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nmdc to acquire three overseas mineral assets

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    http://www.miningweekly.com/article/nmdc-to-acquire-three-overseas-mineral-assets-2011-10-10

    NMDC to acquire three overseas mineral assets

    By: Ajoy K Das
    10th October 2011


    KOLKATA (miningweekly.com) - India’s largest iron-ore miner, NMDC Limited, is negotiating a stake in three overseas mineral assets, with the aim of taking its foreign aggregate investments to around $500-million, by the end of March next year.

    The targeted acquisitions were the Wonarah phosphate deposits of ASX-listed Minemakers, iron-ore deposits from Brazil’s Greystone Mineracao do Brasil, and the Vincy Coal project, in Russia.

    The company did not divulge the breakdown of investments involved in each of the three acquisitions, however officials said that aggregate investments in acquiring overseas mineral assets would be to the tune of $500-million by end of the current financial year in March 2012.

    “A team of NMDC officials have just visited Wonarah and would submit a feasibility report shortly. The due diligence report on Vincy Coal would be ready by this month end. All three assets are of very good quality and our acquisitions should be complete within the current fiscal year,” an official said.

    Indications were that for Wonarah phosphate deposits, NMDC would a form a 50:50 joint venture (JV) with Minemakers which would see the mineral asset being transferred to the JV following NMDC making an additional payment to Minemakers for initial costs already incurred on the deposits, one of the largest under-developed phosphate reserves in Australia.

    In the case of Vincy Coal, NMDC was looking to develop and access a reserve of about 100-million ton. For Greystone, the iron-ore miner was currently in talks with Zamin Advisors, a London-based equity fund that has controlling interests in Greystone.

    In a related development, NMDC has signed an agreement with India’s Sunflag Iron and Steel Company Limited to acquire a 26% stake in the latter’s coal assets in Mozambique. The deal value has not been disclosed but NMDC plans to start shipping part of the coal mined in Mozambique to its two ongoing steel projects within the next three years and to sell part of the coal in the local market.

    Sunflag’s Mozambique asset was estimated to have a reserve of 450-million tons with a current production capacity of five-million tons a year.

    NMDC and Severstal have signed a JV agreement to construct a five-million-ton-a-year steel mill in the southern Indian province of Karnataka entailing an investment of $5-billion. The company on its own was constructing a 3-million ton steel plant in the central Indian province of Chhattisgarh at an investment of $2.9-billion.

    Last month, NMDC concluded the purchase of 50% of the shares of Australia’s Legacy Iron Ore, entailing an investment of A$18.9-million.

    Meanwhile, on the domestic front, NMDC has firmed up a capital expenditure of $500.34-million that would be riding on various projects across the country and would ramp up total iron-ore mining capacity to 50-million ton a year. These include development of the Kumaraswami iron-ore reserves in Karnataka province to extract seven-million ton a year. This would be a replacement for the fast-depleting reserves of the current mine at Donimalai.
 
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