New Delhi: NMDC Ltd is to pay 18.89 million Australian dollars (around Rs 90 crore) for a 50% stake in Australia’s Legacy Iron Ore Ltd, the latter announced on Thursday, in what will help the Indian miner start its first iron ore venture overseas.
“The offer is designed to provide NMDC with an interest in Legacy,” Legacy said on its website. “The offer presents an opportunity to provide the company with substantial funding and working capital to continue to develop its various projects.”
NMDC, which did not say whether it will raise funds to pay for the stake, mines less than 25 million tonnes (mt) of iron ore a year but wants to step it up to 40 mt by 2014-15 for which it needs to look for overseas assets as it is difficult to set up new mines in India.
The company is looking at the US and Africa for new mines and is close to taking a decision to buy a substantial stake in Greystone Mineracao do Brasil in Bahia in Brazil.
On Wednesday, NMDC chairman and managing director Rana Som had said the final formalities for the Australian deal are expected to be sealed quickly. “After we formally become majority stakeholders, we can put our money in exploration,” Som had said. “It will take a couple of years before production can start.”
Western Australia-based Legacy, an exploration firm focused on iron ore and gold, was listed on the Australian Securities Exchange on 8 July 2008. Since then, it has had a number of iron ore, manganese and gold discoveries that are now undergoing drilling and resource definition.