In a meeting held last week in London, Stemcor's senior management had asked Essar Group founder Ravi Ruia to make an upfront payment and take away the assets, which have an estimated enterprise value of USD 800 million, a source told PTI.
Though it could not be immediately ascertained what Ruia had communicated to Stemcor, the source said the British trading firm in the meantime has initiated the process of auctioning the assets which include an iron ore mine and a pellet plant, both located in Odisha.
Essar Steel has the brightest chance of winning the assets as Stemcor management has been continuously favouring Ruias-led firm based on their mutual understanding and faith accruing from a long-time association, the source added.
Stemcor had its first joint venture in India with Essar Steel and jointly, these two firms set up a 3 million tonnes per annum (mtpa) pellet plant at Vizag in Gujarat back in 2001 though Stemcor, later in 2003, sold its stake to Essar Steel.
However, when contacted an Essar Steel spokesperson said: "We keep looking at growth opportunities. However, it is not our policy to comment on any specific proposal."
The assets would help Essar Steel to further consolidate its raw material needs and help the company to hedge itself from the frequent price fluctuations of iron ore.
Meanwhile, almost all Indian steel makers, including Tata Steel, JSW Steel, JSPL, Electrosteel Castings, Adhunik
Metaliks, have evinced interest to buy out Stemcor India's assets. Aditya Birla Group's Essel Mining and Industries and Anil Agarwal's Vedanta are also in the race along with Brazilian miner Vale.
Stemcor has asked all of them to place their initial bids and may allow them to carry out due diligence before putting their final bids. Auction is 6-8 weeks away, the source said.
Earlier in the day, JSPL's Chairman Naveen Jindal said that his company would be "keen" to buy the assets provided those come at an "attractive price".
Stemcor has majority stake in Aryan Mining and Trading Corporation (AMTC), which has 100 MT of iron ore reserves with the licence to mine three mtpa. It also has 10 per cent stake in Mideast Integrated Steel (MISL) in Odisha. MISL has an iron ore mine with a current output of four mtpa.
Stemcor has a subsidiary, Brahmani River Pellets (BRPL), which has a four mtpa beneficiation plant at Barbil, Odisha, and a pellet plant complex at Jajpur, connected by a 220 km underground slurry pipeline.
Also Read: Essar Steel raises $1 bn via external commercial borrowing
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