Gremach acquires 75% in Mozambique firm for $100 mn
The Rs 115-cr Gremach deal with Osho Mozambique will give ownership to the coal mines spread over 13,520 hectares in Moatize located close to CVRD’s coal mines.
By TNN |
MUMBAI: Gremach Infrastructure, a company that provides construction equipment on rent, has acquired 75% equity stake in a Mozambique company for $100 million, in a deal that gives it ownership of 11 coal mines in the South African country.
Managing director Rishi Raj Agarwal said the move to acquire a controlling stake in Osho Mozambique Coal Mining was in line with its aim to own raw material assets which would be later used for coal production.
"We now have a controlling stake in the company which owns 11 prospecting licences...the expected reserves are about 200 million tonnes," he told ET. A sharp demand for consumer goods has forced metal companies to increase production and scout for key raw materials such as coal, iron ore and other minerals. Coal is a key raw material and is used to burn iron ore to make steel.
Gremach’s unit, Austral Coke & Projects, makes low ash metallurgical coke and the acquisition in Mozambique will give raw material security to the company. Recently, Tata Steel and JSW Steel bought equity stakes in coal mines in Mozambique as part of such efforts and are also learnt to scout for coal mines in resource-rich countries such as Australia and parts of South America.
The Rs 115-crore Gremach deal with Osho Mozambique will give it ownership to the coal mines spread over 13,520 hectares in Moatize located close to mining major CVRD’s coal mines. The Brazilian-based CVRD is investing $2 billion to develop its coal mines and will also build the infrastructure needed to mine coal and ship it to consuming centres in India, China and Europe.
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"Mozambique is strategically located for Indian coal needs; freight from the African country is less than half of what is paid to ship the mineral from Australia," Mr Agarwal said. The freight rates from Mozambique currently are at $27 per tonne and are more easier compared with congestion issues at busy Australian ports.Gremach is planning to start prospecting the area in October and it expects to complete the exercise by mid 2008. Gremach is also expanding its existing operations to meet the growing demand for different equipment relating to infrastructure projects. The company plans to invest in specialised equipment and also proposes to acquire high-end multipurpose equipment as they are not available in the local market.
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