Indian tycoon setting consortium to buy Teck’s coal unit
- August 25, 2023
- Posted by: Quatro Strategies
- Categories: Americas, India, Mining & Metals, Rare Earths & Commodities
Indian business magnate Sajjan Jindal, who heads the $23 billion Mumbai-listed JSW Steel, is reportedly assembling a consortium to bid for a 75% stake in the coal unit of Canadian mining company Teck Resources. This move would put JSW Steel in competition with Swiss commodities giant Glencore, which has also submitted an $8 billion bid for the same stake. The stake in question is in Teck’s coal unit, Elk Valley Resources, which produces a significant amount of steelmaking coal.
Jindal’s interest in this acquisition aligns with India’s increasing demand for steel as it aims to double its annual domestic production capacity to 300 million tons by 2030. India’s per capita consumption of steel is currently much lower than the global average, and domestic steelmakers like JSW Steel, Tata Steel, and Steel Authority of India are seeking to secure reliable coal supplies for their growing production needs.
JSW Steel and other domestic steelmakers in India are looking to reduce their vulnerability to supply shocks, which can lead to increased input costs and volatility in earnings. The acquisition of coal mines, especially those producing steelmaking coal, can provide a measure of stability to their operations by securing critical raw materials.
For Jindal, bidding for the Teck coal unit could be a strategic move to ensure a consistent supply of coal for JSW Steel’s operations. The consortium approach allows Jindal to pool resources and expertise with other potential partners. While the option of financing the acquisition entirely through borrowing is available, Jindal and other Indian tycoons are likely to be cautious about taking on excessive debt due to past experiences with bad debt situations in the country.
In addition to Teck Resources’ coal unit, JSW Steel already has a presence in North America with steel plants in Ohio and Texas, as well as coal mining facilities in West Virginia. The outcome of this bidding competition could have a significant impact on JSW Steel’s future operations and its ability to secure a stable supply of coal for its steel production.
Interested in learning more?
Sign up for Top Insights Today
Top Insights Today delivers the latest insights straight to your inbox.
You will get daily industry insights on
Oil & Gas, Rare Earths & Commodities, Mining & Metals, EVs & Battery Technology, ESG & Renewable Energy, AI & Semiconductors, Aerospace & Defense, Sanctions & Regulation, Business & Politics.
Read more insights
US aims to add 200 gigawatts of nuclear power by 2050, boosting clean energy security
The Biden administration has announced an ambitious plan to triple the United States’ nuclear power capacity by 2050, targeting an additional 200 gigawatts through a combination of new reactor builds, upgrades, and reactivation of existing plants. With a shorter-term goal of adding 35 gigawatts within the next decade, the plan aims…
US-Japan $550bn pact turns trade access into a directed capital weapon
The US and Japan are beginning to operationalize the headline feature of their 2025 tariff accord: a $550 billion, US-directed investment and financing commitment that is meant to channel Japanese capital into projects inside the United States that are framed as advancing both economic competitiveness and national security.
The first projects moving into the formal screening process are reported to be in energy, with an initial consultation-panel session scheduled in Washington this week and further meetings expected soon after, as the two sides build a pipeline that could reach President Donald Trump for final decisions as early as 2026.
Volkswagen in talks to supply EV components to India’s Mahindra
Volkswagen (VW) has entered advanced discussions with Mahindra & Mahindra, an Indian car manufacturer, regarding the utilization of significant electric components from VW’s Modular Electric Drive (MEB) platform. This platform, known as an open framework for electric vehicles (EVs), underpins VW’s electric models, as well as those from other VW Group entities such as Audi and Skoda. Mahindra intends to incorporate central MEB components like electric drive units and battery cells into its own EVs. In August, VW and Mahindra signed a term sheet in which VW would supply electric components to Mahindra. Additionally, VW is reportedly engaged in conversations with other businesses looking to adopt its EV technology.