Jindal Stainless (JSL), India’s stainless steel manufacturer, has acquired a 49% stake in Indonesia-based nickel pig iron (NPI) company New Yaking Pte for about USD 157M. The move is strategic for JSL as it aims to secure long-term access to nickel, a crucial raw material for the stainless steel industry.
The all-cash deal will be funded entirely through internal accruals. Under the deal, the companies will set up a joint venture firm for manufacturing NPI in Indonesia, while the deal offers benefits of backward integration to the Indian firm, JSL MD Abhyuday Jindal told FE in an interaction.
The companies will set up an NPI smelter with 2 Rotary Kiln Electric Furnace (RKEF) lines.
Under the agreement with New Yaking, JSL will invest in the development, construction, and operation of a greenfield NPI smelter facility at an industrial park in Halmahera Islands, Indonesia. The facility, with an annual production capacity of up to 200,000 metric tonne of NPI with average of 14% nickel content, is expected to be commissioned within two years.
At present, JSL meets its supply of NPI (15-16%) and the remaining through stainless steel scrap.
JSL has benchmarked an Internal Rate of Return at about 25% and expects breakeven in four years from the start date.