Gujarat NRE buys 30% of Aussie firm
(The Telegraph, June 23, 2005)

Gujarat NRE Coke has acquired a 30 per cent stake in Zinico Resources NL, an Australian mining company having exploration license in iron ore and other base metals.

The acquisition, which costs India's largest metallurgical coke producer Australian $1.5 million, will make Gujarat NRE Coke the single largest shareholder in the Australian mining company Zinico will soon be listed on the Australian Stock Exchange and after that Gujarat NRE vice chairman and managing director, Arun Kumar Jagatramka, will join the Zinico board.

The development gains significance as it makes Gujarat NRE Coke as the first Indian company to acquire any iron ore mines abroad, ahead of integrated steel makers such as Tata Steel or Steel Authority of India (SAIL), which are also contemplating equity participation in iron ore mines abroad to source the ore for their captive use.

Zinico Resources has secured a portfolio of prospective iron ore and base metals projects, which are located in close proximity to existing world-class mining projects in Tasmania.

Jagatramka said Zinico's 'exceptional' asset portfolio provided an ideal opportunity for Gujarat NRE to gain further exposure to the minerals industry in Australia.

It can be recalled that the Indian company has also acquired a colliery in New South Wales in Australia. The production will start from July 15.

Apart from iron ore, Zinico will also give Gujarat NRE access to base metals like nickel and Zinc.

It would take about six months to one year to develop these mines, said Jagatramka. The total investment is estimated over Australian $100 million. However, the Indian company could not provide any estimate of reserve of iron ore as of now.

"Zinico has seven fields. The prospects are very good as these are located close to some very good mines. The reserve will be known after exploration begins. For this, the company will invest Australian $5 million," a senior company official said.

Looking ahead, the company plans forward integration of the Australian projects. It is also contemplating to sell the produce from the mines in the Australian market as well as in the international market.

The company also has long term plans to get into steel making in the future. If it hits iron ore, supply of the raw material will be secured.

It could be mentioned that many integrated steel plants in India, such as Ispat and Essar, do not have captive iron ore mines. Moreover, steel plants across the globe are also making a beeline for acquiring iron mines to hedge against irregular supply of the ore as well as its soaring prices.

Gujarat NRE coke share closed at Rs.110.65 on Wednesday on the National Stock Exchange (NSE), up Rs 2.60 or 2.41 per cent over the previous day, with 2,66,4461 shares traded.