Sesa Goa Ltd. (SESA), India’s largest iron ore exporter, bought Bellary Steel & Alloys Ltd.’s plant and land assets for 2.2 billion rupees ($49 million), foraying into steelmaking after facing an overseas sales ban in one of its mining states.
The resources of the Bellary-based company, which is building a 500,000 metric ton plant and holds 700 acres of land in the southern state of Karnataka, were transferred today, Sesa Goa said in a Bombay Stock Exchange statement. Options are being considered to start the mill, the company said.
Sesa Goa faced hurdles in doubling its mining capacity to 50 million tons by March 2013 after Karnataka banned iron ore exports in July. The federal government also raised railway freight charges and increased export taxes to discourage shipments of the steelmaking ingredient and increase availability for local mills.
“We’ve been looking at setting up value-addition facilities, as desired by the state government, and this acquisition provides us with an excellent opportunity to leapfrog ahead in that direction,” Sesa Goa Managing Director P.K. Mukherjee said in the statement.
Sesa Goa shares rose as much as 1.7 percent to 263.50 rupees and traded at 262.30 rupees as of 12:41 p.m. in Mumbai today. The benchmark Sensitive Index of the Bombay Stock Exchange rose 0.9 percent.
To contact the reporter on this story: Abhishek Shanker in Mumbai at firstname.lastname@example.org
To contact the editor responsible for this story: Andrew Hobbs in Sydney at email@example.com