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| Steel makers put faith in NMDC issue |
| Ishita Ayan Dutt / Kolkata Mar 13, 2010, 00:57 IST |
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Investment bankers may have been skeptical about the pricing of NMDC’s follow-on public offer, but steel companies — ArcelorMittal, Tata Steel, Essar Steel, JSW Steel — have reposed faith in the company by participating in the issue.
NMDC sources said ArcelorMittal had put in bids for about Rs 30 crore, Tata Steel Rs 35 crore, Essar Steel Rs 10 crore and JSW Steel Rs 3 crore. “It shows their confidence in the company,” said the source.
An e-mail to ArcelorMittal went unanswered. Sajjan Jindal, vice-chairman and managing director, JSW Steel, also did not respond. Tata Steel could not confirm.
Incidentally, all these companies have a working relationship with NMDC.
NMDC, the country’s largest iron ore producer with over 28 million tonnes annual production, has signed long-term iron ore contracts with Essar Steel and JSW Steel.
NMDC signed a memorandum of understanding with Tata Steel in January to explore the possibility of an alliance in minerals and steel. The alliance is likely to lead to joint ventures for acquisition, exploration and development of mines, extraction and processing of minerals as well as setting up integrated steel plants.
According to sources, NMDC has also signed a pact with ArcelorMittal for an iron ore project in Senegal, which may pave the way for more alliances.
Industry sources said steel companies would evaluate NMDC in a different way than investment bankers. “Iron ore is the steel industry’s lifeline,” they said.
NMDC is the only source of iron ore for many private sector companies lacking captive mines. NMDC’s mines are in Baildalia in Chhattisgarh and Donimalai in Karnataka. Bailadila has the world’s best ore with 66 per cent iron content.
There have been inordinate delays in mine allocation to steel companies. The country has approximately 23.59 billion tonnes iron ore reserves in Jharkhand, Orissa, Chhattisgarh, Karnataka and Goa. Of this, only 6.311 billion tonnes are proven reserves. Of the 10.68 billion tonnes low-grade or magnetite ore, 75 per cent is in the ecologically and environmentally sensitive Western Ghats region.
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