Essar to buy US’s Trinity Coal for Rs 2,750 cr
By the end of March, Ruias of the Essar group will own coal mines in America after buying steel mills and iron ore mines there three years back.business Updated: Mar 07, 2010 00:37 IST
By the end of March, Ruias of the Essar group will own coal mines in America after buying steel mills and iron ore mines there three years back.
Essar Minerals, Delaware, a subsidiary of the Essar Group has entered into an agreement with private equity firm Denham Capital to acquire 100 per cent ownership of US based Trinity Coal for $600 million (Rs 2,750 crore).
With this, the Ruias investment and commitment in the US would cross $4 billion (Rs 18,400 crore).
The deal, subject to relevant approvals, is expected to close by March end. It will be funded by a mix of equity and debt and will help Essar ensure constant supply of coal for the steel factory in Canada.
The privately held Trinity Coal is among US’s top 10 coal producers with operations in Central Appalachian region and owns and operates mines in Kentucky and West Virginia.
It has reserves of 200 million tonnes of coal, split equally between metallurgy coal for steel production and steam coal for power generation.
Trinity Coal produces 7 million tonnes of coal annually and now the Ruias want to ramp it up to 10 million tonnes.
“We at Essar have an integrated approach to grow our business. Trinity Coal will be an excellent addition to our North American business, ensuring that we become an integrated player in the region,” said Prashant Ruia, CEO, Essar Group.
He said the transaction was part of the group’s strategy to continue to achieve backward integration and to secure raw material needs.
Trinity operates six mining complexes with a total of 10 surface mines, three underground mines and six high wall miners units in Central Appalachian coal basin.
Ruia said the existing management team will be continued. While the entire 100 million tonnes of metallurgical coal will be consumed by Essar’s steel factory, the rest 100 million tonnes of steam coal will be sold to local power companies.