Sajjan Jindal’s JSW Steel is on the verge of acquiring an iron ore mine in South America, providing the group the much needed raw material security.
Acquisition will help firm hedge iron ore supply
MUMBAI: Sajjan Jindal’s JSW Steel is on the verge of acquiring an iron ore mine in South America, providing the group the much needed raw material security.
The acquisition is critical for JSW Steel’s 89% subsidiary JSW Bengal, which is building a steel plant in West Bengal. The company recently doubled the capacity for the unit in the first phase to six million tonnes from 3 million tonne capacity planned earlier.
“We are still doing the due diligence on the South American mine and it could take a few more weeks,” said Seshagiri Rao MVS, director finance, JSW Steel.
Recently, Sajjan’s brother Navin Jindal triumphed in Bolivia, when his flagship group company Jindal Steel and Power won the El Mutun iron ore mines in the South American nation. The 60 kilometre stretch at El Mutun is said to own iron ore deposits of 40 billion tonne.
While the Jindal brothers control and run their flagship companies independently, the styles still converge as is evident by Sajjan Jindal’s plan to acquire a South American iron ore mine. With this probable acquisition, the steel mavens can swap the iron ore in America for local iron ore.
“We can hedge our raw material cost by selling the ore in markets closer to that region (South America) and buy ore locally,” said Rao.
A CLSA report alluded that JSW Bengal plans to list by December 2008, though JSW officials said it was too premature to announce any plans.
While the initial plan was to set up a 10 million tpa steel plant in West Bengal, the company had earlier planned the first phase at 3 million tonne per annum. According to CLSA analysts, the capital expenditure plan for a 3 million tonne plant capacity is 10,000 crore against Rs 15,000 crore for a six million tonne plant.
j_satish@dnaindia.net
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
)
)
)
)
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}