STEEL, METALS AND MINING
New Steel Policy in 6 Months; to push for faster growth
A new steel policy will be put in place in six months to facilitate rapid growth of the domestic steel sector by ensuring faster capacity addition, the government today said. "A Steel Ministry panel, constituted to frame the new Steel Policy will finalise the draft in two months and the new Policy will be ready in another three-four months," Joint Secretary Steel Dalip Singh told PTI on the sidelines of a Steel Summit here.
The work on the policy assumes significance as it is taking place against the backdrop of huge delays in the multi- billion dollar ventures including those of ArcelorMittal and POSCO because of regulatory and land acquisition hurdles.
The government envisages taking India's capacity to 145 MT by 2015-16. The new Policy is needed "to ensure time-bound implementation of green field capacities and to facilitate rapid growth of domestic steel industry," Singh said.
ArcelorMittal, which has proposed projects worth Rs 1.3 lakh crore in Jharkhand, Orissa and Chhattisgarh, is battling with land acquisition problems. POSCO, which has proposed a Rs 54,000 crore project in Orissa, billed as the country''s largest FDI, is facing regulatory hurdles for several years.
Similarly, Tata Steel has been able to acquire only partial land for its projects.
An updated National Steel Policy has been necessitated by the changing dynamics of the sector, including sharp rise in imports.
According to the Steel Ministry, imports rose sharply from 1.4 MT in 2001-02 to 7.3 MT in 2009-10 and steel demand is growing at 10 per cent, as against 8 per cent growth in production.
The new policy will replace the existing framework announced in November, 2005. It had projected country's steel consumption to grow at 7 per cent, based on a 7-7.5 per cent GDP growth rate, and production of 110 million tonne by 2019-20.
The government has set up a panel headed by the Steel Secretary for monitoring the progress on formulation of the new National Steel Policy.
Four task forces have been constituted to study, analyse, consult and formulate draft policy documents on different aspects of the policy.
COALJharkhand stops land acquisition for Bharat coking coal limited
The Jharkhand government has stopped land acquisition for Coal India Ltd. (CIL) subsidiary Bharat Coking Coal Limited (BCCL) as it was not following the prescribed rehabilitation policy, the state assembly was informed Friday.
"The state government has stopped acquiring land for BCCL as the company is not accepting the rehabilitation policy of the state government formulated in 2008," Land and Revenue Minister Mathura Mahto informed the house.
Dhullu Mahto of Jharkhand Vikas Morcha-Prajatantrik (JVM-P), and Leader of Opposition Rajendra Singh, of the Congress, also raised the issue of double standards adopted by the BCCL while giving compensation to displaced people. Several other legislators also supported them.
"CIL adopts double standard while giving compensation to displaced people. In Odisha, CIL gives jobs to those people whose one acre land has been acquired and in Jharkhand, BCCL gives jobs when two acres of land of a person is acquired," said Singh.
In his reply, the minister said BCCL has been asked to follow the state's relief and rehabilitation policy formulated in 2008. "When BCCL declined to follow, then we stopped acquiring land for it," he said.
Post Cag Fiasco, CIL defers NOD on supply pacts with power companies.
Coal India's board has cautiously deferred the approval of fuel-supply agreements (FSA) with power firms as its directors decided to scrutinise the details of the issue which can expose the state-run giant to heavy penalties.
The prime minister's office (PMO) has asked Coal India to sign the agreements by the month-end. The board held a marathon 5-1/2 hour meeting in Delhi on Thursday, ironically on the day the government was in a tizzy after a leaked CAG report estimated that allocation of coal blocks led to a revenue loss of over Rs 10 lakh crore. Bureaucrats in several ministries say they need to be very cautious in the current climate as they fear they may face investigations.
Analysts say the signing of FSAs will force Coal India, which is running short of coal, to resort to costly imports at a time investors are already worried about the government's refusal to allow them to charge market rates.
After the board meeting, a Coal India director had a long interaction with the coal ministry, discussing issues till 8:30 pm. The board will meet again next week but analysts feel Coal India might not be able to sign agreements with all of the 65-odd power units by March 31, 2012. Coal India's acting head Zohra Chatterji told ET that the board was thoroughly examining various issues of the FSA. "It is a long and complex document and we are going through it in detail. We will meet next week to finalise it." On the trigger point for the FSAs, she said: "The government has asked us to go by 80% and we will stick to that."
The trigger point in an FSA refers to the commitment to supply certain volume of coal to consumers, below which the supplier pays a penalty. According to the draft FSA, Coal India would have to pay a penalty if it fails to supply less than 80% of the agreed volume of coal, and would be given an incentive to supply over 90%. The penalty and the incentive both will be 10%.
Analysts feel the company may not be able to complete the process by the end of the month - the deadline set by the PMO. "Since Coal India has not been able to finalise the FSAs till now, it looks unlikely that the company will be able to complete the process by this fiscal as asked by the PMO. There are seven subsidiaries and more than 60 power units," Rajesh Agarwal, head at Research at Eastern Financiers Ltd said.
A former chairman of Coal India said: "They should start the process of signing of fuel- supply agreements late this month which in itself will try to uphold the spirit of the directive from the PMO."
Ashok Khurana, secretary, Association of Power Producers, said: "FSAs are generally a few page documents and after it has been finalised, it will take only a couple of hours for us to see if it suits us. However, if we disagree with some portions of the agreement, we will have to meet Coal India officials to discuss and if possible, amend portions of it."
Task can be Achieved: CIL
Coal India officials, however, feel it is an achievable task and they will be able to complete it well in time. "All CIL subsidiaries will have to sign physically with the power units. We will have to make a serious attempt to complete the process," N Kumar, director technical at CIL said.
