THREE IRON ORE, STEEL FIRMS IN INDIA PLAN THEIR OWN SHIPPING COMPANY

THREE IRON ORE, STEEL FIRMS IN INDIA PLAN THEIR OWN SHIPPING COMPANY

Three state-owned steel and iron-ore companies are establishing a shipping venture to handle captive cargo on what's termed an unsubsidized, self- supporting, profit-generating basis.

Steel Authority of India Ltd. (SAIL), Rashtriya Ispat Nigam Ltd. and Kudremukh Iron Ore Co. expect to keep freight costs down by using their own shipping company.The venture will be capitalized at 1 billion rupees ($32.2 million), with SAIL contributing 60 percent of the equity and the others 20 percent each, according to a company spokesman.

There is a possibility of adding private partners later, the spokesman said. In that case, the three state companies will retain a total 49 percent equity.

A feasibility study done by the three showed an "urgent need" for a venture that would buy or hire ships to transport 16.5 million tons of inbound and outbound cargo.

The study estimates that the three companies will save 500 million rupees in freight costs by chartering ships. These savings will rise to 1 billion rupees if the new company handles all cargo for SAIL and Rashtriya Ispat.

SAIL, a holding company for five steel plants, imports 5.5 million tons of coking coal and exports 660,000 tons of steel every year. Rashtriya Ispat imports 3.3 million tons of coking coal and exports 1.1 million tons of steel and pig iron. Kudremukh exports 6.6 million tons of iron ore a year.