Amidst an escalating India-Canada diplomatic tensions,JSW Steel is reportedly going slow on its plans to acquire coal unit of Canada’s Teck Resources.
Given the current scenario, there has been some slowdown in discussions; but the deal has not been called off, sources in JSW told businessline. A wait and watch approach has been adopted to see how the situation pans out in the days to come, they added.
Ties between the two countries deteriorated sharply after New Delhi and Ottawa expelled each other’s diplomats in a dispute over the murder of a Sikh separatist leader in the Canadian province of British Columbia in June. Earlier this week, India suspended visa services to Canadian citizens.
“The deal has not been called off. But some slowdown in discussions happened due to the current situation. So may be what would have transpired in two months, could be pushed back by another two or so,” said sources aware of the developments.
However, paper-work and talks with banks are continuing.
Also read: India-Canada row: What is at stake?
“But obviously we are waiting it out to see how the current situation plays out over the next few days or months, before committing,” another official told businessline .
An investment in Canada or acquisition of a Canadian company by a foreign company (in this case India) generally is approved by Foreign Ministry there, post security reviews.
JSW Steel declined to comment.
Why Teck Resource is important
Teck had in June said that it received several proposals for its steelmaking coal business.
The Canadian major operates four mines (for steel-making coal) in British Colombia region – Elkview, Fording River, Greenhills and Line Creek. Nearly, 60 per cent of the company’s revenues come from the segment whose annual production was around 22 million tonnes in 2022.
In February this year, Teck announced business reorganisation creating two listed entities—Teck Metals (for copper and zinc) and Elk Valley Resources (pure play steel-making coal production), but the plan was withdrawn in April after it failed to get shareholders approvals.
Japan’s Nippon Steel Corporation is reportedly still in talks to pick up a 10-15 per cent stake in the coal unit.
Indian steel-baron Sajjan Jindal’s JSW is also in the fray to pick up “substantial interest”. Teck claims to produce “low-carbon intensive steelmaking coal” and JSW is amongst its largest buyers.
Also read: JSW Steel net profit nearly triples on lower cost
Steel-making coal or coking coal is a key feedstock component. India, despite being the second largest steel maker globally, is the largest importer and buyer of coking coal.
According to data from DGFT, India’s coking coal purchase from Canada was 0.8 mt in April-June 2023, down 22 per cent year-on-year. However, the country continues to be amongst the top five coking coal suppliers to Indian mills for the period.
