- 29 Mar 2023
- ICICIdirect Research
Jindal Stainless acquires 49% stake in Indonesia based nickel pig iron company
JSL - 288 Change: -2.20 (-0.76 %)News: In a strategic move to ensure long term availability of nickel, India’s largest stainless steel manufacturing company, 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 (Facility) in an industrial park in Halmahera Islands, Indonesia. Pursuant to the collaboration agreement, JSL will acquire a 49% equity interest for a consideration of around US$157 million
Views: The strategic collaboration offers benefits of backward integration as JSL would have stake in the business of NPI. The facility has been planned to be commissioned within two years, with an annual nameplate production capacity of up to 200,000 metric tonnes of NPI with average 14% Ni Content. This is the first-ever strategic partnership entered into by an Indian company for securing stake in nickel reserves globally as India is deficient in nickel ore. The 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 such as stainless steel. Currently, JSL meets bulk of its nickel requirement through stainless steel scrap and NPI/ ferro nickel. This collaboration will secure an ample supply of NPI for JSL, thereby auguring well for the company
Impact: Positive