Gujarat NRE buys third Aussie mine
(The Telegraph, July 5, 2005)

Gujarat NRE Coke Limited, the largest non-captive metallurgical coke manufacturer in the country, has bought a coal mine in Australia, its third acquisition there in the last six months.

The company has taken on lease the entire old Avondale Colliery and part of Huntley Colliery in the Southern Coalfields of New South Wales, Australia.

Gujarat NRE Coke (GNCL) will spend Australian dollar 80 million for the acquisition and development of mines, which have recoverable reserves to the tune of 96 million tonne (mt).

Arun Jagatramka, vice chairman and managing director of GNCL, said the strategic investment would strengthen the company's position in the Southern Coalfields.

The coalfields is known for producing high quality hard coking coal. The investment makes sense as the colliery is close to the NRE No.1 Colliery and the company can exploit the benefits of owning two collieries nearby, he added.

GNCL will produce 1.5 mt of coal from these mines, named NRE NO.2 Colliery.

The NRE 1 Colliery. acquired in December, will start production this month at 1 mt per annum, which will be later scaled up to 2 mt.

By early 2007, GNCL will have access to total 3.5 mt coal from Australia. Of this, 2 mt will be hard coking coal.

The entire volume will be shipped to India to procure 1.4 mt metallurgical coke at the company's two plants in Gujarat and Karnataka.

The Australian buy will make GNCL self-sufficient in raw materials supply.

The acquisition was done through GNCL's Australian joint venture company, Gujarat NRE FCGL Pty Ltd. It is, however, subject to ministerial approval.

The company will fund the project through the foreign currency convertible bond issue that has raised $50 million.

Last month, GNCL had bought a 30 per cent stake in an Australian mining company with license in exploring iron ore and other base metals.

GNCL is the first Indian company to acquire any iron ore mines abroad, ahead of integrated steel makers like Tata Steel or the Steel Authority of India Ltd.

Ernst & Young's mergers and acquisitions divisions has acted as lead corporate finance advisors and Corrs Chambers Westgarth as legal advisors to the company.

GNCL's stock rose 0.98 percent or Rs.1.20 to Close at Rs.124.10 on the National Stock Exchange today with 161,85,82 shares being traded.