New Delhi: Jindal Steel and Power is close to acquiring an iron ore mine in West Africa to secure raw material for its recently commissioned steel plant in Oman and to sell the surplus in the open market.
"We are in discussion with a few targets in West African countries like Cameroon, Senegal and Nigeria for an iron ore mine acquisition and hope to clinch a deal in the next three-four months," a senior company official told PTI.
Though the cost of the acquisition would not be "much", creating infrastructure such as roads and ports while developing the mine would be "higher" and quantifying that would be possible later, he said. "By July-September, we will be able to seal the deal," the official said, adding that the mine would have at least 1 billion tonnes of reserves. Naveen Jindal-led JSPL recently commissioned a 2-million per annum (mtpa) steel plant in Oman, taking its total capacity to 7 mtpa. It has a 3 mtpa steel plant at Raigarh in Chhattisgarh and a 2 mtpa facility at Angul in Odisha. It generally requires 1.6 million tonnes of iron ore to produce 1 million tonnes of steel.
The Oman facility buys the raw material from the open market to run the plant. Operating a plant with raw material purchased from the market leaves a company vulnerable to price vagaries, which can impede growth and affect profitability. "We want to buy a mine so that the plant does not have to face the consequence of fluctuating iron ore prices in the international market. It is very important for us," he said. Africa has natural resources in abundance. JSPL already has established its presence across South Africa, Mozambique, Namibia, Botswana and Mauritania on the continent.
