Hit by the global slowdown, India?s third largest steel maker JSW Steel has decided to postpone its investments, pegged at around Rs 490 crore, in iron ore mines in Chile, and will take a view on this only next year.
The company had earlier put on hold its greenfield expansion in steel making on similar grounds.
Talking to FE, Seshagiri Rao, joint MD and group CFO of JSW Steel, said: “Today there is uncertainty in the demand-supply scenario of iron ore. With entire production of steel coming down from 120 million tonne to 95 million tonne, there are no buyers for iron ore except for China as of now. Hence, huge amount of good quality iron ore is available in surplus from Brazil and Australia on spot basis. If we invest $100 million to make these mines operational, we may not have buyers for it. Hence, we have decided to hold the investment until the situation improves.”
JSW had earlier decided to make the mines operational and produce 4 million tonne of iron ore by December 2009. It has already invested $25 million. JSW Steel shares on Wednesday were marginally up by 0.97% to close at Rs 621.95 on the Bombay Stock Exchange.
The company had in January 2008 acquired 8 concessions in a greenfield area for exploration and exploitation of magnetite iron ore deposits at Atacama in north of Chile. With approximately 1200 hectares, JSW Steel had acquired the concessions for a total of $52 million.
It had then entered into a JV with a Chilean entity, Minera Santa Fe, to develop iron ore mines and other projects in South America, including Chile. Sajjan Jindal, vice-chairman and MD of the company, had in Januray 2008 said the company planned to invest around $500 million in this venture including development of a new port capable of handling super capsize and panamax size ships.