Mittal, Birlas in race for Mitsui's Sesa Goa stake

Lakshmi Mittal, the world's fifth-richest man, is competing with two fellow Indian billionaires to buy control of Sesa Goa, the nation's largest non-state iron ore exporter, people familiar with the plan said.

Japan's Mitsui & Co is selling its 51 per cent stake in Panaji, Goa-based Sesa Goa worth around $1 billion and may select a buyer this week, said the people, who didn't want to be identified before an announcement. The three bidders are Arcelor Mittal, the world's largest steel company, Aditya Birla group and Vedanta Resources Plc, they said. Lakshmi Mittal wants to fend off Kumar Mangalam Birla and Vedanta's Anil Agarwal to obtain iron ore for his steel mills and reduce production costs.

Demand from China drove iron ore prices to records for the past five years, spurring more than $157 billion of mining mergers in 2006. "Iron ore mines are one of the most sought after assets today and the ore available here is of good quality," said Sanjay Dongre, who oversees about $1 billion in stocks at UTI Asset Management Co in Mumbai. "Any company which buys Sesa will not only want to sell in India but continue selling overseas in countries such as China where the demand is huge."

Arcelor Mittal and Posco plan to spend $21 billion on plants in the next seven years in India, which has the world's fifth-largest iron ore reserve. BHP Billiton, Cia Vale do Rio Doce, JSW Steel and Rio Tinto group had earlier considered bidding.

Shares of Sesa Goa advanced 5.3 per cent to Rs 1,806 on the Bombay Stock Exchange (BSE) and traded at Rs 1,751.9. The stock has gained 24 per cent this year, valuing the company at Rs 6,900 crore ($1.6 billion).

Birla group's Essel Mining & Industries has bid about Rs 2,100 ($48.9) a share for the stake, the people said. Arcelor Mittal made the highest bid, offering Rs 2,200 a share, the Economic Times said today, citing unidentified people. Lakshmi Mittal said on February 21 he is considering bidding for Sesa Goa.

Calls by Bloomberg News to the London and Rotterdam offices of Arcelor Mittal were directed to voicemail. Officials at Vedanta Resources, India's largest producer of copper and zinc, were unavailable for comment in Mumbai. Birla group spokeswoman Pragnya Ram declined to comment.

Sesa Goa sells 58 per cent of its 9 million metric tonne production to steelmakers in China and Taiwan, and 11 per cent to buyers in Japan. The company posted a net income of Rs 540 crore in the year ended March 31, 2006.