RCI, Jindal Steel in pact for three projects

Australia's Rocklands Richfield Ltd said on Tuesday it has signed an agreement with Jindal Steel & Power for three projects and will also appoint a nominee of the Indian company on its board.

Under the first project, RCI will sign an equal joint venture agreement with Jindal for a coal-brick project in India.

The estimated total investment will be around $10 million for a capacity of 600,000 tonnes per year. The project will be financed on a 50:50 debt to equity ratio, RCI said in a statement to the Australian Stock Exchange.

The plant capacity of the JV will initially be 1,50,000 tonnes a year, which could be increased to 6,00,000 tonnes in 2-3 years depending upon demand, it said.

The JV aims to commission production by April 2011. RCI expects a return of at least 20% of the capital that both firms inject, it added.

Each party will have three directors on the board of the JV, and the chairman of the board will be a Jindal representative, the Australian firm said.

While Jindal will provide 50 acres land at its existing coal handling and washing plant in Raigarh, RCI will act as a project manager during construction phase and provide technical back-up.

"Jindal has become a strategic shareholder in RCI. This gives our company a very strong backing for its long-term development. The JV for the sintered-brick project will also bring RCI a new income source," chairman Benny Wu said.

Both the companies will also jointly work towards developing two coking coal projects in Australia.

Jindal will also provide technical support to RCI in its coke oven expansion project in China, it added.

The RCI board has approved appointing a Jindal nominee to its board under the condition that Jindal continues to hold 14 percent or more of the total RCI shares.

RCI has also agreed to consider appointment of a second Jindal nominee to the board upon it reaching 19 percent shareholding.

At 12.59pm, shares in Jindal Steel were up 1.26% at Rs744.2 in a weak Mumbai market.