India-Canada dispute: JSW Steel eases back stake purchase in Teck Resources 

In a sign that a diplomatic spat is influencing trade ties, India’s JSW Steel Ltd is slowing down its process to purchase a stake in the steelmaking coal unit of Canada’s Teck Resources. 

Ties among India and Canada weakened pointedly after New Delhi and Ottawa ousted each other’s diplomats in a disagreement regarding the murder of a Sikh dissident leader in the Canadian territory of British Columbia in June, a foreign ministry spokesperson said, citing security threats to its staff in its consulates in Canada. 

India on Thursday suspended visa services for Canadian residents, the source added.  

The source said that discussions between JSW Steel – India’s largest steelmaker by capacity – and Teck over the stake deal had slowed down, however work on the paperwork was going on. 

“We will wait until the issue subsides,” the source said exclusively to Reuters on condition of anonymity as they were not authorised to talk 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 insider added. 

JSW Steel declined to comment whereas Teck Resources said in an emailed response to Reuters, “we do not comment on market rumours or speculation.”  

Canada’s industry ministry, which approves foreign investment deals, said that the procurement of a Canadian organisation by a foreign company would be dependent upon national security survey under the Investment Canada Act. 

A source close to the matter said that JSW is in talks with investment banks including Standard Chartered and Deutsche Bank to get the funding for the transaction. 

“The final numbers could revolve in the range of 34 percent to 37 percent stake,” the first source said. 

JSW Steel is one of the largest customers of Teck’s coal business. 

The Vancouver-based organisation has two times dismissed an unsolicited $22.5bn bid for the whole organisation from global miner and trader Glencore. In July, the organisation said it had gotten offers from “various” interested parties for its coal business. 

Japan’s Nippon Steel has likewise said it stays keen on Teck’s coal business, having in February consented to purchase a 10 percent stake post-split. 

For India, Canada is the fourth biggest exporter of coking coal utilised in the steel business, as per data available with the Indian government. The initial three being Australia, Russia and the U.S. 

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