Indian steel producer JSW Steel is considering the formation of a consortium to bid for a majority stake (75%) in Elk Valley Resources, the steelmaking coal business of Canada’s Teck Resources, Bloomberg reported, citing people with knowledge of the matter.
The people said that talks are ongoing and may not result in an agreement being signed.
The move, which could value the coal business at more than $8bn (C$10.83bn), could potentially rival the offer from Swiss commodities company Glencore for Elk Valley Resources.
Earlier this year, Glencore offered to acquire the steelmaking coal business for nearly $8bn as a stand-alone unit, after its $22.5bn takeover bid was rejected by Teck Resources, which called it “unsolicited and opportunistic”.
At that time, Teck confirmed it had received several proposals for its steelmaking coal operations.
In a statement, Teck said: “The high degree of interest expressed by a wide range of parties underscores the value of Teck’s high-margin, long-life steelmaking coal assets.
“Teck intends to continue to engage with all parties that have indicated interest to identify a path that realises value for shareholders while ensuring continued responsible operations in the Elk Valley to support a sustainable future for the benefit of employees, local communities and indigenous peoples.”
JSW Steel is now looking for banks to finance a potential offer for Teck’s unit.
Last month, Bloomberg reported that JSW Steel was looking to acquire a stake of up to 20% in Teck Resources’ steelmaking coal business.
Recently, Teck signed an agreement with Norden to reduce CO₂ emissions in Teck’s steelmaking coal supply chain.
The agreement is expected to reduce annual emissions by 25% or up to 6,700 tonnes of CO₂ from Norden-handled Teck shipments.