Essar Global in talks to acquire US coal miner Trinity Coal for $600 million
05 Mar 2010
Essar Global Ltd, the owner of Essar Steel, is in talks to acquire the US-based coal miner Trinity Coal from the energy and commodities-focused fund Denham Capital Management for up to $600 million.
Essar Global Ltd, an international conglomerate operating in six business areas - steel, oil and gas, power, communications, construction, shipping and logistics, with the group having an enterprise value of over $20 billion, plans to use the coal to run its steel plant in North America, the Financial Times reported today citing a person familiar to the matter.
Milton, West Virginia-based Trinity Coal, founded in 2005 by industry executive Jeff Hoops and Denham's predecessor, hedge fund manager Sowood Capital Management LP, is the 21st biggest coal producer in the US, according to the US Energy Information Administration.
Trinity, operating in the Central Appalachian coal basin, owns a variety of surface and underground mines in southern West Virginia and eastern Kentucky that are estimated to have reserves of 200 million tonnes of both steam and metallurgical coal and annual output of around 7 million tonnes.
It sells its coal to electric utilities, steel manufacturers, coal brokers, and other buyers primarily in the eastern US.
Boston-based Denham Capital Management had hired Citigroup to sell Trinity Coal in an auction in November 2007 as demand for coal was fast growing due to rising oil and gas prices in the US, but had to abandon the auction due to the onset of the global financial crisis.