000-crore Essar Group, has acquired 1300
acres, out of the required 1960 acres, for its six million tonne steel project in Orissa. The
company had signed a memorandum of understanding in 2005 with the state government
to set up a steel plant along with facilities for making iron ore pellet and transporting iron
ore slurry through dedicated pipeline from Barbil sector to Paradeep.
Essar is investing Rs 15000 crore for the project. It includes an iron ore pellet plant and
setting up of a slurry pipeline. The company’s Bailadilla-Vizag slurry pipleline also passes
through the state.
Note: On an average, a Pellets project of capacity 3-5 mt/a involve a capital
investment of INR 800-1000 crores with a period of 2-3 years from Civil construction to
Commissioning of Production.

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9.0 RECOMMENDATION – PELLETS PROJECT FOR SIL
9.1 SIL – 360◦ CAPABILITY
To venture in to any new enterprise, an internal assessment of the company is imperative.
The above figure illustrates the strengths possessed by SIL which accrue from its long-
standing presence in the Indian Iron Ore export market.
The mentioned aspects make a strong case for SIL to seriously consider foraying in to
beneficiation or Iron Ore Fines from its present position as a trader/exporter of Iron Ore
Fines.
Strategically located
operations for
catering to major
seaborne markets
Unique logistic cost
advantage arising
out of proximity to
ports and integrated
river logistics
Strong project
execution
capabilities with
proven track record
of diversification
Commitment to
sustainable
development
Strong balance and
cash generation
Experienced
management and
manpower wtih
operations running
for over three
decades

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9.2 COST MATRIX
According to Currently prevalent market rates as on [1 April 2011], the following is the rate
differential between Iron Ore fines and Iron Ore pellets in the export market:
Commodity Ex-Works [Mine
or Factory]
Transport cost
[average]
Overall Cost Sales
realization
[average]
Iron Ore Fines INR 2800/MT
(63%)
INR 2500/MT INR 5300/MT INR 6300/MT
Iron Ore Pellets
[Near mines]
INR 4300/MT INR 2500/MT INR 6800/MT INR 8500/MT
Iron Ore Pellets
[Near port]
INR 4300/MT Near Port [Nil] INR 4300/MT INR 8500/MT
Assumptions:
Price of Iron Ore fines Transport Cost Pellet plant operating
cost/MT
140 USD FOB @ 45 INR/USD 1000,000 INR/4000 MT =
2500 INR
1500 INR [based on primary
research, unsubstantiated]
As can be clearly seen,
Margins on:
Fines Pellets: Near Mines Pellets: Near Port
15% 20% 50%
The above calculations, substantiate the claim to having the Pellet project near the Port
Infrastructure.

26
9.3 BARBIL – SUPPLIER AVAILABILITY
Barbil has many mines surrounding it. A graphical illustration is given below:
25
30
35
25 25
35
22
45
40
20 20
16 19 20
35
25
30 30 30
45 45
40
45
25
20
Distance from Barbil in Kms
0
10
20
30
40
50
Jiling-Langald
Jojang
Joribahal Iron…
Jalahuri Iron Mines
Jorudih Iron Mines
Jojang II
Gurubeda Ion Ore…
Bahalda Iron Ore…
Chamakpur Iron…
Inganijhar Iron…
Uchbali Iron Ore…
Balita-BonaikelaInganijhar an -…Baitarani Iron…Khandbandh -…
Murgabeda Iron…
Deojhar Iron Mines
Dalpahar Iron and…
Khandbandh Iron…
Secradih & Dubna
Balsa - palsa &…
Khuntpni &…
Patabeda Iron Ore…
Sunaguturia &…
Jojang-III
Distance Matrix

