India Industry Updates dated 05.05.2012
STEEL, METALS AND MINING
Government plans to set up fund for buying overseas coal assets
Coal Minister Sriprakash Jaiswal today said the government is planning to set up a fund for acquiring of coal assets abroad and urged public sector companies to be proactive in making decisions on foreign investments. The fund would be similar to a sovereign wealth fund. The Minister's comments come against the backdrop of severe coal shortage hurting power, steel and other sectors.
Jaiswal said even though Coal India Ltd (CIL) has surplus resources for investing outside, it is important to have financial support from the government for acquiring large assets abroad. "To address the problem, government is proposing to create a fund on the line of sovereign wealth fund created in some countries," he told reporters in a conference organised by CII.
CIL, which accounts for over 80 per cent of the domestic coal production, has prioritised nations like Australia, South Africa, Mozambique, USA and Indonesia for acquiring coal mines abroad. "The boards of PSU companies need to be proactive in deciding the matters related to foreign acquisitions since delayed decision often results in losing the opportunity," Jaiswal said.
As part of efforts to acquire coal assets abroad, the Maharatna firm had floated an expression of interest to select partners in Australia, USA, South Africa and Indonesia. CIL has a war chest of about Rs 6,000 crore for overseas acquisitions. Last fiscal, the demand-supply gap of coal touched 142 million tonnes (MT) and CIL is eyeing overseas mines to narrow the gap. The shortage is projected to touch 200 MT in 2016-17.
Meanwhile, Jaiswal said the coal regulatory bill is likely to come up before the cabinet next week. On policy related to utilisation of surplus coal, the minister said, "It is likely (to be finalised) in 15 days or a month." Further, Jaiswal said that the auctioning of the coal blocks is likely to start in a month or two.
Environment ministry eases clearance process for Coal based projects
The environment ministry has allowed developers of coal-based power, steel and sponge iron projects to apply for its clearance even as environmental and forest approval for the linked coal mine or block is under its consideration, easing the clearance process for these industries.
In its order, the ministry said that developers can apply for clearance simultaneously with that for the linked coal block or mine, however, the environmental clearance will be officially granted only after preliminary forest clearance is granted to the linked coal source.
The move comes as a relief for promoters of thermal power projects, steel and sponge iron manufacturing units using domestic coal.
At present, developers in these sectors have had to wait for a final forest and environment clearance for the linked coal source before applying for the ministry's approval for the project.
Coal prices expected to fall further
Japanese coal companies recently settled their 2012 benchmark prices at USD 115 a tonne, a fall of 11% on the 2011 price of USD 129.85 a tonne. But ‘spot’, or one-off, sales of Hunter coal have struggled to make USD 105 a tonne and analysts expect the falls to continue.
The latest edition of the Australian Coal Report said thermal coal from South Africa’s Richards Bay terminal was about to dip below USD 100 and quoted a Singapore coal trader who said the Newcastle price was sure to follow.
A leading indicator of Hunter coal prices, the Global Coal Newcastle index, was at USD 102.95 on Friday. So far this year, Japanese customers have bought 55% of the coal shipped from Newcastle; China 15 per; cent and South Korea 10%
Notices to 30 cos including JSPL, JSW, Bhushan Steel and TVNL for delaying development of coal blocks
The government issued show cause notices to 30 companies, including JSPL, JSW, Bhushan Steel and TVNL, asking them to explain the reasons behind the delay in developing the mines.
"...you are hereby called upon to show cause...as to why the delay in development of coal block(s) should not be held as violation of the terms and conditions of the allotment of coal block(s),failing which...action...would be taken against your company(ies) for deallocation," the Coal Ministry said in the notices to the companies on its website.
Jindal Steel and Power Ltd (JSPL) was issued notice for Jitpur coal block in Jharkhand, JSW for Gourangdih ABC block in West Bengal, Bhushan Steel for New Patrapara block in Odisha and Tenughat Vidyut Nigam Ltd (TVNL) for Rajbar E&D in Jharkhand.
Other companies which were issued show cause notices include Andhra Pradesh Power Generation Corporation, CESC Ltd, Maharashtra Seamless Ltd, Gujarat Ambuja Cements and Domco Private Ltd among others.
On Tuesday, the coal ministry had issued show cause notices to 10 firms, including Reliance Power's Sasan, Tata Power, Hindalco and Grasim Industries for delays in developing coal blocks.
