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Steel Authority of India Ltd (SAIL) could soon set up a three million tonne per annum steel plant in Mongolia. “We have offered the Mongolian Government to set up a 3MTPA steel plant there. The cost of the plant could be $3 billion,” Mr C.S. Verma, SAIL Chairman, told reporters at the sidelines of a FICCI event.
The steelmaker is also trying to acquire at least two coking coal mines in the landlocked North Asian country. Mr Verma added that SAIL has also asked the Indian Government for bilateral assistance with the acquisitions. However, he did not give the details on the size of the coal reserves for which SAIL is in the hunt.
“We are in talks with the Mongolian Government. We have told them about our interest but we are yet to hear from them,” said the Chairman.
Tavan Tolgoi region
Mongolia has some of the world's largest untapped mineral reserves and is seeking international developers to tap into the reserves, but it wants to maintain control over the mineral deposits. The Tavan Tolgoi region in South Mongolia, has more than six billion tonnes of coal.
The Tavan Tolgoi region has attracted interest from miners from US, Japan, Russia, Australia, Brazil and Korea. China's biggest coal producer — Shenhua Energy Co, Erdos Chenglong Coal Corp, Rio Tinto, BHP Billiton and Mongol 999, a consortium of Mongolian companies — are among the companies looking to acquire a share of the deposit.
According to Mongolian legislation, up to 49 percent of all shares in Tavan Tolgoi could be transferred to foreign partners, and Mongolia will have more than 50 per cent of the rights.
coking coal mines, a consortium of five public sector companies including SAIL, has also bid for a coal block in Mongolia with an estimated reserve of one billion tonnes. Almost 70 per cent of the block is likely to be coking coal, according to estimates.
With coking coal prices soaring, domestic steel firms such as Tata Steel, SAIL and JSW are in pursuit of overseas mining assets. SAIL imports about 70 per cent of its coking coal requirement and aims to reduce this by acquiring overseas coking coal blocks.
S. African coal blocks
SAIL, through ICVL, may also bid for some of the prospecting coal blocks of BHP Billiton in South Africa. “The board of ICVL will meet on February 25. We will discuss plans to buy BHP's exploration rights in South Africa,” said Mr Verma, who is also the Chairman of ICVL.
SAIL holds a 26 per cent stake in ICVL and according to a company spokesperson, the coking coal acquisitions made by ICVL will be used by SAIL and Rashtriya Ispat Nigam Ltd, the two steelmakers in the ICVL consortium.
BHP Billiton Energy Coal South Africa Ltd is divesting some of its coal prospecting rights because other investor groups are better positioned to develop them, the company said earlier this year.
In January, ICVL had backed out of a possible bid for Australian firm Riversdale Mining. The consortium had expressed interest to bid for the company, but decided not to counter Rio Tinto's $3.9 billion offer for Riversdale.
d.das@thehindu.co.in
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