JSW Steel to Acquire Majority Stake in Australian Mining Company for $120M

JSW Steel announced on Monday that its board has approved the acquisition of up to 66.67% economic interest in M Res NSW HCC Pty Ltd, an Australian company, for USD 120 million. This investment will be made through JSW Steel's wholly-owned subsidiary, JSW Steel Netherlands B.V., according to an exchange filing.

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The Board of Directors approved this acquisition on August 12. The investment involves subscribing to non-voting Class B shares in M Res NSW for USD 120 million. Additionally, JSW Steel is required to invest another USD 50 million in M Res NSW to meet its deferred consideration obligations payable in 2030.

Strategic Acquisition

M Res NSW is owned by Matthew Latimore, who also owns M Resources Pty Ltd. M Resources is an international mining, investment, marketing, and trading company based in Australia. It holds a 30% interest in Golden M NSW Pty Ltd, which is set to own Illawarra Coal Holdings Pty Ltd. Illawarra Coal Holdings operates the Appin and Dendrobium coking coal mines in New South Wales, Australia.

These mines have a total marketable reserve of 99 million tonnes of prime hard coking coal and have produced an average of 6.5 million tonnes per annum (MTPA) over the past five years. The remaining 70% interest in Golden M is held by Golden Investments Australia III Pte Ltd, a wholly-owned subsidiary of Golden Energy and Resources Pte Ltd (GEAR).

Long-Term Strategic Goals

JSW Steel plans to enter into a market-linked offtake contract with Illawarra Metallurgical Coal for purchasing coking coal. This contract will be proportionate to JSW Steel's indirect economic interest in Golden M and its subsidiaries. The acquisition aligns with JSW Steel's long-term strategic goals and ensures a stable supply of high-quality prime hard coking coal, essential for steel production.

Illawarra Metallurgical Coal is known for its premium hard coking coal operations. A secure supply of this high-quality coking coal enhances blast furnace operations and provides JSW Steel with various coal blending options.

This strategic move by JSW Steel aims to secure a consistent supply of essential raw materials for its steel production processes while aligning with its long-term goals.