Naveen Jindal-controlled Jindal Steel & Power Ltd (JSPL) is in the race for Mongolia’s Tavan Tolgoi coal project, one of the 10 biggest deposits in the world.
Vikrant Gujral, vice-chairman and CEO, JSPL, said: “We had made a presentation before the Group of Ministers. We have been informed that we are one of the shortlisted bidders for a 49 per cent stake in Tavan Tolgoi. This is a big deposit and we are the only Indian company to be shortlisted.”
Tavan Tolgoi has six billion tonnes of coal, of which two billion is coking. The balance 51 per cent stake would be held by a government-owned company. Though Gujral did not specify the value of the deal, pointing out that this would have to be studied, industry sources said it could run into billions of dollars as it is an operational mine. He said most Indian companies have been eyeing smaller mining companies, while adding BHP and Brazil’s Vale were also in the fray.
Gujral said the coking coal could be transported to cater to JSPL’s steel plants in India. However, he pointed out that Mongolia is a land-locked country and the mineral would have to be routed through either China or Russia.
JSPL operates a three-million-tonne plant at Chhattisgarh and has lined up two six-million-tonne plants for Orissa and Jharkhand, for which Memoranda of Understanding have been signed. Moreover, there are plans to add another three million tonnes at Chhattisgarh.
Indian steel companies have been scouting for raw material assets overseas in the past few years. Coking coal accounts for around 50 per cent of the raw material costs and proven reserves of prime coking coal in India are at 4.6 billion tonnes, but production is around seven million tonnes only. Also, the quality of Indian coking coal is poor and has to be blended with imported coal.
