Millennium Post

NMDC gets SAIL and RINL feelers for Chh’garh steel JV

Two state-owned steel makers — Steel Authority of India Ltd (SAIL) and Rashtriya Ispat Nigam Ltd (RINL) — have evinced interest to be NMDC's joint venture partner in the proposed Rs 15,525-crore steel project at Nagarnar in Chhattisgarh.

NMDC, which had invited expression of interests (EoI) in February from global steel biggies to become a joint venture partner for its three million tonnes per annum (mtpa) project, is likely to invite soon a fresh round of EoI, dangling the carrot of more stake or even management control.

However, offering the chance to one of the two PSUs is also a option, sources said. Final call on the partnership issue would be taken by the company board at its meeting in the first week of May, they added.

NMDC had offered to give 49 per cent equity in the project to its prospective partner, not management control.

Industry officials said NMDC should have learnt from previous experiences between SAIL-Posco and NMDC-Severstal, where even 50 per cent equity offer did not break the ice.

Two separate steel-making joint ventures that SAIL and NMDC had thought of earlier involving South Korean Posco and Russia's third largest steel manufacturer Severstal respectively did not fructify due to tussle over management control.

'We got just two applications in response to the EoI that we had issued in February. We want wider participation for the steel project from across the world. Hence, we will issue a fresh EoI and hike equity offer,' an NMDC official said

The tepid response to the proposed project has surprised officials since NMDC's Nagarnar project is free from the hazards of land acquisition.

There are also no issues on uninterrupted iron ore supply to feed the project since NMDC is the largest producer of the raw material. Thirty per cent work on the project has already been completed as well.

India is seen as one of the future markets for steel owing to its much below steel consumption than even global average.

All domestic firms, both public and private, are trying to expand capacities and global biggies are continuously trying to set up shop in a bigger way here.

'SAIL and RINL had evinced interests for being NMDC's joint venture partner for Nagarnar steel project. NMDC Board will meet in first week of May and decide on this. The future of the project is not uncertain. It will happen, whether any foreign companies come forward or not. The Board will take a call on the partner issue in its meeting,' the source said.

The source added that Board may even consider roping in either SAIL or RINLfor the project without calling for a fresh round of EoI. In that case, NMDC will retain majority stake and either of the two will be the minority stakeholder.

The Rs 15,525-crore project cost was envisaged to be financed in 1:4 debt-equity ratio. NMDC's maiden venture into steel is scheduled to be commissioned by September, 2015.

NMDC hopes that the partner would bring in necessary technologies capable of producing high-end steel products like CRGO, CRNO and auto-grade steels.
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