Naveen Jindal eyes Africa with steel mill, power plant

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Billionaire Naveen Jindal, via a privately held unit, plans to set up a steel mill in Nigeria and a power plant in Botswana to serve the African market, two people familiar with the development said.

As part of the plan, Vulcan Steel, a privately held company by the Jindal family, has decided to build a 3 million tonne per annum (mtpa) capacity steel plant, while Jindal Power Ltd, another privately held unit, will set up the thermal power unit, which will produce as much as 600 megawatts (MW) at peak capacity. The entities controlled by Jindal have secured minerals and power purchase agreements in both nations.

This would not be the first time Naveen Jindal has ventured overseas. The group’s entry into the Latin American market, however, did not go as planned.

“The plan is to set up a steel plant primarily to produce hot rolled coils with a capacity of 3 MTPA. No one else has a hot-rolled coil-making facility in Nigeria, where the requirement is met through imports,” one of the two people said on condition of anonymity.

While the person did not disclose the investment required for the steel plant, some reports suggested that the group has committed to invest $3 billion in Nigeria.

“It would be too early to comment on investment figures since a lot of decisions are yet to be taken,” the person said.

A second person said Botswana Power Corp. has signed a power purchase agreement deal with Jindal Energy Botswana, for 300MW of electricity for a period of 30 years. The investment is under Jindal Power.

“As per the agreement, Jindal Energy Botswana will design, construct, finance, maintain, own and run the 300MW thermal power station, which is expected to deliver the first electricity into the national grid during the first quarter of 2028. The second phase will additionally add another 300MW, for a total 600MW,” the second person added.

Along with the power station, the group also holds a mining licence for about 3 billion tonnes of coal in the East Mmamabula Coal Fields, with plans to carry out initial mining of 4.5 million tonnes of coal a year, he added.

An email sent to the Naveen Jindal Group remained unanswered.

Naveen Jindal is among several Indian businessmen exploring opportunities in Africa. Many companies are also evaluating prospects in the continent, primarily in the power and steel sectors. Jindal’s pivot towards Africa coincides with India’s efforts to counter China’s influence on the continent and, notably, the African Union gaining full membership of the G-20 under India’s presidency.

The Jindal group expects consumption in Africa to rise, with increased investments from Europe and America following their inclusion in G20.

“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,” one of the two people added. Africa currently consumes 5 million tonnes of steel and is growing at rates exceeding 10%.

While Africa is emerging as the new frontier for investments by China and the rest of the world, there are potential risks, including political and currency volatility and inadequate infrastructure. However, the region’s market potential and the availability of abundant raw material resources are compelling enough for companies to outweigh the drawbacks. Steelmaking is also becoming a regional play, with Essar group planning to set up units in Saudi Arabia. Jindal’s Vulcan unit is also investing in its steel unit in Oman, as the demand for steel for building new infrastructure in the Middle East is growing rapidly.

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