Bhubaneswar, December 24: Tata Steel has decided to acquire an Odisha-based iron ore beneficiation and pellet plant for an enterprise value of Rs 900 crore to secure raw material for its Kalinganagar operations. Tata Steel executed definitive agreements to acquire a 100 per cent equity stake in Brahmani River Pellets Ltd (BRPL).
The acquisition is going to cost Tata Steel over Rs 900 cr. Tata Steel executed definitive agreements to acquire a 100 per cent equity stake in Brahmani River Pellets Ltd (BRPL), which owns the plants, from Aryan Mining and Trading Corporation and other companies of Moorgate Industries Group. It plans to close the deal within four months.
BRPL was originally set up by UK metal group Stemcor and was subsequently demerged as part of a UK court-approved restructuring in 2015 to form Moorgate Industries Group.
Moorgate held a significant stake in BRPL through its shareholding in Aryan Mining and Trading. The four-million-tonne-per-annum pellet plant is located in Kalinganagar Industrial Estate in Jajpur close to the Tata plant. The 4.7mtpa iron ore beneficiation plant is in Barbil, the iron ore belt of Odisha. They are connected through a 220km underground slurry pipeline.
The transaction is subject to the completion of certain conditions, including regulatory approvals, Tata Steel said, adding that the acquisition will be funded through internal cash flows.
Koushik Chatterjee, group executive director and member of the Tata Steel board, said: "The location of the BRPL assets makes this very strategic to Tata Steel, especially to our Kalinganagar operations, and has significant operating synergies to make our Kalinganagar plant even more competitive.
"The iron ore from our captive mine in the Joda and Khondbond region will get transferred through the slurry pipeline and reduce freight costs significantly apart from the 4mtpa pellet plant and other infrastructure that will enhance the operating efficiency and reduce costs of blast furnace operations in Kalinganagar," Chatterjee said.
Building a similar facility would have required significant time and costs, he said. "This acquisition is very timely as we are looking to ramp up the capacity of phase 1 at Kalinganagar."