Indian steelmaker JSW set to gain access to Australian coking coal mines through acquisition

Indian steelmaker JSW Steel said Aug. 12 it that will acquire an indirect economic interest in an Australia-based mining and trading company in a deal that will give JSW exposure to South32's metallurgical coal mines in Australia.

JSW Steel will acquire up to 66.7% of economic interest in Australia-based M Res NSW, which owns 30% interest in Golden M.

Golden M is the proposed owner of South32's Illawarra met coal business in Australia.

JSW's announcement comes just ahead of South32's sale of the Illawarra met coal operations, which South32 said is expected to be completed in September(opens in a new tab).

After Golden M closes the transaction with South32, JSW said it will "...enter into a market-linked offtake contract with Illawarra Metallurgical Coal for purchase of hard coking coal in proportion to its indirect economic interest in Golden M and its subsidiaries."

South32 in February had first announced the sale of the Illawarra met coal operations to the joint venture entity owned by M Resources and its other partner for up to $1.65 billion.

M Res NSW is owned by Matthew Latimore, the owner of M Resources, which is an international mining and trading company headquartered in Australia.

The Illawarra met coal operations consist of the "Appin and Dendrobium coking coal mines and associated infrastructure in New South Wales, Australia," JSW said in an Aug. 12 release that was disclosed to the Indian stock exchanges.

The two mines have total marketable reserves of around 99 million metric ton of prime hard coking coal and have produced an average of around 6.5 MMt/y in the past five years, JSW said.

As part of the JSW's acquisition deal, the company said it will invest up to $120 million for acquiring the economic interest in M Res NSW.

JSW has been looking to acquire overseas coking coal mines, with the most recent transaction reported in May, which allowed the company gain access to premium hard coking coal reserves in Mozambique, according to media reports.

JSW's plans to get access to coking coal mines come in the backdrop of India's ambitious target of achieving 300 MMt of steel production capacity by 2030, which would be an 86% increase from 161 MMt in 2023.

Coking coal is a critical ingredient to produce steel and India typically imports more than 70% of its coking coal requirements, mostly from Australia.

In 2023, India's met coal demand reached 98 MMt, while imports were 74 MMt, S&P Global Commodity Insights data showed.

In 2024, India's met coal demand is set to surpass 100 MMt for the first time, according to Commodity Insights data.