SOURCE: India Globalization Capital, Inc.

India Globalization Capital, Inc.

December 15, 2010 08:00 ET

IGC Enters Into MOU for Mining of Iron Ore

BETHESDA, MD--(Marketwire - December 15, 2010) - India Globalization Capital, Inc.  (NYSE Amex: IGC), a company competing in the rapidly growing materials and infrastructure industry in India, announced the signing of a Memorandum of Understanding ("MOU") with Kommu Venkateshwara Metal Miners (KVM) to establish a mine and export facility in Andhra Pradesh, India.

KVM has approximately 500 acres of land with rich iron ore deposits. IGC and KVM will form a joint venture that will be 60% owned by IGC and will focus on mining iron ore. The iron deposits on the property are estimated to be over 100 million metric tons (MT). According to geology reports and tests, the grade of iron ore on the property is relatively high with 61% to 65% Fe content. The joint venture will have exclusive rights to mine the land in perpetuity. The initial focus of the joint venture will be to establish mining facilities to extract 300,000 to 400,000 MT of ore fines in the first year of production, reaching 1 million MT in the third year. IGC's initial investment will be about $3 Million in cash and IGC will repurpose equipment from its construction business to facilitate operations. Additional capital will be contributed as the production capacity is expanded. The net margins to IGC in the initial phase are expected to be between 20 and 25%. Platts, a global provider of energy and metals information, recently posted CFR prices to North China for 62% iron ore at about $170 /DryMT. 

Ram Mukunda, CEO, commented, "IGC, through its subsidiaries in India, has customers in China, operations at ports and experience with mining, transportation and shipping ore from India to China. We have consistently articulated a plan to vertically integrate our iron ore business to maximize our margins. This joint venture represents a significant step to realize this plan at a modest capital cost."

Mukunda added, "China presently consumes about half of all iron ore shipped worldwide. India is the third largest supplier of ore to China and is also a major consumer in its own infrastructure development. Between domestic consumption in India and increased demand from China, IGC believes that becoming vertical rapidly, with control over the process, is a key part of its strategy to increasing shareholder value."

About IGC:
Based in Bethesda, Maryland, India Globalization Capital (IGC) is a materials and construction company operating in India. We supply iron ore to China and rock aggregate to the infrastructure industry in India. For more information about IGC, please visit the company's web site at www.indiaglobalcap.com.

Forward-looking Statements:
Some of the statements contained in this press release that are not historical facts constitute forward-looking statements under the federal securities laws. Forward-looking statements can be identified by the use of the words "may," "will," "should," "could," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "intends," "potential," "proposed," or "continue" or the negative of those terms. These statements reflect management's current views and are subject to risks and uncertainties that could cause actual results to differ materially from those projected, expressed or implied in these statements. Factors that could cause actual results to differ, relate to: (i) ability of the parties to successfully execute on contracts and business plans, (ii) ability to raise capital and the structure of such capital including the exercise of warrants, (iii) exchange rate changes between the U.S. dollar and the Indian rupee, (iv) weather conditions in India and (v) the ability of the Company to access ports on the west coast of India. Readers are cautioned not to place undue reliance on these forward-looking statements. The Company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events, or otherwise. Other factors and risks that could cause or contribute to actual results differing materially from such forward looking statements have been discussed in greater detail in the Company's Annual Report on Form 10-K for the year ended March 31, 2010 filed with the Securities and Exchange Commission.

Contact Information

  • Investor Relations Contact:
    Mr. John Selvaraj
    301-983-0998