NMDC plans to acquire stake in two overseas assets

In this financial year, the comany is eyeing an acquisition in Brazil and the other in Mozambique

Press Trust of India / New Delhi Apr 30, 2012,
State-owned iron ore miner NMDC by July is looking to acquire stake in two assets abroad including a 26% stake in Brazilian iron ore company Amplus for around $10-15 million.

"In this financial year, we are finalising two acquisitions. One is in Brazil that has a resources of one billion tonnes, for which the due diligence is almost over and other is in Mozambique, where we are getting 15% stake," NMDC Chairman N K Nanda told reporters here on the sidelines of CII steel summit.

The Mozambique asset belongs to Nagpur-based Sunflag Iron and Steel Company Ltd and NMDC already has a memorandum of understanding to acquire 15% stake in former's iron ore mines in the African nation, he said.

Besides, the iron ore miner will finalise its Brazilian acquisition in its Board meeting next month, Nanda said.

"By July, both agreements will be signed. For Brazilian property, due diligence is over and we will finalise it in next Board meeting, to be held in May," he said.

For the deal with Brazilian firm Amplus, NMDC has signed an exclusivity agreement (memorandum of understanding). The MoU seeks investment by the Indian iron ore miner in exploration of Amplus' iron ore reserves and provide its technical expertise.

Against this, NMDC has been offered 26% stake and would cost around$10-15 million, he had said earlier.

NMDC has the option to increase its stake up to 50% in Brazilian company.

The company has kept a budget of Rs 1,200 crore for overseas acquisitions, the NMDC Chairman further said, adding that the company's focus is on low cost acquisitions.

According to industry sources, NMDC has appointed IMC Group Consulting Ltd for doing due-diligence of Amplus' iron ore reserve.

Last year, the iron ore miner had made its first overseas acquisition by acquiring 50% stake in Australian firm Legacy Iron Ore for about Rs 90 crore.

Moreover, it has also started due diligence of a coking coal mine in Russia, while the due-diligence of its proposed phosphate mines acquisition in Australia is underway.