JSW Steel Looks at Global Coking Coal Assets, Supports Safeguard Duty as India Fights Import Rush

JSW Steel, India's second-largest steel producer, is accelerating its bid to lock in raw material supplies and defend margins with a rise in low-cost steel imports that have been squeezing the local industry. CEO Jayant Acharya said the company is willing to add new coking coal assets internationally, if such acquisitions are commercially and strategically meaningful, as part of a broader effort to shield operations from price risks and supply risks.

 

Strategic Acquisitions for Raw Material Security:

JSW Steel's board has recently cleared the acquisition of a 92% holding in Mozambique-based Minas de Revuboe (MDR) for $74 million, which provides access to more than 800 million tonnes of high-quality hard coking coal reserves. The company is also considering additional global opportunities, including a major holding in an Australian coal firm, to secure a stable and low-cost supply of this vital steelmaking input. CEO Acharya underscored that such steps assist in protecting the company from the volatility of global prices and also maximize logistics, as these assets are so close to India.

 

Impact of Import Surge on Margins

The Indian steel sector has witnessed a steep increase in imports, especially from China, which has negatively impacted the profit margins of indigenous producers. JSW Steel Chairman Sajjan Jindal pointed out that sluggish global demand, coupled with high Chinese production and exports, has resulted in higher steel imports into India, which have exerted downward pressure on prices and profitability. During the fourth quarter, JSW Steel's profits declined 64% compared with the year-earlier period, mainly due to higher coking coal prices and import competition.

 

Support for Safeguard Duty and Tariffs:

JSW Steel is a staunch supporter of the recent imposition by the government of a 12% provisional safeguard duty on five segments of steel products for 200 days, based on the Directorate General of Trade Remedies (DGTR) recommendation. The company welcomes this move as a step in the right direction to make the playing field level and stem the influx of low-cost dumping, especially since India continues to be exposed to surplus steel from international markets. Analysts expect these responsibilities to raise local prices and assist in maintaining margins for top players such as JSW Steel.

 

Capacity Expansion and Green Initiatives

In spite of the present headwinds, JSW Steel is going full steam ahead with an aggressive expansion plan, where it aims to have a domestic steelmaking capacity of 50 million tonnes per annum by FY31. It is also investing in green steel projects and clean energy, such as a new green steel unit and a large solar-wind-battery project at its crown jewel Vijayanagar plant.

 

Industry Outlook

With the government's push for infrastructure and strong domestic demand, JSW Steel anticipates steel consumption in India to stay firm. But the company still urges policy actions to mitigate the threat of cheap imports and volatility in global markets.

 

We will consider acquiring new coking coal assets if it is strategically and commercially viable. Safeguard duty or short-term tariffs are a welcome move for the domestic steel industry, particularly since India is vulnerable to cheap imports and excess steel arriving on our shores," said CEO Jayant Acharya.

 

Source: Argus Media, Deccan Herald, Economic Times, Entrepreneur India, The Hindu Business Line, NDTV Profit