Manganese Ore India Ltd (Moil) and mining giant BHP Billiton Plc. plan to make a joint investment of $40-50 million (Rs162-202.5 crore) to set up a ferro alloy plant in South Africa and are scouting for a mine.
A concept paper is being prepared and the proposal still needs formal approval by the companies’ boards, said a Moil official, who did not want to be named since the deal is not final. Moil’s board meets in the second week of August.
Moil is India’s largest manganese ore producer and controls 65% of its ferro alloy production. Ferro alloy, an alloy of iron, is used in steel-making.
A letter of intent has been signed with Richards Bay development zone to set up the plant, according to a filing with the steel ministry.
BHP Billiton representatives in New Delhi did not return calls or emails for comment.
The joint venture aims to tap South Africa’s cheap power as well as abundant ore supply, in which Samancor Manganese Pty. Ltd, an arm of BHP Billiton, has large interests. About 80% of the world’s manganese reserves are in the African nation and power costs 40-50% less than in India.
Most of the ferro alloy products will be shipped back to India to meet the growing requirements of the steel industry. India’s steel industry is expected to meet a shortfall of 2 million tonnes (mt) by 2012 as demand intensifies, amid a spate of infrastructure and construction projects.
According to Moil’s website, about 1.9mt of ferro alloy will be needed to produce 110mt of steel by 2020.
Moil also declared its April-July results on Monday, posting a revenue of Rs161.7 crore, a 40% jump over the same period last year. It reported sales of 315,000 tonnes for the quarter. Profit after tax grew 70% to Rs29.3 crore, as the company streamlines its mining activities and diversifes.
With reserves of 62mt, Moil operates 10 mines in Maharashtra and Madhya Pradesh.
The company is investing Rs25 crore in machinery to intensify underground mining. The company also has tied up with Bateman International Projects BV of South Africa for technology and mineral processing.