The government of the Indian state of Orissa has received eight proposals from companies keen to start coal mining in the Angul district in the centre of the state. Terms and conditions have now been issued for four of the applications while four others are still under process.
Steel and mines minister Raghunath Mohanty said that Jindal Steel and Power Ltd (JSPL), Monnet Ispat and Energy Ltd., Utkal Coal, Kalinga Mines Ltd have been issued terms and conditions for coal mining while National Aluminium Company Ltd (Nalco), Tata Sponge Iron Ltd, Bhushan Steel Ltd and Mandakini Coal Ltd are all having their applications considered.
Jindal Steel and Power Ltd (JSPL) and Monnet Ispat and Energy Ltd both propose to set up steel plants in Angul district. JSPL has signed a memorandum of understanding (MoU) for the establishment of a 6 million tonne per annum (mtpa) splant while Monnet Ispat is to set up a 0.25 mtpa steel plant.
Showing posts with label jindal. Show all posts
Showing posts with label jindal. Show all posts
Wednesday, March 17, 2010
Bolivia Refuses Jindal Contract Modifications
The Bolivian government has said that it will not accept changes to a contract awarded to India's Jindal Steel and Power Ltd to develop a $2.1 billion iron ore and steel project at the El Mutun site in the east of the country near the Brazilian border.
A 40-year contract signed in late 2007 gives Jindal the right to mine about half the reserves at El Mutun which is believed to contain more than 40 billion tonnes of medium-grade iron ore.
However, the government now claims that Jindal rescheduled investments from late-2008 to the second half of 2009, which the company blamed on administrative delays.
As part of the project Jindal was to develop an integrated steel plant with annual capacity of 1.7 million tonnes. However the company has apparently approached the Bolivian government with a proposal to change the contract to reduce the quality of steel production at the proposed plant along with the quantity of steel produced.
"Unfortunately Jindal hasn't fulfilled its commitments with the state," Mining Minister Jose Pimentel told local radio, adding that the government will not accept the Jindal proposal.
A 40-year contract signed in late 2007 gives Jindal the right to mine about half the reserves at El Mutun which is believed to contain more than 40 billion tonnes of medium-grade iron ore.
However, the government now claims that Jindal rescheduled investments from late-2008 to the second half of 2009, which the company blamed on administrative delays.
As part of the project Jindal was to develop an integrated steel plant with annual capacity of 1.7 million tonnes. However the company has apparently approached the Bolivian government with a proposal to change the contract to reduce the quality of steel production at the proposed plant along with the quantity of steel produced.
"Unfortunately Jindal hasn't fulfilled its commitments with the state," Mining Minister Jose Pimentel told local radio, adding that the government will not accept the Jindal proposal.
Wednesday, February 3, 2010
Jindal, Rockfield End Takeover Talks
Australian coal miner Rocklands Richfield has ended takeover talks with India's Jindal Steel and Power. Rockfield said talks had ended because the deal was not in the best interests of shareholders.
Jindal last month matched an offer of 56c a share from China's Meijin Energy Group for the coking coal developer, valuing Rocklands at A$197 million.
Negotiations began in September when the two parties agreed a takeover by Jindal at 42c a share which valued RCI at $146mn. Two further parties – India’s Essar group and Chin’s Meijin – then joined the bidding battle although Essar suddenly quit the bid without citing any reason. Both Jindal and Meijin have bid $197mn for RCI.
Rocklands has coal tenements in Queensland that it estimates hold more than 900 million tonnes of coal and has a coking coal plant in eastern China.
Jindal last month matched an offer of 56c a share from China's Meijin Energy Group for the coking coal developer, valuing Rocklands at A$197 million.
Negotiations began in September when the two parties agreed a takeover by Jindal at 42c a share which valued RCI at $146mn. Two further parties – India’s Essar group and Chin’s Meijin – then joined the bidding battle although Essar suddenly quit the bid without citing any reason. Both Jindal and Meijin have bid $197mn for RCI.
Rocklands has coal tenements in Queensland that it estimates hold more than 900 million tonnes of coal and has a coking coal plant in eastern China.
Monday, February 1, 2010
Jindal and ArcelorMittal In Race For Ziscosteel
Jindal Steel & Power Ltd (JSPL) and Arcelor Mittal are the only two runners in the race to acquire a majority stake in Zimbabwe Iron & Steel Company (Ziscosteel), the largest steelworks in the African country. Ziscosteel is 89 per cent-owned by the Zimbabwean government which is looking to divest a 60 per cent stake as part of its privatisation programme.
