JSW Steel to buy 92.2% stake in Mozambique-based mining firm for $73.8mln

Indian steelmills are dependent on imports for coking coal and procures majority of the key ingredient from Australia, Russia, the United States.Indian steelmills are dependent on imports for coking coal and procures majority of the key ingredient from Australia, Russia, the United States

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JSW Steel said that its board has approved acquisition of Mozambique-based mining company  Minas de Revuboe (MDR), as the steelmaker looks to benefit from MDR's  high-quality coking coal, crucial for steel production.

The company, through its subsidiary JSW Natural Resources
Limited,  will acquire  92.19% equity stake and shareholders loans of
MDR for $73.75 million.  The steelmaker said that the deal enables access to more than 800 metric tonnes of premium hard coking coal reserves in Mozambique, according to an investor presentation from May 17.

MDR owns a high quality and large scale pre-development stage premium hard coking coal mine project in the Moatize Basin of Tete Province, Mozambique, the company added.

The deal is subject to approval from Ministry of Mineral Resources
and Energy, Mozambique  and other applicable customary approvals.

Earlier in the year, JSW Steel flagged that it is exploring various options, including acquisitions and strategic alliances, to enhance its coking coal supply amid goals to increase its production capacity to 37 million tonnes per annum by FY25 and to 50 MTPA by 2030.

ALSO READ: JSW Steel Q4 net profit plunges 65% to Rs 1,299 crore amid higher expenses, low other income

Reportedly, the company is also in talks to acquire a 20 percent stake in the Blackwater coal mine, owned by Australia's Whitehaven Coal, in a deal valued between $750 million and $1 billion. Its previous attempt to acquire up to a 75 percent stake in Canada's Teck Resources' metallurgical coal business did not materialize.

Indian steelmills are dependent on imports for coking coal and procures majority of the key ingredient from  Australia, Russia, the United States, and Canada with Australia being one of the biggest suppliers. However, the recent spike in prices of the steel-making ingredient has raised production costs for steelmakers.