JSPL keen on buying Stemcor assets at right valuation

The other contenders for buying the company assets are Tata Steel and JSW Steel

Jindal Steel and Power (JSPL), one of the contenders for buying Stemcor India's assets along with Tata Steel and JSW Steel, today said it is keen on buying the assets, but only at an "attractive" valuation.

 

"We are keen to buy Stemcor assets. We will obviously acquire something at a valuation which we think is attractive," JSPL Chairman Naveen Jindal told reporters here on the sidelines of miners' body Federeation of Indian Mineral Industries' (FIMI) Annul Gnereal Meeting here.

 

Currently, JSPL has three million tonnes per annum (mtpa) steel production capacity at Raigarh in Chhattisgarh. It also runs a 2 MT plate mill at Angul, Odisha and has a wire rod mill and a bar mill at Patratu, Jharkhand. Capacity of the company would go up to 14 mtpa in three years. Further, it intends to have 20 mtpa capacity by 2020.

 

It generally takes 1.6 MT iron ore to make 1 MT steel. JSPL's need of iron ore would go up manifold with the increase in capacity addition. Hence, it needs to secure iron ore. The company is also looking for iron ore assets overseas.

 

Stemcor had approached almost all Indian steel-makers for selling its assets in India that include a pellet plant and an operating mine, both located in Odisha. JSPL was one of the early contenders for the assets.

 

Stemcor has the majority stake in Aryan Mining and Trading Corporation (AMTC), which has 100 MT of iron ore reserves with the licence to mine 3 MTPA. It also has 10% stake in Mideast Integrated Steel (MISL) in Odisha. MISL has an iron ore mine with a current output of four million tonnes per year.

 

Stemcor has a subsidiary, Brahmani River Pellets Ltd (BRPL), which has a 4 MTPA beneficiation plant at Barbil, Odisha, and a pellet plant complex at Jajpur, connected by a 220 km underground slurry pipeline.

 

The cumulative value of the assets is said to be around USD 800 million. Goldman Sachs is advising Stemcor on the assets sale.