Although it is not clear how much the deal would fetch the Zimbabwean government
Ziscosteel has an annual capacity of 1 million tonnes and is a facility for long products used in the construction sector. According to sources within the steel industry a greenfield facility of the same capacity would cost anywhere from $600 million to $1 billion.
JSPL has been scouting for raw material assets according to sources, the qualifying round has concluded followed by due diligence before bids will finally be submitted.
Ziscosteel has debt estimated at around $300 million. The plant ceased operations in 2008. Even at that stage – before the economic crisis - it was operating at less than break-even capacity. Apart from the steelworks, Ziscosteel also owns an iron ore mine in Zimbabwe.
Although it is not clear how much the deal would fetch the Zimbabwean government
Ziscosteel has an annual capacity of 1 million tonnes and is a facility for long products used in the construction sector. According to sources within the steel industry a greenfield facility of the same capacity would cost anywhere from $600 million to $1 billion.
JSPL has been scouting for raw material assets according to sources, the qualifying round has concluded followed by due diligence before bids will finally be submitted.
Ziscosteel has debt estimated at around $300 million. The plant ceased operations in 2008. Even at that stage – before the economic crisis - it was operating at less than break-even capacity. Apart from the steelworks, Ziscosteel also owns an iron ore mine in Zimbabwe.
Monday, November 9, 2009
Rocklands Rebuffs Jindal Revised Offer
Jindal Steel and Power (JSPL) has raised its bid for Australian coal miner Rocklands Richfield to match a counteroffer by a Chinese firm, only to be rebuffed by the Aussie firm.
Rocklands said the AUS $0.52 a share offer by China’s Meijin Energy was still “superior” than the revised bid made by Naveen Jindal’s JSPL.
The Australian firm has asked the Indian company to place a better bid. Jindal Steel had earlier offered AUS $0.42 a share and signed a term sheet with the Rocklands management on September 22.
After Meijin threw its hat in the bid ring, JSPL revised the offer to AUS $0.50, valuing the company at AUS $194.98 million, or around Rs 841 crore.
The latest Jindal offer is the same as the Ruias-owned Essar Group’s offer in October. Essar entered the fray in October 7 but dropped out of the race on October 20. Meijin Energy joined the bid battle on November 2 at a time when Jindal Steel was carrying out due diligence on Rocklands.
In the revised offer, JSPL wanted Rocklands to reject the Meijin offer, proposed infusion of new equity and sought board representation, all of which had been rejected by the Australian company.
Rocklands said the Chinese were giving a better deal, mainly because of the higher price.
JSPL, which has a steel mill and a power plant in Chhattisgarh and is expanding in Orissa, already owns 14.16 per cent in Rocklands.
The company is looking for coking coal abroad since there is an acute shortfall of the crucial raw material, used in steel making, in India.
Australia, South Africa and Indonesia are the three most sought-after destinations for steel companies seeking to own coking coal. China, which has large deposits of coking coal, rations export, thereby dictating the price.
The Rocklands acquisition will give JSPL entry into the Chinese coking coal market, which foreign companies find difficult to access.
The Aussie company has two metallurgical coke plants in China following its acquisition of China Coke and Chemicals in October 2007. These units make met coke from local coal.
Source: Calcutta Telegraph
Rocklands said the AUS $0.52 a share offer by China’s Meijin Energy was still “superior” than the revised bid made by Naveen Jindal’s JSPL.
The Australian firm has asked the Indian company to place a better bid. Jindal Steel had earlier offered AUS $0.42 a share and signed a term sheet with the Rocklands management on September 22.
After Meijin threw its hat in the bid ring, JSPL revised the offer to AUS $0.50, valuing the company at AUS $194.98 million, or around Rs 841 crore.
The latest Jindal offer is the same as the Ruias-owned Essar Group’s offer in October. Essar entered the fray in October 7 but dropped out of the race on October 20. Meijin Energy joined the bid battle on November 2 at a time when Jindal Steel was carrying out due diligence on Rocklands.
In the revised offer, JSPL wanted Rocklands to reject the Meijin offer, proposed infusion of new equity and sought board representation, all of which had been rejected by the Australian company.
