JSPL to invest $2 billion for capacity expansion in Oman plant

Company will raise the capacity of the plant by 2.5 mtpa

Jindal Steel and Power today said it will invest around $2 billion to raise capacity of its Oman-based wholly-owned subsidiary Shadeed Iron and Steel LLC by 2.5 million tonnes per annum over the next 3-4 years.

Naveen Jindal-led JSPL had bought Shadeed Iron and Steel LLC (Jindal Shadeed) in July 2010 from Abu-Dhabi's Al Ghaith Holdings for about $500 million. The capacity of the plant, third largest in the Middle East, now stands at 2 mtpa.

"We will raise the capacity of the plant by 2.5 mtpa. It will require around $2 billion investment," JSPL's Managing Director and Group CEO Ravi Uppal said here.

On the sidelines of an event after the signing of a $725 million syndicated term loan with Bank Muscat, Uppal said that work on the plant would start after getting the required from the local governments.

Jindal Shadeed's Chief Executive Officer Naushad Ansari said environmental clearance for the proposed expansion of the plant was likely to come in next 8-9 months and after that the company would start placing orders with the hope of completing the expansion by end of 2017 or early 2018.

"We have sufficient land for moving ahead with the plant expansion and raw material is not an issue at all there," he said.

JSPL foresees a tremendous surge in demand for iron and steel in the gulf markets on huge infrastructure spending. It is now producing billets and rounds at the Oman facility and on course to set up 1.6 mtpa rebar mill, which was expected to be commissioned by September-October next year.

JSPL today signed financial closure of $725 million syndicated term loan facility. It was oversubscribed with commitments in excess of $855 million. Bank Muscat with a consortium of 11 banks arranged the facility for Shadeed Iron and Steel. Naveen Jindal was also present in the occasion.

Abdul Razak Ali Issa, Chief Executive, Bank Muscat said: "Oman has always facilitated a conducive environment for several overseas investors, including Indian investors, to set up projects in the country and this has played a pivotal role in helping Oman to achieve its Vision 2020 of diversifying from oil as a major source of income to other allied activities such as metals, downstream oil and gas etc.

"Going forward, we anticipate there would be many such projects being set up by Indian corporates in Oman.