India’s Steel Authority Plans a US$3 Billion for Mongolia Plant (US)

Tuesday, February 22, 2011. State-run Steel Authority of India Ltd. is looking to set up a 3-million metric ton steel plant in Mongolia, as part of plans by India’s largest steelmaker by local capacity to expand overseas, its chairman said. Steel Authority is in talks with the Mongolian government to secure raw materials for the proposed steel plant that will cost US$3 billion to set up, C.S. Verma told reporters on the sidelines of a steel conference Friday. “We would be interested in setting up a plant in Mongolia, if we get coking coal, iron ore and land,” he said.  Mongolia has huge reserves of coking coal, a key raw material for steelmaking. Last month, a consortium of five state-run Indian companies including Steel Authority bid for developing large coal reserves in Mongolia’s Tavan Tolgoi mines deposit. The consortium–International Coal Ventures Pvt.—is also looking at the possibility of bidding for BHP Billiton Ltd.’s coal prospecting rights in South Africa, Mr. Verma said. “ICVL’s board will meet Feb. 25 to decide on the bidding,” he said.  Earlier this month, BHP Billiton-one of the world’s largest producers and exporters of thermal coal-invited initial bids to sell the undeveloped coal prospecting rights of its wholly owned unit in South Africa. India is trying to buy coal mines overseas as local supplies aren’t enough to feed its demand for the power, cement and steel plants the country is building. Besides Mongolia, SAIL is considering setting up steel plants in South Africa and Indonesia. Last month, it agreed to set up a 3-million-ton-per-annum steel plant in Indonesia’s central Kalimantan province. The Indian steel producer is expected to launch a follow-on public offer in the year that starting April 1, 2011 to raise funds to help fund its expansion programs. The government plans to sell a 10% stake in the company, while Steel Authority will issue additional shares equal to another 10% of the expanded equity base. The share sale will be done in two tranches. Steel Authority is among a few state-run companies in which the government plans to sell a small portion of its stake to raise funds for social and infrastructure projects.
India aims to raise 400 billion rupees ($8.84 billion) in the year ending March 31 from share sale in some of the companies.

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