JSW set to buy 2 coal mines in US

JSW Steel is close to acquiring two coal mines in the US.“We are in advanced stages of negotiation and the deal will be completed in a month or two,” a company official told DNA Money on the condition of anonymity.The mines are located in West Virginia, a district known for its coal reserves, the official said. Incidentally, United Coal, the company JSW Steel wanted to buy two years ago, is in the same area. However, DNA Money could not ascertain the total reserves in the mines or the price JSW will pay for the acquisitions. The steelmaker said in November last year that it was looking to spend $500 million on acquisition of coal mines. Seshagiri Rao, the joint managing director and group chief financial officer could not be reached for comment despite repeated calls and messages.The official, however, said the reserves are lower than what United Coal had. United Coal, with its mines in West Virginia and Kentucky in the US, had total reserves of 165 million tonne.JSW Steel was looking to pay around $1.5-2 billion for the company, but later retracted as it found the valuations expensive.The company has been scouting for coal assets to acquire across the globe, from the US to Australia, Indonesia to South Africa. It has been importing coking coal from Australia and aims to secure 50% of coal supplies through captive sources, including global buyouts. JSW Steel, which produced around 7 million tonne of steel last fiscal, will hit the 10 million tonne mark once its ongoing expansion gets over by the next fiscal-end. The increase in production will require use of an additional 5 million tonne coking coal. The company had in 2006 bought a coal mine in Mozambique with reserves of 200 million tonne. However, after exploration and detailed study of the coal, JSW found that the coal had high ash content, making it useless for steelmaking. “We are looking at alternative sites, as the Mozambique project is commercially unviable,” Sajjan Jindal, vice chairman and managing director, JSW Steel said in October last year.The steelmaker has said that the Mozambique mines will be sold to its recently listed sister company JSW Energy. “Fortunately or unfortunately, around 80% of the coal is in the form of thermal coal at Mozambique. We will probably get it valued and sell to JSW Energy. The remaining 20% will be used by our steel plants,” Jindal said in December last year.