RINL proses merger with NMDC

Mumbai: Rashtriya Ispat Nigam Ltd (RINL), which owns the Vizag Steel plant, and National Mineral Development Corporation (NMDC), the country's largest mining company, are exploring a possible merger, with an eye on iron ore security.

"NMDC has iron ore and wants to foray into steel-making, while RINL does not have iron ore, but has expertise in steel-making. If the two come together it make greater sense," P K Bishnoi, chairman-cum-managing director of RINL, said, adding the NMDC board is looking at the proposal.

The proposal is at a very early stage, but a grand merger appears likely in the emerging scenario. The move by the two central public sector companies also seems to have the blessings of the central government.

RINL, which lacks access to captive iron ore mines, is desperate to secure its key raw material base. With plans to raise steel-making capacity to 16 million tonnes and beyond, the company's move has acquired added urgency.

NMDC, a Navratna company, supplies iron ore to domestic steel companies and even exports. It has also been planning to set up a steel plant in Chhattisgarh.

Last year, it had signed a three-way memorandum of understanding with RINL and the Steel Authority of India (SAIL) for this purpose. However, SAIL and RINL have subsequently withdrawn from the proposed venture.

The merger, if it comes through, is likely to have very little impact on NMDC's contractual obligations and merchant sales to steel companies, he said.

Moreover, exports of Bailadila ore, which is supplied to Japanese steel mills, have also been in decline in recent years, given rising demand from the domestic environment and the clamour for curbing iron ore exports.

NMDC, he said, had a proven reserve of more than a billion tonnes of iron ore and produced around 27 million tonnes annually. Since both companies are based out of Andhra Pradesh, sources say, the proposal is also likely to receive much-needed local political support.