JSW Steel in talks to buy 20% in Australian coal mine for $1 billion

Whitehaven selling part of stake in Blackwater mine

Billionaire Sajjan Jindal’s JSW Steel is in talks to buy a 20 per cent stake in a coal mine owned by Australian firm Whitehaven Coal at a valuation of up to $1 billion for the stake.

The transaction could close as early as March if talks are successful, said a source close to the development. JSW Steel plans to increase its capacity to 50 million tonnes per annum by 2030, using acquisitions to secure raw materials to meet its target. The company is scouting for high-quality coal mines in Australia and other places in the world.

Whitehaven is selling part of its stake in the Blackwater mine in Central Queensland as it seeks joint venture partners worldwide. Negotiations with JSW Steel are over the valuation with a price band of $800 million to $1 billion for the 20 per cent stake, thus giving a total valuation of the company at $4-5 billion, said the source.

The transaction will be led by the JSW Group’s Indian listed entity, JSW Steel. Apart from JSW, the Australian company is negotiating with other buyers, including Nippon Steel of Japan. But at present, the Japanese company is busy with its acquisition of US Steel, the source said.

JSW Steel and Whitehaven spokespersons declined to comment on Monday.

In 2023, the JSW Group had made an offer to acquire a 40 per cent stake in the metallurgical coal unit of Canada’s Teck Resources. JSW Steel was to invest up to $2 billion of its own money while getting other partners, but the talks stalled over valuation.

The demand for high-calorific value thermal coal from Australia is expected to remain strong among Indian companies. Analysts said Russian sanctions and weather-related impacts in Queensland, Australia, have also contributed to recent tightness in coal prices.

Indian companies, including the Adani and Tata groups, have made investments in coal mines overseas.

The Adani group ventured into Australia in 2010 with the purchase of the Greenfield Carmichael Coal Mine in the Galilee Basin, Central Queensland, and the Port of Abbot Point near Bowen in North Queensland. The group had planned to invest $16.5 billion in the Australian coal mine and railway network to transport coal to the nearest port, but has scaled down the investment in line with demand. GVK, Lanco, Essar, and Vedanta groups have also acquired coal mines overseas.

JSW Steel’s share price closed flat at Rs 820 a share, giving it a market valuation of Rs 2 trillion.

Jindal has built his empire by acquiring several steel assets in India, including Ispat Steel’s unit in Maharashtra and Bhushan Power and Steel, and power assets of the Jaypee group.

The group is also in the race to acquire a majority stake in MG Motor India to enter the electric vehicle (EV) business in India. It announced a Rs 40,000 crore investment in a new commercial and electric car manufacturing project in Odisha earlier this month. Later, JSW Steel and JSW group entities announced they would invest about Rs 65,000 crore to set up an integrated manufacturing complex in Jagatsinghpur district of Odisha.