JSW
Steel, headquartered in Mumbai, is reportedly in the process of forming a
consortium to submit a bid for a controlling stake in Teck Resources'
steelmaking coal division. Individuals familiar with the situation have
disclosed this information, suggesting that JSW's move could potentially rival
a substantial $8 billion offer already made by commodities behemoth Glencore
Plc.
The
Indian company, JSW, is actively seeking partners to jointly present an offer
to acquire a 75 per cent ownership stake in the specific asset, referred to as
Elk Valley Resources. This represents a notable shift from their previous
strategy in July, when reports from Bloomberg News indicated that JSW was
exploring the possibility of acquiring up to 20 per cent of Teck's coal business.
Should
the deal materialise, it could result in a valuation exceeding $8 billion for
Teck's coal division. JSW has been in discussions with financial institutions
regarding potential financing for their bid, though these discussions are
on-going, and it's important to note that there's no guarantee that an
agreement will ultimately be reached. The sources sharing this information
preferred to remain anonymous due to the confidential nature of the details
being discussed.
Both JSW
and Teck have opted not to comment on the matter when approached by
representatives. It's worth mentioning that any consortium led by JSW could
potentially face competition from Glencore, which had proposed a purchase of
Teck's coal business in June, offering approximately $8 billion as an
alternative to a full acquisition of the Canadian company, based in Vancouver.
Around
the same timeframe, Teck had acknowledged receiving various expressions of
interest in their coal operations from undisclosed parties. Nippon Steel Corp.
of Japan had initially agreed to acquire a share in a spun-off Elk Valley
Resources back in February, but Teck later abandoned the plan to divide its
coal and metals divisions.
In a
recent development, Glencore has demonstrated its sustained interest in the
deal by reserving $2 billion for the potential acquisition of the Canadian
mining company's coal business. This move contrasts with their usual practice
of returning such funds to shareholders.