RFQ for selection of JV Partner(s) for Slurry Pipeline & Pellet Plant Request for Qualification (RFQ) for Selection of Joint Venture Partner (s) for Joint Venture Company for 13 MTPA Nagarnar - Vizag Iron Ore Slurry Pipeline & 6 MTPA Pellet Plant at Vizag Document No.MEC/11/15/U999/NMDC JV/RFQ/JV PARTNER/01 MECON LIMITED RANCHI August 2013 MEC/11/15/U999/NMDC JV/RFQ/JV PARTNER/01 Page 1 of 17 © 2013 MECON Limited. All rights reserved. RFQ for selection of JV Partner(s) for Slurry Pipeline & Pellet Plant CONTENTS Sl. No. Section Page No. 1.0 Background of Prime JV Partners 3 - 5 2.0 Project Background and Status 5 - 6 3.0 Objective of the RFQ 7 4.0 Eligibility Criteria for Prospective JV Partner(s) 7 - 8 5.0 Information / Documents to be Furnished by the 8 - 9 Prospective JV Partner(s) 6.0 Procedure for Submission of RFQ & Time Schedule 9 - 11 7.0 General Conditions 11 - 12 8.0 Contact Address for Further Information 12 - 13 9.0 Disclaimer 13 - 15 Annexure - I: Major Project Facilities 16 Annexure - II: Net Worth Computation 17 MEC/11/15/U999/NMDC JV/RFQ/JV PARTNER/01 Page 2 of 17 © 2013 MECON Limited. All rights reserved. RFQ for selection of JV Partner(s) for Slurry Pipeline & Pellet Plant 1.0 Background of Prime Joint Venture (JV) Partners 1.1 With rising investment in infrastructure / urabanization, rising population of middle class with increasing income levels and thrust on promotion of steel consumption in the rural areas, the demand for steel products in India is projected to grow significantly in the long term which in turn would call for increased demand for iron ore. Two major companies in this segment, viz. M/s NMDC Limited (NMDC) and M/s Rashtriya Ispat Nigam Limited (RINL) are gearing up to meet the expected increase in demand by enhancing production capabilities of existing mines, developing new mines, setting up new integrated steel plants and expanding capacity of existing steel plants. These two Companies have entered into an MOU and are in the process of forming a Joint Venture Company to strengthen their synergy in the sector. 1.2 M/s NMDC Limited were incorporated in 1958 as a Government of India fully owned public enterprise under the administrative control of the Ministry of Steel, Government of India. Since inception, it is involved in the exploration of wide range of minerals including iron ore, rock phosphate, lime stone, dolomite, gypsum, beach sand etc. Being India's single largest iron ore producer and exporter, NMDC is presently producing about 30 million tons of iron ore from 3 fully mechanized mines viz., Bailadila Deposit-14/11C, Bailadila Deposit-5, 10/11A (Chhattisgarh State) and Donimalai Iron Ore Mines (Karnataka State). The Company has its corporate office at Hyderabad. NMDC Projects have following accreditations • ISO 9001: 2008 - QMS Certification for all its iron ore mines and R&D Centre • ISO 14001:2004 - EMS Certification for all its production mines • OHSAS 18001:2007 - OHMS Certification for all its production mines NMDC is presently producing about 22 million tonnes of iron ore from its Bailadila sector mines and 7 million tonnes from Donimalai sector mines. Because of its excellent chemical and metallurgical properties, the calibrated ore from Bailadila deposits has substituted the iron ore pellets in sponge iron making and hence became an important raw material for three major gas-based sponge iron steel producers like Essar Steel, Ispat industries and Vikram Ispat. In addition to these three, the entire requirement of the Visakhapatnam Steel Plant is also being met from Bailadila. MEC/11/15/U999/NMDC JV/RFQ/JV PARTNER/01 Page 3 of 17 © 2013 MECON Limited. All rights reserved. RFQ for selection of JV Partner(s) for Slurry Pipeline & Pellet Plant M/s NMDC Ltd. have made valuable and substantial contribution to the National efforts in the mineral sector during the last five decades and has been accorded the status of schedule-A Public Sector Company. In recognition to the Company's growing status and consistent excellent performance, the Company has been categorized by the Department of Public Enterprises as "NAVRATNA" Public Sector Enterprise in 2008. Besides exploration and mining activities, NMDC has also diversified in the field of renewable energy sector. NMDC has set up a 10.5 MW capacity wind mill in Karnataka. As part of value addition, NMDC is in the process of setting up a green field 3 Mtpa capacity integrated steel plant through BF-BOF route at Nagarnar, district Bastar in the State of Chhattisgarh, India. The Company achieved an annual turnover of Rs 10,704 crores and posted net profit of Rs 6,342 crores in FY 2012-13. Its shares are listed in the Stock Exchange (BSE & NSE). The information on current value at which NMDC shares are being traded in the market can be obtained by visiting website www.nmdc.co.in/investor/stockprice. Government of India has recently reduced its equity share holding in the Company through disinvestment of 10% government shares. Further information about the Company is available at website www.nmdc.co.in. 1.3 M/s Rashtriya Ispat Nigam Limited - Visakhapatnam Steel Plant (RINL-VSP) popularly known as ‘Vizag Steel’, a leading Central PSU & a Navratna Company under the Ministry of Steel is the first shore based Integrated Steel Plant in the country. The Company was established in the year 1982 with its Headquarters in Visakhapatnam. RINL is a market leader in longs with a share of about 10%. Its product-mix include Wire Rods, Rounds, Square, Flats, Channels, Angles & Universal beams. It has been supplying various grades of steel for construction of projects of National importance which include Metros, Power Sector, Bridges, Nuclear complexes etc. RINL has exported finished products to countries like USA, UAE, Thailand, Bangladesh, Nepal, Sri Lanka etc. Its products are made from 100% virgin steel. RINL has a wide marketing network spread across the country. RINL has long term directional plans to expand the capacity of liquid steel to 20 million tonnes in phases by the year 2020 to maintain its important position in the Indian steel market. Under on-going expansion programme, RINL plans to double its capacity to 6.3 Mtpa of liquid steel. The first phase of Expansion to 6.3 Mtpa liquid steel has been brought to the stage of hot commissioning. In addition to MEC/11/15/U999/NMDC JV/RFQ/JV PARTNER/01 Page 4 of 17 © 2013 MECON Limited. All rights reserved. RFQ for selection of JV Partner(s) for Slurry Pipeline & Pellet Plant expansion, RINL is also in the process of adding capacities through revamping / up gradation of existing units like Blast Furnaces, Converters, Sinter Plant and other associated facilities with which capacity will go up to 7.3 mtpa of Liquid steel. RINL has taken number of initiatives for growth of business of the company in addition to its expansion plan, which includes formation of Joint Ventures, acquisition of mineral assets for raw material security, mergers etc. Among many such strategic initiatives taken by RINL, an MOU with NMDC for Slurry Pipeline and Pelletisation Plant has also been signed. In the FY 2011-12, RINL recorded an annual turnover of Rs 14,462 crores and posted post-tax profit of Rs 751 crores. Further information about the Company is available at website www.vizagsteel.com. 2.0 Project Background and Status 2.1 Project Background 2.1.1 As part of further value addition, NMDC intends to set up a 6.0 MTPA iron ore processing plant at Kirandul and a 4.0 MTPA iron ore processing plant at Bacheli (both in Bailadila sector of Chhattisgarh) for production of Blast Furnace pellet grade concentrate . This concentrate is envisaged to be transported through a slurry pipeline system from Kirandul via Bacheli and Nagarnar to Visakhapatnam (Vizag) in Andhra Pradesh (AP). The concentrate off-take would be 2.0 MTPA at Nagarnar and 8.0 MTPA at Vizag as feed for pellet plants / sale. Additionally, about 5.0 MTPA of iron ore concentrate from third parties is also envisaged to be transported from Bacheli / Kirandul up to Vizag using the above mentioned slurry transporation system at mutually agreed terms & conditions. As such, a 15 MTPA (design capacity) iron ore concentrate slurry pipeline system with associated facilities has been proposed to be installed from Bacheli to Nagarnar. Further, a 13 MTPA (design capacity) iron ore concentrate pipeline system is envisaged from Nagarnar to Vizag. Two pellet plants (one of 2 MTPA capacity at Nagarnar and another of 6 MTPA capacity at Vizag) are also envisaged. 2.1.2 The above project is envisaged to be executed in two separate works as follows : MEC/11/15/U999/NMDC JV/RFQ/JV PARTNER/01 Page 5 of 17 © 2013 MECON Limited. All rights reserved. RFQ for selection of JV Partner(s) for Slurry Pipeline & Pellet Plant 2.1.2.1 The 15 MTPA Slurry Pipeline System from Bailadila to Nagarnar with Ore Processing Plants at Bailadila and a 2 MTPA Pellet Plant at Nagarnar, which will be executed by NMDC themselves. 2.1.2.2 The 13 MTPA Slurry Pipeline System from Nagarnar to Vizag and a 6 MTPA Pellet Plant at Vizag, which will be executed under Joint Venture (JV) in which NMDC and RINL are prime promoters. The combined equity share holding of PSU Companies in this Joint Venture Company shall be minimum 52% along with management control. 2.1.3 The indicative project cost under the scope of the above mentioned JV is around Rs.