Tata Steel bought an interest in the Carborough Downs Coal Project to secure coal to support strategic plans to increase steel making capacity from current levels of around 5 million tonnes per annum, produced at its Jamshedpur plant, to around 15Mtpa by 2010.
Growth plans include setting up greenfield plants or acquiring capacity in India and overseas. Tata Steel recently invested in NatSteel Asia, which has a capacity of about 2Mtpa of finished steel.
Tata Steel has also signed an offtake agreement for a proportion of the coal production over the life of the project. The agreement was signed by Brian MacDonald, managing director AMCI Australia, T Mukherjee, deputy managing director (steel) Tata Steel, and AD Baijal, Tata vice president (raw materials).
The Carborough Downs coal project, located in Bowen Basin, is being developed as an underground coking coal project with production scheduled to commence in 2006.
The project life is estimated at 14 years during which approximately 58Mt of raw coal is expected to be mined. A further potential resource of 100Mt is yet to be further defined.
The move comes on the heels of the purchase by another Indian producer, Gujarat NRE, which bought coal mining leases in New South Wales in early-July.