Naveen Jindal-led Jindal Steel & Power (JSPL) is in advanced talks with New South Wales-based mining firm Hudson Resources to form a joint venture for the exploration and mining of coking coal in Australia, said a person who is mediating in the proposed venture. The JV is expected to absorb investments of $100 million once mining commences in the proposed coal block.
The coal mines are located in Maryborough Basin of Queensland with estimated recoverable reserves of 20 million tonne (mt), which could go up to 200 mt, if explored further. JSPL will hold 15% equity in the proposed JV during the exploratory stage, while ASX-listed Hudson Resources, which has interests in minerals such as bauxite and coal, will own the majority stake. Once deposits are defined, the Indian firm will have option to raise its stake to 50%.
The proposed JV will help JSPL meet raw material requirements for two of its upcoming greenfield steel projects with a capacity of 6 mt each in Orissa and Jharkhand. Coking coal is a key input in steel manufacturing.
Another New South Wales-based firm, Hindustan Global Resources (HGR), engaged in exploration, mining and consulting, is negotiating on behalf of the Australian company. HGR has also been assigned the job to carry out exploration and mining work for the JV.
HGR vice-president Amar Bhasin said: “JSPL executives had a fruitful meeting with the directors of Hudson Resources and HGR a few days ago. If everything goes well, we hope to finalise the deal in the next few days.” The initial investments in the venture for carrying out exploration work will be close to $8 million, he added.
JSPL executive director (raw materials) DN Abrol told ET: “We are talking to many Australian mining firms for setting up a JV to meet captive coking coal requirements. The extracted coal will be shipped to India. But, nothing has been finalised so far.”
Several Indian companies in the steel and power generation space have been scouting for coal assets abroad to ensure feedstock for captive consumption. Coal mining in India is confined to few public sector companies and the country has limited reserves of coking coal. As a result, steel companies are largely dependent on imports.
“In order to ensure long-term resource security, companies prefer owning some quality assets abroad. Moreover, its a cost advantage, as coking coal prices in the spot market keeps on fluctuating,” said a New Delhi-based steel analyst.
Source: Economic Times
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