Summary: BMM Lump Offtake Agreement Update
15th June 2015
BMM ISPAT - LUMP OFFTAKE AGREEMENT UPDATE
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HIGHLIGHTS
Executed non-exclusive lump offtake agreement with BMM Ispat in place.
BMM Ispat is a significant and expanding producer of pellets, power and steel.
Production scale testing process agreed.
Batch of existing 53% Fe stockpile to be enhanced to +56% Fe for DRI production scale test.
NSL Consolidated Limited (Company, ASX: NSL, NSLO) is pleased to provide an update in relation to its offtake agreement with BMM Ispat (BMM) for up to 200,000 tonnes of the existing Phase One dry beneficiation plant lump product with typical specifications up to 58%Fe.
Subsequent to the execution of the lump offtake agreement, the Company and BMM have continued working together, and have now finalised and agreed the scope of the technical testing process through the DRI kilns of a production scale batch of iron ore. This includes the development of KPI’s, broad production schedule and logistics for the first delivery.
In order to meet the current end user requirements, BMM requires a +56% Fe lump product for its DRI kilns. NSL have produced a 500 tonne batch for BMM, which was previously beneficiated from circa 22%Fe to 53%Fe and is stockpiled on site, and this will be further enhanced over the coming week to produce +56% lump product for direct feed into BMM’s DRI kiln process.
When the Company has finalised the batch of +56%Fe BMM will then provide the Purchase Order, payment and transport to their steel complex for the technical testing process.
BMM has already successfully completed laboratory scale testing through their process simulators of small batches of the Company’s iron ore. Post this, the larger full production test aims to further strengthen the alignment of offtake requirements between the Company and BMM, with a key outcome being to be able to finalise product specifications for further long term supply.
The lump offtake agreement has the capability of absorbing 100% of the expected output from our existing dry beneficiation plant, but being non-exclusive, it allows the Company to also diversify its customer base going forward.
Commercial terms for the agreement are market based, enabling the Company to access the current robust market conditions in the domestic Indian iron ore sector. A
current market of circa 150 million iron ore tonnes to supply the world’s fourth largest steel industry, the Indian domestic steel industry is planning to triple in size over the next 10 years.
The BMM steel complex is approximately 240kms from NSL operations and located within the Hospet region of Karnataka, southern India’s main steel producing belt.
Production facilities located at the BMM steel complex include:
• Beneficiation Plant of 2.60 Million Tonnes per annum (mtpa)
• Pellet Plant of 2.60mtpa
• Sponge Iron Plant of 0.73mtpa
• Induction Furnace of 0.10mtpa
• Rolling Mill of 0.09mtpa
• Power Plant of 95 MW
BMM has embarked upon expansion projects which will result in new capacities for:
• Integrated Steel Plant of 1.25mtpa