Rocklands said the Chinese were giving a better deal, mainly because of the higher price.
JSPL, which has a steel mill and a power plant in Chhattisgarh and is expanding in Orissa, already owns 14.16 per cent in Rocklands.
The company is looking for coking coal abroad since there is an acute shortfall of the crucial raw material, used in steel making, in India.
Australia, South Africa and Indonesia are the three most sought-after destinations for steel companies seeking to own coking coal. China, which has large deposits of coking coal, rations export, thereby dictating the price.
The Rocklands acquisition will give JSPL entry into the Chinese coking coal market, which foreign companies find difficult to access.
The Aussie company has two metallurgical coke plants in China following its acquisition of China Coke and Chemicals in October 2007. These units make met coke from local coal.
Source: Calcutta Telegraph
Friday, November 6, 2009
Jindal Has Competition In Race For Rocklands
Jindal Steel & Power Limited has a new competitor in the race to acquire Australian coal miner Rocklands Richfield.
China’s Meijin Energy Group has come up with a higher offer, which has found favour with the existing management of Rocklands.
The Australian company has asked Jindal Steel to come back with a matching or higher bid, otherwise, it would terminate the ongoing discussions and allow the Chinese player to start exclusive talks.
Meijin is the third company to bid for Rocklands in as many months — India’s Essar Group had thrown its hat in the ring but soon opted out, leaving Naveen Jindal’s JSPL alone in the race.
Meijin Energy has offered to pay Australian dollar (AUD) 0.52 a share for Rocklands, higher than the AUD 0.42 being offered by JSPL.
Incidentally, Essar had offered AUD 0.50 a share for the Australian company but it did not receive formal support from the Rocklands management.
A Rocklands notice to the Australian Securities Exchange said it had received the Meijin bid on November 2, and after “careful consideration” it found that the bid was “superior” to the Jindal offer, which is 37 per cent lower.
However, the Rocklands board told its shareholders that neither the Jindal nor the Meijin proposals were formal offers at this stage. They are preliminary in nature and subject to due diligence, it said.
JSPL is carrying out a due diligence exercise after both parties signed a term sheet on September 22. According to the pact, Jindal was to complete the due diligence by October 31 and negotiate an implementation agreement by November 15.
On October 28, JSPL sought another month to complete the due diligence and sign the deal by December 15.
JSPL plans to invite Rocklands chairman Benny Wu to India for deliberations after it finishes its groundwork.
JSPL vice-chairman Naveen Jindal plans to visit Australia and China — where Rocklands has large operations — reflecting the Indian company’s keenness and commitment to the proposal.
Before the Meijin proposal came, both Rocklands and JSPL had agreed to extend the due diligence date to November 24 and seal the deal by December 8.
However, JSPL now faces the risk of being beaten by the Chinese company, which claims to be one of the biggest coke producers in China owning 10 coal mines with a combined reserve of 2 billion tonnes. The Meijin proposal values Rockland at AUD 200 million.
JSPL is one of the largest steel long products manufacturers in India with a mill in Chhattisgarh. It also runs a power plant there. The company is building a plant in Orissa and also expanding its power plant capacity in Chhattisgarh.
As the bid battle continues, JSPL has built up a strong position in Rocklands. It now holds a 14.16 per cent stake in the company. The shares were bought in three tranches from the open market and at a price lower than its own offer and that of Meijin.
Rocklands has two main assets — met coke plants in China and coal mines in Australia.
Source: Calcutta Telegraph
China’s Meijin Energy Group has come up with a higher offer, which has found favour with the existing management of Rocklands.
The Australian company has asked Jindal Steel to come back with a matching or higher bid, otherwise, it would terminate the ongoing discussions and allow the Chinese player to start exclusive talks.
Meijin is the third company to bid for Rocklands in as many months — India’s Essar Group had thrown its hat in the ring but soon opted out, leaving Naveen Jindal’s JSPL alone in the race.
Meijin Energy has offered to pay Australian dollar (AUD) 0.52 a share for Rocklands, higher than the AUD 0.42 being offered by JSPL.
Incidentally, Essar had offered AUD 0.50 a share for the Australian company but it did not receive formal support from the Rocklands management.
A Rocklands notice to the Australian Securities Exchange said it had received the Meijin bid on November 2, and after “careful consideration” it found that the bid was “superior” to the Jindal offer, which is 37 per cent lower.
