The Essar group will invest Rs 3,500 crore in Australia, which will include acquisition of a stake in Australian iron ore mine company Cape Lambert, setting up a 7.5 million tonne pellet unit near the ore deposit, a pipeline and a concentrator facility.
Sources close to the development said the Essar group had initiated talks with the promoters of Cape Lambert for acquiring a stake as well as signing an ore offtake agreement. An Essar team had recently visited Cape Lambert's deposits in the northern region of Australia, they pointed out.
They added that the deposit might produce 15 million tonnes of ore a year with 60 per cent iron content at Cape Lambert. The company would start mining by the end of next year, they added.
When contacted, an Essar group spokesperson said, "We keep looking at opportunities globally in the sectors we are in. However, we would not like to comment on any specific project."
According to sources, Cape Lambert is yet to sign an offtake agreement for deposits, which makes it attractive. Essar Steel, a part of the Essar group, has an 8 million tonne pellet plant in Visakhapatnam.
However, the company is unable to use its full capacity due to a shortage of iron ore. Essar Steel procures ore for this unit from the Mineral Development Corporation.
Essar Steel is also in the process of setting up a second pellet unit in its integrated steel plant in Orissa. The group is in the midst of a restructuring, which is being advised by consultancy firm Ernst & Young.
After the restructuring, the group will emerge with a single balance sheet with operating companies in steel, oil and gas, power, shipping and logistics, and telecommunications and BPO operations.
