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Gujarat NRE Coke Ltd (GNCL), the largest non-captive
metallurgical coke manufacturer in the country, is planning
to raise $50-$100 million from the international market reported
a leading business daily.
The board will meet on December 29 to weigh
the options of raising the funds through ADR, GDR or FCCB.
This is the second time in less than a year
that GNCL is raising funds from overseas markets. It issued
FCCB worth $55 million in March 2005 to fund a spate of mine
acquisitions in Australia.
The proceeds from the second issue will be used
to develop a coal mine it acquired during the year.
Gujarat NRE has decided to expedite the mining
plan for Avondale Colliery in New South Wales (NSW), Australia
to cash in on the booming global coking coal market.
The mine has a reserve of 96 million tonnes
of coking coal. The company is expected to pump in $65 million
to develop the mine, which is likely to start production in
2007.
‘Starting with an initial production capacity
of 0.5 million tonnes, it will go up to an annual output of
1-1.5 million tonnes in three years,’ Aurn K. Jagatramka,
vice-chairman and managing director of GNCL, told The Telegraph.
Coking coal price in the international market
is likely to be at $110 a tonne (f..b basis), while GNCL can
produce it at $60 a tonne in Australia.
With this kind of margin, the company will get
the return on investments in less than two years.
The 29th board meeting will also discuss two
other issues — merger of sister concern FCGL Industries
and alteration of the memorandum of association (MoA).
The majority shares of Avondale Colliery is
with FCGL. “With the merger, the complete ownership
of the mine will come to GNCL. This consolidation will also
bring another Australian colliery to GNCL’s kitty,”
company president Sumit Khetan said.
The change in the MoA is being affected to expand
the company’s business.
The coal mines are also expected to produce
significant volumes of thermal coal (high in ash content),
which can be used for power generation.
Gujarat NRE is now setting up a power plant
using the waste heat recovery system. With the thermal coal
in place, it could be using a dual feed plant.
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