Sunday, 30 Jan 2011
ET reported that South Korean steelmaker POSCO has taken a 24% equity stake in an arm of India's largest ferrochrome maker IMFA.
POSCO has paid USD 5 million for the stake in a specially created vehicle that has ferrochrome operations.
The annual production of the joint venture furnace located within IMFA's Choudwar unit in Orissa, is 35,000 tonnes.
Under the agreement with IMFA, POSCO will purchase the low cost ferrochrome from the new furnace for 25 years.
Mr Subhrakant Panda MD of MFA said that "It's a three stage transaction where we first transferred a new ferrochrome furnace to a subsidiary, with POSCO taking 24% in the subsidiary. Subsequently, the subsidiary leased the furnace back to IMFA."
The listed parent IMFA, on the other hand, owns chrome ore, coal mines and power generation businesses, which would have commanded a steeper valuation. IMFA operates five furnaces with a total capacity of 150,000 tonnes. POSCO annually buys 480,000 tonnes of ferrochrome and has a similar long term supply contract to buy 35,000 tonne of ferrochrome from South Africa.(sourced:economictimes.com)
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