Sep 30 2004
Steel Authority of India Ltd (SAIL) signed a memorandum of understanding late last evening with BHP Billiton (BHPB), the world’s largest natural resources company, as the first step towards forming a strategic alliance to jointly develop coking coal and iron ore mines both in India and other countries. SAIL, which is India’s largest iron ore producer with an annual production of around 20 million tonnes, enjoys a longstanding association with BHPB, the leading supplier of coking coal to the Indian steel major.
The proposed strategic alliance plan envisages SAIL investing in BHPB’s coal mines as well as sourcing coal from BHPB under long-term supply arrangements. On the other hand, BHPB would share its expertise in iron ore mining, including advanced technology for exploration, mining and ore beneficiation, while developing iron ore mines in India jointly with SAIL. The outlook of the two strategic alliance partners would be to maximise resource utilisation while exploiting the finite natural resources in an economic and environment-friendly manner.
SAIL would be progressively requiring increased volumes of hard coking coal as well as iron ore to meet its plan of raising hot metal production from the current level of 13 million tonnes to about 20 million tonnes by 2011-12. The strategic alliance with BHPB is part of SAIL’s effort to not only secure long-term supplies of high quality coking coal but also reinforce its own strengths in the area of iron ore mining.
SAIL and BHPB have agreed to jointly finalise the investment plans relating to development of new iron ore mines in India as well as overseas coking coal mines. Before finalising mining and project plans, both the companies would undertake detailed studies, including due diligence, review of the assets, feasibility studies, etc.
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