Jindal Steel & Power Ltd is acquiring Oman-based Shadeed Iron & Steel Co. LLC (Shadeed) for $464 million including the assumption of liabilities of up to $79 million. Shadeed is owned by Abu Dhabi’s Al Ghaith Holdings PJSC, and is installing 1.5 MTPA gas based Hot Briquetted Iron (HBI) plant at Sohar Industrial Port area of Oman.
JSPL, through its Mauritius subsidiary, is in the process of acquiring Shadeed and its assets including plant and machinery as per a disclosure issued on Thursday. As per earlier news reports, the sponge iron maker and power producer will fund the deal through a mix of debt and internal accruals. The company has already tied up with international banks for a loan of $400 million, it said in a statement.
Al Ghaith, a family-owned business house engaged in diverse areas such as oil and gas and real estate, had put the factory on the block due to cash crunch.
The key advantage for JSPL could be the vast gas reserves in the region that would make it cheaper to produce steel in the unit. The transaction will also provide an inroads in the Mid-East region for JSPL. The Naveen Jindal-led firm currently has an integrated plant producing coal-based sponge iron, rail tracks and captive power at Raigarh in Chhattisgarh.
This would be the third significant overseas move by JSPL. It had, four years ago, acquired the rights to mine a large chunk of El Mutun iron ore mines in Bolivia and last year snapped a coal mine in South Africa. JSPL expects that the Shadeed facility can be made operational in the next one year.
It says that there is a strong demand for steel in the Middle East and North African countries, with a supply shortfall estimated to be over 15 million tonne. “Shadeed is currently installing 1.5 MTPA gas based hot briquetted iron plat at Sohar, which will help meet the demand,” it added in the statement.
Earlier news reports had suggested that JSPL plans to export sponge iron from the Sohar facility to begin with but may construct a steel plant at the same location in the future.
JSPL is part of $12 billion diversified OP Jindal Group, and had a turnover of $2.5 billion. It has so far invested $30 billion in expanding its projects across steel, power and mining around the world including South America, Africa and Asia.