Jindal Steel and Power (JSPL) recently came up with an all-cash offer of Aus $221.61 million (about ₹ 1,200 crore) to buy out Gujarat NRE Coking Coal, the Australian subsidiary of Calcutta-based Gujarat NRE Coke, listed on the BSE and NSE also the largest Indian manufacturer of metallurgical coke.
The deal could help JSPL to take full control of two coking coal mines, with an estimated reserve of about 651mt, that Gujarat NRE has in Australia and meet its raw material needs. It may be recalled here that Gujarat NRE already supplies coking coal to JSPL (Jindal Steel and Power) from the New South Wales mines. In May 2012, the Naveen Jindal-led JSPL had acquired 10.07% stake in Gujarat NRE Coking Coal Ltd (GNCCL), for about Aus $25 million (about ₹ 135 crore) while JSPL also signed a long term contract to buy 5mt of coking coal over a 10-year period from it. See JSPL raised its stake in GLCCL, the Australian subsidiary of Gujarat NRE
JSPL has been in search of coking coal mines abroad as the geological reserve of this crucial raw material in steel making through the blast furnace route is limited in India. See article Suitability and Characterization of Coal for Sponge Iron Making
The company also produces power and is on the lookout for thermal coal as well. It operates coal mines in South Africa and Mozambique. Navin Jindal bought Canada’s CIC Energy Corp, which is developing a coal mine in Botswana in 2012 after a failed attempt by his brother Sajjan Jindal’s JSW Steel. At present, Gujarat NRE Coking Coal sells most of its output to its parent Gujarat NRE Coke Ltd at market price on arm’s length terms.
In a filing to the Aussie bourse, JSPL, which is already a minority shareholder in Gujarat NRE Coking Coal with a 19.48 per cent stake, said it was making the unconditional offer to all shareholders of the company
“The Aus $0.20 cash offer allows Gujarat NRE Coking Coal’s shareholders to realise full and fair value of their shares in a volatile equity market. The offer represents an attractive premium of 5 per cent on the closing share price of Aus $0.19 on January 29,” JSPL vice-chairman Vikrant Gujral said in a letter to Gujarat NRE Coking Coal shareholders. The JSPL offer of Aus $0.20 per share represents a premium of 5 per cent over the January 29 closing price of Gujarat NRE Coking Coal on the Australian Securities Exchange (ASX).
(Source: The Telegraph)
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