International BusinessVedanta eyeing JV for steel making
The billionaire Anil Agarwal-promoted Vedanta Resources is in talks with European and Japanese steel producers to get into steel making.
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In August 2004, the company had announced a plan to build a five-million-tonne steel plant with an investment of Rs 20,000 crore. But it was put on the back burner as it started consolidating its position in base metal.
“The company is now looking for a joint venture partner,” a company spokesperson said. In April 2007, Vedanta had picked up a 51 per cent stake in Sesa Goa from Mitsui for Rs 4,070 crore, the largest M&A deal in the industry so far.
Sesa Goa owns 180.5 million tonnes of iron ore reserve. Besides, the Goa-based miner acquired Dempo group’s 70 million tonnes of mineable iron ore reserve for Rs 1,750 crore last month.
This has given the company a clear advantage for getting into steel-making. Getting a joint venture partner would ensure that the group is focused on its base metal business. However, Vedanta’s announcement to get a partner has come at a time when steel consumption has globally slowed down and companies are cutting production.
“Domestic demand has, however, continued and this is the impetus for the company to get into steel-making locally,” an analyst with a domestic brokerage said on condition of anonymity.
Last month, India’s largest steel producer Tata Steel saw a 30 per cent increase in its sale of long products and a 12 per cent rise in sale of flat products over the corresponding month of the previous year.