Sesa Goa, India’s largest private iron ore miner and part of the London-listed Vedanta Resources, has bought 51 per cent stake in Western Cluster Ltd, Liberia, for $90 million. With this, the company has made its first overseas acquisition. Shubhashish spoke to P K Mukherjee, MD, Sesa Goa, to know the road ahead for the company. Edited excerpts:
This is your first overseas acquisition. Many more to follow?
There is always a first time. We have been looking for acquisition abroad for sometime now. We have looked at assets in Brazil quite a few times. We are always on the lookout and this is the first deal that has materialised.
Does this mean we will see more foreign soil acquisition news from Sesa Goa?
Our strategy is to grow. For the time being, we want to focus on this Liberia project and develop it. The project is still two years away and we can expect the first shipment to begin only in financial year 2013-14.
You haven’t acquired any new mine in India for a long time. Has this made you look abroad more aggressively?
We are equally optimistic about India. We look at India as well as outside for growth with the same vigour. For iron ore, there are three geographies with huge reserves. They are Latin America, Africa and Australia and we continue to scan them.
What markets will you target with this particular asset?
Well, this is located on the west side of Africa, so the natural market will be Europe, followed by West Asia and China. This deal gives us the presence in west Africa and we are excited at the prospects.
How soon can we expect the company to come out with a detailed plan?
We have signed the deal with the government. Now it will go to the legislature of Liberia for ratification. We do not foresee that to be a hurdle. Once that is done, we will begin exploration in the next six months followed by the feasibility study, etc. By the end of the current financial year, we should be able to give the timeline and the costs involved in the project.
What is the nature of the asset?
Reserves and resources are over 1 billion tonne and metal content is 330 million tonne. Initially, by 2013-14, we would want to mine and export 5-8 million tonnes of ore and will look to ramp it up to 20-25 million tonnes a year.
Is Liberia conducive to investment?
The country was in a civil war earlier and has had a stable government for the last five-six years. BHP Billiton, Severstal, ArcelorMittal and the Chinese have already invested in the country. ArcelorMittal will produce iron ore shortly, and has laid a 267- km railway line and has invested at least $700 million till date. Severstal has lined up $2.5 billion investments to mine 20 million tonnes of iron ore every year. BHP is working on its feasibility study and Vale is also in talks with the Liberian government for a logistics project. We have been working in the country for one-and-a-half years and have met people who have given us confidence.
