Sanjeev Gupta's GFG group to buy coal mine in Australia

Tuesday 09th January 2018 11:25 EST

Industrial entrepreneur Sanjeev Gupta’s GFG Alliance group’s Simec division has signed an agreement to buy the Tahmoor mine in New South Wales, Australia, from Glencore. Details of the deal were not disclosed, though market estimates have put the value of the deal at about $100m (£74m). Tahmoor, which has 340 staff, is a major supplier of coking coal to the nearby Whyalla steelworks, which GFG bought last summer. The deal saved more than 5,000 jobs at the plant, which had been pushed into administration by falling commodity prices.

Current production at the mine is about 2m tonnes a year of high-quality coking coal which, as well as supplying Whyalla, is sold internationally. Acquiring Tahmoor will safeguard supplies to Whyalla. Gupta said that when combined with the steelworks and iron ore mines that came with Whyalla, Tahmoor would allow the business to become more integrated. “This is an exciting step forward in our stated strategy to create an end-to-end businesses in Australia, from raw materials and energy right through to high-value finished products ready for market.”

The deal is subject to regulatory approval but is expected to complete in the first few months of the year. Buying Tahmoor is just the latest move in GFG’s strategy of snapping up distressed industrial assets that has seen it expand into steel production and recycling, energy, property, shipping, banking and commodities trading.

The company acquired parts of Tata’s UK steel operation when its Indian parent tried to dispose of the whole British business two years ago, before reversing its decision. GFG also bought Rio Tinto’s aluminium smelter and hydro power plant in Scotland. Other UK acquisitions include chunks of the collapsed Caparo engineering group, Midlands car parts manufacturer CovPress and Scottish bike company Shand Cycles.

In December GFG announced a £700m investment plan to acquire or build 500MW of renewable energy generation to power steel plants in the UK as part of its “GreenSteel” strategy. Under this the business aims to quadruple production capacity to 5m tonnes a year, making it the country’s biggest steel producer. GFG has also acquired a mothballed steel plant in Georgetown, South Carolina, which plans to restart. While some have questioned the logic behind acquiring mothballed units, Jay Hambro, chief investment officer and chief executive of Simec, has described the group’s assets as stable and delivering regular returns.

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