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NSL Consolidated: Commissioning Of Kurnool Iron Ore Plant Set For Completion By End Of The Week

NSL Consolidated (ASX: NSL) is on schedule to complete the commissioning of the Phase 1 Kurnool dry separation iron ore plant in India after successfully conducting the first complete full load test.

Full commissioning of the plant continues as the company finalises optimisation of the process capable of producing up to 58% iron grade ore, with completion scheduled for 30 June 2012.

Run of mine ore from the company's nearby Mangal iron ore mine was run through the entire Kurnool circuit, enabling NSL to validate alignment and calibration of all components of the crushing, screening and dry separation plant.

The company is targeting an initial steady production rate of 200,000 beneficiated tonnes per annum from the first phase of operations at the Kurnool stockyard, with beneficiated grades of up to 58% achieved earlier this year.

A 58% iron ore product sells domestically for about US$90 per tonne, meaning that at 200,000 tonnes per annum production, NSL is looking at first phase revenue of $18 million.

In Phase 2 of the project, NSL aims to ramp up production to 400,000 tonnes per annum at higher grades of between 58% and 62% iron. First sales are anticipated in the first half of 2013.

NSL is targeting production of 1.5 million tonnes per annum by the end of 2014, which is achievable through strategic acquisitions and supply agreements.

NSL is the only foreign company to own and operate iron ore mines in India.

The Kurnool stockyard in southeast India is a 12 acre industrial site located adjacent to NSL's existing Kuja iron mine in Andhra Pradesh. The stockyard will source its iron from the nearby Mangal iron ore mine.

Indian steel consumption on the rise

India is the world's third largest iron ore exporter and has low production costs and well established infrastructure. Iron ore is a large but fragmented industry with small-scale operations.

This feeds into a strong domestic market for steel, forecast to increase substantially.

India's leading steel producer JSW Steel forecast recently that Indian steel consumption is seen rising to about 130 million tonnes in 2020 from about 67 million tonnes this year as growing incomes and urbanisation drive demand.

JSW said it expects steel consumption will be close to 70 million tonnes this year and about 80 million tonnes in 2012.

The country is selling iron ore and other iron products to Chinese and Asian customers that are seeking supply diversification, and is also the world's fifth largest steel manufacturer with an annualised growth rate of 10%.

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