Essar Group and Denham Capital announce a purchase-sale agreement for Trinity Coal for US $600 million
March 06, 2010
• Deal will give Essar access to an operational mine with proven resource base of 200 million tons of coal in USA
• Transaction is part of Essar’s strategy to secure raw material source by acquiring mining assets globally for its steel and power operations worldwide
MUMBAI and BOSTON – Essar Group through its subsidiary Essar Minerals, Delaware (“Essar”), and Denham Capital (“Denham”), an energy- and commodities-focused global private equity firm, announced today a definitive agreement by which Denham will sell its ownership of Trinity Coal Partners LLC (“Trinity”) to Essar for US $600 million. Trinity is a leading U.S. 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.
Commenting on the deal, Prashant Ruia, Essar Group Chief Executive, said: “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.”
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.”
Rewant Ruia, Director-Essar Group, said: “Essar’s long-term business strategy is to ensure that its operations have proximity to global markets. It is also focusing on backward integration and securing access to raw material sources in geographies where it has operations.”
“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 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.”
The transaction is part of Essar’s strategy to continue to achieve backward integration and to secure raw material needs for its global steel and power operations. 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, Minn. 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 tons per year to 9 million tons 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, W. Va. and employs approximately 650 employees.
About Trinity Coal:
Trinity is a growth-oriented U.S. coal producer in the Central Appalachian coal basin, operating a variety of surface and underground mines in southern West Virginia and eastern Kentucky. Trinity sells both steam and metallurgical coal to electric utilities, steel manufacturers, coal brokers, and other buyers primarily in the eastern United States.
About Essar Group:
The Essar Group is a multinational conglomerate and a leading player in the sectors of Steel, Energy, Power, Communications, Shipping Ports & Logistics, Construction, and Mining & Minerals. With operations in more than 20 countries across five continents, the Group employs 60,000 people, with revenues of USD $15 billion. For more information, visit www.essar.com.
About Denham Capital:
Denham Capital is a leading global private equity firm, with offices in Boston, Houston, Short Hills, New Jersey and London. With approximately $4.3 billion of invested and committed capital, Denham makes direct investments in all segments of the energy and commodities value chain, including oil and gas, mining, timber, power, carbon assets and energy-related infrastructure and services. The firm invests globally, with investments currently in the US, Canada, South America, Europe, Russia/CIS, Asia and Australia, and across all parts of the capital structure and all stages of the corporate and asset lifecycle, from development projects to mature, operating businesses. Denham typically targets investments in the $50 million to $250 million range. For more information about Denham Capital, visit www.denhamcapital.com. Denham Capital does not provide investment advisory services to the public. Denham Capital Management “SM” is a trademark of Denham Capital Management LP.
Essar Group