Mumbai: In a bid to ensure raw material supplies for its planned steel and power projects, Essar Group is looking for iron ore and coal assets in Africa and South America for a possible acquisition.
“Our merger and acquisition team has been mandated to look for iron ore and coal assets both abroad and in India,” a company official said.
Essar is scouting for raw material assets in Africa and South America, he said, adding that it is, however, not in the race to acquire United Coal Co., a US-based firm that is now on the block.
Since acquiring raw material assets have become costlier and a number of firms have been looking for assets, he said it may take a little while before getting into negotiations.
Increased demand for coal and iron ore has caused a surge in their prices. Since 2004, iron ore prices have gone up by 400% and coaking coal prices by 500%.
Essar has a 4.6 million tonnes per annum (mtpa) steel-making unit at Hazira in Gujarat. The plant does not require coal since it produces the commodity using arc furnaces. The group is expanding its capacity to about 10mtpa and plans to use a combination of blast furnace, corus and arc furnace technologies. The first two methods require coal.