Metallurgical coke producer
SunCoke Energy, Inc.
) ventured into the Asian market by entering into a joint venture
with Indian steel maker VISA STEEL. SunCoke has been looking to
expand its operation in the global coke markets and this Indian
joint venture fits the bill perfectly. If everything is in order,
the deal is expected to close in the first quarter of 2013.
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Per the agreement, the company will invest $64 million (Rs. 368
crores) and have 49% interest in the venture with VISA STEEL
retaining the remaining 51%. The joint venture will comprise VISA
Steel's existing 400,000 metric ton ("MT") per annum heat
recovery coke plant and associated steam generation units at
Kalinganagar in Odisha, India.
The Indian steel industry has grown rapidly and is presently the
fourth largest steel producer in the world. With per capita
annual steel consumption of 121.3 pounds (55 kgs) compared to the
world average of 454.1 pounds (206 kg), the Indian steel market
has ample room for growth in the forthcoming years.
Coke is an integral part in the production of steel and demand
for steel is on the rise in the Indian market due to rapid
infrastructural development. Hence, we believe the SunCoke joint
venture in the Indian subcontinent will not only be opportunistic
but also reap the desired returns for the company. We also
believe a stable political environment in India along with a
strengthening dollar will add to the benefits of the deal.
SunCoke presently has a coke making facility in Vitoria, Brazil,
which it operates for a Brazilian affiliate of
). We believe the decision to expand in other international
markets with solid growth potential bodes well for the future
prospects of the company. The company also has plans to open coke
plants in China.
Headquartered in Lisle, Illinois, SunCoke Energy is a producer
and supplier of coke needed for the steel making process. The
company has 1,160 full time employees and a market cap of $1.09
billion. SunCoke currently retains a short-term Zacks #3 Rank,