CAG report may prompt government to go for a coal regulator
The government is likely to accelerate the process of setting up a coal regulator and speed up the auction of blocks in response to the leaked draft report of the CAG that said the government lost Rs 10.7 lakh crore of revenue by giving away coal blocks to companies instead of inviting bids, power utilities and sector experts said.
The fact that allocation of blocks has been under the scanner has renewed hopes that the government may soon work on reforms to bring about more transparency in coal pricing and auction, they said. "There has always been a need for regulator to separate coal allocation and pricing from politics. Its case becomes stronger as putting in place a regulator would bring about more transparency in resource monetisation and pricing," GMR Group's chief financial officer A Subbarao said.
A senior executive from NTPC agrees. "Coal pricing and even the quality of coal have been a big problem for us. A coal regulator could keep a check on all these issues ," the executive said. Coal ministry officials said the draft bill on coal regulator is ready and will be presented to the Cabinet soon. Power generators are more optimistic about the bill's fate after the ill-practices in the coal sector were brought into the fore by reports that Comptroller and Auditor General was studying losses incurred by the government for allocation of coal blocks. "Now that the problems relating to coal block allocation are in the limelight, it will make for a stronger case for speeding up auction of coal blocks," said Association of Power Producers' Director General Ashok Khurana.
Traditionally, the coal ministry would allocate blocks to utilities on a need basis, where the utility would submit a bank guarantee which was based on the reserves estimated for the mine. Part of the bank guarantee (typically 50%) is linked to timely execution while the rest is linked to production targets. The utility would pay a pre-determined royalty to the state government. Whereas the auction process would entail a competitive bid with an upfront payment.
Power utilities have been demanding more coal blocks auction as not a single coal or lignite block has been awarded for captive use to private companies since October 2008 despite an acute fuel shortage. India has potential reserves of 350 billion tonne, making the country the world's fourthmost coal-rich nation. But the country is a net importer of coal since Coal India, the state utility that supplies power to about 85% of the local capacity, has clocked a dismal 4% year-on-year growth in the past five years. Talking to reporters on Thursday, coal minister Sriprakash Jaiswal said that the government may finalise guidelines auctioning coal blocks through the competitive route in 2-4 months and would subsequently start the auctions.
Victorian government issues tenders for brown coal exports
The Victorian Government will launch a tender process for Australian industry to process brown coal for export.
The Government will release new coal allocations and run a campaign promoting the benefits of coal for the State's economy.
Energy Minister Michael O'Brien said that countries like China and Japan are developing low-emissions technology to burn coal for electricity. He said that the Government's campaign will counter a push by extreme green groups to stop coal mining. He said that "It's an unrealistic agenda that says that we should have an Australia that's powered with no coal. We don't believe that's practical. We don't believe that's necessary, because with low-emissions technology there's no reason why you wouldn't continue to use coal.”
He said that drying the coal in Australia before export will create jobs. But we also have the potential to use it in a high value way. He added that "There are a number of countries [and] a number of companies who have got great confidence that they have technology that can use Victorian brown coal in a low emissions way which has got to be a win win for both the environment and the economy.”
China to restrict coal demand and output to 3 billion tonnes
The world biggest user and producer of coal, will limit domestic output and consumption of the commodity in the five years through 2015 to reduce pollution and curb reliance on the fuel. According to a five-year plan for the coal industry released by the National Energy Administration production and demand will be restricted to about 3.9 billion metric tons a year by 2015.
Ms Helen Lau a Hong Kong based analyst at UOB-Kay Hian Ltd said the nation produced about 3.8 billion tons in 2011.
Mr David Fang a director at the China Coal Transport and Distribution Association said “Demand and output growth will definitely slow because of environmental concerns. The goals look difficult though, unless the government can substantially reduce economic growth and suppress enough energy-intensive industries.”
He said that the Chinese government is targeting average economic growth of 7% a year during the so-called 12th five year plan which covers 2011 through 2015. Annual coal demand in the period should expand by at least the same rate. Coal as a proportion of China energy demand will fall significantly because of adjustments to the nation’s energy structure, environmental protection measures and restrictions on particulates.
Local governments including those in Beijing, Shanghai and Guangdong have pledged this year to release readings of air pollutants smaller than 2.5 micrometers in diameter, known as PM2.5 which can penetrate lungs and enter the bloodstream. The government was criticized last year for a plan to make data on PM2.5 publicly available by 2016.
Bhubaneswari open cast mine produce 70330 tonne of coal in a day
Bhubaneswari open cast mine under Jagannath area produced a whopping 70,330 tonne of coal here on Sunday, the highest single day output in Coal India Limited.
Earlier in the month the OCP, fully outsourced, produced over 60,000 tonne on a single day. A colliery authority said that “The production will go up to about 8,000 tonne a day in the coming days as new machines have been installed. The mine has been given a target of seven million tonne in the current fiscal that we will certainly achieve.”
Not only Bhubaneswari, all other mines at Talcher have boosted coal production at this terminal month of the current financial. Hingula area, which was one of the worst performers last year, is picking up its output despite recurrent agitations by local villagers.
It may be noted that the MCL has pinned its hopes on Bhubaneswari and Kaniha open cast projects in Talcher coalfield to help the company achieve its desired growth rate in future.
MCL Public Relations Officer Mr Diken Mehra told this paper that the company had so far produced about 97 million tonne of coal at the daily rate of 4.3 lakh tonne output both in Talcher and Ib valley areas.
Last year the production was a little over 100 million tonne.