JSW Steel’s proposed acquisition of coking coal assets in Mozambique is expected to take longer as the steelmaker awaits clarity from the country’s incoming government amid ongoing legal disputes, chief executive officer Jayant Acharya told Moneycontrol in an interview. The delays stem from legal action initiated by the target firm, Minas de Revuboe (MDR), against the Mozambique government over issues related to a mining concession.
The acquisition is a strategic move for JSW Steel, supporting its goal of securing high-quality raw materials to optimise its cost structure. This aligns with the company’s ambitious plans to boost production capacity to 37 million tonnes per annum by FY25 and further expand to 50 MTPA by 2030.
Moneycontrol had reported earlier this month that MDR initiated legal action against the Mozambique government through the International Centre for Settlement of Investment Disputes.
"There was impending pressure on the government. The government is not able to take that call and an injunction [is] already filed. The government is in election mode and is just finishing their elections. After that, the new government will take steps to secure as per the agreement. We don't see that as a challenge. However, we'll engage with the new government to ensure the resolution of the asset is done," said Acharya. In the national election held this month, Mozambique's ruling party, Frelimo, retained power, extending its five-decade-long rule in the southern African nation.
MDR owns a high-quality and large-scale pre-development stage premium hard coking coal mine project in the Moatize Basin of Tete Province. The deal is still subject to approval by the Ministry of Mineral Resources and Energy in Mozambique and other customary approvals.
JSW Steel, through its subsidiary JSW Natural Resources Limited, will acquire a 92.19 percent equity stake and shareholder loans of MDR for $73.75 million. The steelmaker said that the deal enables access to more than 800 million tonnes of premium hard coking coal reserves in Mozambique, according to an investor presentation from May 17.
Meanwhile, as part of its international plans, the Indian steelmaker completed acquisition of a 20 percent stake in Illawarra coking coal asset, a group of mines and infrastructure in New South Wales, Australia. With the ongoing efforts of backward integration, the management expects coking coal costs to decline by $20-25 per tonne sequentially in the current quarter.
Coking coal, or metallurgical coal, is a high-carbon, hard coal used to create coke, an essential ingredient in steelmaking. Around 780 kg of coking coal is needed to produce 1 tonne of steel, as coke aids in reducing iron ore usage and supports the furnace charge in blast furnaces.
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