Industry Updates on 13th June 2012

13.06.2012 Industry Updates

INDUSTRY UPDATES


STEEL, METALS AND MINING
MOEF draft seeks to keep miners away from inviolate forest areas
If theenvironment ministry's draft proposal for 'inviolate forest areas' is accepted, large swathes of healthy forests, including national parks, wildlife sanctuaries, tiger reserves and wildlife corridors, would be out of bounds for all mining activities, and not just coal excavation.

The ministry's draft lists criteria for identifying forest patches where mining should be banned following the GoM on coal's decision to junk the no-go policy of the environment ministry. The GoM instead asked the ministry to delineate 'inviolate forest areas' based on a new set of norms.

A committee, under environment secretary Tishyarakshit Chatterjee, has submitted its draft report that looks to give the demarcation legal teeth by notifying inviolate patches under the Environment Protection Act, 1986. Although initially promoted by the coal ministry and Coal India Limited, the no-go policy was attacked later by mining lobbies for lacking a legal mandate.

The norms proposed include forest cover, forestry type, biological richness and wildlife value of areas under review, hydrological and socio-economic benefits. These are tough criteria that can be difficult to overlook in grant of mining rights.

The formula and criteria recommended by the Chatterjee panel will mean that areas within 1 km of parks and sanctuaries and critical migratory corridors linking wildlife habitats would almost by default be regarded as inviolate.


The strong pro-environment criteria recommended by the committee takes more into consideration hydrological values of forests like whether green patches are catchment areas for rivers or feed wetlands. This will also command weight in demarcating the area not to be mined.

Areas located within direct draining catchment of streams utilized as water sources for projects would automatically be excluded. Boundary areas of important wetlands bigger than 10 hectares and storage reservoirs for irrigation, water supply or power projects too would be off limits.

The committee has recommended that in the first phase, the Forest Survey of India (FSI) mark areas on the basis of wildlife and forestry-related criteria. Then, state and central agencies along with the FSI collect and generate data on the three other parameters - hydrological, socio-economic and aesthetic values.

Once this exercise is complete, the ministry would notify areas under the Environment Protection Act after taking the views of state governments and other stakeholders, the panel has advised.
(Economic Times)


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COAL
Indonesian coal miners take on initiatives ahead of export ban

The Jakarta Post reported that with the ban on unprocessed coal exports imminent in two years, a handful of coal producers are racing with time in conducting feasibility studies to manufacture derivative products using new technologies to convert the commodity to gas or liquid fuels.

State owned coal producer PT Bukit Asam in tandem with fertilizer producer PT Pupuk Sriwijaya has launched an initiative to identify the commercial viability of coal gasification. Mr Bukit Asam corporate secretary Hananto Budi Laksono told The Jakarta Post last week that “Pusri will absorb coal gas produced, when the technology is proven to be economic.” He added that the company was also embarking on other initiatives to study the feasibility of Coal to Liquid (CTL) and calorie upgrade technologies.

The state-sanctioned Center for Minerals and Coal Technology Research and Development (tekMIRA) is involved in helping Bukit Asam and Pusri on their coal conversion initiatives. According to tekMira chief Bukin Daulay, by using the so-called Direct Liquefaction system, one metric ton of coal with a content of above 6,000 kilogram calorie per kilogram can produce 3.5 barrel of synthetic diesel fuel. Indonesian coal, which mostly comes with a lower calorie, will be able to yield around 2.5 barrels of fuel using the same amount of coal.

Despite making economic sense, experts argue that the direct liquefaction method creates a bigger environmental hazard as the making of the fuel produces prodigious amounts of carbon dioxide, even before the fuel is burned. The process also uses enormous amounts of water, creating more environmental impact.

Coal producer PT Darma Henwa, through its subsidiary, DH Energy, is also embarking on pioneering initiatives on gasification, liquefaction and also upgrading technologies at its production base in Pendopo, South Sumatra. The company expects gasification project to begin commercial production in 2016, while upgrading to begin as early as next year.

Indonesia’s second largest public listed coal producer, PT Adaro, is also researching coal calorie upgrading technology. Adaro external relations general manager Bambang Susanto said the research would be completed “in a few years” and that the company was looking for a suitable site for a pilot plant.
(Steel guru)
CIL invites firms for assessing CBM reserves in India

Coal India Limited has invited expression of interest from companies for carrying out studies to assess methane reserves of coalfields as part of efforts to increase energy supply and overcome fuel crunch.

CIL said on its website that “Central Mine Planning & Design Institute invites expression of interest for undertaking R&D work under ministry of coal from established R&D/scientific institutes for carrying out scientific studies on coal bed methane reserves estimation for Indian coalfields.”

The tender which opened last week will expire next month.

“India has large coal reserves which may be amenable for harnessing of coal bed methane. Several blocks have been carved out and allotted for commercial extraction of CBM.

“Carving out more blocks in the greenfield areas for commercial development of CBM is to be taken up on priority basis to augment energy supply in the country. For reliable assessment of CBM resource for carving out CBM blocks in greenfield areas, proving of coal reserves is a pre-requisite,” the tender document said.

India’s CBM production is estimated to reach 4 million standard cubic meter per day (mmscmd) by 2016-17, as compared to the current level of 0.23 mmscmd in 2011-12. In order to increase production of CBM, 33 bocks have been awarded so far, according to a government release. The total commercial production of CBM in the country in 2011-12 (up to February, 2012) was 74.833 mmscmd.
(Steel Guru)

IRON ORE
Mining season in Goa comes to a standstill due to monsoon

With the onset of monsoon, the iron ore mining business in Goa has come to a standstill, with only lumpy ore being transported from the sites to ports.

