Monnet Ispat and Energy Ltd (MIEL), India's second-largest coal-based sponge iron producer, is set to soon acquire majority stake in a 25-million tonne (mt) coal mine in Colombia. The Rs 1,960-crore MIEL wishes to feed its steel and captive power plants in India using the coal made available through the acquisition.
“Talks are on for the acquisition; annual production capacity of the mine is 50,000 tonnes per annum,” said N C Jha, chief executive officer of Monnet’s mining business, without divulging financial details. The former Coal India chairman said the working mine had reserves of both coking and non-coking coal and the deal was likely to be clinched in a month or two.
The development comes on the heels of the scrapping of Jindal Steel and Power’s $2.1-billion contract to develop the El Mutun iron ore deposit in another South American country, Bolivia.
Monnet has been also looking at coal assets in Africa to source coking coal for its steel mills, chairman and managing Director Sandeep Jajodia had told Business Standard in a recent interview.
Monnet had acquired Indonesian coal company PT Sarwa Sembada Karya Bumi in Sumatra for $24 million through its wholly-owned subsidiary, Monnet Global Ltd, in 2010-11. The Indonesian mine is expected to begin production shortly. A recent change in the mineral export regulations of the South Asian nation has led investors, including Indian infrastructure companies, to look elsewhere for acquisitions.
New Delhi-based Monnet Ispat has sponge iron manufacturing facilities at Raipur and Raigarh in Chhattisgarh. It is developing a 1.5-mt integrated steel plant at Raigarh. It is implementing a 1,050 Mw power plant at Angul in Odisha.
MIEL plans to set up an additional 2,000 Mw power generation capacity by 2014.
The Monnet Group plans to invest around Rs 2,700 crore this financial year. Of this, around Rs 700 crore will be invested in the new steel plant. The rest would be used to set up power capacities. The company’s share price at the Bombay Stock Exchange closed on Monday at Rs 291, up 0.6 per cent as compared to the previous close.