India’s Jindal Stainless Limited (JSL) has acquired a 49 percent equity stake in nickel pig iron producer New Yaking Pte, Indonesia, entailing an investment of $157 million to secure supplies of the critical input in the production of stainless steel, a statement of JSL said on Wednesday, March 29.
The all-cash deal will be funded entirely through internal accruals. Under the deal, the companies will set up a joint venture firm for the manufacturing of nickel pig iron in Indonesia, while the deal offers benefits of backward integration to the Indian firm, JSL managing director Abhyuday Jindal said.
“India has insufficient reserves of nickel ore, and hence it has to be imported. Nickel constitutes about 50 percent of our input costs, and it is also a volatile commodity. There is a shortage of nickel in the country and for our 2.9 million mt capacity of stainless steel production, we require 125,000 mt of nickel per year, of which about 15-16 percent is sourced through the nickel pig iron route,” he said.
The deal is expected to fully secure JSL’s nickel pig iron requirement and will give it first right of refusal for production at the plant in Indonesia.
Under the agreement between JSL and New Yajing Pte, the joint venture will construct and operate a greenfield nickel pig iron smelter at Hamahera Island, Indonesia, with an annual production capacity of 200,000 mt with 14 percent average nickel content, and the plant is scheduled to be commissioned by the end of 2024-25.
