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JSW Steel to start production in September from its recently acquired USA coal mines

 


13-Aug-2010

JSW Steel is expected to start production from September from the coking coal assets in the US which it acquired in the month of May this year for a total consideration of $100 million to partially meet the rising raw material need of its steel business. The company is planned to produce 1 million tonnes of coal in the first year starting from September 2010 which will go up to three million tonnes in the third year of operation.

The acquired coal assets with resources of 123 million tonnes are located in West Virginia in the US with estimated reserves of around 45 million tonnes on part of the area where drilling has already been carried out. One of the mines is already operating and the mine has its own railway load out and barge facility. Originally these mines were owned by a string of US-based companies.

JSW Steel, part of the $8 billion O P Jindal Group is India's third-largest steelmaker. The company currently has an installed production capacity of a little over six million tonnes in Vijaynagar in Karnataka and is working to add another three million tonnes to it. It also operates a one million ton per annum plant in Salem. As per the company reports this integration will benefit the company immensely even after factoring the higher freight from USA to India. While the total coking coal requirement of the company is estimated at 5 million tonnes per annum at the current capacity (about 6 million tonnes) the proposed coking coal from US will give integration to the extent of 20per cent in the first year and goes up further at enhanced capacity of 11 million tonnes to 35-40 per cent.

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