SunCoke of US in talks to buy 26% in Global Coke

SunCoke Energy Inc, the largest independent producer of metallurgical coke in the US, is in talks with domestic met coke maker Global Coke Ltd for picking up about 26% equity stake in the latter.

“SunCoke Energy plans to invest $30 million for a 26% stake and talks are on,” Devendra Kumar Ojha, managing director of the Kolkata-based unlisted Global Coke, confirmed to DNA.

Interestingly, the development comes at a time when both the companies, SunCoke Energy Inc and Global Coke Ltd, are planning to get listed through initial public offerings, in US and India, respectively.

The deal, if it fructifies, would be valuing Global Coke, which would soon have a capacity of 50,000 tonne of metallurgical coke a month, at a little over $115 million.

“Under the deal, SunCoke would provide operations, engineering and technology support to Global Coke,” Ojha said.

Global Coke currently operates two plants - condemned units that were turned around - at Jamnagar in Gujarat and Sindhudurg in Maharashtra, whose capacities are being raised to 25,000 tonne a month each. It is also setting up 12 mw capacities of co-generation power each at Jamnagar and Sindhudurg.

Global Coke already has a long-term offtake contract for 90% of its expanded capacity.

To strengthen its logistical infrastructure, company is in the process of setting up its own jetty in Goa. It has set up a wholly owned subsidiary in Singapore, Global Minerals and Metals Pte Ltd for coal trading, a operation which currently contributes to around 15% of its turnover.

Global Coke’s turnover was Rs800 crore in 2010-11, which is expected to touch Rs1,200 crore in 2011-12.

While all its existing projects were funded by loans and internal accruals, Global Coke is now preparing to go public and is believed to be in talks with merchant bankers.

SunCoke has been in operation for over 45 years and currently own and operate four metallurgical coke making facilities in US and one in Brazil.

SunCoke is also now setting up its fifth US facility expected to be completed in the fourth quarter of 2011. With this, SunCoke’s coke capacity will rise to 5.9 million tonne a year. It also owns and operates 15 coal mines in the US in Virginia and West Virginia. SunCoke has now targeted Brazil, China, Eastern Europe and India for expansion. Apart from SunCoke, Global Coke has an existing pact with Beacon Hill Resources plc, a LSE-listed company for coal supply.