15 March 2023 – After the merger of two Indian stainless steel companies, they seem to be urgently looking for fresh capital to refinance their debts. Has the company’s marriage brought bigger problems into the house? Indonesia is threatening nickel miners with the withdrawal of their mining licences. And Asian stock markets react positively to rising US bank shares.
Indian stainless steel group with more drastic problems?
After the merger of the two Indian stainless steel groups Jindal Stainless Ltd. and Jindal Stainless Hisar was approved and completed at the end of 2022, the Jindal Group is now urgently trying to raise fresh capital.
Investors in Green Bonds wanted
Even though there is no official launch yet, the group is spreading through the media that it is thinking of issuing green bonds to further restructure its debt and to be able to refinance more cheaply. Clearly a test to see how investors react to it and a possible indication that the group may not be quite as well off as it would like to make it known via its publications.
Exports of Jindal slumped by 80%
In addition, export taxes on steel and stainless steel forced Jindal to make nearly 95% of its sales in the domestic market in at least one reporting period last year. The company’s exports had slumped by 80% after the imposition of the duty.
Loops in financing and bad debt?
So the merger of the two stainless steel groups, which had already been announced in 2020 and had dragged on until the end of 2022, may have torn holes in the financial ceiling of the two companies that are not apparent at first glance. In addition, one of the two companies may have brought bad debts with it, which must now be eliminated quickly before the problems with it become even bigger.
Indonesia threatens nickel miner with licence revocation
The Indonesian government has once again made it clear that nickel reserves are not strategically intended for export and should be kept in the country to benefit from higher value export products.
Withdrawal of mining licences looms
According to a recent Reuters report, Luhut Pandjaitan, Coordinating Minister for Maritime and Investment Affairs has threatened to revoke the mining licences of nickel mining companies if they do not comply with the country’s environmental laws.
Indonesian nickel mining under criticism
The Indonesian government is increasingly criticised for letting environmental protection slide in the mining and processing of nickel. Environmental groups had clearly warned that the Indonesian environment could be permanently destroyed by the overexploitation of nickel.
Government investigates operations at Indonesia Morowali Industrial Park
Luhut also announced at an economic forum in the capital Jakarta that the processes at the largest nickel processing complex, the Indonesia Morowali Industrial Park (IMIP) operated by Tsingshan Group, will be closely scrutinised. A government team is currently investigating environmental problems and workers’ complaints about restrictions on their rights.
Asian markets positive today
Asian markets reacted positively today to signals from the United States suggesting that, for example, the Federal Reserve could raise interest rates much less sharply.
US bank shares rise
After a US bank caused turmoil on the markets due to financial difficulties, US bank shares have recovered. So a scenario like 2008 is not to be expected at the moment. This has clearly contributed to the positive mood on the markets.
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