Indian iron ore mining project under threat
Plans for India’s single biggest direct foreign investment project were in turmoil in mid-May after mining giant BHP Billiton, one of two potential investors, was reported to be pulling out of the $10 billion iron ore mining and steel manufacturing project in India’s eastern mineral-rich region. BHP was to mine ore that would be processed by its joint venture partner POSCO of South Korea, but it emerged that BHP Billiton may be refused a mining license because it has no equity stake in the steel plant—a prerequisite under the state government’s policy. POSCO, the world’s fifth-largest steel manufacturer, will still go ahead with its plans.
The Indian government’s taste for using IPOs to facilitate its partial disinvestment from state-owned industries is showing no sign of weakening. Over the past few weeks several public sector giants such as NHPC, Indian Airlines and Air India have announced IPOs. Now the latest to join that bandwagon is Powergrid Corporation, India’s largest power transmission company. It is planning to raise around $330 million through a share issue of approximately 10% of its outstanding equity.
The latest growth figures reported by the Indian insurance sector—particularly private sector insurance companies—are providing strong support to India’s efforts to open up the sector to investment. Many of the private sector insurance companies are in joint ventures with global giants such as Sun Life, Allianz, Prudential, New York Life, Standard Life and Old Mutual. Despite some having been in operation for only a few years, the group as a whole reported 129% growth in new premiums for fiscal year 2004-2005 to $1.2 billion. The industry giant, the public sector Life Insurance Corporation of India (LIC), reported 22% growth in new premiums to $4.2 billion despite seeing its market share fall to 78% from 87%.