Sajjan Jindal-led JSW Steel is planning to bid for a majority stake in Teck Resources’ coking coal business. The Canadian company is considering various proposals, including a partial sale of its steel-making coal business.
The Indian company has initiated discussions with Teck Resources to acquire anywhere between 20% and 75% stake in latter’s steel-making coal or coking coal, business. The stake would be priced anywhere between $1 billion and $8 billion, depending on the percentage it intends to acquire, sources close to the development said.
Teck Resources’ coking coal (a type of coal that is used in the process of making steel) business is housed under Elk Valley Resources. Earlier in February this year, Teck Resources had announced plans to reorganise its business into two separate publicly-listed companies: Teck Metals Corp and Elk Valley Resources.
The separation “will create two world-class resource companies and provide investors with choice for allocating investment between two businesses with different commodity fundamentals and value propositions.”
According to sources, to acquire a larger pie, JSW Steel would form a consortium of “interested parties” to acquire a majority stake. The discussions are at a “very early stage” and there is no confirmation the talks would be “conclusive” and result in a deal, they added.
Earlier JSW Steel was in talks to acquire up to 20% stake, with discussions in the preliminary phase, and had also sought bank financing to fund the deal.
When contacted a JSW spokesperson said the company did not wish to comment.
Earlier in April, Swiss commodities firm Glencore had placed a bid for a majority stake in Elk Valley Resources, but it was rejected by Teck Resources which termed the offer as “unsolicited and opportunistic”.
However, late in June Glencore made another offer, which included the acquisition of the latter’s metal mines in North America also. There were also others such as Japan’s Nippon Steel Corp in the fray. Certain media reports pegged the deal up to $8 billion, which JSW Steel, if it forms a consortium, has to better.
In an interview with FE in July 24, JSW Steel Joint MD & CEO Jayant Acharya said that the company would be “selectively” bid for iron ore and coking coal mines in a bid to ensure raw material security. The company intended to “look at” coking coal mines that might come up for bidding in India, Australia, Canada or other places.