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Essar Group acquire US coal miner Trinity Coal

World Coal,

Essar Group, through its subsidiary Essar Minerals, Delaware, has announced an agreement to acquire US coal producer Trinity Coal Partners LLC (Trinity) from energy and commodities-focused fund, Denham Capital, for US$600 million. The deal is subject to relevant approvals and should be closed by the end of March.

Trinity, based in Scott Depot, West Virigina, operates six mining complexes in the Central Appalachian coal basin, with ten surface mines, three underground mines and six highwall miner units in Kentucky and West Virginia. It has a proven resource base of approximately 200 million t of coal, with an even split between met and steam coal.

The strategy
The acquisition raises Essar’s US investment to US$4 billion and forms part of the Group’s strategy to achieve backward integration and secure raw materials for its global steel and power operations, with coal and iron ore prices expected to rise as the global economy begins to recover.

Essar plan to increase coal production at Trinity from 7 million tpa to 10 million tpa. It is reported that half of this initial 7 million tpa output will be shipped to Essar’s Algoma steel plant in Ontario. The remaining thermal coal used in power generation will be sold to US utilities.

A new era
Essar Group chief executive, Prashant Ruia, said of the deal: “Trinity Coal will be an excellent addition to our North American business, ensuring that we become an integrated player in the region. Access to Trinity’s vast coal reserves and the opportunity to work with a team of skilled personnel will take us closer to our vision of becoming one of the lowest cost steel producers in the world. I look forward to welcoming the people of Trinity Coal to the Essar family.”

Ken Woodring, CEO of Trinity commented: “Over the last five years, our partnership with Denham has strengthened our management team and enhanced operational quality to drive value across the organisation. In this new era of our firm, we are excited to become a leading provider of resources to Essar as it increases production to meet demand for its expanding customer base.”

Essar’s  steelmaking capacity is 14 million t, spread across plants in Canada, India and Indonesia. Essar also owns iron ore reserves in excess of 1.4 billion t in Minnesota, and it is scaling up its power generation capacity in India to 6000 MW.

Meanwhile, it is reported that the Group may be planning to float on the London Stock Exchange as part of its plans to raise US$3 billion to fund acquisitions and expand its steel, oil and power businesses. The Group commented: "Essar Group is always looking at a range of different funding options but has not yet made any specific decision with regards to its future financing.”

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