Monnet Ispat and Energy Ltd (MIEL), India’s second-largest coal-based sponge iron producer, is set to acquire majority stake in a coal mine in Colombia. The acquisition of the 25 million tonne (MT) coal mine in the Latin American nation is aimed at feeding the domestic steel and captive power plants of the Rs 1,960 crore company.
“Talks are on for the acquisition of a mine in Colombia which has an annual production capacity of 50,000 tonne per annum,” N C Jha, Chief Executive Officer (CEO) of Monnet’s mining business, said without divulging financial details. The former Coal India Chairman also added that the working mine has reserves of both coking and non-coking coal and the deal is likely to be clinched in a month or two.
The development comes close on the heels of scrapping of a similar deal by an Indian company in the Latin American region -- Jindal Steel and Power Ltd’s $2.1 billion contract to develop El Mutun iron ore deposit in Bolivia. Apart from Latin America, Monnet has been looking at coal assets in Africa to source coking coal for its steel mills, Chairman and managing Director Sandeep Jajodia had told Business Standard in a recent interview.
Monnet Ispat had acquired Indonesia coal company PT Sarwa Sembada Karya Bumi in the Jambi Province of Sumatra for $24 million through its wholly-owned subsidiary Monnet Global Ltd (MGL) in 2010-11. The Indonesian mine is expected to begin production shortly. A recent change in the mineral export regulation of the South-Asian nation has lead investors, including Indian infrastructure companies, to look elsewhere for acquisitions.
New Delhi-based Monnet Ispat has sponge iron manufacturing facilities at Raipur and Raigarh in Chhattisgarh and is currently developing a 1.5 MT integrated steel plant at Raigarh. The company is also executing a 1,050 Megawatt (Mw) power plant at Angul in Orissa. MIEL plans to set up an additional 2,000 Mw power generation capacity by 2014.
The Monnet Group plans to invest around Rs 2,700 crore this financial year. Of this, around Rs 700 crore will be invested in the new steel plant. The rest Rs 2,000 crore would be used to set up power capacities. The company’s share price at the Bombay Stock Exchange (BSE) today closed at Rs 291.0, up 0.6% as compared to previous close.