JSW Steel Monday announced its plan to acquire up to 66.67% of Australian miner M Res NSW HCC Pty Ltd (M Res NSW) to enhance its raw material security.
In a filing with the exchange, the company stated that its board, during a meeting on August 12, approved the acquisition of an economic interest of up to 66.67% in M Res NSW through the subscription of non-voting Class-B shares, involving an investment of $120 million.
As per the investment terms, the company will need to invest an additional $50 million in M Res NSW as deferred consideration, payable in 2030.
The company highlighted in its regulatory filing that securing raw materials and optimizing costs are key strategic priorities for JSW Steel, and this acquisition represents a significant advancement towards these goals.
M Res NSW is owned by Matthew Latimore, who also owns M Resources Pty Ltd (M Resources), an international mining, investment, marketing, and trading company based in Australia.
M Res NSW holds a 30% interest in Golden M NSW Pty Ltd (Golden M), which is set to become the ultimate owner of Illawarra Coal Holdings Pty Ltd (Illawarra Metallurgical Coal).
Illawarra Metallurgical Coal operates the Appin and Dendrobium coking coal mines along with related infrastructure in New South Wales, Australia.
The mines have 99 million tons of marketable reserves of prime hard coking coal and have averaged 6.5 million tons per annum in production over the past five years. The remaining 70% of Golden M is owned by Golden Investments (Australia) III Pte Ltd, a subsidiary of Golden Energy and Resources Pte Ltd (GEAR).
Post-acquisition, JSW Steel plans to enter into a market-linked offtake contract with Illawarra Metallurgical Coal for coking coal, reflecting its indirect economic interest in Golden M and its subsidiaries.
JSW stated that the acquisition aligns with its long-term strategic objectives and ensures a stable supply of high-quality prime hard coking coal, which is essential for steel production.
In a media statement the company mentioned, "Illawarra Metallurgical Coal operates as a premium hard coking coal mine. Securing a stable supply of this high-quality coal ensures optimal blast furnace performance and offers JSW Steel valuable coal blending options. With limited prospects for additional premium hard coking coal assets, this acquisition is a crucial move for securing raw materials for JSW Steel."
Indian steelmakers primarily fulfill their coking coal needs through imports.
JSW Steel, aiming for a steelmaking capacity of 50 million tons by 2030, has been enhancing raw material security. In May, the board approved the acquisition of Minas de Revuboe Limitada (MDR), which holds a premium hard coking coal project in Mozambique's Moatize Basin.
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