Jindal Steel eyes $2 billion iron ore mine purchase
Jindal Steel & Power Ltd. (JSP), India’s second-biggest steelmaker by value, is aiming to secure its own iron ore supply with the $2 billion acquisition of an iron ore mine in West Africa, Bloomberg Businessweek reported.
The investment will secure deposits of at least 1 Gt (1.1 billion st) and include building a transport line. The New Delhi-based company has looked exhaustively for reserves in Sierra Leone, Ghana, Mauritania, Sudan, Gabon and Liberia, he said.
Jindal Steel, which plans to more than quadruple capacity by spending as much as 350 billion rupees ($6.5 billion) in the next two years, is looking to secure raw material sources following curbs on iron ore mining in India. The New Delhi-based company, run by billionaire lawmaker Naveen Jindal, ended a $2.1 billion contract with the Bolivian government in July to develop the El Mutun iron ore mines following a dispute.
“We’re in advanced stages of talks, executive director Manish Kharbanda said, without giving details. “The lesson we learnt from Bolivia is to not put all our eggs in one basket.”
Jindal Steel already operates coal mines in South Africa and Mozambique and recently acquired Canada’s CIC Energy Corp., which is developing a coal mine in Botswana.
Some obstacles include uncertainty about the estimated reserves, lack of infrastructure to ship iron ore from the mines and political instability, Kharbanda said. The scourge of transnational crime, drug and arms trafficking, terrorism and piracy are threatening West Africa’s slow march to stability, the United Nations Office for West Africa said in an Oct. 8 press note on its website.
In India, concern over illegal mining and environmental breaches has prompted the government to restrict mining in the biggest iron ore producing regions of the country. India’s top court banned mining in the southern state of Karnataka last year and agreed to partially lift the ban this year. Goa, the largest exporting state, halted mining after a government-appointed panel reported damage to environment.
Goa is the first among seven mineral-rich states the panel will probe, said Vishwapati Trivedi, former secretary at the mines ministry, raising concerns the curbs may widen.
Jindal Steel’s capacity will increase to 13 million metric tons by 2015, according to V.R. Sharma, chief executive officer of the steel business. The company, which runs a 3 million ton steel plant in the central state of Chhattisgarh, is building a mill each in the eastern states of Odisha and Jharkhand and a factory in Oman.