Tata Steel To Acquire Lloyds Metals' Arm To Secure Iron Ore Pellet Supply

Tata Steel Ltd. on Wednesday announced the acquisition of a majority stake in iron ore pellets manufacturer Thriveni Pellets Pvt. Ltd. for Rs 636 crore to secure supply of the product. The company will buy 50.01% of TPPL from Llyods Metals & Energy Ltd.

Thriveni Pellets owns Brahmani River Pellets Ltd., which operates a 4 MTPA pellet plant at Odisha's Jajpur along with a 212 kilometre slurry pipeline. The acquisition aims to secure pellet making facility for supply of iron ore pellets to Tata Steel in India, according to a stock exchange filing.

Iron ore pellets are small, hard, spherical balls made from finely ground iron ore. They are a vital raw material for the steel industry, used as a substitute for lump ore in blast furnaces and direct reduction iron (DRI) plants.

The deal is subject to approval from Competition Commission of India. The transaction is expected to be completed within a period of 3-4 months, subject to necessary regulatory approvals.

Following the transaction, Tata Steel will hold 50.01% of TPPL and balance 49.99% stake will continue to be held by Llyods Metals.

Tata Steel said it will prioritize investments in volume growth, value added downstream portfolio, identified mining assets and infrastructure to serve the needs of the India business and low carbon low capital intensity process technologies for sustainable steel making of the future.

Llyods Metals' board also approved a proposal to enter into a non-binding Memorandum of Understanding with Tata Steel for examining potential areas of cooperation in areas such as raw material mining, logistics, pellets and steel making. The company is into the business of manufacturing of sponge iron, power generation and mining activities.

Shares of Tata Steel and Llyods Metals ended 0.8% and 3.4% higher, respectively, ahead of the announcement, compared to a 0.3% decline in the benchmark Nifty 50.