RINL keen on merger with NMDC

Written by Economy Bureau | Kolkata, May 30 | Updated: Jun 1 2008, 03:21am hrs
Rashtriya Ispat Nigam Ltd(RINL), which operates the shore-based Visakhapatnam Steel Plant, has proposed a merger with National Mineral Development Corp (NMDC) to secure iron ore mines, which would give it the sort of cost advantage enjoyed by Steel Authority of India Ltd and Tata Steel.

At the same time, NMDC will get access to RINLs technology for its proposed steelmaking foray, RINL has suggested to the steel ministry.

PK Bishnoi, RINLs chairman and managing director, said RINL has also sounded out NMDC but none of them has responded formally. Bishnoi has said RINL does not face any problem regarding iron ore security since it has contracts with NMDC, but what matters is the steep rise in prices.

In most of the fresh contracts for iron ore, prices have shot up by 65%. Although RINL will not have to pay that high a price to NMDC, whatever increase it pays would affect RINLs profitability.

He pointed out that NMDC now wants to put up a steel plant. They are worried about getting technology and I am worried about iron ore. So we can exchange our worries and join hands together to consolidate and strengthen our positions, Bishnoi said.

If we get together we can look at acquiring many more steel plants in India and iron ore mines abroad. Our balance sheet will be strengthened, Bishnoi said.

He said a merger of RINL and NMDC would create a steelmaker with a capacity of 25 million tonne per annum and iron ore production of 40-50mtpa over the next ten years. RINL aims to increase its capacity from 3.6mtpa at present to 16 mtpa over the next ten years, with 6.3mtpa coming up by 2010. NMDC is planning to set up a 3-4m tonne steel plant in Chhattisgarh.