JSW Steel considers 75% interest in Teck's coal unit

JSW Steel Ltd. is attempting to put together a consortium to compete with commodities giant Glencore Plc's $8 billion offer for the majority of Teck Resources Ltd.'s steelmaking coal business. According to the sources, Mumbai-based JSW is looking for partners for an offer to buy a 75% stake in the asset known as Elk Valley Resources Ltd. That represents a significant change in strategy from July, when Bloomberg News reported that JSW was considering purchasing up to 20% of Teck's coal business.

A sale might be worth more than $8 billion for the coal industry, and JSW has been talking to banks about funding for a potential offer. They asked to remain anonymous because the discussions were private and there was no guarantee that an agreement would be reached. Any JSW partnership may still have to compete with Glencore for the coal asset. Glencore in June suggested purchasing the company for approximately $8 billion as an alternative to acquiring Vancouver-based Teck completely.

Around that time, Teck stated, without identifying the parties, that it had received several indications of interest in its coal business. Before Teck abandoned the proposal to split its coal and metals divisions, Japan's Nippon Steel Corp. had agreed to buy a stake in a spun-off Elk Valley Resources. Glencore demonstrated its continued interest in a deal earlier this month by reserving $2 billion in funds that would have otherwise gone back to shareholders for the possible purchase of the Canadian miner's coal business.