The SAIL-RINL joint venture is in advanced stages of discussions for acquiring 10% stake in Oman-based limestone miner Majan Mining Company (MMC) for around Rs 200 crore, according to sources.
"The two PSUs had joined hands in 2008 to jointly explore and develop limestone mine in Oman. This joint venture has been talking to Majan Mining Company to buy 10% stake. The deal will happen soon," a source close to the development told PTI.
MMC's limestone mine is located in West Teetam, Salalah in Oman and has 350 million tonnes of reserves. The deposits have low silica content and high reactivity making them ideal for usage in the steel industry.
MMC started commercial production in late 2008 with two million tonnes per annum production in the first phase. Plans are afoot to ramp up the production to five and ten million tonnes per annum (mtpa) in the second and third phases, respectively.
The source said consultancy firm KPMG has valued MMC at around $300 million and based on this valuation, the 10% stake would cost SAIL-RINL over 30 million or around Rs 200 crore.
"MMC has agreed to share the final valuation report of KPMG with the two PSUs since the non-disclosure agreement has already been signed with the two," he said.
A team comprising officials from RINL and SAIL had gone to Oman in 2009 and the sample of limestones brought by them was tested at The Research and Development Centre for Iron and Steel (RDCIS) at Ranchi.
SAIL-RINL JV will soon send a merchant banker to Oman for due diligence of the MMC mine. The two companies had earlier shortlisted Grant Thornton for the job. However, it did not get the task.
Meanwhile, on the instance of SAIL, MMC has already sent 50,000 tonnes of limestone for plant trial, which has been okayed by the state-run steel maker.
Limestone is used in both iron and steel making. The main role of limestone is as a fluxing agent or flux.
SAIL has also signed an initial pact with Oman Oil Co to jointly set up a three mtpa gas-based steel plant in Oman with an investment of around Rs 15,000 crore.
RINL too is looking at Saudi Arabia to put up a three mtpa steel plant as a joint venture with local major Rajhi Steel at an investment of Rs 20,000 crore.