NMDC mulls tie-up with Kobe Steel for Australian mine

Mining major NMDC today said it is looking at partnering with Japan-based Kobe Steel for acquiring stake in an iron ore project in Australia.

NMDC is also holding discussions with several other companies to jointly bid for the project owned by Perth-based Atlas Iron, NMDC Director (finance) S Thiagarajan said here.

NMDC along with two other firms had submitted a $230-million non-binding bid to buy over majority stake in the mine. However, one of the companies later pulled out from the consortium.

"As the Saudi-based ABS Consulting has not come forward, we are actively looking for partner. We may go with companies like Kobe," Thiagarajan told PTI.

"We wanted to have a tie up with ABS. NMDC is a mining expert and they (ABS) have money. Unfortunately they have not responded," he said.

NMDC has teamed up with ABS Consulting and Boulder Steel for nearly 75 per cent stake in the Australian mine. NMDC was proposed to take a 15 per cent stake, ABS Consulting a majority 55 per cent, while Boulder Steel the remaining 5 per cent. The Ridley project reportedly has estimated reserves of about 2 billion tons of iron ore.

NMDC has also tied up with Kobe Steel to set up a 0.5 million tonne iron nugget plant at Sponge Iron India Ltd (SIIL) facility at Palaoncha in Andhra Pradesh.

Thiagarajan said the Australian project is highly capital intensive and may go up to $1.36 billion.

"It needs lot of thinking. Many parties are coming for the Australian project. We have to consider many things before we finalise the party. We may need Government's approval also since the investments crosses $1 billion," Thiagarajan said.

Besides, NMDC is in process of forging alliance with ArcelorMittal for a project in Senegal.

He said there no shortage of fund with NMDC for expansion and acquisition plans. "NMDC has cash reserves Rs 14,000 crore. This year also we are going to make good profits. So there no problem for cash as such."

Thiagarajan said that NMDC, which had reported 94.38 per cent growth in the Q1 on yearly basis, is expected to demonstrate better performance in the second quarter.

He said though the quantity may not go that much, the price increase will help the profitability shoot up.

He said there will be a slight fall in iron ore prices due to ban imposed by the Karnataka government on export of iron ore and also the Chinese Government’s ban on iron ore imports with Fe content less than 60 per cent.