MOIL scouting for overseas mines ahead of IPO

Expecting higher demand for manganese

BY Siddharth Kumar
Nagpur

Government-run MOIL Ltd, formerly Manganese Ore (India) Ltd, which is expected to hit the capital market with a Rs 1,500 crore initial public offering (IPO) later this month, is scouting for mines overseas. The company expects higher demand for manganese in the coming years.

"We are looking to acquire mining properties in South Africa, Congo and Turkey, as the demand for manganese by Indian steel producers is expected to rise in the near future," said KJ Singh, chairman and managing director, MOIL Ltd.

"We are at the initial stage of acquisition. We have sufficient cash balance for such deals - about Rs 1,700 crore," added GP Kundargi, director (production and planning), MOIL. "MOIL is a debt free company and has healthy profit margins."

MOIL currently has 10 mines -- six located in the Nagpur and Bhandara districts of Maharashtra and four in the Balaghat district of Madhya Pradesh. All these mines are about a century old. Most of the mines are underground except three which are open-cast.

Tehelka visited MOIL’s Kandri mine, which is an underground mine in the Nagpur district and found that the company maintains high safety standards. Unlike coal blocks, where gases like methane and carbon mono-oxide pose a threat to human health, mining at Kandri was quite clean. The working conditions in the mine were quite conducive with proper ventilation and good lighting. “The output at Kandri is about 60,000 metric tonne per annum and 700 people working on the site”, said Kundargi.

According to rating agency CARE Research, with increasing domestic steel capacities the demand for manganese ore is expected to be strong.

For the production of steel, manganese is a key component. Industry experts say India's steel output is likely to increase to 120 metric tonne by 2012 from about 70 metric tonne at present.

MOIL Ltd's 20 percent stake sale is expected to fetch about Rs 1,500 crore. The company's public offering of 33.6 million shares, comprises 10 per cent stake sale by Centre and 5 percent each by Madhya Pradesh and Maharashta governments.

At present, the union government holds 81.57 per cent in the company, Maharashtra 9.62 per cent and Madhya Pradesh 8.81 per cent.

The government-run miner's officials say the company is getting full support from its employee union for this stake sale. “We see bigger participation under the staff quota of the IPO,” Kundargi added.

MOIL, which functions under the Ministry of Steel, had a profit after tax of Rs 466 crore for the financial year 2009-10.

(The visit to Kandri mines (Nagpur) was sponsored by MOIL)

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