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| Jindal Steel & Power buys Canadian firm for Rs 650 cr Thu, 06 Sep 2012 00:40:00 +0530 |
| Business Standard economy Policy News Jindal Steel and Power (JSPL) has bought CIC Energy Corp of Canada for Rs 650 crore. In 2010, JSW Energy had offered Rs 2,500 crore for this company. CIC has coal mines in Botswana, Africa, with reserves of six billion tonnes. The deal was concluded through Jindal BVI Ltd (JBVI), a subsidiary of JSPL. JBVI and CIC will now be merged and delisted from the Canadian stock exchange in a month’s time. In 2010, JSW Energy tried to buy CIC Energy for Rs 2,500 crore. The deal, however, fell through as CIC failed to get the required approvals and renewals for mining from the Botswana government within the stipulated deadline Since then, CIC Energy has got all required approvals for the mine and power plant. Yet, JSPL managed to buy the company at nearly one-fourth of what JSW Energy had offered. Botswana is a landlocked country and JSPL will be spending close to Rs 550 crore in developing the mine. Sushil Maroo, director and group CFO, JSPL, said the company aimed to spend Rs 3,850 crore more to set up a 300 MW power plant in Botswana. Coal for this power plant will come from the mines owned by CIC. The coal production and setting up of the power plant will happen in two-three years. The deal will provide JSPL the opportunity to tap the highly lucrative and power deficient South African Development Community (SADC) countries. Maroo said the entire SADC region was connected through a common grid which gave the company an opportunity to serve other countries ,which are part of SADC, through power plants in Botswana. He said, “South Africa is power deficient and we are in talks with the government to set up a 1,200 MW power plant in Botswana to serve South Africa.” Even though JSPL has been present in Africa through various mining deals in SA and Mozambique, this particular deal gives it a strong foothold as it will be producing power in the region and serving the local market. The company has no plans to bring the coal to India at the moment but it did not rule out a possibility of this in the future if it is cost effective. The mines have an estimated reserve of six billion tonnes, out of which 2.4 billion tonnes have been proven. Maroo said the acquisition had been a part of the company’s strategy of acquiring coal mines abroad for self sufficiency. The company is betting on the huge power demand in Africa and aims to serve the continent from Botswana through the well connected grids. “There is free export and import of power in SADC,” the company said. Currently, SADC has a membership of 15 member states, namely; Angola, Botswana, Democratic Republic of Congo (DRC), Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Seychelles, South Africa, Swaziland, United Republic of Tanzania, Zambia and Zimbabwe. |
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