Calcutta, Oct. 17: Jindal Steel & Power Ltd has acquired a majority stake in Australian coking coal miner Gujarat NRE Coking Coal Ltd, partially securing the supply of this scarce raw material for its steel units.
JSPL, through its various subsidiaries, would acquire up to a 53.62 per cent stake in the company, listed on the Australian Securities Exchange, through a mix of stocks, convertible options and note. At present, it holds around 31.49 per cent in the company.
The Naveen Jindal-company will also get up to 60 per cent of the coal mined from Gujarat NRE’s New South Wales mines in Australia.
JSPL’s move comes after several failed attempts in the past to get a toehold in the coking coal mining business in Australia. Apart from Guj NRE, it was rebuffed by Rocklands Richfield, another coal miner from Australia. However, today the shareholders of the Australian firm approved Jindal’s offer.
Gujarat NRE Coking Coal (GNCCL) is a subsidiary of Arun Kumar Jagatramka’s Calcutta-based Gujarat NRE Coke Ltd, one of India’s top independent producer of metallurgical coke.
“The shareholders of GNCCL, the Australian mining company, have unanimously passed all seven resolutions at the general meeting held yesterday at Wollongong in Australia, which included authority to Jindal Steel & Power Ltd (Jindal Group) to acquire a majority stake in the company,” Gujarat NRE Coke said in a statement to the BSE.
The resolutions are mainly related to the structure of the deal, which includes the issue of Aus $45-million convertible note to Jindal Steel’s subsidiary Jindal Steel and Power (Mauritius) Ltd.
The shareholder approval will pave the way for JSPL to subscribe to 328.5 million new shares at Aus $0.20 as well as an equal amount of unlisted transferable options (convertible to equity) in the Australian company.
The options are exercisable at nil consideration within a period of five years from the date of issue. As a result of the introduction of fresh equity, the holdings of JSPL will increase to 44.68 per cent. Once the options are converted, JSPL’s holding would reach 53.62 per cent.
Guj NRE, operates two hard coking coal mines in the southern coal fields of New South Wales, Australia.
The mines, NRE No. 1 Colliery and NRE Wongawilli Colliery, contain estimated coal reserves of 125 million tonnes (mt) and have a potential mine life of over 30 years. The hard coking coal production is being increased from the current level of around 1.5mt per annum to over 5mt by 2016, according to information available on the website of the firm.
The company also enjoys the advantage of being close to a port facility, Port Kembla Coal Terminal. Access to this terminal offers favourable transportation logistics and reduces transportation costs, the website informed.
At present, JSPL imports 1.5 mt coking coal, which is expected to increase to over 3mt in five years.
JSPL has a steel capacity of about 5.5mt per annum at Angul in Odisha and Raigarh in Chhattisgarh. It plans to commission a 2mt plant in Oman and increase total steel capacity to 11.5mt per annum by 2015-16.