According to Macquarie Research Commodities, strong Indian and Japanese demand for thermal coal, coupled with the move of China from a significant net exporter to a balanced state in 2007 have been mainly responsible for the rising coal prices. Prices are expected to stay high or even scale newer heights in the coming months. And even for this, like all, the report blames India and has stated categorically that large additions to steelmaking capacity in India and Brazil in the coming years could also significantly boost demand and keep the coking coal market tight. This may not augur too well for companies using coal as a raw material but for those with coal reserves, it means boom time is here to stay. Surely Gujarat NRE Coke would be laughing all the way to the bank and must be laughing quite often as the trips to the bank would have surely gone up.
Right now coal is at a high and those owning mining rights with large reserves are the kings. The core metals which are ored – like iron, bauxite are all very much in demand. Infact the mantra is – own a mine and all riches will be yours. In that context, GMDC has been a winner for some time now. It has huge reserves of coal and the way the stock price has been zooming on the bourses is indicative of the goldmine on which it is currently sitting.
The best part about GMDC getting all the riches is that it is ploughing back all the bounty it is earning into building up more for the company. It is leveraging all the coal capabilities into cement, power, SEZ and port in Gujarat. How does it plan to do that? It is getting into a JV with cement unit and another with a power unit. The cement unit would also develop a mineral based SEZ and a port with GMDC. Thus GMDC would have a captive coal customer in each cement plant as well as power plant and the power plant would have captive customer in cement plant.
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