"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.
Jindal Steel and Power ( JSPL ) 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.
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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.
Jindal Steel stock price
On May 06, 2014, Jindal Steel & Power closed at Rs 243.80, down Rs 0.1, or 0.04 percent. The 52-week high of the share was Rs 338.40 and the 52-week low was Rs 181.55.
The company's trailing 12-month (TTM) EPS was at Rs 14.12 per share as per the quarter ended March 2014. The stock's price-to-earnings (P/E) ratio was 17.27. The latest book value of the company is Rs 149.07 per share. At current value, the price-to-book value of the company is 1.64.
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