JSW may be in race for Canadian steel co

MUMBAI: Algoma Steel, the Canadian company on the lookout for a strategic investor, might meet potential bidders and brief them this week. International reports named the Sajjan Jindal-led JSW Steel as one of the interested suitors, with Severstal and Evraz of Russia and Brazil’s Companhia Siderurgica Nacional (CSN) also in the fray.

JSW Steel refused to respond to the reports and company officials were unavailable for comments. An international newswire had earlier quoted JSW Steel’s finance director Sheshagiri Rao as saying that “synergies between his company and Algoma will be examined”. Only last month, the company had denied that it is interested in Algoma.

But the reports were enough for Algoma shares to jump Canadian $2.3 to close at Canadian $53.89 on the Toronto Stock Exchange on Tuesday. JSW Steel’s shares were up 0.5% to Rs 535.8 at the BSE on Wednesday. Its shares have climbed 13% in the past week, but analysts said the climb was more due to the possibility of product price hikes.

JSW Steel has mentioned in the past that it wants to acquire cold-rolled mills — facilities that make high value steel products — in Europe or in North America. But sources close to the company point out that the plans have been hit by high valuations in the industry, especially after Mittal-Arcelor and Tata-Corus deals.

Algoma, valued at about $1.5 billion, had earlier held talks with German steelmaker Salzgitter, but differences in valuations saw the deal being called off. The Canadian steelmaker has a capacity of 2.6 million tonnes. But lack of access to raw materials might be a problem for suitors like JSW Steel. On the other hand, CSN has operations in the US and can access iron ore from its mines in Brazil.