27
ROAD DISTANCE BETWEEN BARBIL AND IMPORTANT PORTS
Long term agreement to secure raw material supplies:
With SIL’s infrastructure presence in the Port at Gopalpur, a long term supply agreement
with miners in and around Barbil sector could secure long-term Iron Ore Fine supplies to
feed its Pellets project.
Some of the suppliers who already have an association with SIL are illustrated below:
RP Sao
Thriveni Earth Movers
Kay Pee Enterprises
Sai International
KN Ram
These suppliers represent the best option base for SIL to venture in to long-term
agreement.
MINE
SOURCE
PORT DESTINATION
BARBIL
GOPALPUR PARADEEP GANGAVARAM HALDIA
424 KM 328 KM 703 KM 318 KM

28
9.4 GOPALPUR – PORT INFRASTRUCTURE
Introduction:
Gopalpur is located along the Bay of Bengal in the Eastern Indian State of Orissa. Paradeep
and Vishakhapatnam Ports are located at a distance of 160 Km North and 260 Km South
respectively of Gopalpur. The location is near the village Arjipali almost midway of a 22
km stretch of coastline between the town of Gopalpur-on-sea and Rushikulya river mouth
on the North.
Existing Rail Linkages:
Gopalpur is blessed with excellent rail connectivity having its own railway siding and is
only six kilometers inside from the main Howrah-Vishakhapatnam-Chennai broad gauge
railway line. This railway siding is broad enough to handle a total cargo of more than 35
million tons.
Road Connectivity:
The national Highway No. 5 (Kolkata-Chennai) passes about 6 Km from Gopalpur Port
site. State Highway 7 and 17 are also connected with NH 5 and provide good road network
in the region. There are two access roads connecting Gopalpur Port area to NH 5.
Government has already announced the National Highway from Gopalpur on sea in
Orissa to Raipur in Chattisgarh. This highway makes it possible to connect the inaccessible
and tribal areas of Ganjam, Kondhmal, Kalahandi and Naupada district of Orissa. This
connectivity would facilitate transport of forest produce and other agricultural products to
the port of Gopalpur on sea and to larger markets on the coastal areas.
Environment:
Gopalpur Port, located on the East coast of India in the State of Orissa is one of the most
environment friendly ports in region. The Port is being developed on a 4 Km stretch of
coast line, which is devoid of vegetation. This area is barren and falls in the rain shadow
region. There are no mangrove/tidal rain forest. This area is not home to any endangered
species of flora or fauna. The other sensitive area which may be of concern to other ports
like nesting grounds of Olive Ridley Turtles are also not in the Port Zone. Nor is the
proposed site near any heritage, historical or any place of national importance. The nearest
habitation is the fishing village of Arjipalli which falls outside the proposed port site.

29
The construction of the Port will involve acquisition of land, but here again the
environment friendly aspect of the Port comes into the fore. The land to be acquired is
mostly the de-graded area which has been mined out by Indian Rare Earths Ltd. In fact
what is today degraded land will be converted into a state of the art Port in future
Due to its very nature, that is a state of the art Port, a small number of persons would be
needed to operate the facilities thereby reducing the burden on the land for mass housing.
The Port management has plans to carry out afforestation in the area to enhance the natural
beauty and add to the ecological balance.
0
200
400
600
800
1000
Angul
Bhilai
Bokaro
Burnpur
Cuttack
Dantewada
Dhenkanal
Durgapur
Jagadalpur
Jagatsinghpur
Jaipur
Jamshedpur
JharsugudaKalahandi
Keonijhar
Kharagpur
Koraput
Kobra
Mayurbhanj
Raigarh
Raipur
Rayagada
Sambalpur
Sidhi
Sundargarh
Distance Matrix
Distance from Gopalpur

30
9.5 FINANCIAL CALCULATIONS - SIL
Snapshot of SIL’s Balance sheet:
From the Balance sheet of M/S Sara International Limited as at March 31, 2010,
Total Assets INR 188,73,43,159
Equity INR 063,42,55,094
Debt INR 124,97,89,566
Debt to Equity Ratio 2 app.
This analysis is based on the standard model of limiting debt-equity ratio to 2:1 and also
borrows from the example of the Brahmani River Pellets project of Stemcor which
involved,
Project cost USD 320 million
Debt USD 245 million
Equity USD 75 million
Debt to Equity Ratio 3.2 app.
It is quite clear that for an estimated project cost of INR 1000 crores the present balance
sheet size of SIL is not sufficient, hence as a proposal for this project the following
recommendations are proposed:

