Jindal Stainless to invest Rs 1,290 crore in nickel pig iron JV in Indonesia

Jindal Stainless on Tuesday signed a joint venture agreement with an Eternal Tsingshan unit to develop a greenfield 200,000 metric tonne nickel pig iron plant in Indonesia.

Jindal Stainless will be investing $157 million (Rs 1,290 crore) in the project over the coming two years for a 49% equity stake. The remaining stake will be with New Yaking Pte, a unit of Eternal Tsingshan.

Jindal Stainless will be making the investment from internal accruals, according to Abhyuday Jindal, the company’s managing director. The investment will help India’s largest stainless steel manufacturer secure supplies of nickel, a key input for making the shiny alloy, he said.


“Now that we are a 3 million tonne capacity player, not having backward integration for nickel was a big risk for the country,” Jindal told ET.

The investment will buy Jindal Stainless the first right of refusal for the nickel pig iron smelted at the proposed plant, but no concessionary rates. The company said that the fiscal benefits of the investment will show on its consolidated balance sheet once the plant becomes operational.

Nickel pig iron is a cheaper alternative to pure nickel for making stainless steel popularised by the Chinese. It accounts for 16% of the total nickel requirements of Jindal Stainless, the company said. The rest of nickel requirement is met through scrap and to a lesser extent through pure nickel.

New Yaking, which will be the majority stakeholder in the proposed plant, will be looking after the operations of the smelter, Jindal said. The Indonesian company’s capital investment in the project will be relatively lower.

“We prefer to keep this much (49%) stake because we do not want to get into the operational part,” he told ET. New Yaking already operates multiple such plants in Indonesia with investments from other overseas players, he added.

The plant is proposed to have two rotary kiln electric furnaces (RKEF) and is expected to be operational by the end of FY25. Jindal Stainless expects to make a 25% internal rate of return on its investment.