JSW Steel confirms deal talks with Teck Resources unchanged amid India-Canada diplomatic row

JSW Steel Vijayanagar plant

JSW Steel has not changed its plans for a potential stake buy in the metallurgical coal unit of Canada’s Teck Resources amid souring diplomatic relations between India and Canada, Jayant Acharya, Joint Managing Director (Jt MD) and Chief Executive Officer (CEO), JSW Steel, told Moneycontrol in an exclusive interview on October 23.

The Sajjan Jindal-led steel giant had earlier said that it was considering buying a 20-40 percent stake in the Teck Resources unit.

"Our focus has not changed. I think the India-Canada situation will improve over time. We will continue to engage in discussions with the company, and if there is value and merit in the asset, we will look at it," Acharya said.

Last month, Reuters reported, quoting sources, that the Sajjan Jindal-led conglomerate is going slow on its plans to acquire the coal unit of the Canadian firm, reflecting signs that the ongoing frosty relationship between both countries is straining corporate ties.

When asked about the timeline for concluding this deal, Acharya said, "It is difficult to say because the conclusion will have to happen on both sides. We will know this over time."

Teck is the world’s second-largest exporter of sea-borne hard coking coal, and its quality makes it much sought-after as the world seeks greener steel production. The steel giant's interest in Teck highlights growing requirements for the companies to choose greener ingredients amid preparations for a low-carbon future.

Teck did not immediately respond to a request for comment.

India imports the steel-making ingredient coking coal from countries including Australia, Russia, the United States, and Canada. The deal, if it passes through, will help the steel maker put a lid on costs amid worries of higher coking coal costs in 4QFY24.

The ties between India and Canada came under severe strain following Canadian Prime Minister Justin Trudeau's allegations last month of a ''potential'' involvement of Indian agents in the killing of Khalistani separatist Hardeep Singh Nijjar in June.

The row deepened last week after Canada pulled 41 diplomats from India in response to India's threats to revoke the official status of those diplomats if they didn't leave. Canada now has 21 diplomats in India. The 41 who left were accompanied by 42 dependents.

Meanwhile, to address the input cost issue, the steelmaker is looking to procure coking coal from various sources internationally while also mulling the development of domestic mines.

"We will continue to look for strategic assets, either in terms of a stake or alliance, as long as the quality of coking coal meets the objective and as long as the commercial value makes sense," Acharya said.