Mithun Roy

Mumbai: Gujarat NRE Coke, the lowash metallurgical coke maker, is planning to invest $425 million in the next three years to develop its mines.

The Rs 1,000 crore Kolkatabased company will increase its production from its NRE no 1 mine to 4.5 million tonnes from the current 0.5 million tonnes by fiscal 2012.

It is also planning to boost production from Avondale and Elouera mines - located in Australia — to 2.5 million tonnes by fiscal 2013.

The company will also ramp up its coking coal production to 7 million tonnes from Australia by fiscal 2013 from 1 million tonnes currently.

The group has cokemanufacturing facility of over 1 million tonnes and has captive coking coal mines in Australia with reserves of approximately 560 million tonnes.

On expanded capacity, the company will need 1.7 million tonnes of coal for its India operations; the rest — 4.3 million tonnes — will be sold in the open market.

Arun Kumar Jagatramka, vice-chairman and managing director, Gujarat NRE Coke, said: “We have plans to invest $425 million over the next three years to develop our mines.”

Jagatramka said there’s a distant possibility of coke prices falling below $500 in the near term. There may be slowdown in exports in China due to Olympics and prices of coke may shoot up beyond $600, he added.

Analyst Jignesh Kamani of MF Global said in its recent research report that as Gujarat NRE Coke is shifting its focus from coke manufacturing to mining, its revenues from coal business would contribute 63% to top line by fiscal 2013 as against 20% in fiscal 2007. For fiscal 2009, the company will source 75-80% of its coal requirement from captive mines.

As a result, the company’s blended cost of coal is likely to be at $120 per tonne, 40% lower than its peers.

Source : DNA