- 01 Apr 2025
- ICICIdirect Research
JSW STEEL HAS INFORMED THE EXCHANGES THAT IT HAS RECEIVED A LETTER OF INTENT (LOI) FROM BHARAT COKING COAL (BCCL) FOR THE APPOINTMENT AS WASHERY DEVELOPER & OPERATOR FOR DUGDA COAL WASHERY
JSWSTEEL - 1030 Change: -5.80 (-0.56 %)News: JSW Steel has informed the exchanges that it has received a Letter of Intent (LOI) from Bharat Coking coal (BCCL) for the appointment as washery developer & operator for Dugda Coal Washery at Bokaro in Jharkhand, for the period of 25 years. It will have a firm linkage of 2 MTPA of raw coking coal and right over Washery product. Additionally, BCCL will supply raw coking coal to the company at a premium of 2.35% over its notified price.
View: This will enable the company to improve the quality of its domestic coking coal quality through this washery facility. It’s already in the process of commissioning three coking coal mines, which will provide 2 MT of coking coal over the next two years. Additionally, the additional supply of 2 MT of coking from BCCL will strengthen the domestic source, thereby reducing dependence on imported coking coal. This shall result in coal cost savings of ~₹ 700 crore annually for the company resulting in ~₹ 25/share upgrade to our target price calculation. Thus, we maintain a positive outlook on JSW Steel, driven by its strategic capacity expansion, robust domestic steel demand, and anticipated profitability growth aided by impending safeguard duty on steel imports.
Impact: Positive