Discussions between India’s JSW Steel and Canada’s Teck over the latter’s stake sale have slowed, Reuters reported.
In the first sign that the diplomatic spat is affecting trade relations, India’s JSW Steel Ltd is slowing the process of buying a stake in Canadian steelmaker Teck Resources’ coal unit, Reuters news agency reported, citing a source close to the discussions.
Relations between India and Canada deteriorated sharply after New Delhi and Ottawa expelled each other’s diplomats in a dispute over the killing of a Sikh separatist leader in the Canadian province of British Columbia in June.
On Thursday, India suspended visa services for Canadian citizens, citing security threats to its employees at its consulates in Canada, an Indian Foreign Ministry spokesman said.
Discussions between JSW Steel – India’s largest steelmaker by energy – and Teck over the stake sale have slowed, although work on paperwork continues, the source said.
The source told Reuters, requesting anonymity because he was not authorized to speak to the press: “We will wait until the problem subsides.”
“We don’t expect things to get out of hand. We are doing the paperwork for the appraisal and talking to the banks and this is still happening,” the source added.
JSW Steel declined to comment.
“We do not comment on market rumors or speculation,” Tech Resources said in an email response to Reuters inquiries.
Industry Canada, which approves foreign investment deals, said an acquisition of a Canadian company by a foreign company would be subject to a national security review under the Investment Canada Act.
A source close to the matter said JSW is in talks with investment banks including Standard Chartered and Deutsche Bank to secure financing for the deal.
The first source said: “The final numbers may range between 34% to 37%.”
JSW Steel is one of the largest customers of Teck’s coal business.
The Vancouver-based company has twice rejected an unsolicited $22.5 billion offer to buy the entire company from global miner and trader Glencore. In July, the company said it had received offers from “various” interested parties for its coal business.
Japan’s Nippon Steel also said it remained interested in Teck’s coal business, having agreed in February to buy a 10 percent stake following the split.
For India, Canada is the fourth largest exporter of coke used in steelmaking, according to Indian government data. The top three are Australia, Russia and the United States.