Jindal Saw in talks to buy 50% of Australian mine

Jindal Saw, pipe manufacturer, is in talks with North Clermont Coal Ltd, Australia, to buy up to 50% stake in one of its coal mine.
A source close to the talks told DNA, “North Clermont Coal is looking to offload 42-50% stake in its coal mine and is in talks with Jindal Saw for it.”

The source said that the coal mine has total reserves of 130 million tonnes (mt), and at 50%, Jindal Saw will get access to 65 mt. The deal size is expected to be $120 million (around Rs 565 crore).

“The mine is currently an unexplored one and the cost to develop it will come up to A$100 million,” the source said. He said the Australian company is looking for a strategic or a financial investor for the mine.

North Clermont Coal is an unlisted company based in Australia.
Jindal Saw did not comment for the story. Emails to get updates on the company’s expansion plans regarding the steel plant went unanswered.

Currently, Jindal Saw sources coking coal from BHP Billiton at $260-270 per tonne with an added freight cost of $35 per tonne. Coking coal is a higher grade variety of coal.

Jindal Saw needs coking coal in the production of ductile iron (DI) pipes.

The company currently has a capacity of 3 lakh tonnes and is ramping it up to 5 lakh tonnes by June 2011.

An analyst with a domestic research firm said, “For per-tonne production of DI pipe, the company needs the same amount of coking coal. Therefore, post its expansion, it will need a regular supply of 5 lakh tonnes of coking coal every year.”

Jindal Saw is currently spending Rs 650 crore on its expansion plans and hopes to complete it in 15 months.