NMDC's sole foreign acquisition has hit a roadblock. A few shareholders in Australian company Legacy Iron Ore, acquired by NMDC in 2011, have sent it a notice, asking it to either fulfill the promises made during the acquisition, or leave.
Speaking to Business Standard, a source close to the development said shareholders with at least 10 per cent stake in Legacy Iron Ore have threatened they would seek an extraordinary general meeting to vote out the three NMDC representatives from the Legacy Iron board. These shareholders complained though NMDC had promised a host of targets, including a few related to the Australian miner's growth, it was silent on these.
Legacy Iron Ore is listed on the Australian stock exchange.
NMDC said, "Functioning of the Legacy board is independent of that of NMDC. Accordingly, it wouldn't be appropriate for NMDC to comment on the issues raised by you pertaining to Legacy."
In 2011, NMDC had bought 49.61 per cent stake in Legacy Iron Ore for $19 million. Since then, the shareholders argue, NMDC hasn't done anything for the company. During the acquisition, NMDC had said Legacy would be the used to strengthen NMDC's foothold in Australia, adding all acquisitions Down Under would be routed through Legacy Iron. NMDC also had plans to spin-off Legacy's gold and iron ore deposits into separate companies to enhance their value. However, this hasn't materialised so far.
Currently, Legacy Iron Ore is developing an iron ore project and exploring gold deposits and manganese ore.
On condition of anonymity, an NMDC official said the company was in the process of making a few acquisitions in Australia, through Legacy Iron.
"These things take time. We are sure the shareholders would understand this. We are doing everything to grow the company and increase our presence in Australia," he said.
NMDC holds 50 per cent stake in Legacy Iron. Its representatives on the company's board are N K Nanda, NMDC director (technical); S Thiagarajan, chief financial officer of the state-owned miner and Subimal Bose.
In the six-member Legacy Iron board, N K Nanda is non-executive chairman, while Thiagarajan and Bose are non-executive directors.
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