The Naveen Jindal-led Jindal Steel and Power Ltd (JSPL) has acquired a majority stake in Gujarat NRE Coking Coal, the Australian subsidiary of Kolkata-based Gujarat NRE Coke, which would enable it to secure resource supply and minimize risk in prices.
JSPL have now acquired a 52% stake in Gujarat NRE Coking Coal. The deal was done about two weeks back. Now JSPL is the majority shareholder in the company.
Coking coal is the major ingredient in steel production.The company had initially acquired a 19.5% stake, which it later increased to 31.5% in March this year. So far, JSPL has invested about $ 157 million in acquiring the stake.
JSPL want an assurance in supply and price stability, which is to explorie opportunities outside India, as there is a shortage of resources in the domestic market. The company is aggressively looking to acquire coking coal and iron ore mines abroad, specially in West Africa and other regions.
Currently, JSPL imports 1.5 MnT coking coal, which is expected to increase by 3 MnT in the next five years. The company has a steel capacity of about 5.5 MnTPA in the domestic market and 2 MnTPA in Oman, outside India. It is planning to increase the total steel capacity to 11.5 MnTPA by 2015-16.
Gujarat NRE's Australian subsidiary Gujarat NRE Coking Coal has mines in Australia with over 650 MnT of coking coal resources. The subsidiary is also listed on the Australian stock exchange.
The mines NRE NO 1 and NRE Wongawilli are located in the Illawarra region of New South Wales, Australia. The hard coking coal production is being increased from current level of around 1.5 MnTPA to over 5 MnTPA by 2016, making it one of the top 10 hard coking coal producers in the world, according to information released on company's website.
Earlier, JSPL had made an unconditional offer to acquire Gujarat NRE Coking Coal. But the offer was not accepted by promoters and the board, which is also planning to become India's third-largest steel producer by 2015. By 2020, revenues from its steel business are expected to rise about five times to Rs 80,000-1,00,000 crore. Currently, JSPL is India's sixth-largest steel maker.
Gujarat NRE is the largest independent producer of met coke in India with an installed capacity of 1.434 MnTPA.
Source: BS
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