Naveen Jindal eyes African Venture, Steel Mill in Nigeria, Power Plant in Botswana

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Naveen Jindal eyes African Venture, Steel Mill in Nigeria, Power Plant in Botswana

Naveen Jindal eyes African Venture, Steel Mill in Nigeria, Power Plant in Botswana

Industry News
Sep 21,23

Billionaire Naveen Jindal is embarking on a strategic venture in Africa through a privately held subsidiary, according to insiders familiar with the development. The plan encompasses the establishment of a steel mill in Nigeria and a power plant in Botswana, both aimed at serving the burgeoning African market.

In this endeavour, Vulcan Steel, a privately held entity under the Jindal family's purview, has committed to constructing a steel plant with an annual production capacity of 3 million metric tonnes (mtpa). Concurrently, Jindal Power Ltd., another privately held subsidiary, is set to establish a thermal power facility capable of generating up to 600 megawatts (MW) at peak capacity. These Jindal-controlled entities have successfully secured mineral rights and power purchase agreements in both Nigeria and Botswana.

This marks not the first time Naveen Jindal has ventured into international territory, although the group's previous foray into the Latin American market did not yield the anticipated results.

The steel plant's primary objective is to manufacture hot rolled coils with a 3 MTPA capacity, addressing the gap in Nigeria's domestic production of this vital steel product, which has historically relied on imports, as disclosed by an anonymous source familiar with the plan.

While specific investment figures for the steel plant have not been disclosed, there are reports suggesting that the group has pledged to invest approximately $3 billion in Nigeria. The insider cautioned that it is premature to provide precise investment figures since many decisions are still pending.

In a separate development, a second source revealed that Botswana Power Corp has inked a power purchase agreement with Jindal Energy Botswana for 300MW of electricity over a 30-year term, an initiative spearheaded by Jindal Power. Per the agreement, Jindal Energy Botswana will oversee the design, construction, financing, maintenance, ownership, and operation of the 300MW thermal power station. The first electricity deliveries into the national grid are anticipated in the first quarter of 2028, with an additional 300MW slated for the second phase, bringing the total capacity to 600MW.

In addition to the power station, the group also holds a mining license for approximately 3 billion tonnes of coal in the East Mmamabula Coal Fields, with initial mining operations targeting 4.5 million tonnes of coal annually.

Naveen Jindal is among several Indian business leaders exploring opportunities in Africa, a trend observed as many companies evaluate prospects in the continent, particularly in the power and steel sectors. This strategic pivot aligns with India's endeavors to counter China's influence on the continent, and notably, the African Union's full membership in the G-20 during India's presidency.

The Jindal group anticipates a surge in consumption across Africa, driven by increased investments from Europe and America following their inclusion in the G-20.

"We have seen consumption in Africa is going to increase in a big way. So, we expect that the steel industry in Africa will grow and mature in the next 5-10 years," remarked one of the sources. Currently, Africa consumes 5 million tonnes of steel, with growth rates exceeding 10%.

While Africa emerges as an attractive investment destination for China and the global community, potential risks such as political instability, currency volatility, and inadequate infrastructure exist. Nevertheless, the region's market potential and abundant raw material resources continue to attract companies, with steelmaking evolving into a regional endeavour, as evidenced by the Essar group's plans to establish units in Saudi Arabia. Jindal's Vulcan unit is also investing in its steel operations in Oman, reflecting the surging demand for steel to support infrastructure development in the Middle East.

Source: Mint