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British trading firm Stemcor has extended the deadline for bids to buy its Indian iron ore mines, earlier set for mid-November, by a few weeks.
It values these at $1.3 billion and it feels it has to finalise a deal by December, as its lenders have given it a deadline to repay loans worth $1.2 bn by year-end.
Banking sources say Tata Steel is not keen now to make a bid. Yet, the race is getting into the final lap, with the Jindal brothers and the Ruias of the Essar group in the fray. Bhushan Steel has also been shortlisted by Stemcor's banker, Goldman Sachs, to bid in the final round.
Stemcor had also started negotiations with ICICI Bank, which had sued the company in the Kolkata high court, restraining it from selling any assets till loans of Rs 587 crore are repaid. Bankers say the dispute between ICICI and Stemcor will not hamper the proposed sale, as both parties have come to a settlement.
The production at Naveen Jindal's Jindal Steel & Power factory in Odisha is suffering due to scarcity of iron ore. JSPL finds the Stemcor assets attractive and plans to jointly bid for these with JSW Steel. The company has said the assets have a geographical advantage and huge long-term potential. Its 4.5 million tonne pellet plant in Barbil, Odisha, is expected to be commissioned by March next year.
With the production of iron ore closed in Karnataka and Goa, there is also demand from Sajjan Jindal's JSW Steel plant (at Bellary in Karnataka), operating at low capacity. "It makes sense for him to buy the mine as well as the pellet plant which is already operational," says a banker advising one of the bidders. JSW Steel is also in expansion mode and needs all the ore and pellets it can lay its hands on. In fact, the company is looking to sell its US pipe-making business, so that it can invest more in India.
