NEW DELHI Jindal Steel and Power Ltd(JNSP.NS) 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 V.R. 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.
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 GNM.AX, the Australian unit of Gujarat NRE Coke Ltd (GJNC.NS).
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 (SAIL.NS) and Neyveli Lignite Corp (NELG.NS), 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.
(Editing by Himani Sarkar)
Trending On Reuters
State Bank of India (SBI) reported its sharpest quarterly profit drop in five years on Friday but cheered investors by saying that fewer than feared of its loans risked turning sour. Read