MUMBAI India's JSW Steel Ltd, the flagship company of steel tycoon Sajjan Jindal, has started talks with Sandur Manganese about a long-term iron ore supply agreement, a company official said on Wednesday.
These discussions are a part of the company's efforts to ensure iron ore availability for its 18 million tonne (mt) steel capacity which is spread across three locations in India.
"We are going to have a long-term tie-up with them (Sandur Manganese) for supply of iron ore. They have a capacity of 1.6 mt now, but they can reach up to 3 mt," Vinod Nowal, deputy managing director of JSW Steel, told Reuters.
"Discussions are still going on and we want to tie-up for the entire 3 mt," he added.
A top ranking official from Sandur Manganese confirmed that it was in talks with JSW Steel but said no decision has been reached until now. He spoke on condition of anonymity.
JSW will also be bidding aggressively in an iron ore mine auction in July in the southern-western state of Karnataka, Nowal added. It needs 30 million tonnes of iron ore annually to produce 18 million tonnes of steel.
JSW Steel is India's biggest steel company in terms of domestic capacity but unlike companies such as Steel Authority of India Ltd and Tata Steel Ltd, it does not have access to its own iron ore mines -- one of the most important raw material required for viable steel making.
The group has operations across steel, power, ports and cement businesses across India. It has bid for Tata Steel UK's assets and is among one of the seven short-listed companies.
The mines of Sandur Manganese are located in the Bellary district and are very close to JSW Steel's Vijayanagar unit, according to Sandur's website.
For the quarter ended March 2016, the company posted a consolidated net profit of 1.71 billion rupees ($25.5 million), up from 623.8 million rupees a year ago. It posted net sales of 104 billion rupees, which came down by 15 percent mainly on the back of lower steel prices.
($1 = 67.0018 Indian rupees)
(Reporting by Promit Mukherjee; Editing by Keith Weir)
This story has not been edited by Firstpost staff and is generated by auto-feed.
Published Date: May 19, 2016 00:45 AM | Updated Date: May 19, 2016 00:45 AM