INDIA'S third-largest steel producer is backing the emerging iron ore story in South Australia in a $10 million deal with junior Apollo Minerals.
 

The Australian-listed Apollo announced yesterday it would farm its three iron ore projects -- in South Australia, Western Australia and West Africa -- into a new vehicle that will be majority-controlled by Jindal Steel and Power's Australian arm, leaving a suite of base metals projects the main focus of Apollo.
 

Apollo chief operating officer Dominic Tisdell said the deal had been a "long journey" and was in the pipeline before the Indian company took a 9.25 per cent stake in the junior less than a year ago.
 

"Jindal is going through a major international growth phase and they are looking to expand their iron ore steel production up to 20 million tonnes per annum, and they need to source a lot of that iron ore offshore," he said on the sidelines of the Mines and Money conference in Hong Kong yesterday, adding it was also a win for South Australia.
 

"Historically, Western Australia has had the limelight because of the presence of the majors, but the direct shipping ore is getting harder to find. South Australia's time is now. In the area we are in, 15 years ago there wasn't one mine in operation; now there are several."

Shares in Apollo jumped 20 per cent on the news to 7.2c.
 

Jindal is also looking for coal exposure and earlier this year lodged a $22m bid for Gujurat NRE Coking Coal, a NSW coalminer Jindal already had a 19.5 per cent stake in. The Indian giant also has coal exploration interests in Queensland and is setting up a Brisbane office to support its Australian interests.
 

"It's not just China that is growing -- India is growing too. It won't have as rapid growth as China, but it has a huge amount of development in front of it," Mr Tisdell said.
 

Apollo also had Chinese parties interested in its iron ore projects and it two Chinese shareholders on its register. "It was important for us to find a strategic partner that could help finance the development of the project and could also take the product themselves," Mr Tisdell said.
 

Jindal will invest $10m into the new vehicle, which will be listed on the Australian market, and Apollo shareholders will receive shares in the new vehicle and will hold about 49 per cent of the new entity. In South Australia, Apollo is targeting an operation that initially produces 2.5 million tonnes of ore per annum, with the initial capital expenditure expected around $400m.