Indian state-run miner NMDC Limited is willing to financially bail out ailing steel producer Neelachal Ispat Nigam Limited (NINL) provided it is granted an iron ore block in the eastern state of Odisha where the steel mill is located, a state government official said on Tuesday, October 22.
NINL is seeking an immediate infusion of $42 million to continue its steelmaking operations and NMDC is willing to put up the funds if the Odisha government allocates an iron ore block as it seeks to ramp up its mining operations in the key iron ore-bearing state, the official added.
NINL had approached the central government seeking a financial package to sustain its operations, but the latter for its part asked NINL’s principal shareholders, the state-run trading firm MMTC Limited and the Odisha government, to provide the necessary funds, the official said.
However, funds from MMTC were unlikely to be forthcoming as the trading firm itself was up for disinvestment and the central government is proposing to sell its stake in the company to private investors, the official said.
Hence, with funds from existing shareholders unlikely, NINL had approached cash-rich NMDC to infuse funds into the steelmaking facility at a time when NMDC is already diversifying into steelmaking and nearing the completion of its 3 million metric ton per year greenfield steel mill in the central India province of Chhattisgarh.