AGO (ASX) nmdc talks with japan's kobe steel bid ago

NMDC in talks with Japan's Kobe Steel to bid for Atlas Iron

Raj Kumar Sahu, July 14, 2010 (New Delhi)
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State owned National Mineral Development Corporation or NMDCs quest to beef up its iron ore portfolio has taken a hit.

It is because NMDCs partner, Saudi Arabia's ABS Consulting has backed out from the consortium in its bid to acquire Australian iron ore company Atlas Iron.

As part of its overseas expansion plans, NMDC along with Saudi-based ABS Consulting and ASX listed Boulder Steel Ltd have submitted a $230-million non-binding bid to buy 70 per cent stake in Perth-based Atlas Iron.

The company is now putting up a brave face.

It is not NMDC who backtracked but ABS, who only invited NMDC to join hands, has decided to not to go ahead with the deal. And anyway NMDC would have got only a minority stake of only 15 per cent with ABS providing sweat equity of 5 per cent and 10 per cent was to be bought by NMDC, said Rana Som, CMD of NMDC.

So is there a plan B? Sources say that NMDC is looking for a new partner and though the management refused to divulge any name.

Sources indicate NMDC is in talks with Japan's Kobe Steel to bid for Atlas Iron and the two companies are now looking for acquiring majority stake in the Atlas Iron.

Sources also reveal that the Atlas Iron deal may be worth $160-170 million. But analysts believe seeing the reserves of about two billion tones available with Atlas Iron, it is a good deal.

NMDC refused to confirm the alliance with Kobe steel but hinted that all hope is not lost.

We don't want to go for any acquisition just for the sake of acquisition. If it is not worth we would not go. In recent past we have rejected many deals and though the Atlas Iron assets are good here too we cant go for overpricing, said Som.

The jury is out on whether to stop iron ore exports for giving raw material security to steel makers, but NMDC now plans to import iron ore from acquired assets overseas.

And the 2 billion tonnes reserves with Atlas iron is equivalent to SAIL's Chiria mines in Jharkhand which is enough to supply iron ore for about 50-60 years to a 10 million tons steel plant like the one operated by JSW Steel.

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