One of India’s largest Steel producers in the private sector, JSW Steel has been in the middle of problems with regards to its supply of raw material. JSW Steel is likely to purchase a substantial share in Sandur Manganese and Iron Ore Mines located in Karnataka. The BSE listed Steel company is in talk with the Sandur mines for buying up of the stakes. This step is taken by JSW so as to improve its Iron ore supply as well as cut its logistics costs.
“JSW Steel India
is in talks to buy a significant stake of the promoter in Sandur Manganese at a considerable premium to its current market price,” stated an investment banker close to the deal.
As JSW has its steel plant in Karnataka, Sandur Mines can be the best source for the supply of raw material as the very mine is also situated in the same location. Sandur owns a 74.15 % stake in the company. Sandur has appointed Edelweiss Financial Services to sort out the buyers for the stake.
At present JSW is sourcing its Iron ore supply from NMDC which is India’s largest Iron ore miner, through e-auction. The ore is supplied to JSW from NMDC’s mines located in Odisha and Chhattisgarh. With the buying up of the shares, JSW is likely to get a surplus supply of raw materials from Sindur Mines. Meanwhile, the company is already buying a part of its raw material requirement from Sandur.
“We are open to selling stake in the listed company to a partner if they are interested in buying surplus iron ore for which an equity holding is essential.We are in talks with five strategic investors including JSW to build an alloy steel plant with an investment of anywhere between Rs 900 crore and 1,000 crore which is partly financed by equity and debt. Sandur will continue to own majority stake in the new joint venture”, stated Nazim Sheikh, joint managing director, Sandur Manganese & Iron Ore Mines.