Jindal to expand steel output, buy mines in West Africa

LONDON Fri May 24, 2013 10:55pm IST

A labourer works inside an iron factory on the outskirts of Jammu October 1, 2012. REUTERS/Mukesh Gupta/Files

A labourer works inside an iron factory on the outskirts of Jammu October 1, 2012.

Credit: Reuters/Mukesh Gupta/Files

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LONDON (Reuters) - Mid-sized producer Jindal Steel and Power (JNSP.NS) hopes to quadruple steel output by 2016 to cash in on an infrastructure boom in the world's second most populous country and is also in talks to buy mining assets in West Africa.

V. R. Sharma, head of steel operations at one of India's largest producers, told Reuters he was targeting a rise in output to 16 million tonnes per year by 2016 from 4 million now thanks to new steelmaking plants in India and Oman.

This would make them one of the top-30 largest producers worldwide, based on current figures, and compares with the 88 million tonnes churned out by sector leader ArcelorMittal in 2012.

The steel industry worldwide has taken a hammering since 2008, and steel prices have been weakening since the beginning of the year .IOLA-CNI=SI. Jindal's consolidated net profit fell 35 percent to 7.6 billion Indian rupees in the first three months of 2013.

Sharma said that for Indian producers the global weakness would be countered by the $1 trillion in infrastructure investment planned by the Indian government over the next four years.

"The whole world is in a turmoil but I think India needs not to worry because whatever we produce is sellable," Sharma said.

"There has definitely been pressure on profits but there are profits. Still Indian companies are not in red, they are in black so I think things will pick up in the next two or three quarters...with the infrastructure projects, which the government has already declared, things must look better."

Steel consumption in India rose by 2.5 percent in 2012 but growth is expected to accelerate, to 5.9 percent in 2013 and to 7.0 percent in 2014, according to the World Steel Association, as monetary easing supports investment.

Jindal, which has an annual turnover of $3.5 billion, pulled out of talks to invest in a Cameroon mine owned by iron ore producer Afferro Mining Inc <AFF.V AFFA.L> in February, but it is still looking to invest in mining in Africa.

It is looking at pelletising in Mauritania and is in talks to buy mining assets in Liberia and Namibia, Sharma said.

"We are looking for more mines in West Africa and I am sure we should be concluding something in the next 3-4 months time. The Affero deal didn't work but we are now working with another company," he said.

Jindal is also planning construction of a power plant in Botswana and in Mozambique, where it already owns coal assets.

(Editing by Patrick Graham)

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