JSPL acquires majority stake in Gujarat NRE Coking Coal

The company had initially acquired 19.5% stake, which was increased to 31.5% in March this year

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 minimise risk in prices.

“We have now acquired a 52 per cent stake in Gujarat NRE Coking Coal. The deal was done about two weeks back. We are now the majority shareholders in the company,” Ravi Uppal, managing director and group CEO, JSPL, told Business Standard.

The company had initially acquired a 19.5 per cent stake, which it later increased to 31.5 per cent in March this year. Coking coal is the major ingredient in steel production.

So far, JSPL has invested about A$157 million in acquiring the stake.

“At JSPL, we want an assurance in supply and price stability, which is why we are exploring opportunities outside India, as there is a shortage of resources in the domestic market,” Uppal said. The company is aggressively looking out to acquire coking coal and iron ore mines abroad in West Africa and other regions.

Currently, JSPL imports 1.5 mt coking coal, which is expected to increase to over 3 mt in the next five years, he said. The company has a steel capacity of about 5.5 MT per annum in the domestic market and 2mt per annum in Oman, outside India. It is planning to increase the total steel capacity to 11.5 mt per annum by 2015-16.

Gujarat NRE’s Australian subsidiary Gujarat NRE Coking Coal has mines in Australia with over 650 million tons 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 MTPA to over 5 MTPA by 2016 making it one of the top 10 hard coking coal producers in the world, according to information on company’s website.

Gujarat NRE is the largest independent producer of met coke in India with an installed capacity of 1.434 MT per annum.

Earlier, JSPL had made an unconditional offer to acquire Gujarat NRE Coking Coal. But the offer was not accepted by promoters and the board.

JSPL 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.