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Case Study | investment succ ess
GUJARAT NRE
Gujarat NRE discovers riches
in Australian coal
The coal mining giant has turned to Australia to locate new coal
reserves, drawn by the country’s rich resources, robust economic
credentials and strong government support.
Australia’s rich reserves of premium
coking coal have proved irresistible to
Indian coal mining conglomerate Gujarat
NRE Coke Limited. The company has
acquired two Australian coal mines in less
than two years, and earmarked A$150
million over five years to develop more
collieries in the country.
In addition, the company has stakes in
mineral and metal exploration operations,
including gold, copper, iron ore and
uranium. Australia’s abundant and diverse
mineral resources, experienced industry
professionals and advanced mining
infrastructure ensure Gujarat NRE has a
long future in the country.
Based in Kolkata, Gujarat NRE Coke Limited
was established in 1993 and is the largest
non-captive manufacturer of low ash
metallurgical coke in India. The company
has three coke manufacturing facilities
with a combined production capacity of
over 1 million tonnes per annum. It also
owns a steel manufacturing plant in
Gujarat and wind farms with a capacity to
generate 27.5 mw of green power.
Coal is the dominant commercial fuel in
India, providing half of commercial primary
energy demand and a third of total energy
needs. Demand is projected to grow from
391 million tonnes in 2002 to 758 million
tonnes by 2030. Only China’s demand for
coal is expected to outstrip India’s.
Less than five per cent of India’s coal
reserves are coking coal. As a result, the
country relies on imports to meet about a
quarter of its annual needs. India currently
imports around 22 million tonnes of coking
coal each year, and this is expected to reach
64 million tonnes per annum by 2011–12.
The steel manufacturing sector is expected
to further increase the demand for coking
coal to 100 million tonnes per annum by
2020.
Searching for coal Down Under
Gujarat NRE has operated in Australia
since 2004. The high quality of premium
coking coal was a key reason for investing
in the country, according to Mr Arun
Kumar Jagatramka, Vice Chairman and
Managing Director of Gujarat NRE Coke
Limited and Chairman of India NRE
Minerals Limited.
“We wanted to secure a steady, long-term
supply of coal for our operations,” he says.
“Due to the long history of coal
operations in the country, Australia has
the raw materials, infrastructure,
technology and skilled staff we require.
There are very few competing
destinations for this type of investment.”
Australia’s mineral deposits remain
significantly under-explored. Since 1990,
more than a dozen new world-class deposits
have been discovered. Significant discoveries
are still being made in areas that have been
mined for more than 100 years.
Gujarat NRE purchased the Bellambi West
Colliery in southern New South Wales in
December 2004 for A$25 million. Renamed
NRE No. 1 Colliery, the mine employs 180
people and started operations in August
2005. The first shipment of coal was sent to
India in December 2005. The mine has
already yielded more than 500,000 tonnes
of coal. Gujarat NRE expects to extract up
to 4 million tonnes of coal per annum once
the mine is in full production.
“Due to the long history of coal operations in the country, Australia has the raw
materials, infrastructure, technology and skilled staff we require. There are very
few competing destinations for this type of investment.”
ARUN KUMAR JAGATRAMKA, VICE CHAIRMAN AND MANAGING DIRECTOR, GUJARAT NRE COKE LIMITED
In May 2006, the company purchased
its second colliery at Avondale, also in
southern New South Wales. It is currently
completing initial studies and coal
sampling and plans to reopen the mine
in 2010. The colliery is expected to
provide employment for more than 150
people and produce around 1.5 million
tonnes of coal a year.
Both these operations employ locals who
are experienced in the mining industry as
well as people who are undertaking
training to enter the sector.
“In terms of hiring staff, we have had no
issues,” says Mr Sanjay Sharma, Company
Secretary at India NRE Minerals Limited. “As
the collieries are located in a traditional
mining region, it has been relatively easy to
find people who have the relevant skills and
knowledge. We provide employment for a
large number of people in the community
and as such, have been warmly received
and supported.”
Mr Jagatramka also praised the facilities in
the Illawarra region where the collieries are
located, describing the Port Kembla Coal
Terminal as the best he had seen.
“The excellent infrastructure makes it
effortless for us to transport the coal from
our mines,” adds Mr Sharma.
A land of opportunities
Gujarat NRE has found Australia to be
a land rich with opportunities, and has
invested close to A$75 million in miningrelated
ventures. These include:
> The acquisition of Zelos Resources NL,
a listed Australian company with a
portfolio of coal, gold, iron ore and base
metal projects in Tasmania. The company
has since been renamed Gujarat NRE
Resources NL.
> Investment in Plouton Resources,
which is securing licences to conduct
exploratory work in Australia targeting
coal, oil, gold, copper, iron ore and
uranium deposits.
In November 2006, Gujarat NRE floated
a company called Gujarat NRE Mineral
Resource (GNMR) to carry out oil
exploration in Australia. The company
has access to more than 10,000 square
kilometres of virgin territory in the
petroleum-rich Canning basin of Western
Australia. GNMR will partner with
Australian minerals company Rey Resources
Limited (which is partly owned by Gujarat
NRE) to explore the area.
Government support
Gujarat NRE received support and advice
from the federal, state and local
governments when it was considering
investing in Australia. Invest Australia met
with senior management in Kolkata and
helped identify and evaluate a range of
investment opportunities. The agency also
organised introductions to Australian
companies and government departments
that could facilitate Gujarat NRE’s entry
into the Australian market.
“Australia is an investment-friendly
destination, with a robust economy and the
most stable business and political
environment in the Asia-Pacific region,”
says Mr Jagatramka. “Its regulatory
environment is designed to make it easy for
foreign companies to establish operations
in the country – and that has certainly been
our experience.
“Without the assistance provided by various
departments and agencies at all levels of
government, we would have found it much
more challenging to set up in Australia.
“The welcoming attitude displayed by
government, business and the communities
in which we operate is deeply appreciated,”
says Mr Jagatramka. “We see a long and
prosperous future for us in Australia.”
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Case Study | investment succ ess GUJARAT NRE
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