JSW Steel in talks to buy iron ore terminal in Tamil Nadu from Sical Logistics.

JSW Steel is in talks to buy an iron ore terminal in Tamil Nadu from Sical Logistics, a move aimed at backward integration of its operations and saving on cost of importing the key raw material, people familiar with the deal told ET. Sical Logistics runs an iron ore terminal with a capacity to handle 6 million tonnes (mt) of iron ore annually at government-owned Ennore Port.

The terminal's existing infrastructure can be further leveraged to handle 12 mt per annum to meet growth volumes, according to its website. Sajjan Jindal-led JSW Steel is greatly dependent on import of iron ore as it does not own any captive mines in India and the availability of iron ore in the country remains constrained after restrictions clamped by the courts in the wake of illegal mining. JSW Steel imports almost half of its iron ore requirement of about 20 mt per annum.

'Sical Logistics' terminal at Ennore makes sense for JSW Steel,' said one of the persons, requesting not to be named. VG Siddhartha Hegde, the promoter of Cafe Coffee Day, which owns majority of shares in Sical Logistics, is in charge of the discussions with JSW Steel, the person added. A spokesperson of Sical Logistics declined to comment on the development, saying, 'We are not initiating any media activity at present.'

JSW Steel executives said the company is likely to negotiate hard on the deal. Sical Logistics spent Rs. 360 crore to build the terminals first phase of 6 mt capacity and will need another Rs. 120 crore to take the capacity to 12 mt. JSW Steel, on the other hand, built a 10 mt iron ore jetty in Goa for Rs. 180 crore and a 20 mt terminal in Ratnagiri, which has room for further expansion for Rs. 700 crore.


ET