Tata Steel to buy iron ore assets of erstwhile Stemcor
Reuters | Photo Credit: Reuters

Tata Steel Ltd said on Friday it has signed a definitive pact to acquire Brahmani River Pellets Ltd, a supplier of iron ore pellets, for Rs 900 crore ($132 million) including debt.

The acquisition will help Tata Steel meet its ore requirements and improve the feed mix for its steel plants at Kalinganagar in Odisha and at Jamshedpur in Jharkhand, the company said in a stock-exchange filing.

Tata Steel is buying Brahmani from Kolkata-based Aryan Mining and Trading Corp and Moorgate Industries Group, which had set up the iron ore company in 2006.

Moorgate was formed after the demerger of the Stemcor Group of companies as part of a restructuring approved by a UK court in 2015.

Stemcor was one of the world's largest steel traders and one of Britain’s largest private companies before it underwent a restructuring after failing to repay debt it had taken on to buy iron ore assets in India.

Brahmani has a pellet plant of 4 million tonnes a year capacity and an iron ore beneficiation plant of 4.7 million tonnes capacity in Odisha. It also has a 220-km slurry pipeline that connects the two plants.

The all-cash deal is likely to be closed within four months. The final deal value will include closing adjustments, the steelmaker said.

The Bhubaneswar, Odisha-based ore supplier posted revenue of Rs 452 crore in 2015-16, down sharply from Rs 1,068 crore the previous year.

The proposed acquisition comes at a time when Tata Group, of which Tata Steel is a part, is in the middle of a controversy related to the abrupt sacking of Cyrus Mistry as the chairman of group holding company Tata Sons Ltd in October.

Mistry resigned from all listed Tata Group companies, including Tata Steel, earlier this week and took the battle against Tata Sons and Ratan Tata to the National Company Law Tribunal.

Like this report? Sign up for our daily newsletter to get our top reports.

Leave Your Comment(s)