The acquisition, subject to Australian ministerial approval, comprises the Old Avondale Colliery and part of Huntley Colliery, to be re-named NRE No. 2 Colliery.
The lease is in close proximity to the company’s NRE No. 1 Colliery, previously known as the Bellpac1 Colliery, that Kolkata-based Gujarat NRE Coke bought in December.
NRE No. l started room and pillar coal production in March from the Balgownie Seam at Russell Vale.
“This strategic investment strengthens the position of our company in the Southern Coalfields of New South Wales. The coalfields is renowned for producing high quality hard coking coal and the investment makes sense given its vicinity to our NRE No. 1 Colliery,” GNCL vice chairman and managing director Arun Jagatramka said.
Ernst & Young Mergers advised Gujarat NRE Coke as lead corporate finance advisors, and Corrs Chambers Westgarth as legal advisors.
The deal comprises some 5500 hectares of mining leases within the Illawarra Coal Measures of the Sydney Basin. Indicated recoverable reserves are approximately 96 million tonnes. The new mine is expected to produce 2Mt of coal a year, and development applications to begin mining as soon as possible are in train.
GNCL plans to use a BHP Billiton plant to process coal mined at its Australian operations. India imported about 16Mt of coking coal in 2004.
