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JSW Steel will be competing with global steel major Japan’s Nippon Steel and other major bidders to acquire 20 per cent stake in Australia’s Blackwater coal mine from Whitehaven Coal.
Though companies are yet to decide on the final valuation, the deal is expected to be about $1 billion, said a source close to the development.
Whitehaven had acquired two coal mines — Blackwater and Daunia — from BHP last October for a cash consideration of $3.2 billion. The valuation of the overall deal could see major jump in few months after acquisition, if the deal for 20 per cent is closed at $1 billion, he added.
This is the second attempt by JSW Steel to acquire a mining asset overseas after pulling out of race to acquire a majority stake in the metallurgical coal business of Canada’s Teck Resources. The stake was later picked up by Swiss mining and trading major Glencore Plc.
Coking coal is a key input for steelmaking and domestic steel makers are completely dependent on imports from Australia, Russia and Canada. A few traces of coking coal found in India are of inferior quality and it remains largely unexplored.
A JSW spokesperson declined to comment on Blackwater coal mine aquisition.
Securing supplies
JSW Steel has developed relationship with specific suppliers in Australia, Canada, Mozambique and Indonesia and exploring other regions for coking coal supply to enhance it raw material security.
It has also entered into yearly contracts with overseas suppliers to ensure consistent quality of various grades of raw material. In India, JSW Steel has been focusing on backward integration and operates 13 iron mines. Of this, nine are in Karnataka and four in Odisha.
With a target to increase capacity to 50 million tonne per annum in next 10 years from current 28 mtpa, JSW Steel is looking to secure supplies of metallurgical coal for its coal-fired blast furnaces in India.
Adani Group is already investing $16.5 billion in Australia’s Carmichael mine project. Import of coking coal from Australia stood at 13.21 billion tonnes from April-August 2023.
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