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Mesco chases coal assets in US, Australia

Private steel maker Mesco Steel is scouting for assets like precious minerals, iron ore and mainly coal to ensure raw material availability for its steel plants under capacity expansion. "We are looking at acquiring assets abroad. We are eyeing assets like precious minerals, iron ore and coal as prices are low at this moment. We are exploring such opportunities in Australia, America, Vietnam and Cambodia," Mesco Steel CMD Rita Singh told agency. Singh said the company is serious on coal assets, mainly coking coal, to feed its steel plants as not only "market is down", but the company is also looking to acquire some distressed steel mills in Odisha. "We are currently assessing proposals for 6-7 such properties in the state," she said. The focus, Singh said, is on acquiring coking coal blocks in the range of 100-150 million tonnes (MT) overseas to feed its current as well as proposed acquisition of mills, if any. She said due diligence is under way "for several opportunities in various geographies, including South-East Asia and Australia which the company has zeroed in on, but nothing is final at this moment and the takeover would depend on viability of the venture, besides logistics issues". Mesco Steel has already announced its plan to take its capacity to 4.5 million tonnes (MT) in the next 3-5 years with an investment of Rs 13,500 crore. The company looks to raise capacity of MISL steel plant at Jajpur, Odisha, to 3.5 MTPA (million tonne per annum) from the existing 1.2 MTPA and working on plans to achieve 1 MTPA capacity at the recently acquired Maithan Ispat. Mesco Steel, through its arm Mideast Integrated Steels (MISL), had set up a steel plant of 1.2 MT per annum (MTPA) capacity in Kalinga Nagar, Odisha. Also, in April this year, it acquired Maithan Ispat for Rs 1,160 crore in a mix of debt and equity deal. Post-acquisition of Maithan Ispat, Mesco Steel has added capabilities to produce sponge iron, billets and heavy beams. The USD 4-billion group has also recently signed an agreement with South Korean steel giant POSCO to shift the latter's patented Finex plant to India. Still stuck with its 12 MT plant in Odisha, POSCO is likely to shift its first Finex facility to Kalinganagar in the state from Pohang, South Korea, after a definitive pact with home-grown steelmaker Mesco scheduled for August. "We have already signed an initial pact with POSCO, for Mesco also operates an iron ore mine in Barbil region and has another (iron ore) mining on lease at Malangtoli in Odisha".

source: http://www.moneycontrol.com