RINL seeks Rs 40K cr NMDC JV

Seeking to expand its capacity to 20 million tonnes per year,state-run navratna behemoth Rashtriya Ispat Nigam Limited....

Seeking to expand its capacity to 20 million tonnes per year,state-run navratna behemoth Rashtriya Ispat Nigam Limited (RINL) has solicited mineral giant National Mineral Development Corporations (NMDC) participation in jointly setting up a 10 million tonne integrated plant in its existing plant at Vishakhapatnam at an estimated investment of Rs 40,000 crore.

In a letter to NMDC,RINLs Director Finance P Madhusudan pointed out that his company possesses 20,000 acres of well-situated land and RINL is desirous of fully utilizing the land bank for its growth potential. The consultants appointed by the Vizag-based company has recently assessed its to 20 million tonnes,Madhusudan said and pointed out that that RINL’s capacity expansion was very essential for its long term sustainability. To meet the growing need of the country,Vizag Steel has to expand its capacity to 20 MT say by 2020 or so. We note than NMDC is expanding its capacity and it is therefore requested to keep a provision of 36 MT iron ore for RINL while considering commitments for other customers. We invite NMDC to consider and join RINL at Vishakhapatnam in setting up a 10 MT plant, he said. While iron ore would come from navratna company NMDC,land and allied infrastructure would be ensured by RINLs already functioning 7.3 MT plant. RINL is expanding its capacity from 3 million tonnes to 6.3 million tonnes of liquid steel at a cost of Rs 8,600 crore. It is understood that RINL is keen on a 50:50 equity JV with NMDC.

Arguing that RINL was squarely dependent on NMDC for its linkages and logistics,the Director RINL Director Finance urged the mining behemoth to reserve 36 MT of ore for it to meet its requirements,which is an additional quantity of 26.2 MT over and above the 9.8 MT already committed to it. The capacity expansion of RINL was imperative for its long term sustainability as its variable cost of production was high by Rs 5,000 to Rs 9,000 per tonne as compared to its competitors,who possess captive coal/iron ore mines,the official said. RINL for long does not have any captive iron ore mines unlike another PSU Steel Authority of India Limited (SAIL). When contacted a senior NMDC official ruled out any such possibility of entering into a JV with RINL or earmarking the said quantity of iron ore for it. Primarily we are a mineral producing company and our core area of activity is not steel making. Besides,if we have to reserve the said 36 MT of ore for RINL,then we would be left with virtually little for our other customers with whom we have existing commitments. Moreover,how does it help us to set up a 10 MT plant as we have already indicated to set up our footprints elsewhere. At the moment our focus is to increase or mineral base through viable acquisitions for which we are already doing due diligence, he said.

NMDC is already going full throttle on setting up its 3 MT plant at Ngarnar in Chhattisgarh besides doing intense due diligence for jointly building up a plant at Bellary area of Karnataka jointly with Nippon Steel of Japan at an estimated investment of Rs 10,000 crore. NMDC currently produces around 30 MT iron ore and is aiming to ramp up it to 50 MT by 2014-15. BSE-listed NMDC reported profit after tax of Rs 1504 crore as against Rs 773 crore for the first quarter of the current fiscal thereby registering a growth of 94.57 per cent.