These firms were allocated blocks between 1999 and 2008 for development of captive mines for power generation.
The show cause notices were also been sent to public sector Jharkhand State Mineral Development Corporation and Chhattisgarh Mineral Development Corporation. Besides MP, the blocks are located in Jharkhand and Chhattisgarh. Of the 218 blocks allocated, 25 have been taken back by the government.
While the coal-mining for commercial sale is a monopoly of the PSU Coal India, firms in power, steel and cement were given the coal blocks for captive use on the first-come- first-serve (FCFS) basis. But most of them could not develop the blocks for various reasons ranging from problems in environment clearances and difficulties in land acquisition.
Goa government will be transparent in allotting mining lease : Chief Minister Manohar Parrikar
Goa government will adopt a transparent procedure, including auctioning, in allotting mining leases in the state, Chief Minister Manohar Parrikar said today. "I am of the opinion that whenever there is a national asset (like mining) they should be auctioned rather than giving it to the person who applies for it," Parrikar told reporters on the sidelines of the oath-taking ceremony of Goa Governor.
Though he is yet to consult his colleagues or party on the issue of auctioning, Parrikar said the transparency in the allocation of mining leases would be spelt properly in the state mining policy that would be ready by May-end or June this year.
The chief minister said he is helpless in case of the existing leases, which were given to the owners when the Portuguese ruled over Goa. "There are historical reasons why Goa has mining leases", he said, adding that after the Portuguese left, the leases should have been handed over to the government.
Goa is the largest exporter of iron ore in the country. As per the record available with the mines and geology department, there are 90 active mining leases, which tapped 43 million metric tonnes of iron ore during the last financial year.
The state was also in the news for rampant illegal mining by night traders. The illegal mining scam was estimated to be Rs 4,000 crore over the last five years by the Public Accounts Committee headed by Parrikar.
Odisha govt mulls CAP on Iron Ore production
The Odisha government may impose a cap on iron ore production in the state, dealing a blow to the industry reeling under closures, loss of production and a nation-wide crackdown on illegal profiteering.
A senior Odisha government official told ET on condition of anonymity that the state has begun work on restricting iron ore production to about 52 million tonnes annually. Odisha produced about 75 million tonnes in 2010-11, a third of the country's annual output of about 218 million tonnes.
The move, if implemented, will sharply cut iron ore availability for many small-scale steel producers in Chhattisgarh, Jharkhand and Odisha and could affect plans of bigger companies such as Tata Steel, Essel Mining and Sarda Mines, which supplies to the pellet plant of Jindal Steel and Power, the Delhi-based Naveen Jindal group company.
Iron ore prices may go up, shortages may increase and steel production, already hit by the ban in Karnataka, will be further affected if Odisha's plans are implemented. Production in key states is already down and the country produced only 208 million tonnes of the ore in 2010-11 compared with 218.5 million tonnes in 2009-10. The financial year ended March 31, 2012, was even more severe.
Steel firms are already crying foul. "Such caps, if they are not enlarged in a couple of years, will leave no room for additional projects," said a senior Posco executive.
A report by Karnataka's anti-corruption watchdog last year on illegal mining practices in the state's mineral-rich Bellary district and a SC investigation have forced state governments like Goa and Odisha to deal sternly with illegal mining and to consider new taxes and annual caps like the one approved.
SHIPPING, TRADE AND TRANSPORT
KPT handles its largest vessel till date
Kandla Port Trust (KPT) has achieved another high by berthing its largest vessel yet.
On April 29, the m.v. Double Prestige, under the agency of Chowgule Brothers Pvt. Ltd, called at the Port with 59,000 tonnes of coal. The vessel was of length 770 feet, GRT 50,617 and DWT 95,709.
Considering the tidal conditions and the long channel, the Marine Department had to plan the movement meticulously to bring in the vessel at the correct tide and time. Capt. D. C. Bhatt, KPT’s senior pilot, assisted in bringing in and berthing the vessel. The berthing of a vessel of such huge dimensions in the given tidal conditions was a tremendous feat, emphasised an official release.
The operation was carried out under the guidance of Deputy Conservator, Capt. H. K. Sibal, and the directions of the Harbour Master, Capt. Srinivas, with help from Port tugs, flotilla and the signal station, the release pointed out.
KPT has thus once again proved its capabilities and its commitment to serve the nation, the release stressed.