Jindal steel to spend $300 million to develop new, existing mines in Africa

Johannesburg: Jindal Steel and Power, India's biggest producer of the alloy by market value, plans to spend $300 million in developing new and existing mines in Africa.

The move is part of the company's strategy to source coal assets abroad to meet raw material demand of its steel and power plants at home. Jindal Africa, the company's Africa subsidiary, would invest $250 million in developing a coalmine in Mozambique's coal-rich Moatize region, Ashish Kumar, CEO of Jindal Africa, told ET on the sidelines of an international mining meet.

He said the remaining funds would be used to expand the capacity of its mine in Piet Retief in South Africa's Mpumalanga province. Kumar said the Mozambique mine is expected to start operations this year, producing 1 million tonne of coal.

He said the company would raise its capacity to 10 mt over the next few years. The capacity of the South Africa mine would be raised from 0.8 mt to 1.3 mt by fiscal 2013, he said. The steel and power producer is expanding its footprint in Africa, a continent known for its rich and largely untapped mineral wealth.

Jindal Africa has so far acquired 30 prospecting licenses for coal, manganese , iron ore and diamonds in Tanzania, Zambia, Madagascar, Mozambique and South Africa. The group is also constructing rail and port infrastructure in Mozambique and has agreed to build a 2,600 MW thermal power plant in the country.

"We came into Africa only in 2008 and since then we have been investing in the projects," Kumar told Mining Indaba, a conference of mining companies from across the world. "It is only of late that we have decided to build our corporate brand presence across the continent ."

Jindal Africa was the first foreign company to secure a mining license in Mozambique. It was also the first to get into the difficult terrain south of Zambezi river. "Our presence there has opened up doors for many other investors to come into the region," said Manoj Gupta, country head of Jindal Africa.

"While we have made reasonable progress in Mozambique and South Africa, we are at an exploratory stage in Tanzania, Zambia and Madagascar. It will take us 2 to 3 years to take up mining there."