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Mar 19, 2014, 12.11 PM IST | Source: Reuters

Jindal to stop buying metallurgical coal from Australia

Jindal Steel, headed by billionaire lawmaker Naveen Jindal, got access to 650 million tonnes of coking coal resources in October after buying a majority stake in Gujarat NRE Coking Coal, the Australian unit of Gujarat NRE Coke Ltd.

Jindal to stop buying metallurgical coal from Australia
Jindal Steel and Power Ltd  will stop buying coking coal from Australia in three months from now as its own mines there start shipping, a top company official said, a move that could further soften prices of the commodity.

Recent coking, or metallurgical, coal price settlements by major miners showed a fall in the price of all coal types for the first quarter of 2014, underscoring a weak demand outlook from steelmakers in Asia.

"We get 50,000 tonnes per month from our mine in Mozambique and another 50,000 tonnes we buy from Australia," said VR Sharma, deputy managing director of Jindal Steel.

"But after three months we will not be buying because we have our own mines there," he told Reuters late on Tuesday.

Also read:  Jindal Power commissions 600 MW unit at Tamnar, Chattisgarh

Jindal Steel, headed by billionaire lawmaker Naveen Jindal, got access to 650 million tonnes of coking coal resources in October after buying a majority stake in Gujarat NRE Coking Coal, the Australian unit of Gujarat NRE Coke Ltd.

Gujarat NRE Coking's two mines, located in New South Wales, are currently producing 1.5 million tonnes per year and are expected to have an output of 5 million tonnes by 2016.

Australia is the world's largest coking coal exporter, with shipments expected to rise 6 percent to 163.9 million tonnes this fiscal year ending March 31.

Sharma said Jindal Steel's coking coal consumption will more than double to 2.6 million tonnes by 2016 as it expands capacity. About 80 percent of the coal will come from its mines abroad and the rest it will buy from the open market.

But unlike other Indian companies such as Steel Authority of India Ltd  and Neyveli Lignite Corp , Sharma said Jindal Steel was no longer looking to buy coal mines overseas as it has enough coking coal resources now.

India's coking coal imports are set to rise 6 percent to 35 million tonnes this fiscal year ending March 31. Domestic output has been stagnant at 18 million tonnes per year as most reserves are in thickly populated areas.

Jindal Steel stock price

On October 01, 2014, Jindal Steel & Power closed at Rs 170.95, down Rs 2, or 1.16 percent. The 52-week high of the share was Rs 350.00 and the 52-week low was Rs 165.20.


The company's trailing 12-month (TTM) EPS was at Rs 14.86 per share as per the quarter ended June 2014. The stock's price-to-earnings (P/E) ratio was 11.5. The latest book value of the company is Rs 142.79 per share. At current value, the price-to-book value of the company is 1.20.

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