India’s Essar Group looks set to buy the American coal miner, Trinity Coal, from its current owners Trinity Denham Capital Management in a deal worth $550-600 million. It is Essar’s first major coal acquisition abroad and the deal looks set to go through in the next two weeks.
Trinity is one of the top 10 coal producers in the US with reserves of 200 million tonnes and an annual output of about 7 million tonnes.
The deal will provide Essar with coking coal and thermal coal linkages for its steel mills in North America and for a power project currently under construction in India. Essar has a steel plant in Minnesota plus a plant at Sault Ste Marie in Ontario, Canada, which it acquired in 2007 for $1.63 billion. Capacity at Minnesota Steel is being expanded in two phases, with a 4.1 million tonnes per annum (mtpa) pellet plant and another 1.5 mtpa steel plant, which is expected to be completed by 2012 and 2015, respectively. It is also planning to expand capacity of Algoma Steel in Sault Ste Marie to 5 mtpa from 4 mtpa.
Essar Power, has a 1,200-Mw power project being built in Gujarat, which will be dependent on imported coal. It is also setting up a power project at Salaya near Jamnagar in Gujarat which will also be dependent on imported coal and which is due to be completed by 2011.
Essar is one of a number of Indian power producer to look abroad for sources of coal.
1 comment:
This is a big move for Essar and shows a shift in momentum to Indian and Chinese co's in the race to secure raw materials. I bet this isn't the last US to coal company to be taken over by Indian or Chinese firms.
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