UltraTech Cement in talks to buy Mozambique mine for Rs 1,500 crore
India's largest cement maker, UltraTech Cement is in talks to acquire a large limestone mine in Mozambique for about Rs 1,500 crore. The negotiations between the company and the mine owner which started about two months back could subsequently result in the group building a 1-2 million tonne cement plant. This plant will be located in the African country where demand for the building material has been growing at the rate of around 8-9% annually.
The limestone mine is located in the Magude region in southern Mozambique near the capital city of Maputo and has reserves of more than 700-800 million tonnes of high grade limestone.
In April 2010, UltraTech acquired Dubai-based, 2.3 million tonne, ETA Star Cement for about Rs 1,700 crore which has given them access to the construction-heavy markets of UAE, Bahrain and Bangladesh.
"Mozambique is one of the fastest growing countries in Africa and has a very industry-friendly government that promotes investments in minerals," said Devesh Sharma, group managing director of Future Focus, a consultancy that guides Indian and foreign companies in setting up businesses in the African country. "Apart from having large limestone reserves, the country is also rich in high grade coking coal which is vital for steelmaking," Sharma added.
The Tatas and the Ruias of the Essar Group, were among the first Indian companies to enter Mozambique to buy coking coal mines. The Tatas have a 35% stake in Riversdale Energy (Mauritius), which owns coal assets in Mozambique. Tata Steel had formed a venture with Riversdale to develop the Benga coal project in Mozambique, before Riversdale was acquired by Rio Tinto. The Birlas led by their strategy head Dev Bhattacharya have been scouting for mines in the Magude and Salamanga regions for over three months.