New York: World’s largest steel producer ArcelorMittal has expressed interest in buying the troubled US-based coal firm Massey Energy Co, says a media report.
Quoting people familiar with the matter, the Wall Street Journal said “steel giant ArcelorMittal SA is among the companies that have expressed interest in buying Massey Energy Co if the coal miner decides to sell itself.”
Luxembourg-based Arcelor’s preliminary exploration of a possible deal began a few months ago and is in the early stages, the report added.
Last week, Coal India chairman Partha Bhattacharyya had said that the company is in talks to acquire mines from two US companies, Peabody Energy Corp and Massey Energy Co.
Quoting a person familiar with the situation, the daily said, “the talks have focused on Coal India’s possible purchase of a Massey mine but have yet to turn serious.”
David Khani, an analyst at FBR Capital told the WSJ that “steel companies with a presence in India are among the most eager to secure such assets because India’s coal generally is of poorer metallurgical quality than the coal found in China, the US or Australia.”
Indian steel companies are “scouring the world for supply,” Khani told WSJ.
The most advanced discussions so far are with rival Alpha Natural Resources Inc, which has submitted an offer for Massey. Besides, Arch Coal Inc of St Louis, and Pittsburgh- based Consol Energy Inc also are exploring Massey deals.
In recent weeks, Massey’s board has been exploring strategic options, including whether to pursue a sale and open a formal auction. The firm also is examining recapitalisation to pay investors a dividend or to buy back shares.
Massey, the sixth-biggest coal producer in the US, also could decide to maintain the status quo, the daily said.
Massey’s consideration of a sale comes as its stock price has been driven down following an April explosion at the company’s Upper Big Branch mine in Montcoal. It killed 29 miners in the worst US coal-mining accident in 40 years.
As of Friday, Massey’s stock had fallen 14% from the day of the accident. Massey’s shares rose 10 cents Friday to $47.12 on the New York Stock Exchange.