However, the Rocklands board told its shareholders that neither the Jindal nor the Meijin proposals were formal offers at this stage. They are preliminary in nature and subject to due diligence, it said.
JSPL is carrying out a due diligence exercise after both parties signed a term sheet on September 22. According to the pact, Jindal was to complete the due diligence by October 31 and negotiate an implementation agreement by November 15.
On October 28, JSPL sought another month to complete the due diligence and sign the deal by December 15.
JSPL plans to invite Rocklands chairman Benny Wu to India for deliberations after it finishes its groundwork.
JSPL vice-chairman Naveen Jindal plans to visit Australia and China — where Rocklands has large operations — reflecting the Indian company’s keenness and commitment to the proposal.
Before the Meijin proposal came, both Rocklands and JSPL had agreed to extend the due diligence date to November 24 and seal the deal by December 8.
However, JSPL now faces the risk of being beaten by the Chinese company, which claims to be one of the biggest coke producers in China owning 10 coal mines with a combined reserve of 2 billion tonnes. The Meijin proposal values Rockland at AUD 200 million.
JSPL is one of the largest steel long products manufacturers in India with a mill in Chhattisgarh. It also runs a power plant there. The company is building a plant in Orissa and also expanding its power plant capacity in Chhattisgarh.
As the bid battle continues, JSPL has built up a strong position in Rocklands. It now holds a 14.16 per cent stake in the company. The shares were bought in three tranches from the open market and at a price lower than its own offer and that of Meijin.
Rocklands has two main assets — met coke plants in China and coal mines in Australia.
Source: Calcutta Telegraph
Sunday, September 20, 2009
JSW Seeks Karnataka Iron Ore Mine
Jindal South West Steel Limited (JSW Steel Ltd), the flagship company of the JSW Group, is seeking allotment of a captive iron ore mine in the iron ore-rich Bellary-Hospet region of north Karnataka. The company has applied to the state government and is waiting for the grant of the mining lease.
The company currently procures iron ore from the open market for its steel plant at Toranagal in Bellary as the state government is yet to fulfil its assurance of grant of a lease for a mine with reserves of 110 million tonnes in the Bellary region.
The company needs its own mine to expand the steel plant to 11 million tonnes per annum. This is scheduled to commence in 2010. Currently, it operates a steel mill with a capacity of 7.8 million tonnes.
The company required around 25 million tonnes iron ore to feed its plant once the expansion was completed, said Sajjan Jindal, vice-chairman and managing director, JSW Steel Ltd.
“We have been looking for mines since the start of our steel plant. But some people have gone to court against allotment of mining lease to us. We are waiting for the state government to sanction certain mining concessions. Once these come, we will take up the next phase of expansion,” Jindal told Business Standard.
Acquisition of a mine in Bellary is crucial for the company as it is in the process of expanding its steel-making capacity to 11 million tonnes per annum by 2010. The company has also received the state government’s approval to further expand the capacity to 16 million tonnes per annum at an investment of Rs 20,000 crore.
He said the proposed acquisition of the mine would meet around 50 per cent of the company’s raw material requirement. The the remaining would be procured from the open market, he added.
“There are not enough deposits at the mine we are looking to acquire. But, we are also developing new technologies to use low-grade iron ore.”
JSW Steel Ltd is the single-largest investor in the state. Its investments amount to Rs 21,700 crore.
For the year ended March 2009, the company reported a 73 per cent drop in its net profit to Rs 458.5 crore on a turnover of Rs 15,179 crore, a growth of 20 per cent over the previous year.
Source: Business Standard
The company currently procures iron ore from the open market for its steel plant at Toranagal in Bellary as the state government is yet to fulfil its assurance of grant of a lease for a mine with reserves of 110 million tonnes in the Bellary region.
The company needs its own mine to expand the steel plant to 11 million tonnes per annum. This is scheduled to commence in 2010. Currently, it operates a steel mill with a capacity of 7.8 million tonnes.
The company required around 25 million tonnes iron ore to feed its plant once the expansion was completed, said Sajjan Jindal, vice-chairman and managing director, JSW Steel Ltd.
“We have been looking for mines since the start of our steel plant. But some people have gone to court against allotment of mining lease to us. We are waiting for the state government to sanction certain mining concessions. Once these come, we will take up the next phase of expansion,” Jindal told Business Standard.
