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JSL becomes first Indian company to secure stake in nickel reserves globally

ICICIdirect Research 29 Mar 2023 DISCLAIMER

What's Buzzing 

Jindal Stainless (JSL) has entered into a collaboration agreement with New Yaking Pte for investment in, development, construction and operation of a nickel pig iron (NPI) smelter facility located in an industrial park in Halmahera Islands, Indonesia. 

Context 

Jindal Stainless (JSL) will acquire a 49% equity interest for a consideration of ~US$157 million (~Rs 1290 crore). JSL will make investment through internal accruals. This is the first-ever strategic partnership entered into by an Indian company for securing a stake in nickel reserves globally as India is deficient in nickel ore. 

Our Perspective 

Nickel is one of the key raw materials used in manufacturing stainless steel (more, especially the 300 series grade). The nickel price trend has been a key factor in the stainless steel business across the globe. Geopolitical issues, logistical hurdles, pandemic induced constraints, etc, often affect the demand supply dynamics of nickel, thereby increasing the cost and uncertainty for its user industries like stainless steel. The strategic collaboration offers benefits of backward integration as Jindal Stainless (JSL) would have stake in the business of NPI. The facility is planned to be commissioned within two years, with an annual nameplate production capacity of up to 200000 metric tonnes of NPI with average 14% nickel content. This is the first-ever strategic partnership entered into by an Indian company for securing a stake in nickel reserves globally as India is deficient in nickel ore. Currently, Jindal Stainless meets a bulk of its nickel requirement through stainless steel scrap and NPI/ferro nickel. This collaboration is expected to secure an ample supply of NPI for JSL, thereby auguring well for the company.

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