Mangaluru: Kudremukh Iron Ore Company (KIOCL), a prominent exporter of iron pellets, has been forced to shut down its operations for five months due to the collapse of the national market and the lack of its own mine. The company had been relying on external sources of iron ore, processing it at its plant in Kulur, and exporting it to foreign countries. However, this business has now come to a grinding halt.
The shutdown has put the future of 1,000 employees, including 500 contract workers, in jeopardy. These employees, working in the company’s offices and factories in Bangalore and Mangalore, are facing uncertainty, and their livelihoods are at risk due to the company’s inability to continue operations.
The decline in demand for iron ore in China, the world’s largest importer, has led to a significant decrease in prices. Chinese companies have reduced production due to falling demand, resulting in a decrease in iron ore prices from $140 per ton six months ago to $102 now. This decline in prices has made it unsustainable for KIOCL to continue operations.
KIOCL requires prices higher than $135 to be profitable, but the current prices are insufficient, leading to the shutdown. The company has been trying to acquire a mine at Deodari in Bellary, but the project has been controversial due to concerns about handing over forest land to the mine. The company had paid ₹300 crore to the forest department for mining in the 404-hectare area and had received approval from the Central Environment Department. However, the project has been stalled due to opposition.
The price of iron ore has been fluctuating over the last seven months, with prices in January at $136, February at $125, March at $110, April at $112, May at $119, June at $108, and July at $95. The decline in prices has made it challenging for KIOCL to continue operations, and the company is now facing an uncertain future.