Indian government-owned NMDC is to buy 50% stake in the Australian Legacy Iron Ore. The Rs 92 crores investment, roughly equal to Australian $19 million, will make it the first Navratna company to get into an overseas project of this magnitude.
A memorandum of understanding was signed between the two parties on May 24, 2011. The signing of the deal culminated this MoU. Legacy Iron Ore Chief Executive Officer Sharon Heng said that they were delighted to have secured India's National Mineral Development Corporation Limited as a cornerstone investor in Legacy.
He added it was NMDC's first investment outside of India and after conducting extensive due diligence on Legacy, NMDC have concluded that they were the ideal entry point for them into the Australian iron ore and resource sector.
This is not the only overseas deal NMDC has in line. It also signed an initial agreement with Sunflag Iron & Steel Co. regarding acquisition of a 26% stake in a coal project it owns in Mozambique. The deal with Sunflag will help them source coking coal and iron ore for upcoming steel projects in India. Rana Som, NMDC's chairman, said earlier this week that they expected to get coal from Mozambique to India in the next three years when the production was expected to begin.
Rana Som also said that with our expertise in iron ore mining and steel-making and their (Legacy's) exploration expertise, we will make a perfect synergy for both the companies. Simultaneously, it will provide us a ready-made foothold in Australia, he added.