The Steel Authority of India Limited (SAIL) and Rashtriya Ispat Nigam Limited (RINL) joint venture is in advanced stages of discussions for acquiring a ten per cent stake in Oman-based limestone miner Majan Mining Company (MMC) for around US$30mn, according to Indian media reports.
"The two PSUs had joined hands in 2008 to jointly explore and develop limestone mines in Oman. This joint venture has been talking to Majan Mining Company to buy a ten per cent stake. The deal will happen soon," a source close to the development was reported as saying.
MMC's limestone mine is located in West Teetam, near Salalah, and has 350mn tonnes of reserves. The deposits have low silica content and high reactivity making them ideal for the steel industry.
MMC started commercial production in late 2008 with 2mn tonnes per annum (mtpa) capacity in the first phase. Plans are in place to increase production to 5mtpa and 10mtpa in the second and third phases, respectively.
Indian news agency reports added that consultancy firm KPMG has valued MMC at around US$300mn and based on this valuation, the ten per cent stake would cost SAIL-RINL more than US$30mn.
SAIL has also signed an initial pact with Oman Oil Co to jointly set up a 3mtpa gas-based steel plant in Oman with an investment of around R150bn (RO1.04bn). RINL is also looking at Saudi Arabia to set up a 3mtpa steel plant as a joint venture with local major Rajhi Steel at an investment of R200bn.
The reports added that a team, comprising officials from RINL and SAIL, had visited Oman in 2009 and the limestone samples brought by them were tested at the Research and Development Centre for Iron and Steel (RDCIS) in Ranchi, Jharkhand.
The SAIL-RINL venture will soon send a merchant banker to Oman for due diligence of the mine.
The two companies had earlier shortlisted Grant Thornton for the task, but it was not awarded the job.
© Muscat Daily 2012