31
Proposed Financing avenues:
•Debt at 700 crores and Equity at 300 crores
•Reasonably comfortable Debt to Equity ratio at 2.33
Going for a
balanced mix of
Debt and Equity
• Going for an Initial Public offering to fund its equity capital
for the project
• In this recommendation, project scope doesn't explore the
vision of the Promoters of SIL
Equity
• Rupee term loans costly at present - Recent RBI revision of
rates
• Foreign Currency loans available at Libor referenced rates
• SIL's credit rating BBB according to CRISIL
Debt
•External commerical borrowings, general tenure 5 years
•Buyers credit for Working capital and Capex
requirements, tenure upto 3 years
Foreign Debt
•Debentures
•Foreign Currency Convertible Bonds
Future financing
options

32
9.6 KEY CONSIDERATIONS
Raw Material
availability
•Iron Ore fines are abundantly available in the Barbil sector, getting into a long-term contract to secure supplies
would ensure timely availability
•Coal makes a very important part of the input, with Port viscinity, sourcing Coal would be a much easier task
compared to having the production setup in the hinterlands
Water
availability
•Abundant water supply available near the port
Land
availability
•With levelled land lying unused, Land availability, with land filling options are abundantly available near
Gopalpur area
Forest
Clearance
•The adjoining area near Gopalpur port doesn't have substantial forest cover hence the danger of degradation is
minimal
Environment
Clearance
•The Project wouldn't substantially hamper the daily life of the local populace around, nor does it endanger any
other specie in the area
Pollution
Clearance
•Requisite technology investment with clean technology as the focus can fasten getting Pollution clearance
Factory
License
•With SIL's existing Port Infrastructure and Capex capacity, factory license could be obtained
•Beneficiation projects get priority according to Centre and State regulations
Labour
availability
•Labour exchanges aplenty in Orissa, Cheap and skilled labour availability wouldn't be a hindrance

33
10.0 ANNEXURE
10.1 MINES IN ORISSA
MINE STATUS
BELKUNDI IRON ORE (OMDC), KEONJHAR OPERATING
BHADRASAHI MINE (OMDC), KEONJHAR OPERATING
THAKURANI MINE (OMDC), BARBIL, KEONJHAR OPERATING
JODA EAST IRON ORE (TISCO), KEONJHAR OPERATING
KATAMATI IRON ORE (TISCO), KEONJHAR OPERATING
MURGABEDA IRON ORE , KEONJHAR OPERATING
DAITARI IRON ORE (OMC) , JAJPUR OPERATING
GANDHAMARDAN IRON ORE , KEONJHAR OPERATING
BOLANI IRON ORE (SAIL), KEONJHAR OPERATING
ESSEL MINING AND INDUSTRIES {JILLING LANGOLATA IRON
ORE ), KEHOJHAR """
OPERATING
BPJ IRON ORE (OMC), KEONJHAR OPERATING
KASIA IRON & DOLOMITE ORE (ESSEL MINING IND. LTD.)
BARBIL, KEONJHAR
OPERATING
BARAPADA KASIA IRON ORE , BARBIL, KEONJHAR OPERATING
JORUDI IRON ORE , M/S TARINI MINERALS, JODA, KEONJHAR OPERATING
DEOJHAR IRON ORE , M/S TARINI MINERALS AND PVT. LTD.,
KEONJHAR
OPERATING
GONUA IRON ORE , M/S MAITRI SUKLA, KEONJHAR OPERATING
KHANDADHARA IRON ORE (OMC), JODA, KEONJHAR CLOSED
NARAYANI SONS (SURGUTURIA IRON ORE ), KEONJHAR OPERATING
ROIDA IRON ORE (MESCO), KEONJHAR CLOSED
BARSUAN IRON ORE (SAIL) SUNDARGARH OPERATING
KHANDABANDHA IRON ORE (OMC), SUNDARGARH OPERATING
KALTA IRON ORE (SAIL), SUNDARGARH OPERATING
KOIRA IRON ORE (ESSEL MINING), SUNDARGARH OPERATING
TRB IRON ORE (JINDAL STEEL & POWER), SUNDARGARH OPERATING
GORUMAHISANI IRON ORE , MAYURBHANJ OPERATING
TOMKA IRON ORE (MEESCO), SUNDARGARH CLOSED

