India's largest iron ore miner National Mineral Development Corporation (NMDC) said on Thursday that Australia's Legacy Iron Ore has accepted its bid for a 50% stake in what would be the first-overseas iron ore mine acquisition by an Indian public sector firm.
"We are in the last stage of our first overseas acquisition and they (Legacy) have already accepted our bid," said Rana Som, chairman, NMDC. "Now it is only a matter of their shareholders approving the sale. We are also in the final stages of acquiring assets in the US and Russia."
Legacy Iron Ore, which is listed in the Australian Stock Exchange, put the valuation of the deal at A$ 18.9 (Rs 92.2 crore) for a 50% stake in the firm. It is likely to be approved in November. The Australian firm based in Perth holds prospective iron ore tenements in both the central Yilgarn and Pilbara areas of Western Australia.
NMDC's success notwithstanding, public sector undertakings (PSUs) have a poor track record of acquiring mineral assets. A consortium of steel, mining and power companies, International Coal Ventures Ltd (ICVL), which was formed two years ago specifically for this purpose has little to show by way of achievements.
"Many private firms from India such as Aditya Birla, Lanco, GVK have done very well at picking up properties here," said Ivor Roberts, executive director, department of mines and petroleum, government of Western Australia.
"We have seen a lot of interest from public sector firms as well but they have shown a relative lack of risk taking abilities and also are not able to match the high valuation. Chinese PSUs have been more proactive," he said.
The region is one of the most productive and diversified mineral and petroleum regions in the world, with more than 50 mineral and petroleum products being produced in commercial quantities worth around $63 billion annually.
Mining was the main contributor to its economy in 2009-10, valued at $51.0 billion.
"In the last couple of years, prices of coking coal have been so high that the valuation of all properties has gone up," said C S Verma, chairman, ICVL and Steel Authority of India Ltd. "Under the current conditions it is not feasible to buy assets as the expectations from sellers is very high. But still we are in an advanced stage in 3-4 cases and by the end of this financial year we will have something to show for our efforts."