Jindal Steel and Power today bought 100 per cent stake in Australian mining and exploration company Legend Mining's iron ore project in Cameroon for AUD 17.5 million (Rs 100 crore).
The acquisition of Ngovayang Project, located in south-western region of the West African country, is aimed at securing raw material for JSPL's recently commissioned two million tonnes per annum (mtpa) steel plant in Oman.
Jindal Steel and Power (JSPL) has already paid AUD 6 million in the first tranche of the deal and will pay another AUD 6 million in July next year.
The last tranche of AUD 5.5 million would be paid after execution of a mining convention between JSPL and the Cameroon Government, Legend said in a filing to the Australian Securities Exchange (ASX).
The Cameroon project covers around 2,970 square km area comprising three exploration permits. Legend had carried out an extensive aeromagnetic survey in February 2010.
"Legend is now in a strong position financially to pursue exploration activity in its wholly-owned Fraser Range tenements and new project opportunities. We now have cash and liquids of more than AUD 15 million...," said Legend's Managing Director Mark Wilson.
When contacted, a JSPL spokesperson said: " We don't have any comment on Cameroon deal yet."
Legend had in November last year announced that it had entered into a share sale and debt assignment agreement (SSDAA) with a wholly-owned subsidiary of JSPL for the sale of Legend's 90 per cent interest in Camina SA, the holding firm of Ngovayang project in Cameroon.
"Under the SSDAA, Jindal will acquire 100 per cent of the shares of Legend Iron Ltd and the inter-company loans provided by Legend to Camina, for a total cash of AUD 17.5 million," it said.
Apart from Oman, JSPL has a 3 mtpa steel-making plant at Raigarh in Chhattisgarh and a 2 mtpa facility at Angul in Odisha. It generally requires 1.6 million tonnes of iron ore to produce one million tonnes of steel.
The Oman facility buys the raw material from the open market to run the plant. Operating a plant with raw material purchased from the market leaves a company vulnerable to price vagaries, which can impede growth and affect profitability.