Acquisition of a mine in Bellary is crucial for the company as it is in the process of expanding its steel-making capacity to 11 million tonnes per annum by 2010. The company has also received the state government’s approval to further expand the capacity to 16 million tonnes per annum at an investment of Rs 20,000 crore.
He said the proposed acquisition of the mine would meet around 50 per cent of the company’s raw material requirement. The the remaining would be procured from the open market, he added.
“There are not enough deposits at the mine we are looking to acquire. But, we are also developing new technologies to use low-grade iron ore.”
JSW Steel Ltd is the single-largest investor in the state. Its investments amount to Rs 21,700 crore.
For the year ended March 2009, the company reported a 73 per cent drop in its net profit to Rs 458.5 crore on a turnover of Rs 15,179 crore, a growth of 20 per cent over the previous year.
Source: Business Standard
Monday, July 20, 2009
Jindal Buys Turkish Chrome Ore Assets
It is reported that Indian steelmaker JSL has acquired chrome ore assets in Turkey. The transaction will help JSL meet its raw material requirements and to control input costs.
The acquired mines, which cost the company about USD 6 million, will meet captive chrome ore requirements of the proposed stainless plant in Orissa and also serve the demand of Asian, European and American markets.
The total chrome reserves that JSL has acquired from individual investors, having interests in mineral resources at six to seven different locations in Turkey, could be over 2 million tonnes.
Source: Steel Guru
The acquired mines, which cost the company about USD 6 million, will meet captive chrome ore requirements of the proposed stainless plant in Orissa and also serve the demand of Asian, European and American markets.
The total chrome reserves that JSL has acquired from individual investors, having interests in mineral resources at six to seven different locations in Turkey, could be over 2 million tonnes.
Source: Steel Guru
Thursday, April 30, 2009
Jindal Steel Discussing Australian Coal Joint Venture
Naveen Jindal-led Jindal Steel & Power (JSPL) is in advanced talks with New South Wales-based mining firm Hudson Resources to form a joint venture for the exploration and mining of coking coal in Australia, said a person who is mediating in the proposed venture. The JV is expected to absorb investments of $100 million once mining commences in the proposed coal block.
The coal mines are located in Maryborough Basin of Queensland with estimated recoverable reserves of 20 million tonne (mt), which could go up to 200 mt, if explored further. JSPL will hold 15% equity in the proposed JV during the exploratory stage, while ASX-listed Hudson Resources, which has interests in minerals such as bauxite and coal, will own the majority stake. Once deposits are defined, the Indian firm will have option to raise its stake to 50%.
The proposed JV will help JSPL meet raw material requirements for two of its upcoming greenfield steel projects with a capacity of 6 mt each in Orissa and Jharkhand. Coking coal is a key input in steel manufacturing.
Another New South Wales-based firm, Hindustan Global Resources (HGR), engaged in exploration, mining and consulting, is negotiating on behalf of the Australian company. HGR has also been assigned the job to carry out exploration and mining work for the JV.
HGR vice-president Amar Bhasin said: “JSPL executives had a fruitful meeting with the directors of Hudson Resources and HGR a few days ago. If everything goes well, we hope to finalise the deal in the next few days.” The initial investments in the venture for carrying out exploration work will be close to $8 million, he added.
JSPL executive director (raw materials) DN Abrol told ET: “We are talking to many Australian mining firms for setting up a JV to meet captive coking coal requirements. The extracted coal will be shipped to India. But, nothing has been finalised so far.”
Several Indian companies in the steel and power generation space have been scouting for coal assets abroad to ensure feedstock for captive consumption. Coal mining in India is confined to few public sector companies and the country has limited reserves of coking coal. As a result, steel companies are largely dependent on imports.
“In order to ensure long-term resource security, companies prefer owning some quality assets abroad. Moreover, its a cost advantage, as coking coal prices in the spot market keeps on fluctuating,” said a New Delhi-based steel analyst.
Source: Economic Times
The coal mines are located in Maryborough Basin of Queensland with estimated recoverable reserves of 20 million tonne (mt), which could go up to 200 mt, if explored further. JSPL will hold 15% equity in the proposed JV during the exploratory stage, while ASX-listed Hudson Resources, which has interests in minerals such as bauxite and coal, will own the majority stake. Once deposits are defined, the Indian firm will have option to raise its stake to 50%.
