State-run miner NMDC is likely to offer majority stake in its upcoming R15,525-crore steel plant at Nagarnar in Chhattisgarh to a strategic partner having expertise in making steel using the latest technology.
Confirming the move, a senior steel ministry official said that the stake sale would be subject to the PSU being able generate good value for the investments made. Stating that the prospective partner would also have to run the plant, the official, however, added that NMDC was “in no hurry” to offload the stake and would rather wait until a suitable buyer turned up. Sources in NMDC, however, said the firm was also toying with the idea of offering the maintenance and operational contract for the 3-million-tonne plant to PSU steel maker Rashtriya Ispat Nigam in lieu of sharing a fixed percentage of annual profit.
The steel ministry has already ruled out giving state-run SAIL any equity participation in NMDC’s maiden steel venture as the steel company is in the midst of a massive capacity expansion.
A senior NMDC official told FE that representatives from South Korean steel major Posco, which has been struggling to find a solid foothold in India since long, had also visited the plant sometime ago, but have not come with any proposal so far.
Another government official said though Posco, which is still grappling with regulatory issues concerning its proposed $12-billion greenfield project in Odisha, might find the Nagarnar unit attractive, as it won’t have to go through the rigmarole of acquiring land and getting mine leases. The South Korean company, which has reiterated its commitment to invest in India in a massive way, would find buying into Nagarnar unit a viable option.
A pure-play miner, NMDC had in 2009-10 conceived the Nagarnar steel plant with the intention of value-addition and diversifying its business to hedge itself from the vagaries of iron ore prices. Questions were raised on the decision in the ministry itself and in 2013, a global tender was also floated in vain for roping in a partner with experience and expertise in making steel. The plant is likely to be commissioned in one to one and a half years.
SAIL’s plates are indeed full. The company is in the last leg of its
R72,000-crore expansion plan that will take its hot metal capacity to 23.1 mt from 13.8 mt now. It has also readied its ‘Vision-2025’ seeking to raise the capacity further to 50.4 mt.
