Indian steel manufacturer JSW Steel’s planned acquisition of a coal concession in Mozambique is embroiled in a legal dispute.
The deal, which involves the purchase of Minas de Revuboè (MdR) from the estate of deceased Australian mining tycoon Ken Talbot, has been put on hold, according to a report by Bloomberg.
JSW Steel had initially agreed to acquire MdR in November 2023 and later agreed to acquire a 92% stake for $74m (Rs6.35bn) in May last year.
However, the Mozambican Government revoked MdR's mining lease, valued at approximately $50bn, before the transaction could be finalised.
This has led to a legal battle between MdR and the Mozambican Government, leaving JSW Steel as a bystander.
According to the report, the Ministry of Mineral Resources and Energy in Mozambique published a notice in August, offering a 30-day period for objections to the concession being awarded to a new entity, Stonecoal.
Stonecoal had applied for the coal-mining rights in August, but the concession has not yet been granted, according to Mozambique's mining licence database.
MdR has initiated legal proceedings in Mozambique to have the original concession reinstated.
A spokesperson for the Talbot estate said: “MdR's focus is on having the original concession reinstated such that it can complete the sale of the project to JSW. We consider the termination of the contract is illegal and does not follow due process.”
MdR disputes the ministry's claim that a lack of exploration justified the permit's cancellation.
The company cites land disputes, including with a local mayor, as reasons for the delay, which were previously acknowledged by the ministry but later disregarded.
Additionally, the company has also started arbitration proceedings in Geneva against the Ministry of Mineral Resources and the presidency, overseen by the International Centre for Settlement of Investment Disputes, the report said.
The first tribunal meeting is expected in the first quarter of this year.
JSW Steel's thwarted acquisition is a setback for its plans to secure essential materials for steel production.
The company highlighted in an August presentation that the concession has the potential to produce 280 million tonnes of premium hard-coking coal.
