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JSW Bengal plans IPO to fund plant

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By OUR CORRESPONDENT in Mumbai
  • Published 28.01.08
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Mumbai, Jan. 28: JSW Bengal Steel, the Jindal company that will set up a plant in Bengal, will come out with an initial public offering (IPO) to part-finance the project.

The steel plant is estimated to cost Rs 15,000 crore and will be financed through an equity of Rs 5,000 crore and a debt of Rs 10,000 crore.

Of the Rs 5,000- crore equity, parent company JSW Steel will invest between Rs 1,000-1,500 crore and the balance will be raised through the IPO.

In the first phase, a capacity of six million tonnes will be set up and this will be raised to 10 million tonnes in phases.

A board meeting of JSW Steel today approved the six-million-tonne integrated plant in the first phase and the investment in the project. Iron ore will be supplied from a 1,200-hectare mine in Chile.

The company is finalising another joint venture to feed the Bengal plant.

“With this, the feasibility of the Bengal project becomes good,” said JSW Steel managing director Sajjan Jindal.

JSW Steel also wants to build a deep sea port off Sagar Island in Bengal to receive the ore from Chile in large bulk carriers.

“We want logistics support for our steel plant in Bengal. According to the suggestion of the Bengal government, we’ve decided to undertake a pre-feasibility study for the proposed deep sea port,” Jindal added.

The Bengal project, to be implemented within three years, is expected to be commissioned by June 2011.

To operate a six-million tonne steel plant, the company will need around 11 million tonnes of iron ore and 5.5 million tonnes of coal.

The company expects to mine around four million tonnes of ore from Chile by 2010 and about 20 million tonnes by 2011. For supply of coking coal, the company has leased mines in Mozambique and is negotiating for mines in Canada and Australia.