JSW Steel is considering forming a partnership to compete with commodities giant Glencore's $8 billion offer for the majority of Teck Resources' steelmaking coal business, according to some sources.
Mumbai-based JSW is seeking partners for an offer to acquire a 75% interest in the asset, known as Elk Valley Resources, sources said. That is a marked shift in its approach from July, when Bloomberg reported JSW was interested in up to 20% of Teck’s coal business.
According to sources, JSW has been talking to banks about funding for a potential offer, and the deal might be worth more than $8 billion for the coal industry. Sources said that discussions were still in progress and that it was uncertain whether an agreement would be achieved.
Any JSW consortium could yet face competition for the coal asset from Glencore, which in June proposed to buy the business for about $8 billion as an alternative to a full takeover of Vancouver-based Teck. Around that time, Teck said it had received indications of interest in its coal operations without naming the interested parties. Japan's Nippon Steel Corp had agreed to take a stake in a spun-off Elk Valley Resources in February before Teck dropped the plan to split its coal and metals businesses after failing to muster shareholder support.
Teck, under the direction of CEO Jonathan Price, is still under pressure to come up with a strategy that can defeat both its failed split proposal and a prospective Glencore full takeover. Glencore hinted earlier this month that it was interested in working with Teck by reserving $2 billion for the possible purchase of the Canadian miner's coal business.