Sajjan Jindal led JSW Steel is understood to be in the final lap of negotiations to buy out London based Steel Marketing Corporation’s (Stemcor) India assets. If the deal fructifies, it would be the culmination of the British steel trading company’s efforts to sell off its assets in India after years of failed attempts. The assets are held by Stemcor India, the Indian arm of UK based and Oppenheimer family controlled Stemcor Holdings Ltd.
“JSW Steel is in very advanced stage of talks for takeover of Stemcor’s assets. This appears to be a very strategic acquisition from the company’s perspective since the pellet plant is located in a very favorable location, given JSW’s interest to set up a 10 mnt steel mill in Odisha”, said a source close to the development. He said, Tata Steel was also in the hunt for Stemcor’s assets but opted out after its price offer was found to be unattractive for the promoters. A Tata Steel source, however, has denied it.
Both JSW Group and Stemcor declined a comment on the prospective deal. An e-mail questionnaire sent to both remained unanswered.
Though Stemcor’s assets have invited the best of bidding interest, players like Jindal Steel & Power Ltd (JSPL), Tata Steel, Essar Steel, Aditya Birla owned Essel Mining & Industries Ltd and Steel Authority of India Ltd (SAIL) have all vied for takeover in the past, the deal could not be sealed. Even JSW Steel was in the race earlier for takeover of the Stemcor owned facilities. One of the key reasons for the Stemcor deal not going through can be the lack of an attractive valuation price by the bidders, said an analyst who chose to remain unnamed.
|Stemcor operates in India through Brahmani River Pellets Ltd (BRPL). This company owns a 4 mnt pellet plant at Kalinganagar industrial complex in Odisha’s Jajpur district close to a cluster of steel plants. It also runs an iron ore beneficiation unit of equal capacity in Keonjhar district. Iron ore mines are held by Aryan Mining & Trading Corporation Ltd (AMTC) where Stemcor holds a majority stake. And, AMTC holds a 100% stake in BRPL. It was the mining asset that pulled the leading steel players to the acquisition race. The current valuation of the assets is not known but last year, an industry estimate had pegged the figure at about a billion dollars.
BRPL produces iron ore pellets from iron ore concentrates after beneficiating low grade iron ore fines. The low grade fines with Fe less than 56-57% are beneficiated at beneficiation plant through grinding, gravity and magnetic separation process to produce high grade iron ore concentrates with 63-64 % Fe. This high grade iron ore concentrates in the form of slurry is transported to pellet plant through an underground slurry pipeline.
Source: Steel 360 Magazine Dec’16 Issue