Mumbai: India’s top iron ore miner NMDC Ltd. is looking to sell a stake of at least 49% in its Chhattisgarh steel plant, as it prepares to begin production at the 3-million-ton facility in three to six months, according to a company official.

The state-run miner is seeking a partner for its first steel venture, which has been eight years in development, to infuse working capital and provide steel-making expertise, the official said on Monday, declining to be named in line with company policy. NMDC has appointed an adviser to help find an investor, the official said.

The government has urged the company to accelerate its plans to begin production at the plant, the official said, as India’s mills ramp up output to record levels to fuel Prime Minister Narendra Modi’s infrastructure boom. The nation plans to triple its steel-making capacity, which would catapult it above Japan as the world’s second-biggest producer, and help revive the fortunes of an industry mired in debt.

NMDC didn’t respond to emails and a phone call to the chairman’s office seeking comment. The shares extended gains to as much as 2.9% at Rs124 in Mumbai, the biggest intraday jump in more than two weeks, even as the benchmark S&P BSE Sensex Index traded little changed.

Stiff competition

The Hyderabad-based miner will face stiff competition for investment amid a clean-up of stressed assets led by the central bank that has left a number of highly indebted steelmakers on the block, including Essar Steel India Ltd., which is among the top five producers in India. The nation churned out just over 100 million tons of steel in the year to March.

Two of India’s top mills, JSW Steel Ltd. and Tata Steel Ltd.,. have already expressed interest in snapping up steel companies that are now in insolvency proceedings, a list that also includes Bhushan Steel Ltd. and Monnet Ispat & Energy Ltd.

The total investment cost of NMDC’s steel plant is estimated at Rs18,000 crore ($2.8 billion), of which the Indian miner has already spent about Rs10,000 crore, the official said. The company is looking to borrow from domestic debt markets for the remaining cash, the official said.

NMDC is also trying to secure mining leases from the state governments in Chhattisgarh and neighbouring Jharkhand for coking coal and iron ore for the plant, the official said. The miner plans to produce 35 million metric tons of iron ore in the current year through March, compared to 34 million tons last year, the official said. Bloomberg