34
KAY PESS ENTERPRISES IRON MINE, BARBIL, KEONJHAR OPERATING
KASIRA BHANJAPALI IRON, SUNDARGARH CLOSED
SULIAPAT IRON ORE , MAYURBHANJ OPERATING
THAKURANI IRON ORE , KAYPEE ENTERPRISES (Crusher) OPERATING
BHANJIPALI IRON ORE , KOHIRA, M/S J.N.PATTNAIK,
SUNDERGARH
OPERATING
BALDA BLOCK IRON ORE, KEONJHAR, M/S SIRAZ-UD- DIN&
CO., KEONJHAR
OPERATING
ORGHAT IRON MINES, M/S RUNGTA SONS (P) LTD., KOIRA,
SUNDARGARH
OPERATING
NUAGAON IRON MINE, KJS AHLUWALIA, KEONJHAR OPERATING
THAKURANI IRON BLOCK "B" S.L. & M.L. .SARDA KEONJHAR OPERATING
BADAMPAHAR IRON MINE, LAL TRADERS & AGENCIES PVT.
LTD..MAURBHANJ
CLOSED
SAN-INDUPUR IRON & BAUXITE MINE, RUNGTA SONS PVT.
LTD., KOIDA
OPERATING
ROIDA IRON MINE-II, KHATAU NARBHERAM, KEONJHAR OPERATING
PATABEDA IRON MINE, M/S M.G.MOHANTY, BONAI,
SUNDARGARH
OPERATING
RAIKELA IRON ORE MINE, M/S GITARANI MOHANTY,
SUNDERGARH.
OPERATING
JORURI IRON ORE MINE,M/S GITA RANI MOHANTY(KMC)
KEONJHAR
OPERATING
CHAMAKPUR IRON RE MINES, K.C PRADHAN, KEONJHAR OPERATING
KJS(JALDIHI) IRON & BAUXITE MINE, S N MOHANTY
KEONJHAR
OPERATING
SUKRADIHI IRON ORE MINE.M/S OMC LTD., KEONJHAR OPERATING
JARIBAHAL IRON ORE MINE.KEONJHAR OPERATING
KOLHA ROIDA IRON ORE MINE KEONJHAR OPERATING
GHUSURIA ISO MINES, D C DOGRA, RAIRANGPUR,
MAYURBHANJ
OPERATING
RAIKELA IRON ORE MINES, S N MOHANTY , RAIKELA,
SUNDERGARH
OPERATING
GUALI IRON ORE MINES, GUALI, KEONJHAR OPERATING
BALITA IRON ORE MINES, BELIPADA, KEONJHAR OPERATING
RAIKELA IRON ORE MINES, NATIONAL ENTERPRISES,
SUNDERGARH
OPERATING

