acquisition of coal mining firm Minas de Revubo (MDR) by JSW

Hello and I welcome you all at Global affairs. Recently a major deal has been cracked by JSW and that will help India's energy needs. JSW Steel's board of directors approved the acquisition of coal mining firm Minas de Revubo (MDR) for about $74 million. The steelmaker officially said on Friday that the purchase of a 92 percent stake in MDR will give JSW access to more than 800 million tonnes of premium hard coking coal reserves in Mozambique. MDR's mine is not yet operational but the company aims to start developing the mine in the 2024-25 financial year. And production will start soon. 

 Is this deal important?

 Following the start of the Russia-Ukraine conflict, the Argus-assessed Australian PLV hard coking coal price crossed $600/t in March 2022. On May 17, it was at $237 per tonne, Fluctuations in coking coal prices have been a concern for Indian steelmakers, as they work to increase production in anticipation of rising demand from the infrastructure and automobile sectors.  Certainly, due to the Russia-Ukraine conflict, India's economic development faced a coal crisis as India used to import huge amount of coal from that country but due to USA restrictions, India had to reduce coal imports in huge quantity.The company estimates capital expenditure of Rs 200 billion ($2.4 billion) in financial year 2024-25 as it will increase its steelmaking capacity. 

JSW Steel is targeting a production capacity of 50 million tonnes per annum by financial year 2030-31.  This deal was very necessary considering India's industrial capacity, although it will definitely be a blow to India's goal of reducing carbon imports by 2050 and zero carbon ambition by 2070.

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