Essar group firm to buy Trinity Coal in US for $ 600 million

Essar Group CEO Prashant Ruia at a press conference in Mumbai on 6th March, 2010.

The Essar Group today said that one of its subsidiaries, Essar Minerals, would purchase the United States-based Trinity Coal Partners LLC for $ 600 million from Denham Capital, an energy-and-commodities focused global private equity firm.

The deal was announced by Essar Group Chief Executive Prashant Ruia at a press conference here.

He said the transaction would give Essar access to an operational mine with proven resource base of 200 million tonnes of coal in the US and was part of Essar's strategy to secure raw material sources by acquiring mining assets globally for its steel and power operations worldwide.

Essar Minerals, Delaware, and Denham Capital have signed a definitive agreement in this regard.

Trinity is a leading US coal producer with operations in the Central Appalachian region. The deal is subject to relevant approvals and is expected to close by the end of the month.

An Essar press release said that, as one of the top 10 US coal producers, Trinity owns and operates mines in Kentucky and West Virginia, and has a proven resource base of approximately 200 million tonnes of coal – split equally between metallurgical coal and steam coal. It currently produces approximately 7 million tonnes of coal annually and plans to ramp up production to 10 million tonnes per year.

"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," Mr Ruia said.

Mr Carl Tricoli, Managing Partner of Denham Capital, said: "Our investment tenure in Trinity illustrates Denham’s ability to create value from the assets in which we invest. Trinity and Essar are well-suited to work together to meet the production needs of Essar’s facilities."

"Over the last five years, our partnership with Denham has strengthened our management team and enhanced operational quality to drive value across the organization," said Mr Ken Woodring, CEO of Trinity. "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 of 14 million tonnes is spread across plants in Canada, India and Indonesia. It also owns iron ore reserves of over 1.4 billion tonnes in Minnesota. Additionally, the Group is scaling up its power generation capacity in India to 6,000 megawatts (MW).

Denham acquired Trinity in January 2005 and during its ownership, Trinity more than doubled reserves as well as increased productive capacity from approximately 1.7 million tonnes per year to 9 million tonnes per year.

Trinity operates six mining complexes with a total of 10 surface mines, three underground mines and six highwall miner units in the Central Appalachian coal basin. The firm is based in Scott Depot, West Virginia, and employs approximately 650 employees.

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