Tata Steel has agreed to wholly acquire Odisha-based Brahmani River Pellets (BRPL) from Aryan Mining and Trading Corporation, and other companies in the Moorgate Industries Group (MIG). The transaction is based on an enterprise value of INR 900 crores ($132.7 million) plus closing adjustments.

BRPL was initially established by MIG, which was formed by a demerger in 2015 from Stemcor. BRPL owns a 4 million tonnes/year iron ore pellet plant in Jajpur and a 4.7m t/y iron ore beneficiation plant in Barbil. The two are connected by a 220km underground slurry pipeline.

“The location of the BRPL assets makes this very strategic to Tata Steel, especially to our Kalinganagar operations, and has significant operating synergies to make our Kalinganagar plant even more competitive for the future,” says Tata Steel executive director Koushik Chatterjee in a statement seen by Kallanish.

Iron ore from Tata’s captive mine in the Joda and Khondbond region will be transferred in future through the slurry pipeline, thereby reducing freight cost. The pellet plant is seen reducing blast furnace operations costs at Kalinganagar. “To build a similar facility would have taken significant time and costs and therefore this acquisition is very timely as we are looking to ramp up the capacity of the Phase 1 at Kalinganagar,” Chatterjee adds.

The acquisition, which is set for completion in four months, will improve the feed mix for Tata’s Kalinganagar and Jamshedpur plants, the steelmaker says.

In the six months through September Tata’s Indian deliveries rose 6% on-year to 4.76 million tonnes, while turnover also rose 6% to INR 22,042 crore ($3.25 billion) and net profit surged 502% to INR 825 crores.