MOIL seeks allies for play abroad

Manganese Ore India Ltd (MOIL), India’s biggest manganese ore producer, is seeking to venture abroad, just like bigger peers Coal India and NMDC.

The company is seeking partners for international operations.
According to a note posted on the company’s website, MOIL has requested companies to submit expressions of interest (EoI) for partnering with it to develop or pick up stakes in mines overseas.   

The note said: “MOIL plans to have agreement with existing overseas mine owners of manganese ore to supply it to domestic (India’s) ferro producers.”

It also plans to go for exploitation of manganese ore and other minerals like chrome etc. for which it is looking forward for leases or to purchase properties from foreign countries directly, under a special purpose vehicle or through joint ventures.

The company had issued global tenders in December and the last date for submitting an EoI is January 31. It is likely to draw up shortlist by the second or third week of February.

Analysts said this augurs well for MOIL, where production volume is the main concern.

“Though, manganese ore is an important ingredient for steel manufacturing, and going ahead its demand is only going to rise, but if the company fails to meet the rising demand for the product, it could miss the bus,” said an analyst from a leading domestic brokerage house.

Manganese ore is essentially used in steel making to provide ductility and strength. The ore is first melted at high temperatures to form an alloy of iron and manganese. Then this alloy, also called as ferro manganese is fed to steel plants during production of steel.

Therefore, demand and pricing of steel has a direct bearing on the demand and pricing of manganese.

During an interaction with the company’s management in November before its IPO, K J Singh, chairman and managing director, MOIL had said that the company was in talks with a Turkish player for some joint venture agreement.

A source in MOIL said it is now open to countries such as South Africa, Chile and Turkey for a possible partnership to develop or buy stakes in manganese mines there.

“We will look at picking up stake in any mine above 50-100 million tonnes reserves in case the proposal comes,” said the source.
However, this person specified that the company has kept its options open and depending on the proposal interested players submit, MOIL will evaluate whether to have a joint venture, a memorandum of understanding, a lease agreement or a direct buyout of asset.

The analyst with the domestic brokerage house said while the company had initiated actions for a joint venture, it will be interesting to see how much time does it really take to have its hands on an overseas asset.

“Coal India had International Coal Ventures Ltd — both had been talking about picking up mining assets, but when it comes to public sector units, the pace of work is really slow,” he said.
MOIL is the biggest manganese ore company meeting almost 50% of India’s total manganese production, currently has a total of 10 manganese mines spread across an area of 1,798 hectare.

The company has 22 million tonnes of proved reserves and 37.2 million tonne of measured mineral resources of manganese ore. This takes its total reserves close to 60 million tonne.