NMDC eyes Rs 10,000-cr from stake sale in Nagarnar plant

NEW DELHI: State-owned iron ore miner NMDC is looking at garnering Rs 8,000-10,000 crore from sale of its 50 per cent stake in upcoming three million tonne per annum steel plant in Chhattisgarh to a strategic partner.

The company intends the partner to bring in necessary technologies capable of producing high-end steel products like CRGO, CRNO and auto-garde steels which India mostly relies on imports to meet the domestic demand, a Steel Ministry source said.

"Since, NMDC is currently a pure-play miner, it has been felt necessary to bring in a partner which can produce those types of steel. It has already sought expression of interest (EOI) from interested parties and the response so far has been very encouraging," the source said.

Work on NMDC's steel plant, estimated to cost Rs 16,000 crore, at Nagarnar in Chhattisgarh is almost half way through. The project is slated to start production within the next couple of years.

The source said the state-run firm would like to partner with a foreign company, having good reputation in the world steel market and sufficient experience of running steel mills.

Candidature of the local firms like Tata Steel, SAIL, JSW Steel, RINL, Jindal Steel and Power, Essar Steel would also be accepted, but keeping in view the target products in mind, many may not remain in contention in the last lap, where only 2-3 firms would be called for financial negotiation after seeing presentation of all the participants.

"Following presentations, an expert committee would take stock of the merits and demerits of the participants and call only two to three firms for financial negotiation," he said.

The company which would ensure uninterrupted coking coal supply would be given preference, he said.
NMDC had conceived the Nagarnar steel plant in 2009-10 with the intention of value-addition and diversifying business to hedge itself from the volatility of iron ore prices.

NMDC would supply iron ore to the project, its maiden venture into steel-making, from its existing mines at nearby Bailadila while coking coal, also a key raw material for steel making, was planned to be imported.

However, with the hardening of the coking coal price in the world market and the scarcity of mines for acquisition, it has now been decided that much importance would be given to the partner which would ensure steady coking coal supply to the project.

Another source said Steel Minister Beni Prasad Verma has also given his nod for the stake sale in the steel plant, mainly keeping in mind the need for better technology and steel products in the country.

"He is keen to seeing NMDC signing the pact with the proposed partner within next three months and if everything goes well, I don't think it would be difficult to meet the deadline," said.