Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

JSW Steel was declared preferred bidder for three iron ore mines in the Indian state of Odisha on Feb 16. The company bid for these mines at a premium of 95-132pc to market prices. 


These three mines are Nuagaon iron ore mine, Ganua iron ore mine and Narayanposhi iron ore and manganese mine. The combined estimated iron ore reserves at these mines are approximately 1091.835mn mt. The auctions were held on Jan 31, Feb 1 and Feb 4, 2020. 


JSW Steel has aggressively to bid for these iron ore mines by committing to pay the Odisha state as high as Rs132 for every of Rs100 worth of ore produced from the mine according to the price fixed by the Indian Bureau of Mines (IBM). JSW steel spends Rs1,500/mt on logistics including conveyors and slurry pipeline for transport of iron ore. After securing these captive mines, the company will spend far less on logistics and save almost Rs1,300/mt, which can be adjusted against these premiums. 

Premiums bid by JSW Steel
Nuagaon Iron Ore Mine95.20%


Despite not owing any captive iron ore or coal mines, JSW Steel has managed to become India’s leading steelmaker due to its operational efficiencies. Davis Index had early covered how the amendments to India’s mining law would help JSW Steel to reach its ambition of becoming India’s largest miner and process 100mn mt of iron ore. JSW plans to acquire more mines in states of Karnataka and Goa in future auctions and use the ore for their own steel production.


In India, JSW has an installed steel production capacity of 18mn mt and plans expand to 28mn mt in the next fiscal. JSW has planned expansion of 5mn mt at Dolvi in Maharashtra and acquired Monnet Ispat with capacity of 1.5mn mt/yr. The company also plans to acquire Bhushan Power and Steel which has a steel producing capacity of 3.5 mn mt/yr.

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