35
DALPAHAR IRON ORE MINES, DALPAHAR, DHARAMCHANDA
JAIN, KEONJHAR
OPERATING
BAITARANI IRON ORE MINES, DR, SAROJINI PRADHAN,
CHAMPUR, KEONJHAR
OPERATING
10.2 COMPARISON BETWEEN PELLETS AND SIZED ORE
Particulars Pellets Sized Ore
Average Campaign Period 120 days 60 days
Average yearly shutdowns 3 6
Total time loss in shutdowns 15 days 30 days
Total Productivity Loss 4.16% 8.33%
Production Capacity (Per day) 120 mt 80 - 90 mt
Fines generation in transit Nil 2%
Iron Lumps / Ore required per ton of
sponge iron
1.50 mt 1.60 mt
Fines (-5mm) in ore 2% 8%
Coal consumption per ton of sponge Iron 1.4 mt 1.6 mt
Electricity consumption 50 units 70 units
Total cost of shutdown maintenance 50% 100%
Sponge Iron Fines <10% >20%
Cost of production of per ton of Sponge
Iron
Lower Higher
Laterite 0 2%

36
10.3 FIGURE – IRON ORE DEPOSITS OF INDIA

37
10.4 MINES IN BARBIL SECTOR
Name of Mine Distance from
Barbil in Kms
Jiling-Langald 25
Jojang 30
Joribahal Iron Mines 35
Jalahuri Iron Mines 25
Jorudih Iron Mines 25
Jojang II 35
Gurubeda Iron Ore
Mines
22
Beheld Iron Ore Mines 45
Chamakpur Iron Ore
Mines
40
Inganijhar Iron and
Mineral Mines
20
Uchbali Iron Ore Mine 20
Balita-Bonaikela 16
Inganijhar an - Bonaikela 19
Baitarani Iron Mines 20
Khandbandh - Jojang
Mines
35
Murgabeda Iron Mines 25
Deojhar Iron Mines 30
Dalpahar Iron andmines 30
Khandbandh Iron Mines 30
Secradih & Dubna 45
Balsa - palsa & jojang 45
Khuntpni & Unchbali 40
Patabeda Iron Ore Mines 45
Sunaguturia & Laupada 25
Jojang-III 20

38
10.5 SPONGE IRON MANUFACTURERS
STATUS OF SPONGE IRON INDUSTRIES IN KEONJHAR DISTRICT
Sl.
No.
Name & Address of
the Industry
No. of Kilns &
Capacity
1. M/s. Orissa Sponge
Iron Ltd.
At/P.o-Palaspanga
Dist-Keonjhar
1 X 350 TPD
13.2 MW power
plant
(WHRB & AFBC
Boiler)
1 x 500 TPD
2 x 24 MW (WHRB
& AFBC Boiler)
2. M/s. Rungta Mines
(Sponge Iron Division)
At-Karakola, P.o-
Barbil.
Dist-Keonjhar
5 x 100 TPD
3. M/s. Deepak Steel and
Power Ltd.
At-Topadihi, P.o-
Barbil
Dist-Keonjhar
2 x 50 TPD
2 x 100 TPD
4. M/s. Sree Metaliks Ltd.
At-Loidapara, P.O-
Barbil
Dist-Keonjhar
2 x 50 TPD
4 x 100 TPD
1 x 300 TPD
CPP 8 MW
( WHRB)
CPP 20 MW
( WHRB + AFBC)
5. M/s.Kusum Power
Met (P) Ltd.,
At- Kutugaon.
Dist-Keonjhar
2 x 50 TPD
2 x 100 TPD
6. M/s. N.K. Bhojani Pvt.
Ltd.
3 x 40 TPD

