JSW Steel is looking to snap up a major stake in Teck Resources' metallurgical coal unit as it seeks to secure supplies for its expansion plans, according to chairman Sajjan Jindal.
India’s biggest steel producer intends to bid for 20%-40% of Elk Valley Resources, a unit of the Canadian company, Jindal said. Japanese and South Korean mills also plan to buy a stake in the asset, and a combined offer could value the unit at $8-billion, he said.
A transaction is likely to happen within a month, the Indian tycoon said in an interview with Bloomberg Television on Friday.
Teck produces very high quality metallurgical coal, which India needs for steel-making, as the locally mined material is mostly of a lower grade, Jindal said. “We believe that this could be a very strategic fit for us, therefore we are taking a significant stake.”
Securing coal supplies is key for JSW’s plan to almost double its annual steelmaking capacity to 50 million tons in India by the end of the decade. The company is looking for coal assets globally, including in Australia and Canada.
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Bloomberg News reported last week that JSW was seeking partners for an offer to acquire a 75% interest in Elk Valley. A JSW-led consortium could yet face competition for the asset from Glencore, which in June proposed buying the business for about $8-billion as an alternative to a full takeover of Teck.