NMDC Spice International, a proposed 50:50 joint venture between state-owned miner NMDC and Spice Minerals and Metals, a part of the Spice Energy group, is close to acquiring two iron ore deposits in Armenia. The acquisition is likely to entail an investment of $500 million (Rs 2,173 crore).

NMDC Chairman and Managing Director Rana Som said two iron ore deposits had been identified with reserves of 300 million tonnes and 75 million tonnes and the final discussion over the acquisition will be held by the weekend.

Spice Energy officials were travelling and not available for comment. The firm, promoted by a group of individuals, has interests in oil and gas, power and alternative fuels. Sanjay Malhotra, one of the promoters of Spice Energy, has a stake in SpiceJet.

Investments in these mines will be roughly 30 per cent more than in most mines because the quality of ore here requires higher value addition and pelletisation. The investment will be equally shared between NMDC and the Spice group.

Som said the 75-million- tonne deposits, which were privately held, had been fully explored.

"We will make pellets and bring them to India through the Poti port in Georgia on the Black Sea. The project also has rail links," he added.

Industry sources said the project could bring some respite and improve availability of iron ore in the Indian market.

The project could help bridge an anticipated shortage in the light of India's target of a steel capacity of 300 million tonnes by 2020, which would require iron ore reserves of approximately 14 billion tonnes over 30 years. India has proven reserves of 6.311 billion tonnes of the total estimated reserves of 23.588 billion tonnes.

NMDC is a major supplier of iron ore to JSW Steel [Get Quote], Essar Steel [Get Quote], Ispat Industries [Get Quote] in the private sector and Rashtriya Ispat Nigam in the public sector. NMDC produces 30 million tonnes of iron ore from its Bailadila mines in Chhattisgarh and Donimalai in Karnataka.