Thu, Jun23 2011
Hyderabad: Iron ore producer NMDC may pull out of the joint venture to develop iron ore mines of global steel giant ArcelorMittal in Senegal finding it unviable to invest heavy amounts on evacuation infrastructure.
“While NMDC wants to begin the mining works on a small scale and invest on evacuation infrastructure at a later stage in phases, the Senegal government is insisting on developing the infrastructure as a condition to begin mining works,” said a person close to the development, on the condition of anonymity.
Further, the same person said, “There has been no positive response from the Senegal government for nearly two years for the request of NMDC to allow small scale mining first and allow developing infrastructure later. The issue is yet to be resolved.”
NMDC had early last year entered into a joint venture agreement with ArcelorMittal to develop the Faleme iron ore mines in the West African country for which the steel giant had entered into a pact with the Senegal government in 2007. The mines were estimated to have iron ore reserves of around 750 million tonnes (mt) and the joint business plan of NMDC and ArcelorMittal was to produce 15-25 mt of iron ore a year at peak operations.
While NMDC and ArcelorMittal had agreed to invest around $1 billion each towards developing the mines, the project also required infrastructure for evacuating the iron ore production that includes a port and a 750 km railway track, which involved further investment of around Rs 10,000 crore, or $2.23 billion.
As the Senegal government was not responding positively on the issue of evacuation infrastructure, NMDC had last year asked the Indian government to help it by creating a fund similar to South Africa Fund to develop the port and railway infrastructure. However, the Indian government did not respond favourably to the repeated requests of NMDC till date.
When contacted, NMDC chairman Rana Som said, “There is no progress in the project and it is now in hibernation. The government of Senegal has to give its consent to the model of development.”
On the large amounts of around Rs 10,000 crore required for developing the port and railway infrastructure for iron ore evacuation, Som said, “It is also not the world’s best project. It is just a modest project and we are not interested in spending such huge amount of money on the infrastructure.”
Som said, “Of course, there is no progress for the past two years but we are still in discussions and prefer to wait for the final outcome.”
Further, he said NMDC is going to shortly take up the matter with ArcelorMittal, who is also waiting for the outcome. “We are always there for being a partner of ArcelorMittal but at the same time we don’t want to go for a commitment of more than a $1 billion investment in the project, at least for now. Committing such large amounts could be difficult now.”(By MyDigitalfc)
Hyderabad: Iron ore producer NMDC may pull out of the joint venture to develop iron ore mines of global steel giant ArcelorMittal in Senegal finding it unviable to invest heavy amounts on evacuation infrastructure.
“While NMDC wants to begin the mining works on a small scale and invest on evacuation infrastructure at a later stage in phases, the Senegal government is insisting on developing the infrastructure as a condition to begin mining works,” said a person close to the development, on the condition of anonymity.
Further, the same person said, “There has been no positive response from the Senegal government for nearly two years for the request of NMDC to allow small scale mining first and allow developing infrastructure later. The issue is yet to be resolved.”
NMDC had early last year entered into a joint venture agreement with ArcelorMittal to develop the Faleme iron ore mines in the West African country for which the steel giant had entered into a pact with the Senegal government in 2007. The mines were estimated to have iron ore reserves of around 750 million tonnes (mt) and the joint business plan of NMDC and ArcelorMittal was to produce 15-25 mt of iron ore a year at peak operations.
While NMDC and ArcelorMittal had agreed to invest around $1 billion each towards developing the mines, the project also required infrastructure for evacuating the iron ore production that includes a port and a 750 km railway track, which involved further investment of around Rs 10,000 crore, or $2.23 billion.
As the Senegal government was not responding positively on the issue of evacuation infrastructure, NMDC had last year asked the Indian government to help it by creating a fund similar to South Africa Fund to develop the port and railway infrastructure. However, the Indian government did not respond favourably to the repeated requests of NMDC till date.
When contacted, NMDC chairman Rana Som said, “There is no progress in the project and it is now in hibernation. The government of Senegal has to give its consent to the model of development.”
On the large amounts of around Rs 10,000 crore required for developing the port and railway infrastructure for iron ore evacuation, Som said, “It is also not the world’s best project. It is just a modest project and we are not interested in spending such huge amount of money on the infrastructure.”
Som said, “Of course, there is no progress for the past two years but we are still in discussions and prefer to wait for the final outcome.”
Further, he said NMDC is going to shortly take up the matter with ArcelorMittal, who is also waiting for the outcome. “We are always there for being a partner of ArcelorMittal but at the same time we don’t want to go for a commitment of more than a $1 billion investment in the project, at least for now. Committing such large amounts could be difficult now.”(By MyDigitalfc)
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