JSW Steel's plans to acquire a 40% stake in Teck Resources' metallurgical coal unit have been significantly delayed due to diplomatic tensions between India and Canada. The company had been in discussions with European and Japanese banks to raise funds for the deal, which could have reached up to $2 billion. However, the ongoing diplomatic standoff has cast doubt on the transaction's future. JSW Steel had been interested in Teck Resources because it produces high-quality raw materials not readily available in India. The company aims to increase its capacity to 50 million tonnes per annum by 2030 and secure its raw material supplies.

While Switzerland's Glencore plc is another bidder for Teck Resources' entire coal company, offering up to $8.2 billion, the diplomatic tensions between India and Canada have put the entire deal in doubt. JSW Steel is now reconsidering its plans and exploring alternative high-quality coal-producing mines in Australia.

JSW Group, which includes JSW Steel, has grown by acquiring various steel assets in India. The group is also seeking to enter the electric vehicle segment in India by acquiring a majority stake in MG Motor India.

CreditSights analysts have noted that the acquisition, if successful, could moderately worsen JSW's leverage ratios, potentially breaching downgrade rating triggers. However, they do not foresee any immediate downgrade risk, as rating agencies may provide time for cost savings to take effect before any rating action. Nonetheless, the acquisition could raise concerns among environmental, social, and governance (ESG) investors due to its size and impact on capital expenditure tendencies.