RINL’s merger with NMDC rejected

Indian steel producer Rashtriya Ispat Nigam Limited’s (RINL) plan of securing raw material security through corporate activity has suffered a setback with the Indian government ruling out a merger with country’s largest iron-ore miner, NMDC Limited.

Steel Minister Chaudhary Birendra Singh this week said that the government had not found any merit in the proposal submitted for the RINL-NMDC merger and that the government would not follow it up further.

RINL operates a six-million ton a year steel mill in southern Indian port town of Vishakhapatnam, but does not own any captive iron-ore mines.

The merger was aimed to ensure backward and forward integration for the government-owned companies and to improve the cost competiveness of RINL with secured captive source of raw material.

Both the companies are under the administrative charge of the Ministry of Steel.

RINL is also the only government steel company without any captive iron-ore mines and has a merchant agreement to source the raw material for its steel mill at Vishakhapatnam with NMDC Limited.

In fact, following the announcement that the merger had been rejected, all major trade unions irrespective of their political affiliations have come out in opposition to the government decision.

Spokesperson of the left-aligned Centre for Indian Trade Unions and Indian National Trade Union Congress aligned to the Congress party, said that merger proposition had been rejected because the federal government wanted to sell its equity holding in RINL to private investor.

The government had already announced that it favoured inviting strategic private investors to pick up equity stake in the steel mill that NMDC is building to keep the company’s focus on mining operations.

Source – miningweekly.com