JSW grabs up US mines

INDIAN steelmaker JSW Steel has purchased three coking coal mines in West Virginia in a deal worth $US100 million.
JSW grabs up US mines JSW grabs up US mines JSW grabs up US mines JSW grabs up US mines JSW grabs up US mines

JSW Steel

Donna Schmidt

Following the announcement of JSW’s annual results on Friday, company chief financial officer Seshagiri Rao said that the properties, scheduled to begin producing in September, had a total reserve of 123 million tonnes.

In a Bombay Stock Exchange filing the company noted that one of the mines was operational and 1Mt of coking coal would be shipped from that mine in the first year. The company plans to raise production to 3Mt in three years.

The company said the other mines would be ready in 24 months, though Rao did not confirm the total number of mines purchased or the identity of the seller or sellers.

"While the total coking coal requirement of the company is estimated at 5Mt per annum at the current capacity (about 6Mt), the proposed coking coal from the US will give integration to the extent of 20 per cent in the first year and goes up further at enhanced capacity of 11Mt to 35 per cent," the company said.

"The integration will benefit the company immensely even after factoring the higher freight from USA to India.”

The company told various media outlets that JSW was examining fundraising options for its expansion plans.

Currently, JSW has an installed production capacity of more than 6Mt in Vijaynagar, Karnataka, and expects to add another 3Mt there. It also operates a 1Mtpa plant in Salem.

An anonymous internal source initially indicated the steel producer’s plans earlier this year.

“We are in advanced stages of negotiation and the deal will be completed in a month or two,” the official said in February, noting at that time that a deal was close to being met.

The company also said last November it was scouting for international coal assets from the US, Australia, Indonesia or South Africa, and expected to spend $500 million on coal mine acquisitions.

In mid-2008, JSW eyed fellow Appalachian operator United Coal, entering into a race to acquire the company in a deal believed to be worth about $2 billion (RS8600 crore). It withdrew its takeover bid that December.

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