Gujarat NRE Coke, India?s largest metallurgical coke producer, does not see any softening in the prices of the product despite a slackening in demand from China as huge requirements from India will continue to fuel its value.

?In the long-run (3-5 years), we do not see prices coming down. Shortages in the sector will continue to play its part in the prices. Moreover, the entire Indian growth story has not been factored into production plans, which means demand-supply gap will be high,? said company vice-chairman and managing director Arun Kumar Jagatramka.

India is expected to produce 110 million tonne of steel by 2011-12 and a staggering 300 million tonne steel by 2020 from about 55-56 million tonne in 2008 and 44.4 million tonne in 2005-06. According to the estimates 1 mt of steel will require 0.6 mt of met coke or 60 mt of coke requirement for 100 mt of steel. Demand from Foundries, Soda Ash plants, Chemical Units and other sectors have not been considered in this projection.

For the secondary steel producers, only about 10 producers have captive plants with coke production at about 4 mtpa. By 2012 coking coal requirements in the country is expected to reach 84 mt while domestic production is pegged at 9 mt. By 2020 coking coal requirement will reach 170 mt while domestic production will be at a paltry 12 mt.

?The annual contract price for coking coal is $310 a tonne while spot prices can be as high as $360 a tonne. We see good growth due to this demand-supply mismatch,? Jagatramka said. Gujarat NRE is the only Indian company with coking coal mines in Australia having more than 500 million tonne of metallurgical coal. The coal mines are owned through its subsidiaries?Gujarat NRE Minerals Ltd.

Production from its two mines are to be more than a million tonne in the current fiscal and development of the mines, which is currently on, will take production beyond 7 million tonne per annum by 2012-13.

Companies are now increasingly looking at Australia, Canada, USA and China to bridge the coking coal shortage. Among emerging potential, companies are looking at Mozambique, Indonesia and other South African nations.

Jagatramka, however, said the company is bullish on Australia and did not want to venture to another country. On the increasing prospects of coking coal in Mozambique, Jagatramka said Gujarat NRE is sceptical about the true potential of the place.

?Most areas in Mozambique are only in the prospecting licence stage and reserves have to be identified and established. Huge investment in infrastructure is required before mining can actually take place,? Jagatramka said.

Besides ownership of coal mines in Australia, the company has done cornerstone investments in resource prospecting companies that are scouting for coal, gold, iron ore and various other base metals. ?This is a viable route for Indian companies. Japan did it in the past and we should follow the same model,? the vice-chairman said.

The company holds about 10% stake in New Zealand-based coal producer, Pike River Coal, 15 % in Ray Resources and about 9 % stake in Plutton.

The company has also has 27.5 mw wind power energy farm and a mini steel mill in Gujarat to recycle steel scraps and manufacture TMT Bars