NEW DELHI (Metro Rail & Steel) : Japan’s JFE Steel has initiated discussions about acquiring a stake in the metallurgical coal business of Canada’s Teck Resources, adding to the growing list of potential investors, which includes mining giant Glencore. This development comes as major steelmakers seek to diversify their sources of coking coal in response to sanctions on Russia, one of the world’s leading producers. The previously undisclosed talks between JFE and Teck have been underway since September, potentially reshaping the global coal industry landscape.
The ongoing tensions and sanctions on Russia have had a significant impact on the global metallurgical coal supply chain. Russia’s status as a prominent producer has made it a central focus in the quest for a stable supply of this vital resource.
Teck Resources, a leading player in the mining industry, refrains from commenting on speculations. Instead, the company has directed the public’s attention to its earlier statement, highlighting its ongoing engagement with various parties regarding the steelmaking coal business. This cautious approach is in line with Teck’s careful and considerate dealings in the constantly evolving world of mining and resources.
Sources close to the matter indicate that the discussions between JFE Steel Corp and Teck Resources are still in their early stages. It remains uncertain whether these deliberations will result in a formal agreement. Critical details, such as the exact stake JFE is interested in and the price they are offering, are yet to be disclosed.
The metallurgical coal industry is a relatively exclusive club, with only a few major players dominating the market. The largest producers hail from Australia, Canada, and Russia.
Notably, Japan’s Nippon Steel had previously expressed its desire to acquire a 10% stake in Teck’s coal business for C$1.15 billion. This valuation placed the entire business at approximately C$11.5 billion, with the option to increase their stake to 17.5%. The interest shown by Nippon Steel underscores the attractiveness of Teck Resources’ coal business to international investors.
Teck Resources had been contemplating the separation of its coal and copper businesses since March. While the initial proposal was voted down by shareholders, the company has remained open to the idea of splitting the two. Earlier this year, Teck also turned down a substantial unsolicited takeover offer for the entire company from Swiss mining and trading firm Glencore. Since then, Glencore has expressed its interest in purchasing the coal business for approximately $8.5 billion.
Teck Resources is at a crossroads, and its CEO, Jonathan Price, has expressed the company’s intention to make a decision on the separation of its coal and metals businesses by the end of this year. Two distinct options are on the table: a complete sale of the coal business for cash or a partial sale with the proceeds being redirected to bolster the copper business.
