NEW DELHI (Commodity Online): India’s steel major Essar Minerals, a subsidiary of the Essar Group, has inked a pact with private equity firm Denham Capital to acquire 100 per cent ownership of US-based Trinity Coal for $600 million.

The deal is expected to close by March end. It will be funded by a mix of equity and debt and will help Essar ensure constant supply of coal for the steel factory in Canada.

The privately held Trinity Coal is among US’s top 10 coal producers with operations in Central Appalachian region and owns and operates mines in Kentucky and West Virginia.

It has reserves of 200 million tonnes of coal, split equally between metallurgy coal for steel production and steam coal for power generation.

Trinity Coal produces 7 million tonnes of coal annually and now the Ruias want to ramp it up to 10 million tonnes.

Essar feels that Trinity Coal will be an excellent addition to its North American business, ensuring that Essar become an integrated player in the region.

The transaction was part of the group’s strategy to continue to achieve backward integration and to secure raw material needs.

Trinity operates six mining complexes with a total of 10 surface mines, three underground mines and six high wall miners units in Central Appalachian coal basin.

Meanwhile, India’s NMDC Ltd is betting on the expansion plans of steel companies to find a market for the additional iron ore it plans to produce from its mines in the next couple of years.

The company currently produces about 30 million tonne, primarily from its mines in Chhattisgarh and Karnataka. By opening three more mines, including two in Chhattisgarh and one in Karnataka, it could take its production capacity up to about 50 million tonne.

However, analysts feel NMDC would be left with significant surplus ore in the years to come, owing to the plans of the private sector steel companies to own mines both in India and abroad.

Some of the new steel plant projects proposed by these companies, particularly in Karnataka have been tagged to the availability of iron ore mines for captive use.