The proposed JV will help JSPL meet raw material requirements for two of its upcoming greenfield steel projects with a capacity of 6 mt each in Orissa and Jharkhand. Coking coal is a key input in steel manufacturing.
Another New South Wales-based firm, Hindustan Global Resources (HGR), engaged in exploration, mining and consulting, is negotiating on behalf of the Australian company. HGR has also been assigned the job to carry out exploration and mining work for the JV.
HGR vice-president Amar Bhasin said: “JSPL executives had a fruitful meeting with the directors of Hudson Resources and HGR a few days ago. If everything goes well, we hope to finalise the deal in the next few days.” The initial investments in the venture for carrying out exploration work will be close to $8 million, he added.
JSPL executive director (raw materials) DN Abrol told ET: “We are talking to many Australian mining firms for setting up a JV to meet captive coking coal requirements. The extracted coal will be shipped to India. But, nothing has been finalised so far.”
Several Indian companies in the steel and power generation space have been scouting for coal assets abroad to ensure feedstock for captive consumption. Coal mining in India is confined to few public sector companies and the country has limited reserves of coking coal. As a result, steel companies are largely dependent on imports.
“In order to ensure long-term resource security, companies prefer owning some quality assets abroad. Moreover, its a cost advantage, as coking coal prices in the spot market keeps on fluctuating,” said a New Delhi-based steel analyst.
Source: Economic Times
Friday, April 24, 2009
Jindal Set To Start Mining At Bolivian Site
India's Jindal Steel and Power will start mining iron ore next month at Bolivia's El Mutun site, where it plans to invest $2.1 billion, the company said on Friday.
After meeting with President Evo Morales, Jindal Executive Vice President Vikrant Gujral said the company was ready to start production at the vast reserve, which lies near the border with Brazil.
"Next month we'll start producing raw material. I've invited the president to go to El Mutun because we want him to be there when the mineral crusher starts working," Gujral told reporters.
He did not specify how much the crusher will produce and said full production would not start until 2012.
A 40-year contract signed in late 2007 gives Jindal the right to mine approximately half the area of El Mutun, which has estimated iron ore reserves of more than 40 billion tonnes, though they are said to be of medium-grade quality.
In comparison, proven reserves in ore-rich Carajas in Brazil's northern state of Para total 1.5 billion tonnes.
Gujral said that as soon as the government gives Jindal rights over the land the company will begin investing some $300 million a year over the next three years.
The government said earlier this week that it would soon grant Jindal rights over the land it has requested.
As part of the project, Jindal has vowed to develop an integrated steel plant with an annual capacity of 1.7 million tonnes, which would start up by 2010.
Jindal and Bolivia will share the profits generated by the project, which officials have said would amount to $200 million per year in taxes and profits for the Bolivian state.
Source: Reuters
After meeting with President Evo Morales, Jindal Executive Vice President Vikrant Gujral said the company was ready to start production at the vast reserve, which lies near the border with Brazil.
"Next month we'll start producing raw material. I've invited the president to go to El Mutun because we want him to be there when the mineral crusher starts working," Gujral told reporters.
He did not specify how much the crusher will produce and said full production would not start until 2012.
A 40-year contract signed in late 2007 gives Jindal the right to mine approximately half the area of El Mutun, which has estimated iron ore reserves of more than 40 billion tonnes, though they are said to be of medium-grade quality.
In comparison, proven reserves in ore-rich Carajas in Brazil's northern state of Para total 1.5 billion tonnes.
Gujral said that as soon as the government gives Jindal rights over the land the company will begin investing some $300 million a year over the next three years.
The government said earlier this week that it would soon grant Jindal rights over the land it has requested.
As part of the project, Jindal has vowed to develop an integrated steel plant with an annual capacity of 1.7 million tonnes, which would start up by 2010.
Jindal and Bolivia will share the profits generated by the project, which officials have said would amount to $200 million per year in taxes and profits for the Bolivian state.
Source: Reuters
Tuesday, February 10, 2009
Lenders Tighten Terms For Jindal's Bengal Project
Lenders are tightening the funding terms for Jindal Steel’s Bengal project, raising the spectre of a delay in the execution of the state’s largest steel plant.
The banks and financial institutions have laid down two conditions: first, they want the promoters to stump up more cash in the form of equity, so they are tightening the debt-equity ratio to 1:1 from an earlier 2:1. The Jindals may now have to put up Rs 50 billion in the first phase of the Bengal plant instead of Rs 3.3 billion earlier.
