New Delhi: Power and steel company Monnet Ispat & Energy Ltd (MIEL) is expecting to buy coal and manganese ore assets in Mozambique, South Africa and Botswana with a $100 million budget, executive vice chairman and managing director Sandeep Jajodia, said on Thursday.
“We are going to buy one or two assets overseas depending on the size and reserves,” Jajodia told reporters. “We are looking at four-five proposals and we are keeping our fingers crossed. Something might click this financial year.”
In the last financial year, a Monnet Ispat unit purchased Indonesian coal company PT Sarwa Sembada Karya Bumi for $24 million with 65mt of thermal coal reserves for captive and commercial use.
“We have been happy with this acquisition, but the hunger for more coal is there,” Jajodia said. “Coal is going to be an important area for us.”
MIEL through its subsidiary is building merchant power plants and is currently setting up a 1,050 MW power plant in Angul.
Several Indian companies have been buying mines overseas to secure raw materials for their plants with mining in India facing social and environmental constraints.
Analysts have said many asset purchases overseas are risky as some of the blocks are not developed yet highly priced. Besides, the policies of the host countries face the prospect of being changed.
Jajodia agreed with the risks listed by the analysts but said the overseas assets were still attractive, owing to the severe shortage of minerals in the local market.
“South Africa and Indonesia have billions of resources. They don’t need that much of it. They would rather make some money out of it,” he said.
Regarding the high valuations of the overseas assets, he said resources like coal were comparable to crude oil, which could be bullish in future.
The company made a cash profit of Rs 96.11 crore in the January-March quarter, up slightly from Rs 94.48 crore in the year earlier.
Business was hit by the drop in power tariffs and volatility in steel prices, a company release said.
In the current year, steel and power prices were expected to be stable and result in better price realizations, Jajodia said.