International Ferro Metals (LON:IFL) is to branch into retort coal with the acquisition of six coking plants near Newcastle, Australia.
The plants process bituminous coal to produce a high quality carbon product used in ferroalloy and steel production.
IFL is partnering with private South African group Portnex, which specialises in metallurgical coal, to buy the plants from the receivers of Pacific Carbon Pty and Modderriver Minerals.
IFL will own two thirds of a new company that will buy the plants and Portnex the remainder.
The six are on Kooragang Island and have a capacity of 100,000 tonnes of retort coke per annum with an existing customer base in Australia, New Zealand and Asia.
IFL and Portnex have been granted exclusivity for 30 days for due diligence and the paperwork, with IFL’s portion of the deal to be funded from its existing cash.
Chris Jordaan, IFL‘s chief executive, said: "This potential acquisition is an important step in executing our strategy of diversifying our product and customer base.
“The coke can be sold to a distinct customer base, which demands high quality and security of supply.
“We have a long relationship with Portnex working with them on our alternative reductant initiative, and together we have confidence we can return the Pacific Carbon assets to profit."
International Ferro recently posted its first profit since 2008 on the back of record sales of ferrochrome, its staple product.