Gujarat NRE Coke : Using expansion and diversification as tools for growth
(The Indian Express, Ahmedabad, 20 July 2005)

Gujarat NRE Coke Limited, a private sector non-captive producer of low ash metallurgical coke, is diversifying into steel making and power generation. The largest domestic non-captive metallurgical coke producer is setting up a 3 lakh tonne per annum steel rebars facility at Gandhidham in Gujarat at a cost of about Rs 50 crore. The company will make rebars from sponge iron, scrap and Ferro alloys. The project would be completed by December 2005.

The 20-mw power plant, at an investment of Rs 80 crore, will be ready by December 2006. Initially, the company will mostly use sponge iron from the market to make rebars. Six months after the steel mill start working, the company intends to go for backward integration and set up a sponge iron manufacturing facility as well. According to initial estimates, the capacity will be equal to that of steel making (3 lakh tonnes).

GNCL will invest another Rs 50 crore in the sponge iron facility. The company plans to use iron ore from its newly acquired Australian mining unit to feed the sponge iron plant. GNCL has acquired a 30 per cent stake in Zinico Resource NL, which has secured prospective iron ore and base metals projects in Tasmania in close proximity to existing world-class mining projects.

The company claimed that it would still be cheaper to import coal from Australia than wheel it to Gujarat from mineheads in the country. Steel plants across the world are making a beeline for mines to hedge against irregular supply as well as soaring prices. The company plans to buy 30% of the equity of Australian exploration company Zinico Resources NL for an undisclosed amount.

The portfolio of assets complied by the board and management of Zinico Resources is exceptional and present an ideal opportunity for our company to gain a further strategic exposure to the broader minerals industry in Australia. Jagatramka is scheduled to join the Zinico Resources board once the Australian company is listed on the Australian Stock Exchange. Gujarat NRE Coke is an Indian metallurgical coke producer and has an annual capacity of 500,000 metric tonnes.