A $12.2 million joint venture (JV) agreement with prominent Andhra Pradesh company Vijay Group has positioned Perth-based NSL Consolidated to rapidly expand its Indian iron ore operations.
“In previous calendar years, the Vijay Group’s extensive iron ore and coal mining contracting business has been operating at a 70 million tonne per annum rate,” NSL managing director Cedric Goode said.
“Their extensive equipment and operating/management expertise will be integrated into the JV as quickly as possible, which has significant strategic benefit to NSL,” he said. “NSL and Vijay are targeting the JV to be operating at an estimated 1.5 million tonnes per annum of saleable iron ore within two years, with potential to increase this target further in four to five years.”
Under the agreement, Vijay has agreed to inject about US$12.2 million into NSL’s Indian business (NSLMR) in multiple staged tranches, with the first share due by 6 April.
In return, Vijay will earn an initial 40 per cent interest in the company and a final 9 per cent equity interest if it delivers two further operating iron mines.
The joint venture will focus on the development and expansion of existing mining assets, as well as future acquisitions.
NSL said the first tranche of funds would be used to complete the purchase, construction and commissioning of the Phase 2 wet beneficiation plant at its Kurnool operations.
The WA company gained recognition in 2012 as a maiden iron ore producer in the southeast Indian state of Andhra Pradesh; the only foreign iron ore company to own and operate in India’s enormous domestic and international iron ore market.
“During April-November 2012, the Indian steel industry achieved a growth rate of 5.36 per cent, the highest in the world,” Mr Goode said.
“The existing domestic production of approximately 74 million tonnes per annum is expected to grow to 200 million tonnes per annum by 2020.”