Sajjan Jindal-controlled JSW Steel has secured prospecting licences through its Netherlands-based wholly owned subsidiary to explore and exploit magnetite iron ore deposits in northern Chile's Atacama region.
According to the announcement made by JSW Steel on Wednesday, the company will pay $52 million (about Rs 200 crore) for mining licences over 1,200 hectares.
The move is part of JSW's efforts to augment captive sources of iron ore and coal, in India and overseas, for its Indian steelmaking operations.
Sajjan Jindal, Vice-Chairman and Managing Director, said, "The mines are expected to have good quality magnetite iron ore deposits located near the Pacific coast, facilitating shipment of ore at competitive costs. It acts as a natural hedge against high-cost iron ore procured from third parties in India once these mines are made operational."
JSW's current iron ore security is at 30 per cent.
"We are in talks to forge a joint venture to develop various iron ore mining projects in South America," Jindal added.
"With the acquisition, the company could also look at iron ore swapping and not necessarily ship the ore from Chile, which could involve significant transportation cost," a JSW official said.
At present, JSW is expanding its Vijaynagar facility and the 10 million tonne plant at Salboni in Bengal.
The company has doubled the capacity of the Bengal project in the first phase to six million tonnes, which would be operational by June 2011.
The Chilean venture is JSW's maiden acquisition of an iron ore asset.
On the coking coal front, JSW has secured the Rhone block as part of a joint venture in Jharkhand as well as some licences in Africa.
However, the company is still scouting for coking coal mines in Australia and Africa, as it targets steel making capacity of 30 million tonnes by 2020.
JSW Steel is engaged primarily in the manufacture of flat products, hot rolled coils, cold rolled coils, galvanised products, etc. auto grade/white goods grade CRCA steel.