NMDC steel plant sale may fetch up to $4 bn

Bankers and shareholders of mineral firm NMDC are set to clear the demerger of the steel plant on Tuesday, paving the way for its sale. Some of India’s top steel companies are expected to participate in the sale process of the demerged entity, which could fetch an enterprise valuation of up to $4 billion as the competition will be intense due to its access to iron ore mines in Chhattisgarh, say bankers.

The Indian government currently holds 60.8 per cent stake in the company and is keen to sell its stake in the three-million-tonne-perannum steel plant at Nagarnar, Chhattisgarh in the ongoing calendar year. Under the demerger plan, the steel company would have a mirror shareholding of NMDC, and the ~18,000 crore invested by NMDC in the steel plant would be transferred to Nagarnar Integrated Steel Plant as equity.

“Unlike the Bharat Petroleum Corporation sale process, where the government had received a single bid and the sale was abandoned, NMDC’S steel plant would see all steel companies making a bid as it has access to iron ore mines,” said a banking source. Tata Steel, JSW Steel, Arcelormittal and Vedanta are likely to participate in the sale process, the banker said, asking not to be quoted.

In February, Tata Steel MD and CEO TV Narendran had said the company is not looking for other assets after Nilachal Ispat acquisition.

NMDC shares closed 3.25 per cent up at ~111.10 on the BSE on Monday, with a total market valuation of ~32,559 crore. The shares have lost 16.7 per cent in value since January.