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Jindal Steel completes CIC Energy buy

JSPL says will invest $700 mn for setting up facilities at its Botswana properties.

Written by Agencies | Mumbai | Published: September 5, 2012 6:10:07 pm

Jindal Steel and Power (JSPL) today announced completion of its acquisition of CIC Energy and said it will invest up to USD 700 million in next 3 years for setting up facilities at the Canadian firm’s properties in Botswana.

On July 23,the Naveen Jindal-led firm had entered into an all cash deal to acquire 100 per cent stake in CIC Energy for about USD 115 million (over Rs 600 crore). The deal gives JSPL access to 2.4 billion tonnes of high thermal coal reserves of CIC in Botswana at the Mmamabula mine.

According to JSPL’s Chief Financial Officer Sushil Maroo,the company will invest USD 100 million on opening Mmamabula coal field and setting up of 300 MW power plant for about USD 600 million.

“We are planning to set up a 300 MW power plant and open the coal mine in Botswana over the three years period. Total investment is up to USD 700 million,” he said told reporters here through a conference call while announcing the completion of acquisition of CIC Energy.

He added that JSPL has secured all the necessary approvals to acquire CIC Energy and the Canadian firm will be merged with Jindal BVI Ltd,a wholly owned subsidiary of the Naveen Jindal-led firm.

The Canadian firm will also be delisted from the Toronto Stock Exchange and this process will begin within a week,Maroo said.

JSPL aims to tap the local power market as the nearby countries are power deficient,he said,adding that the countries are well connected through a transmission grid.

However,the company does not have any immediate plans to bring the Botswana coal to India as the African nation is a land-locked country and development of evacuation facilities will take time 3 to 5 years time,he said.

Besides,it is also looking to set up a 1,200 MW power plant to cater particularly to the South African market as its mining complex is 30 kms away from it,he said,declining to give a time-line.

“The possibility exists of setting up another 1,200 MW power plant because of the opportunities available there,” Maroo said.

He also said the acquisition of CIC Energy and development of coal mine in Botswana will not be a bitter experience for the company as it had been in Bolivia,from where it exited in July over fuel supply woes and some regulatory issues.

“Bolivia was a different issue,there we were supposed to set up a steel plant but did not get gas. Here,in Botswana,it is all about coal mining. (The African) country’s rating is better than Bolivia,” he said.

According to JSPL,CIC already has all the regulatory approvals to do mining at Mmamabula coal field,including water allocation and environmental clearance.

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