One of India’s leading players in the specialty steel, coking coal and ferro-chrome industry, VISA Steel, and one of the United States’ largest independent producers of metallurgical coke, SunCoke Energy, Inc., have decided to form a coke-making joint venture in India.
For some time now, the general trend being observed in India’s steel sector has been a steady increase in the demand for coking coal from large and medium-sized steel producers.
VISA Steel officials said the venture would now try and capitalize on this steady growth, a sentiment which has obviously found an echo in SunCoke, whose head honcho, too, said the coke industry in India offered tremendous growth opportunities.
According to a statement released by both companies, VISA Steel had decided to sell a 49 percent stake in VISA Coke, a 400,000-ton capacity coke oven battery to NYSE-listed SunCoke Energy for about US $67 million. VISA Steel is located in eastern India, in Kolkata.
“This is a great opportunity for VISA Steel to partner with SunCoke, known for its operating and technological expertise, to grow the coke business,” said Vishambhar Saran, chairman of VISA Steel. Saran said in late October that VISA Steel (VSL) had transferred the coke oven assets to its subsidiary VISA Coke Ltd. (VCL).
Fritz Henderson, chairman and chief executive officer of SunCoke Energy, said in a written statement accompanying the announcement, “We are pleased to partner with VISA Steel, a company with strong leadership in the steel and coke industry, to grow our international footprint and establish a coke making presence in India.”
The joint venture will comprise VISA Steel’s existing 400,000 ton-per-year heat recovery coke plant and associated steam generation units at Kalinganagar in Odisha, India. The transaction is expected to close in the first quarter of 2013, subject to customary conditions, including approval from VISA Steel shareholders.
Since metallurgical coke is in high demand, the strategic partnership is expected to also position VCL for better earnings through SunCoke Energy’s expertise.
According to a news report in the Hindu Businessline, in September, VSL had got a corporate debt restructuring package approved, which provided for an initial two-year moratorium and an extended term of repayment for next eight years.
Some reports here said VISA Steel has been posting net losses since fiscal years 2011-12, and the joint venture will infuse much-needed funds. VISA Steel’s board, in September 2012, had approved the restructuring of the company’s debts. As part of the efforts to restructure the company and its debt, the company had decided to make plans to sell off assets and extend loan maturities.
VISA Coke, a subsidiary of VISA Steel, is responsible for running its coke-oven battery and buying of coke for its steel plant. Coke is a very important raw material in steelmaking and the coke-oven battery converts coking coal into coke,
which is then used in the blast furnace to make steel.
There are also expansion plans in the offing, said VISA Steel. The company said that it planned to set up a 1.25 million-ton steel plant with a 100,00-ton manganese alloy plant and a 300-MW power plant in the central state of Madhya Pradesh.
Apart from this, the company also had plans to set up a 2.5 million-ton steel plant and a 500-MW power plant at Raigarh, Chhattisgarh.
Sohrab Darabshaw contributes an Indian perspective to MetalMiner.