SAIL proposes JV model for acquiring overseas mining assets

State-owned Steel Authority of India (SAIL) today floated the idea of combining the resources of all the industry players to create a "war chest" for "big ticket" buyouts of mines abroad.

"There are 4-5 big players in the domestic steel industry. I think, now, if they can come together to create a big war chest we can go for big ticket acquisition of resources which are not available in the country. In the long-run, it is in the interest of the industry," SAIL Chairman S K Roongta told reporters on the sidelines of a FICCI-organised Steel Summit here.

Roongta, who is also the head of the special purpose vehicle (SPV) created by the government for such acquisitions --International Coal Ventures Ltd (ICVL), said that steel firms should optimise the use of vital steel making inputs iron ore and coking coal.

ICVL-- which is a consortium comprising top PSUs NTPC, SAIL, Coal India, NMDC and RINL, since its inception in 2008, has not met with any success in acquiring coking coal assets abroad.
    
Private steel firms too are scouting for such resources in countries like South Africa, Indonesia and Australia among others to reduce their dependence on expensive imports and cut their input cost.
    
Essar Steel Business Group CEO Malay Mukherjee, who was also present on the occasion, said the company is keenly looking at merger and acquisition opportunities overseas.
   
Essar Group recently acquired mining properties overseas.
    
High iron ore and coking coal prices, which have seen a surge of up to 90 per cent since last year--have increased the input cost pressure on steel firms leading to higher cost of the commodity in the domestic market.
    
Asked if SAIL, would change the price structure of its steel products in June, Roongta said, "I do not see any reasons for increasing prices of our long and flat steel products next month."
    
Mukherjee said, "Steel prices would depend on many factors, including the prices of coking coal and iron ore.
    
SAIL had lowered prices of its long steel products last month by up to Rs 2,000 a tonne, citing improved supply situation in the domestic market. Last month, steel ministry had convened a meeting of major domestic steel firms to take a stock of the rising price situation in the country.