SAIL to invest $12 bn in four overseas plants

Steel Authority Of India Ltd. | Steel & Iron Products | Metals & Mining | BSE: 500113 | NSE: SAIL

22 Feb 2011 Evaluate

Steel Authority of India (SAIL) plans four three-mtpa manufacturing facilities, one each in Indonesia, Mongolia, South Africa and Oman, at a cumulative investment of $12 billion. The company has already signed the memorandum of understanding with the Indonesian government and is in constant dialogue with the governments in Mongolia, South Africa and Oman for setting up the three-mtpa steel plant.
The proposed investments are likely to be financed in an 80:20 debt-equity ratio and the state-owned firm might rope in a strategic investor to part-finance the equity part. It would take three years for a plant to go on stream from the day of signing a definitive agreement. The plants would basically cater to the domestic requirement of steel in each country.
Apart from expanding its operations beyond the country’s borders, SAIL intends to solicit the allocation of raw material assets in these countries in lieu of setting up the plants. It will use these assets to meet the demand of the proposed plants, as well as existing and future projects in India. The Maharatna company has already embarked on a Rs 70,000-crore capacity expansion plan to enhance its domestic production capacity from the current from 14.35 mtpa to 23.46 mtpa by 2012-13. Out of the total capex, Rs 10,000 crore has been earmarked for the development of mines. SAIL also plans to enhance its steel-making capacity to 60 mtpa by 2020.