Talks between India’s JSW Steel and Canada’s Teck over the sale of the latter’s shares had slowed, Reuters reported.
In the first sign that a diplomatic row is affecting trade ties, India’s JSW Steel Ltd is delaying the process to buy a stake in the steelmaking unit of Canada’s Teck Resources, Reuters news agency reported, citing a source is close to the discussions.
Ties between India and Canada have 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.
India on Thursday suspended visa services for Canadian citizens, a foreign ministry spokesperson said, citing security threats to staff at consulates in Canada.
The source said talks between JSW Steel – India’s largest steelmaker by capacity – and Teck over the stake sale had slowed, although paperwork was being worked on.
“We will wait until the matter is resolved,” the source, who asked not to be identified because they were not authorized to speak to the press, told Reuters.
“We don’t expect things to get out of hand. We are doing the paperwork for the valuation, talking to banks and this is still happening,” the source added.
JSW Steel declined to comment.
“We do not comment on market rumors or speculation,” Teck Resources said in an emailed response to questions from Reuters.
Canada’s Ministry of Industry, which approves foreign investment deals, said the acquisition of a Canadian company by a foreign company would be subject to a national security assessment 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 transaction.
“The final figures could range from 34 to 37 percent of the shares,” the first source said.
JSW Steel is one of the largest customers of Teck’s coal operations.
The Vancouver-based company has twice rejected an unsolicited $22.5 billion bid for the entire business of global miner and trader Glencore. In July, the company said it had received offers from “several” interested parties for its coal business.
Japan’s Nippon Steel has also said it remains interested in Teck’s coal business, after agreeing in February to buy a 10 percent stake following the split.
For India, Canada is the fourth largest exporter of coking coal used in the steel sector, according to Indian government data. The first three are Australia, Russia and the United States.