Russian Majors Eye Indian OrePublished by MAC on 2006-03-09
Source: Financial Express ()
Russian majors eye Indian ore
by Financial Express, NEW DELHI
9th March 2006
Russia's leading metal companies Rusal and Magnitogorsk Iron and Steel Company (MMK) have zeroed in on India for big-ticket investments in the aluminium and steel sectors.
The $5.25 billion MMK is poised for billions of dollars in Orissa to set up a 10 million tonne greenfield steel plant. It has sought the Centre's assistance for land procurement in the iron-ore rich state.
Alongside, Rusal, the $6.1 billion aluminium giant, has also evinced interest in investing in an aluminium venture in India. It is the world's third largest primary aluminium producer, providing primary aluminium and value-added products in 50 countries. Rusal accounts for 75% of aluminium production in Russia and 10% globally.
These, coupled with the recently announced investments by South Korean steel major Posco in Orissa and London-based Mittal Steel in Jharkhand, will make India a hot investment destination for global steel and metal companies.
For the proposed 10 mtpa facility in Orissa, MMK is expected to pump in about $10 billion, based on the investment estimates of Posco and Mittal Steel in similar-sized steel plants in the country. While Posco has proposed a $12-billion investment for its 12 mtpa steel plant, Mittal Steel is planning to invest $10 billion for an equal capacity in Jharkhand.
• Third largest global aluminium producer
• Produced 2.7 mtpa of aluminium in 2005
• Revenues topped $6 billion in 2005
• Eyes investment in aluminium plants Magnitogorsk
• Russia's largest steel company
• Had an 11.38 mtpa capacity in 2005
• Turnover in 2005 stood at $5.25 billion
• Plans 10 mtpa steel plant in Orissa
A senior government official told FE that investments by the two Russian companies have been discussed at the highest levels. "Russian industry minister Victor Khristenko has discussed the proposals with Indian Prime Minister Manmohan Singh during the latter's recent visit to Moscow. The main issue from the Russian side pertains to allotment of land. New Delhi has assured facilitation of these investments," the official said.
MMK is Russia's largest steel company with total steel production of 11.38 million tonne. MMK's revenues in 2005 was $5.25 billion while its profit before tax stood at $1.41 billion. Rusal's revenues in 2005 increased 12.8% to $6.1 billion compared to $5.4 billion in 2004. While Russian companies are investing over $20 billion annually in foreign countries, their investment in India is abysmally low at $120 million a year. Both India and Russia are keen to substantially increase the bilateral trade and investment. An indication to this effect was given by Russian economic development and trade minister German Gref who said the two countries need to expand their mutual trade from $2.9 billion registered in 2005 to $10 billion before 2010.