JSW Steel to acquire 66.67% stake in Australian coking coal firm for $170 mn

In a bid to ensure a steady supply of coking coal for steel production, JSW Steel will acquire a 66.67% economic interest in the Australian firm M Res NSW for $170 million through its subsidiary, JSW Steel (Netherlands) B.V. This will involve purchasing 60 million Class B shares, which do not carry any voting rights, for $120 million, the company informed via an exchange filing on Monday. The Indian steelmaker will invest $50 million to cover deferred obligations due in 2030. The acquisition is expected to be completed by September 2024.

JSW Steel shares are trading at ₹919.25, up 0.21% from yesterday, with an intraday high of ₹927.50.

Owned by Matthew Latimore of M Resources, an Australia-based international mining and trading company, M Res NSW holds a 30% stake in Golden M NSW, which is set to acquire Illawarra Coal Holdings. The remaining 70% stake in Golden M NSW is held by a subsidiary of Golden Energy and Resources (GEAR). GEAR and M Resources agreed to acquire Illawarra Metallurgical Coal from South32 Limited for $1.6 billion.

Illawarra Coal operates the Appin and Dendrobium coking coal mines in New South Wales, Australia, with reserves of 99 million tonnes and an average annual production of 6.5 million tonnes.

Due to limited domestic reserves of premium-quality coal, Indian steelmakers primarily import coking coal from Indonesia, the USA, Russia, and Australia.

Following the acquisition, JSW Steel will establish a market-linked off-take contract with Illawarra Metallurgical Coal for coking coal. This move is part of JSW Steel's strategy to secure a steady supply of high-quality coking coal, crucial for steel production. The deal supports JSW Steel's goal of securing raw materials, enhancing its blast furnace operations, and ensuring competitiveness in the global steel market.

In May earlier this year, the company had said that it will acquire a 92.19% equity stake in Mozambique-based Minas de Revuboe (MDR). The company owned one of the world’s largest high-quality pre-development stage premium hard-coking coal projects in Mozambique, with JORC reserves of over 800 million tonnes.