39
At- Rugudihi, Barbil
Dist-Keonjhar
7. M/s. Tata Sponge Iron
Ltd. At- Beileipada,
Joda,
Dist-Keonjhar
2 x 375 TPD
CPP 7.5 MW
1x 500 TPD
CPP 18.5 MW
8. M/s. Grewal
Associates
At-Matkambeda,
Barbil
Dist-Keonjhar
4 x 100 TPD
9. M/s. Sumrit Metalicks
(P) Ltd.
At- Soyabali, Barbil.
Dist-Keonjhar
2 x 50 TPD
10. M/s. OMDC Sponge
Iron Plant
At-Thakurani , Babil
Dist-Keonjhar
1 X 100 TPD
11. M/s. Hima Ispat Ltd.
At- Barpada
Dist-Keonjhar
1 x 300 TPD
12. M/s. Deepak Steel &
Power Ltd. At-
Uliburu, Barbil
Dist-Keonjhar
2 x 100 TPD
13. M/s. Beekay Steel &
Power Ltd. AT-
Uliburu, Barbil.
Dist-Keonjhar
1 x 300 TPD
14. M/s. Crackers India
Pvt. Ltd.
At-Gobardhanpur.
Dist-Keonjhar
2x 100 TPD
15. M/s. Sri Ganesh
Sponge Iron Pvt. Ltd.,
At-Kutugaon.
2 x 100 TPD

40
Dist-Keonjhar
16 M/s. Shree Jagannath
Metalicks
At-Khaparakai,
Palaspanga. Dist-
Keonjhar
1 x 100 TPD
1 x 100 TPD
17. M/s. Orion Ispat Ltd.
At-Ramchandrapur.
Dist-Keonjhar
3 x 100 TPD
18. M/s. MSP Sponge Iron
(P) Ltd.
At-Haldiaguna,
Gobardhanpur,
Dist-Keonjhar
2 x 40 TPD
2 X 50 TPD
19. M/s. Aditya Sponge
and Power
At-Dublapal, Telkoi
Dist-Keonjhar
2 x 100 TPD
20. M/s. Patnaik Steels &
Alloys Ltd., At:
Purunapani,Nayagarh,
PO: Dubuna, Dist:
Keonjhar
1 x 350 TPD,
Electricity(WHRB)-
8 MW

41
Serial No Name and Address Products and Qty Remarks
of the Industry
1 Kalinga Iron works Pig Iron-13110
TPM
Have their own mines.
Roida ‘C’ Iron & Mn.
Mines, Roida
At/Po-Barbil
Dist-Keonjhar Granulated Slag-
3312 TPM
(Blast Furnace I -170 TPD
Furnace II – 130 TPD Span pipe-1683
TPM
Furnace III – 140 TPD
Furnace IV – 140 TPD ) Gas based power
plant 16 MW
2 Arya Iron and Steel Co. Pvt.
Ltd.
Iron ore Pellets-
One lakh ton per
monthAt: Matkambeda,
Barbil, Keonjhar
3 B.R.M. Hi-tech Steelss Pvt.
Ltd.
M.S. Rods, Angles,
Flats, Squares,
Channels, Bars,
Round and

42
At: salarpenth, PO:
Mahadeijoda, Dist:
Keonjhar
structures- 3000
Ton/month
4 Jindal Steel and Power Ltd, Iron Ore Pellets-10
MTPA
Have their own mines.
Soyabally, Barbil, Keonjhar Producer gas –
1,80,000
5 Kalinga Metallics & Power
Pvt Ltd, Gopalpur,
Badaposi, Keonjhar.
MS Bars- 6000 MT/
Month

43
11.0 REFERENCES
Reuters, 11th March 2010
http://www.cesorissa.org/mines.asp
http://in.reuters.com/article/2010/04/13/crisil-ratings-idINSGE63C0CN20100413
http://ibm.nic.in
http://orissaminerals.gov.in/website/default.aspx?GL=home
http://www.steelmint.com/
http://www.fedmin.com/
http://www.indiastat.com/
http://www.saragroup.co.in/
http://www.advanced-exploration.com/industry/io_products/
www.portal.gsi.gov.in/
http://proquest.umi.com/pqdweb?cfc=1
http://www.cmie.com/
www.outokumputechnology.com/28620.epibrw
http://www.fois.indianrail.gov.in/
Financial report for the year ended March 2010 - SIL
Media Reports - Business Standard and The Economic Times
Sara Connect - Jan-Mar 2011, Oct-Dec 2010 and Jul-Sep 2010

Iron Ore Pellets Project Feasibility Study in Orissa

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