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India’s JSW Steel is slowing down the process of buying a stake in the steelmaking coal unit of Teck Resources (TSX: TECK), Reuters reported, quoting a source close to the discussions.
Ties between India and Canada deteriorated sharply after New Delhi and Ottawa expelled each other’s diplomats in a dispute over the murder of the Sikh separatist leader Hardeep Singh Nijjar in British Columbia in June.
India suspended visa services for Canadian citizens on Thursday, citing security threats to its staff in its consulates in Canada.
The source mentioned that discussions between India’s largest steelmaker, by capacity, and the Canadian miner regarding the stake sale had slowed down, although work on the paperwork continued.
“We will wait until the issue subsides,” the source told Reuters, declining to be identified as they were not authorized to speak to the press.
“We are not expecting things to go out of hand. We are doing the paperwork for the valuation, talking to banks and this is still happening,” the source added.
JSW Steel declined to comment.
“We do not comment on market rumors or speculation,” Teck Resources said in an emailed response to Reuters queries.
Teck’s stock fell 4.4% following the Reuters report.
A source close to the matter said that JSW is in talks with investment banks including Standard Chartered and Deutsche Bank to secure the funding for the transaction.
“The final numbers could revolve in the range of 34-37% stake,” the first source said.
JSW Steel is one of the largest customers of Teck’s coal business.
In July, Teck’s CEO said the company is still engaged with several suitors for the sale of its metallurgical coal business.
This week, Rio Tinto chief executive Jakob Stausholm said the miner plans to make more investments in Canada but ruled out any chance of taking a run at Teck.
(With files from Reuters)
