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Gujarat Buys BHP's Elouera Coal Mine for A$49 Million (Update2)

By Tan Hwee Ann

May 16 (Bloomberg) -- Gujarat NRE Resources NL, a unit of India's largest non-state producer of steelmaking coal, agreed to pay A$49 million ($41 million) to buy the Elouera coal mine in Australia from BHP Billiton Ltd.

Buying Elouera will enable Gujarat to tap rail links and storage, which will help it start production at its other mines, Gujarat said today in a statement to the Australian Stock Exchange. The company said it plans to start production at its Australian mines before June 30.

Coal demand from Indian steelmakers is rising, with imports of coking coal likely to rise 10 percent this year, according to the country's mining ministry.

``Apart from providing quality infrastructure and mining equipment for Gujarat's southern coalfields production strategy, including a private rail link, it gives the company additional coking coal reserves,'' said Arun Jagatramka, chairman of Gujarat NRE Coke Ltd., the parent company, in the statement.

Shares of Gujarat NRE rose as much as 4 cents, or 13 percent, to 35 cents, and traded at 33 cents at 12:38 p.m. Sydney time.

BHP, the world's largest mining company, ceased mining at Elouera in New South Wales state in June 2005, the Melbourne- based company said in an e-mailed statement. It then sub- contracted mining there till March this year.

``This won't have any impact on our production volumes,'' said Emma Meade, a spokeswoman for BHP Billiton, over the phone.

The mine has measured resources of 12 million tons, according to BHP Billiton's 2006 annual report, and total resources of 41 million tons.