India's largest stainless steel manufacturing company, Jindal Stainless (JSL), has entered into a collaboration agreement with New Yaking to invest in, develop, construct and operate a Nickel Pig Iron (NPI) smelter facility in Indonesia.
The facility will be located in an industrial park in Halmahera Islands, and JSL will acquire a 49 per cent equity interest in the business for around USD 157 million.
This marks the first-ever strategic partnership entered into by an Indian company for securing a stake in nickel reserves globally. As India is deficient in nickel ore, this move is a major strategic step for JSL to ensure the long-term availability of nickel. The Facility is planned to be commissioned within two years, with an annual production capacity of up to 200,000 metric tonnes of NPI with an average 14 per cent Ni Content. The collaboration offers the benefits of backward integration, as JSL will have a stake in the business of NPI.
Commenting on this landmark move, MD, Jindal Stainless, Mr Abhyuday Jindal said, “This path-breaking collaboration will enhance value for stakeholders with JSL acquiring a stake in nickel supply to create raw material security for its stainless steel operations. This acquisition will usher a sharper competitive advantage to JSL in Indian and international markets.”
The nickel price trend has been a key factor in the stainless steel business across the globe. Further, geo‑political issues, logistical hurdles, pandemic-induced constraints etc. often affect the demand-supply dynamics of nickel, thereby increasing the cost and uncertainty for its user industries such as stainless steel. Currently, JSL meets bulk of its nickel requirement through stainless steel scrap and NPI/ ferro nickel and this collaboration will secure an ample supply of NPI for JSL.