NSL Consolidated has entered into an offtake agreement for its first 200,000 tonnes of future phase two 58-62% iron wet beneficiation plant fines product. Executed with significant Indian steel producer BMM Ispat, the agreement has the capability of absorbing all expected output from NSL’s wet plant.
Being non-exclusive, the agreement allows the company to also diversify its customer base going forward.
Commercial terms are market based, availing the company to access the current robust market conditions in the domestic Indian iron ore sector. A market of approximately 150 million 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.
Importantly, the agreement was reached directly with the end user, avoiding the need for traders and the uncertain credit worthiness inherent with this medium, and therefore reducing the sales transactional risk.
It is expected that this agreement, as the last piece of the Indian operations puzzle, will also aid the company in finalizing non-equity funding to build its wet beneficiation plant.
Both parties are working closely at finalizing offtake/purchase agreements for the existing phase one, 50-55% iron lump product. The company expects to be able to make a further announcement in this regard soon.
BMM’s current and future expanding production of steel can easily absorb 100% of the company’s production. During detailed evaluations both parties confirmed the strong alignment in the company’s iron ore specifications produced and BMM’s required iron ore raw material specification.
The BMM steel complex is approximately 240km from NSL operations and located within the Hospet region of Karnataka, southern India’s main steel producing belt.