Second, the lenders led by the State Bank of India and ICICI Bank have asked the Jindals to stabilise the Bellary plant in Karnataka before embarking on any new project.
Jindal’s JSW Bengal has planned to set up a 10-million-tonne plant in phases at an investment of Rs 350 billion.
The first phase of 3mt has been broken up into two parts. Initially, an iron ore beneficiation and a pellet plant along with coal mines at Sitarampur and Kulti will be developed at a cost of Rs 40 billion. Later, the 3mt steel making unit will be set up at a cost of another Rs 60 billion.
The first phase is expected to be complete by the end of 2012 – a commitment that Sajjan Jindal made on November 2 when chief minister Buddhadeb Bhattacharjee laid the foundation stone for the steel project at Salboni.
JSW officials said the company would take a call on the project in March. However, the decision could be further delayed. The company’s Bellary plant was expanded from 3.8mt to 6.8mt in September 2008 but it did not use the extra capacity as steel demand floundered.
JSW now hopes to start production at Bellary in March. Industry experts say it can take a few months before production stabilises there.
Steel prices have continued to fall and this will make it harder for the company to raise funds for expansion.
The company could put the steel making facility at Salboni on hold even as it goes ahead with plans to build the mineral processing plant. Bankers could be persuaded to fund such a venture because of the lower risks. Even then, Jindals may have to bring in Rs 20 billion in the form of equity instead of Rs 13.33 billion originally considered.
“Cash is a real problem now,” said Biswadip Gupta, CEO of JSW Bengal. JSW Steel holds 89 per cent in the company with the rest being held by the Bengal government.
“However, we are going ahead with prospecting at the Sitarampur and Kulti coal blocks,” he said without saying when construction work could begin.
The company is hoping that margins will improve in the next few months when it renegotiates coking coal and iron ore contracts at lower prices. Like other steel makers, JSW Steel was caught in a bind when the prices of the finished product — steel — fell by a third even as it remained locked into high-priced raw material contracts.
Source: Caclutta Telegraph
The banks and financial institutions have laid down two conditions: first, they want the promoters to stump up more cash in the form of equity, so they are tightening the debt-equity ratio to 1:1 from an earlier 2:1. The Jindals may now have to put up Rs 50 billion in the first phase of the Bengal plant instead of Rs 3.3 billion earlier.
Second, the lenders led by the State Bank of India and ICICI Bank have asked the Jindals to stabilise the Bellary plant in Karnataka before embarking on any new project.
Jindal’s JSW Bengal has planned to set up a 10-million-tonne plant in phases at an investment of Rs 350 billion.
The first phase of 3mt has been broken up into two parts. Initially, an iron ore beneficiation and a pellet plant along with coal mines at Sitarampur and Kulti will be developed at a cost of Rs 40 billion. Later, the 3mt steel making unit will be set up at a cost of another Rs 60 billion.
The first phase is expected to be complete by the end of 2012 – a commitment that Sajjan Jindal made on November 2 when chief minister Buddhadeb Bhattacharjee laid the foundation stone for the steel project at Salboni.
JSW officials said the company would take a call on the project in March. However, the decision could be further delayed. The company’s Bellary plant was expanded from 3.8mt to 6.8mt in September 2008 but it did not use the extra capacity as steel demand floundered.
JSW now hopes to start production at Bellary in March. Industry experts say it can take a few months before production stabilises there.
Steel prices have continued to fall and this will make it harder for the company to raise funds for expansion.
The company could put the steel making facility at Salboni on hold even as it goes ahead with plans to build the mineral processing plant. Bankers could be persuaded to fund such a venture because of the lower risks. Even then, Jindals may have to bring in Rs 20 billion in the form of equity instead of Rs 13.33 billion originally considered.
“Cash is a real problem now,” said Biswadip Gupta, CEO of JSW Bengal. JSW Steel holds 89 per cent in the company with the rest being held by the Bengal government.
“However, we are going ahead with prospecting at the Sitarampur and Kulti coal blocks,” he said without saying when construction work could begin.
The company is hoping that margins will improve in the next few months when it renegotiates coking coal and iron ore contracts at lower prices. Like other steel makers, JSW Steel was caught in a bind when the prices of the finished product — steel — fell by a third even as it remained locked into high-priced raw material contracts.
