 "JSW Steel to invest $120 mn in Australian miner for raw material security")
JSW Steel on Monday announced acquisition of up to 66.67 per cent in Australian miner M Res NSW HCC Pty Ltd (M Res NSW) in a bid to boost raw material security.
In an exchange filing, the company said the board at its meeting on August 12 has approved the acquisition of an economic interest of up to 66.67 per cent in M Res NSW by way of subscription to non-voting Class-B shares, for an investment of $120 million.
The investment would be made through wholly owned subsidiary JSW Steel (Netherlands) BV.
According to the terms of the investment, the company would have to further invest $50 million in M Res NSW towards deferred consideration payable in 2030.
In its regulatory filing, the company mentioned that raw material security and cost optimisation were key strategic priorities for JSW Steel and this acquisition was a step forward in achieving the objectives.
M Res NSW is owned by Matthew Latimore, the owner of M Resources Pty Ltd (M Resources), an international mining, investment, marketing and trading company, with headquarters in Australia.
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M Res NSW owns a 30 per cent interest in Golden M NSW Pty Ltd (Golden M), the proposed ultimate owner of Illawarra Coal Holdings Pty Ltd (Illawarra Metallurgical Coal), whose operations consist of the Appin and Dendrobium coking coal mines and associated infrastructure in New South Wales, Australia.
These mines have total marketable reserves of 99 million tons (mt) of prime hard coking coal and have produced, on average, 6.5 mtpa in the past five years.
The remaining 70 per cent interest in Golden M, the filing mentioned, is held by Golden Investments (Australia) III Pte Ltd, which is a wholly owned subsidiary of Golden Energy and Resources Pte Ltd (GEAR).
As part of the post-acquisition strategy, JSW Steel, either directly or through its subsidiaries, intends to enter into a market-linked offtake contract with Illawarra Metallurgical Coal for the purchase of coking coal, proportionate to its indirect economic interest in Golden M and its subsidiaries.
JSW said that the acquisition aligns with JSW Steel's long-term strategic goals and secures a stable supply of high-quality prime hard coking coal, which is critical for steel production.
"Illawarra Metallurgical Coal is a premium hard coking coal operating mine. A secure supply of this high-quality coking coal allows for superior blast furnace operations and provides JSW Steel with coal blending options. Given the limited visibility of additional capacity premium hard coking coal assets, this acquisition is an important step in securing raw material for JSW Steel," the company said.
Indian steelmakers’ coking coal requirements are mostly met through imports.
JSW Steel, which has a target of achieving steelmaking capacity of 50 mt by 2030, has been beefing up raw material security.
In May, the company’s board had approved acquisition of Minas de Revuboe Limitada (MDR), which owns a pre-development stage premium hard coking coal mine project in the Moatize Basin of Tete Province in Mozambique.