OREANDA-NEWS. Jindal Steel and Power Ltd (JSPL) has acquired a majority stake in Gujarat NRE Coking Coal, the Australian subsidiary of Kolkata-based Gujarat NRE Coke, which would enable it to secure resource supply and minimise risk in prices.

The deal will enable JSPL acquire a majority stake of 53.63 per cent in Gujarat NRE Coke's Australian subsidiary through a deal that involves issue of convertible notes, placement of shares and option to acquire shares at a later stage.

The deal, announced last month, was cleared on Wednesday by the shareholders of Gujarat NRE Coking Coal - the Australian subsidiary of Kolkata-based Gujarat NRE Coke - in a general body meeting held in New South Wales.

Prior to the transaction, JSPL was the second largest shareholder in Gujarat NRE Coking Coal, after its promoters, with 31.49 per cent stake.

“The deal with Gujarat NRE will give us an assurance in supply and price stability, which is why we are exploring opportunities outside India, as there is a shortage of resources in the domestic market,” said Ravi Uppal, MD and CEO, JSPL.

Gujarat NRE Coking Coal's Company Secretary Sanjay Sharma said in a filing to the Australian Securities Exchange (ASX), “This is to advise that all seven resolutions proposed in the general meeting of the company held on October 16, 2013, have been unanimously resolved by show of hands by the shareholders who attended the meeting,”

All 7 resolutions were related to the structure of the deal, which includes issue of AUD 45 million convertible notes to Jindal Steel's subsidiary Jindal Steel and Power (Mauritius) Ltd. It also involves placement of upto 328.5 million shares at AUD 0.20 per share to Jindal together with a 5-year option to acquire equal number of shares.

JSPL (Mauritius) has already given an advance loan of over AUD 16.61 million to Gujarat NRE Coking Coal, which had reported a loss (after tax) of AUD 76.60 million, to meet the working capital deficit and repay some of the debt. JSPL has also appointed a Director on Gujarat NRE's Board.

Gujarat NRE's Australian subsidiary Gujarat NRE Coking Coal has mines in Australia with over 650 million tons of coking coal resources. The subsidiary is also listed on the Australian stock exchange.

The mines NRE NO 1 and NRE Wongawilli are located in the Illawarra region of New South Wales, Australia. The hard coking coal production is being increased from current level of around 1.5 MTPA to over 5 MTPA by 2016 making it one of the top 10 hard coking coal producers in the world.

Gujarat NRE is the largest independent producer of met coke in India with an installed capacity of 1.434 MT per annum.