Source: Caclutta Telegraph
Monday, July 14, 2008
Jindal To Buy West Asia Chrome Ore, Manganese Mines
Jindal Stainless (JSL), the country's largest stainless steel manufacturer, is close to acquiring chrome ore and manganese mines in West Asia to cater to its project in Orissa.
The move comes in the backdrop of the Orissa government's failure in allocating mines for the Ratan Jindal-controlled company's ferrochrome project, for which the memorandum of understanding (MoU) was signed five years ago.
Arvind Parakh, director (business development and strategy), Jindal Stainless, said that the company was in the process of acquiring two mines, which should be finalised over the next two-three months.
He said the company would have a significant cost advantage after the acquisition as the steel maker is currently procuring the raw material from the state government-controlled Orissa Mining Corporation (OMC) at market rates.
"The MoU for the ferrochrome project was signed around five years back and captive mine allocation was part of the agreement. However, after failing to allocate mines, the state government chalked out an alternative strategy of linkages from OMC at market rates," Parekh said.
The output from the assets would cater to the company's 150,000-tonne per annum ferrochrome and ferroalloys project in Orissa. "We have already committed Rs 7,000-8,000 crore in the first and second phases of the project but are yet to get the mines," he said. Parakh said the cost of acquisition would not be much because they were not explored.
"We do not have to go through a bidding process and its privately held so it should be quick."
Jindal Stainless is looking at an outright acquisition of the mines. However, it also open to buying a 30-50 per cent stake with an offtake agreement.
Industry sources said that the captive mines would improve Jindal Stainless' margins significantly. At present, its margins stand at 18-22 per cent, which could go up to 35 per cent. Chrome ore prices have increased hugely over the past few years.
"When we finalised the project, chrome ore was at Rs 3,000 a tonne and ferro chrome at Rs 28,000-30,000 a tonne. Today, chrome ore costs Rs 30,000 a tonne while ferrochrome is priced at Rs 85,000-90,000 a tonne," said Parakh.
Jindal Stainless has a chrome ore mine in Orissa, which is used to feed the Vizag plant. "We have around eight to nine hectares but it is not enough for the Orissa project," said Parakh.
Mine allocation and land acquisition are the two stumbling blocks for most steel projects in the country. None of the mega steel projects, including that of Tata Steel and Posco, have been allocated mines.
Source: Business Standard
The move comes in the backdrop of the Orissa government's failure in allocating mines for the Ratan Jindal-controlled company's ferrochrome project, for which the memorandum of understanding (MoU) was signed five years ago.
Arvind Parakh, director (business development and strategy), Jindal Stainless, said that the company was in the process of acquiring two mines, which should be finalised over the next two-three months.
He said the company would have a significant cost advantage after the acquisition as the steel maker is currently procuring the raw material from the state government-controlled Orissa Mining Corporation (OMC) at market rates.
"The MoU for the ferrochrome project was signed around five years back and captive mine allocation was part of the agreement. However, after failing to allocate mines, the state government chalked out an alternative strategy of linkages from OMC at market rates," Parekh said.
The output from the assets would cater to the company's 150,000-tonne per annum ferrochrome and ferroalloys project in Orissa. "We have already committed Rs 7,000-8,000 crore in the first and second phases of the project but are yet to get the mines," he said. Parakh said the cost of acquisition would not be much because they were not explored.
"We do not have to go through a bidding process and its privately held so it should be quick."
Jindal Stainless is looking at an outright acquisition of the mines. However, it also open to buying a 30-50 per cent stake with an offtake agreement.
Industry sources said that the captive mines would improve Jindal Stainless' margins significantly. At present, its margins stand at 18-22 per cent, which could go up to 35 per cent. Chrome ore prices have increased hugely over the past few years.
"When we finalised the project, chrome ore was at Rs 3,000 a tonne and ferro chrome at Rs 28,000-30,000 a tonne. Today, chrome ore costs Rs 30,000 a tonne while ferrochrome is priced at Rs 85,000-90,000 a tonne," said Parakh.
Jindal Stainless has a chrome ore mine in Orissa, which is used to feed the Vizag plant. "We have around eight to nine hectares but it is not enough for the Orissa project," said Parakh.
Mine allocation and land acquisition are the two stumbling blocks for most steel projects in the country. None of the mega steel projects, including that of Tata Steel and Posco, have been allocated mines.
Source: Business Standard
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