India’s biggest steelmaker JSW Steel said it could spend up to $1 billion on capacity expansion or acquisitions this financial year and will bid for iron ore and coking coal mines in upcoming auctions to secure raw material supplies.
Unlike its nearest rivals Steel Authority of India and Tata Steel, JSW does not own any iron ore mines. It buys the raw material mostly from Indian companies but imports sometimes as well. It also buys millions of tonnes of coking coal each year from countries such as Australia, Canada, and the United States.
“That’s the strength of my balance sheet.”
Rao said JSW would submit expressions of interest this month for two iron ore mines in the eastern state of Odisha. They hold reserves of 70 million tonnes and 90 million tonnes respectively, Odisha’s joint director of mines, Manorajan Mishra told Reuters.
Iron ore from one of the mines can only be used by the winning bidder for its own use, while output from the other mine can be sold, Mishra said.
JSW is India’s biggest steelmaker by capacity. It imports 8 million tonnes of coking coal every year and has identified a mine in the state of Jharkhand that it wants to bid for, Rao said. It is also considering bidding for three more mines there, he said.
The company will continue to look to buy assets as long its finances were not stretched.
“We are growth-oriented,” Rao said. “But unless I am sure I can make money for the shareholder I will not do it. Four acquisitions that I have done in India all are profitable now.”
Source: Business-Standard