Gujarat NRE Coke Limited

NRE No. 1 Colliery

The NRE No. 1 Colliery (erstwhile South Bulli Colliery) was acquired by Gujarat NRE Coke Ltd., through its subsidiary Gujarat NRE Australia Pty Ltd. in December 2004. The mine located in the Southern Coalfields of New South Wales, approximately 10 kilometers north of Wollongong and around 60 kilometers south of Sydney in Australia will ensure a steady supply of high quality raw material for its coke ovens operations in India and provide insurance against price volatility.

Regional Geology

The NRE No 1 colliery holding is surrounded to the north, south and west by other collieries. Geologically, the region is generally referred to as the Southern Coalfield, which is part of the Sydney Basin of New South Wales and is situated towards the southernmost extremity of the Sydney - Bowen Basin of eastern Australia.

The colliery holding is adjacent to the south eastern margin of the basin. Depositionally, the basin had been active during Permian and Triassic times with phases of tectonism and/or igneous activity extending from Permian to recent times. In the Southern Coalfield, the general sequence, from top to bottom, consists of the Hawkesbury Sandstone, the Narrabeen Group, and the Illawarra Coal Measures. There are at least seven phases of cyclic sedimentation in Sydney sub-group. The most important of these depositional cycles are the three sequences at the top of the Sydney sub-group, which contain, from bottom to top, the Wongawilli coal seam, the Balgownie coal seam, and the Bulli coal seam.

The Bulli seam lies immediately below the Coal Cliff sandstone of the Narrabeen Group. The Illawarra Coal Measures are underlain in the Wollongong area by marine sediments of the Upper Shoalhaven Group.

Mine Geology

The mine spread over 6421 hectares and having reserves of around 300 million tonnes of coking coal comprises three coal seams, the Bulli seam, which occurs at the top of the Illawarra Coal Measures, the Balgownie seam, some 8 to 10 metres below it, and the Wongawilli seam, which lies between 22 and 25 metres below the Balgownie seam. Two minor seams, the Cape Horn seam and the Hargraves seam, lie between the Balgownie and Wongawilli seams, but are too thin to have any economic significance. The average seam thicknesses of the Bulli, Balgownie and Wongawilli seams are 2.01 metres, 1.25 metres, and 9.75 metres respectively,

though only the basal 2.5 metres of the Wongawilli seam is regarded as the working section. The Bulli seam has been worked extensively in the mine area for almost 120 years, the Balgownie seam was worked between 1967 and 1982 and again in 2002, but there has been no systematic production from the Wongawilli seam in this colliery. Both the Balgownie and the Wongawilli seams are largely untapped resources.

Bulli Seam

The Bulli seam lies at the top of the Illawarra Coal Measures. It outcrops on the eastern slope of the Illawarra Escarpment, and lies beneath some 450 metres of younger rocks towards the western part of the colliery. This seam has been worked extensively in this colliery for almost 120 years, since 1887.

The Bulli seam is predominantly comprised of dull to dull banded coal with some brighter content towards the base of the seam; some included thin stone bands, often sideritic, form regionally consistent markers. The working section of the seam varies in thickness from 1.63 metres to 2.72 metres, and averages 2.01 metres. The in situ ash content of the Bulli seam averages approximately 16.7 per cent. Around 84% to 82% of recoverable coal is predicted as marketable with yields coking coal to thermal coal ranging from 66:18 to 70:14.

The Balgownie Seam

The Balgownie seam lies within 7 and 13 metres below the Bulli seam throughout the Mine. It was mined between 1967 and 1982 and again in 2002. The thickness of the Balgownie seam ranges from 0.46 to 1.50 metres, and is usually between 1.22 and 1.35 metres. The top 1.0 metre (approx) of the seam is regarded to be of better quality than the base, which consists of interbedded coal and mudstones. The in situ ash content of the Balgownie seam varies from 12 to 25 per cent, but is seldom above 18 per cent.

The Balgownie coal has very low phosphorous levels typically <0.05 and <0.5 for sulphur. Thus, there is a high demand

for it, for blending low phosphorous coals with high phosphorous iron ore. The Bulli also has low sulphur levels typically <0.5 although phosphorous is usually 1.0 so the blended product (Balgo) is high quality hard coking coal with low phosphorous and low sulphur by world standards. It has always been regarded as an attractive additive to Bulli seam blends, due to its favourable swelling properties and its low phosphorous content.

Wongawilli Seam

The Wongawilli seam lies between 22 and 25 meters below the Balgownie seam with resources totaling around 200 million tonnes. Geologically the Wongawilli seam in this area is generally 8 - 9 metres in thickness. The projected working section, near the base of the seam, is usually in the range of 2.2 � 2.5 metres thick, thinning to less than 2.0 metres towards the holding boundaries in the far north and east.

The seam is quite banded with the majority of coal plies being dull and bright. The coal plies are concentrated in the lower half of the seam. The upper half of the seam grades upward from coal to interbedded coal and carbonaceous and tuffaceous sedimentary rocks. Coal is generally duller in the upper part of the seam. Disseminated siderite, and calcite on cleat, is common.

Highlights of the Mine

The Market Demand for "Balgo"

The coal products from the NRE No. 1 Colliery are world class due to their very low phosphorous levels (<0.005ppm), high calorific value, low ash coal and low sulphur contents and their suitability for direct feed into coke oven to produce blast furnace coke, ranked among the best in the world.

The low phosphorous levels in Balgownie Seam coal (Balgo) represent some of the lowest known levels of phosphorous in the world. The merits of the Balgownie low volatile metallurgical coals are:

Strong coke
Low phosphorous
Low sulphur
Good Fluidity
Nil oven wall pressure
Adequate reflectance

There is also a strong, diversified demand for the Bulli coals, due to its quality characteristics. By mining to produce a blend of Balgownie and Bulli coal, the quality of both the hard coking coal and the thermal coal products are enhanced. The low phosphorous coking coal will be a premium product in the world coal market and be in high demand by European steel mills.

Historically iron ore mines concentrated on mining low phosphorous iron ore deposits. Such deposits have been heavily exploited over the last 30 years and as a consequence mines are now forced to mine deposits with higher concentrations of phosphorous. The availability of low phosphorous coking coal offsets the issue of high phosphorous iron ore facing the iron ore miners and steel mills. There is also potential to prepare a third saleable product, PCI coal, which is intermediate in value between coking and thermal coal.

Methane Gas Reserves

There is scope to develop extensive high quality methane gas resources (estimated in excess of 50 years), existing within the Wongawilli seam which contains the largest field of gas in the region. The presence of gas up to 10m3/t with acceptable CO2 ratios in the Bulli and Balgownie seams may also be exploited for gas sales or power generation. Government incentives and grants are available in projects, which reduce greenhouse gas (methane) emissions for which the Balgownie project may qualify.

The NRE No. 1 Colliery acquired as a measure of backward integration has made Gujarat NRE Coke Limited the first and only coke manufacturer in India to have a captive prime coking coal mine overseas. It will ensure a steady supply of high quality raw material for its coke ovens operations in India in a highly volatile environment and save purchase costs. The colliery will also create employment in the Illawarra area and in India with benefits to both the nations.