JSW Steel is planning to list an international mining unit in London in the first such move by one of India's fast-growing steel companies.
The country's second-biggest private steelmaker presently only serves about a third of its 4m tonnes of steelmaking capacity from its own iron ore mines.
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But it is working on building up an international mining portfolio, acquiring the rights to explore for iron ore in the mineral rich eastern Indian state of Jharkhand, as well as an exploration licence in Chile. It is also in negotiations to buy mines in Canada and Australia.
"These mining assets are mostly greenfield, which requires a lot of money for development," Seshagiri Rao, JSW Steel finance director told the Financial Times.
"So that's why we wanted to raise that money through taking the mining unit to listing and then we can unlock that value."
The move follows a boom in steelmaking in India as producers take advantage of a fast-growing economy and access to the country's cheap supplies of iron ore to increase capacity.
JSW Steel said it was still too early to provide a valuation for the mining unit or a timeline for the listing and did not elaborate on what mines it plans to buy in Canada and Australia.
However, the mines would be packaged into JSW Steel Netherlands and listed on the London Stock Exchange, Mr Rao said.
Under its expansion plans, JSW Steel hopes to increase its capacity to about 22m tonnes of steel a year by 2011, for which it plans to cover about 23m tonnes of its iron ore needs and 11m tonnes of its coal requirements from its own mines.
By way of comparison, Sesa Goa, an Indian iron ore miner, produces 25m tonnes of the resource a year and has a market capitalisation of about Rs133bn ($3.4bn), according to Mumbai based brokerage, Emkay.
However, Vishal Chandak, of Emkay, said JSW's plan was speculative given the difficulty of executing on mining operations in India and abroad and JSW Steel's lack of an extensive track record in this area.
