The Illawarra-based company placed 100,000,000 shares at $0.25 per share with Jindal, which will also secure supply of coking coal with an offtake agreement.

Jindal will receive 500,000 tonnes per annum of coking coal produced from Gujarat’s mines in New South Wales over 10 years. It will have an option to buy an additional 500,000tpa depending on production levels.

The deal has delivered Jindal Steel a 14% stake in the company.

Gujarat executive chairman Arun Kumar Jagatramka said: “We are delighted to introduce Jindal Steel as a cornerstone investor in the company and look forward to a long and lasting relationship.”

New Delhi-based Jindal has an annual turnover of $US3.5 billion and is part of the $15 billion diversified O.P. Jindal Group. It has committed investments exceeding $15-20 billion in the future and has several business initiatives running simultaneously across continents.

The Indian government is proposing to create a sovereign wealth-type fund to buy overseas coal assets.

For some time the Indian government has been encouraging private and public entities to buy coal assets abroad and now it is prepared to put some skin into the game.

Indian coal minister Shri Sriprakash Jaiswal recently told a Confederation of Indian Industry round table that acquisition of coal properties abroad had become more important in light of domestic production constraints and the growing demand for coal from different consuming sectors, particularly steel and power.