Stemcor invests in Indian coke production
Stemcor, the world’s largest independent steel trader, has entered into a strategic partnership with Sathavahana Ispat Limited (SVIL), a producer of pig iron and coke located in Hyderabad, India. Under the agreement, SVIL has issued new preferential shares to fund expansion plans and Stemcor has acquired a 14.69% stake in the enlarged shareholder structure.
In March 2007, SVIL commissioned a 300,000 tpa metallurgical coke production facility in the State of Karnataka, equidistant from the sea ports of Chennai and Marmugao. Approximately 70% of output is currently consumed by SVIL’s own pig iron plant and the balance is sold to the domestic market.
The expansion project will add two further coke oven batteries and increase capacity to 425,000 tpa. Surplus output will meet increasing demand for metallurgical coke from steelworks in the Bellary belt, which currently require more than 3 mtpa and rely heavily on imports. Under a purchase agreement with a local government-owned power company, waste heat recovered from the coke manufacturing process will be used to co-generate 40 mw of power.
SVIL’s pig iron plant is located in the State of Andhra Pradesh, 50km south of the coke production facility and close to the Bellary-Hospet iron ore mines. It has a rated capacity of 210,000 tpa of foundry-grade pig iron and supplies approximately 3% of Indian domestic consumption.
Commenting on the investment David Faktor, Group Managing Director at Stemcor, said: “SVIL is a well-run company with a strong position in the market. We are delighted to be playing a role in its expansion and look forward to working with the experienced management team under Mr. A.S. Rao.”
SVIL is a public company quoted on the Bombay Stock Exchange. Mr. A.S. Rao and family have a substantial shareholding in the company. As a strategic investor, Stemcor is providing SVIL with bridging finance in addition to taking an equity stake. Stemcor is SVIL’s supplier of coking coal and will continue to be the supplier when production capacity is expanded.