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26 Dec 12 JSL gets relief in chrome ore penalty case

Business Standard reported that the Revision Authority under the Union mines ministry has set aside an Odisha government order directing Jindal Stainless Ltd to pay INR 6 crore for shortage of chrome ore found during audit.

The final order of the RA said that “I do not find any proof of removal of tailings and the case seems to be based on notional of discrepancy of figures in computation in various returns. In the circumstances, it is held that there is no case for invocation of Section 21 (5) of MMDR Act and as such the order is set aside.”

The authority upbraided the government for issuing a penalty order for the materials without giving the company a chance to be heard. But it said, the state government can initiate a fresh proceeding against the company.

The final order said that “The state government is at liberty to initiate fresh proceedings against the Revisionist (JSL) under relevant sections of MMDR Act, and take appropriate action after providing copies of the relied documents and full opportunity of hearing.”

The Authority, however, said, the issue of Transit Permit and Mining Due Clearance Certificate should not be stopped. The Jajpur Road DDM had refused to issue transit pass for mineral transportation and Mining Dues Clearance Certificate to the company. JSL raises chromite from the Kaliapani mines for its steel plants based in Haryana and Andhra Pradesh.

The Jajpur road Deputy Director Mines (Mines) had issued a penalty notice of INR 6 crore against JSL due to mismatch of chrome ore tailings or wastages raised from its Kaliapani chromite mines and the amount recorded in the book balance. The company was asked to pay the cost price, royalty and other taxes for 10,155 tonne chrome tailing which was found missing during physical verification of the mine as per section 21 (5) of Mines and Minerals Development and Regulation (MMDR) Act.

Source – Business Standard


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19 Oct 11 Glencore International in talks to acquire 24% stake in Croniment Alloys

MUMBAI: Metals and energy giant Glencore International is in talks to buy 24% stake in Indian ferro chrome maker Cronimet Alloys, people with knowledge of the development told ET.

A deal, which they said could be for Rs 50-75 crore, would mark Switzerland-based Glencore’s entry into India. Ferro chrome is an important raw material for making stainless steel, which has wide usage in emerging powerhouses India and China.

A spokesperson for Glencore said the company will not comment on speculation. The company had raised about $11 billion through a public offering of shares in May to fund foreign acquisitions.

Cronimet, which did not respond to queries sent by ET on the deal, had said at a recent annual general meeting that it has mandated Euromax Capital to scout for investors. It had also said that Glencore had shown “interest” in picking up a stake.

An investment banker in the know of the deal said Cronimet’s promoters would offer part of their 70.5% stake to Glencore at a premium to the company’s current share price.

Cronimet’s shares have jumped about 46% in the last three weeks. On Tuesday, it closed 2.7% up on the Bombay Stock Exchange at 138.6, valuing the company at Rs 170 crore.

The development is also in line with Glencore’s acquisition plans. The minerals company is already in the race for a majority stake in mining firm Xstrata.

The $145 billion Swiss company can bring in chrome ore and convert it into ferro chrome at Cronimet’s facilities in Andhra Pradesh.

Cronimet, formerly known GMR Ferro Alloys, is setting up a 165,000 tonne high carbon ferro chrome project at Kolathpangi in Orissa.

Two-third of the project cost of 330 crore will be financed by a consortium of banks including SBI, State Bank of Travancore, Central Bank of India and Uco Bank.

The company has also issued convertible warrants amounting to 54 crore on a private placement basis to part-finance the expansion project. Its current capacity is about 30,000 tonne.

A senior executive of a stainless steel maker said, “There is an increased likelihood of foreign players coming to India as emerging markets are the only place where demand for steel and stainless steel has been growing.”

The cost of power in India is less than that in other countries, the executive added.

Cronimet consumes about 3,500 units of power to make a tonne of ferro chrome.

The company buys power from the Andhra Pradesh State Electricity Board at an average cost of 2.75 a unit.

A recent report by Greshma Research says Cronimet is on a “growth trajectory and its expansion plans are scheduled to be completed in two years. Major challenges such as land acquisition have been taken care of. Apart from this, the company is looking at ramping up its backward integration operations to reduce operational costs and improve margins.”

Backward integration typically implies owning ore that would reduce costs and smoothen supplies to the smelters in Andhra Pradesh.

The development is also in line with Glencore’s plan. It is in the race to acquire mining company Xstrata.

Cronimet Alloys, which has manufacturing facilities in Andhra Pradesh, makes high carbon ferro chrome, which is used by the stainless steel industry.

It was formed when GMR Industries spun off its metallurgical division in 2006.

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