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Jindal Steel & Power Buying Oman's Shadeed For $464M

M&A

May 20, 2010, 11:48 PM IST

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Jindal Steel & Power Buying Oman's Shadeed For $464M

BY PALLAVI S.

This deal, which will allow JSPL to foray into Middle-East, is the firm's third large overseas move.
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 Dhabis 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. OMAN - Jindal Steel & Power Mauritius Ltd of Mauritius, a wholly owned
subsidiary of Jindal Steel & Power Ltd, acquired Shadeed Iron & Steel Co LLC, a Sohar-based manufacturer of steel and iron products, from Al Ghaith Holdings, for OMR ###.### mil (USD ... SOUTH AFRICA # Jindal Steel & Power Ltd of India, a unit of JSL Ltd, acquired Mpumalanga- based Kiepersol Thermal Coal Mine. Terms were not disclosed. MONGOLIA - Jindal Steel & Power (Mauritius) Ltd, a unit of Jindal Steel & Power Ltd, acquired the entire share capital of Rolling Hills Resources LLC, a uranium mining company and a ##### joint venture between Bluerock Resources Ltd and Uranerz Energy INDIA - Jindal Steel & Power Ltd acquired a ##% stake in Globeleq Singapore Pte Ltd, a construction company.

Having established itself in India, Jindal Steel & Power Limited is now reaching out to the global market with a range of investment strategies. The company continues to capitalize on opportunities in high growth markets, expanding its core areas and diversifying into new businesses. With the development rights for 20 billion tonne of El Mutun Iron Ore Reserves in Bolivia, JSPL plans to invest US$ 2.1 billion in the next few years on mining and on setting up an integrated

1.7 MTPA Steel Plant, a 6 MTPA Sponge Iron plant, a 10 MTPA Iron Ore Pellet Plant and 450 MW power plant in the South American nation. This will be the largest investment by an Indian company in South America and also the largest investment by a foreign company in a single project in Bolivia. The project is expected to generate gainful employment for thousands of people while also catalyzing economic growth for the Republic of Bolivia. The company has already secured land to start the project and expects to start exporting iron ore in early 2011. Commercial dispatch of iron ore is likely to commence soon in Bolivia. The company will start construction soon on the DRI, pelletisation and steel project. These are expected to become operational in the next 3-4 years. Jindal Steel Bolivia (JSB), a subsidiary of Jindal Steel and Power Limited (JSPL), reached a historical landmark as the company commenced dispatch of iron ore from its El-Mutun mines in Puerto Aguirre, a river port in Bolivia. Iron ore from here will be transported to different destinations through the Parana Paraguay Hidrovia riverway. This is for the first time that iron ore from JSB will be exported. JSB will be exporting iron ore, mainly to China, Middle East, European and South American countries. A joint venture agreement was signed between Jindal Steel Bolivia S.A (JSB), a subsidiary of the company and Empresa Siderurgica Del Mutun (ESM), a Government of Bolivia entity and is valid for 40 years. The Bolivia project is anticipated to generate gainful employment for thousands of people and catalyze economic growth of the Republic of Bolivia. Investment in Bolivia US $ 2.1 billion in next 8 years
Pellet Plant: 10 MTPA Sponge Iron Plant: 6 MTPA Steel Plant: 1.7 MTPA Power Plant: 450 MW

CSR Activities at JSB JSB has taken up several CSR initiatives in the surrounding mining areas. Some of the areas where the company has actively involved itself include: Health
JSB has formed several medical and paramedical teams carrying out comprehensive medical checkups of locals including distribution of free medicines. The teams work in harmony with the hospitals and medical institutions of the area and offer assistance to people free of cost.

Community Development Programs

Around 6,200 pets and street animals vaccinated. Over 200 ceiling fans have been distributed in various schools of Puerto Suarez and Puerto Quijarro. Donation for development of sports and games in the German Busch province area.

Mosquito control and eradication measures (fumigation) have been taken twice-a-year in several areas of Puerto Suarez, Puerto Quijarro and El Carmen Rivero Torrez; reaching 35,000 inhabitants.

Environmental Protection Measures for Employees

All JSB employees are made to follow mining regulations for health and safety purposes. Permanent training is provided to employees in order to follow environmental protection norms as well as in CSR activities. Impact of air, water, noise and other pollution levels on the environment is monitored on a monthly basis. Dust removal mechanism has been installed at machinery. Periodic irrigation of roads, plant access and platforms for dust suppression.

GTL International S.A. Jindal Steel and Power Ltd. through its subsidiary in Mauritius has acquired a substantial stake in a local oil & gas company, GTL International S.A. The company is currently engaged in the development of PALMAR FIELD, having estimated recoverable reserve of 24.7 BCF Gas and 0.87 MMBBL of condensate. M/s GTLI has already completed drilling of one well having 3,500 m in depth and expects to commence the supply of 6 mmcfd of Natural Gas and 120 bbl of Condensate shortly. GTLI has also formed a mixed partnership with the Bolivian State company YPFB, named YPFB GTLI SAM, for exploring 4 blocks (Itacaray, Rio Beni, Almendro and Cupesito). Jindal Power Limited (JPL), a company promoted by Jindal Steel & Power Ltd. (JSPL), has been contributing significantly to the growing needs of power in the country. JPL has set up Indias first mega power project in the private sector at Tamnar, Raigarh, Chhattisgarh. The company has invested approx. Rs. 4310 crore for setting up a 1000 MW thermal power plant which commenced commercial operation of the 1st unit in December 2007 and all four units (250 MW each) within a short span of nine months. The fuel supply of the plant is met through its captive coal mines. About 6.9 km conveyer pipeline has been set up for transportation of coal between the mines and the plant. The company has constructed a 258 km, 400 KV Double Circuit transmission line from the plant to the PGCIL sub-station at Raipur through which power can be sold anywhere in India. 25 kms away from the project-site, an 18 m high dam over the river Kurket has been built, to meet the plant's water requirements. Jindal Power Limited plans to add a 2400 MW Thermal Power plant to the existing capacity of the 1000 MW thermal power plant at Tamnar at an estimated cost of Rs 13,410 crore. The company has already placed an order with Bharat Heavy Electricals Limited (BHEL) for supply, erection and commissioning of 4X600 MW Boiler Turbine Generation (BTG) package. The existing 1000 MW power plant was set up with four Turbine Generators of 250 MW each, also supplied by BHEL. JPL has also signed a MoU with the State Government of Jharkhand to set up a 2640 MW thermal power plant. In the Hydro sector, JPL has signed agreements for 6100 MW projects in Arunachal Pradesh in a joint venture with the Hydro Power Development Corporation of Arunachal Pradesh Limited (HPDCAPL) on a Build, Own, Operate and Transfer basis. Our vision is to establish a presence in other forms of power generation such as gas, wind, nuclear and solar with a focus on hydro and other forms of environment friendly renewable energy sources.