Industry players like Goa Mineral Ore Exporters Association claim that 80% of the business will be down, as fines cannot be laden in trucks and transported to the jetties from where it is ferried to the port by small ships.

Mr Swaminathan Sridhar GMOEA executive secretary said that only few mining companies extract the lumpy ore, while rest deal with fines which are low grade. He said that extraction and transportation of ore becomes difficult during rains due to logistic reasons.

From a record 54 million tonnes of export in 2010-11, before crackdown on the illegal iron ore, the exports had plummeted to 43 million tonnes in 2011-12. GMOEA Secretary, Mr Glenn Kalavampara said that “The indications are that the exports would further be down by 15% for the current financial year, adding that the trends of exports in April-May this year were indicative of the downfall.”

He said that 38 million tonnes mining export is projected for 2012-13.

He added that “But it may be too early to predict.”

The statistics available with the GMOEA indicate that export was around 8-9 million tonnes for April to May 2012, which is less in comparison to corresponding period last year.
(Steel guru)
Karnataka seeks permission to mine extra 10 million tonne iron ore

The Karnataka government has filed an affidavit before the Supreme Court seeking 10 million tonnes a year additional iron ore production.

Karnataka chief secretary Mr SV Ranganath said that “The state has been getting lot of requests for setting up iron ore benefaction units and also to encourage small and medium industries, we have sought apex court's permission for additional 10 million tonne per annum production.”

He added that “If this is allowed, then we have will have a total of 40 million tonne per annum production in the state. We hope to get clearances soon.”

Mr Ranganath said that “Currently only four ‘A category' mining companies are permitted to supply ore. In a few months from now, 20 more companies which are in final stage of implementing reclamation and rehabilitation plan will go on stream.”

He added that “For time being, this quantity is sufficient to fulfil the state's needs. There are 20 mining leases of 50 hectares and above in category A. The restarting a few of these will make available around 10 million tonnes.”

The Supreme Court, based on the recommendation of the Central Empowered Committee, to check illegal milling, had capped iron ore mining in the state at 30 million tonne a year. Bellary district was fixed at 25 million tonnes, whereas for other districts such as Chitradurga and Tumkur, a ceiling of 5 million tonnes had been imposed.
(Steel guru)
Naxal threat to iron ore supply from NMDC

National Mineral Development Corporation has come under the scanner of red army that has hinted to disrupt the transportation of steel making raw material from its facility in Chhattisgarh.

The country’s largest iron ore producer has major mining facilities in Dantewada district of Chhattisgarh. Most of the mines are located in the pockets where Naxalites have considerable sway. Of the three fully mechanized mines of the NMDC, two are located in Dantewada including the first large scale open cast iron ore mine in India.

Terror struck on the tracks transporting iron ore from NMDC facilities in the intervening night of Sunday and Monday that had alerted the authorities. The NMDC officials are however refusing to comment on the issue stating that it is a matter related to the Naxalites and hence they will not comment.

A group of heavily armed Naxalites numbering more than 100 stormed into Bhansi railway station and took the railway staff on duty hostage. The rebels blew up a big portion of track and damaged the engine of a train after failing to set it on fire. The rebels threatened the railway staff of dire consequences and warned not to operate trains in the section during the night hours.

The warning of Naxalites was an overt signal to disrupt the transportation of iron ore from NMDC facilities. For, only goods train carrying iron ore was plying in the section in the night hours as the only passenger train chug from the route during day time.

Through the rail route, the mining major was transporting iron ore from Dantewada to Visakhapatnam to ship the raw material to the other countries. Dantewada Superintendent of Police Narendra Khare told Business Standard that “I will not comment anything on the development whether the Naxalites have intensified their attack against NMDC.”

Meanwhile, transportation of iron ore remain affected on the rail route throughout the day as the damaged track could not be repaired. The railway officials said by late in the evening, the work was likely to be completed.
(Steel Guru)

CEMENT
Buyers build on cement on rate cut, lower CCI penalty Buzz ‘
Shares of cement makers ended firm on Tuesday after a sluggish start on hopes April's dismal industrial output will prompt the Reserve Bank of India to cut rates that will boost construction activities.

Market speculation that India's anti-monopoly watchdog could pass an order steeply reducing penalties on cement companies for alleged cartelisation also contributed to the upbeat mood. Holcim-controlled ACC and Ambuja Cements rose by over 3% and 5%, respectively, while Aditya Birla Group company Ultra-Tech gained almost 2%.

"Infrastructure stocks got a leg up on Tuesday after dismal IIP numbers reinforced hopes of a rate cut and more proactive measures by the government," said Navneet Munot, CIO, SBI Mutual Fund. The central bank is widely expected to cut a key rate, at which it lends to banks, by 25 basis points at its policy meet next Monday as faltering economic growth coupled with policy paralysis threaten to reduce the country's investment rating to junk status, as pointed out by rating agency S&P in a report on Monday.

Traders also bet on the possibility of a reduction in estimates of penalty for alleged cartelisation during 2008-10, an event that has weighed on cement shares in recent months. "Rumours were rife that CCI may reduce the extent of penalty on cement makers to 3% of turnover from an estimated 5-10 %," said Rikesh Parikh, V-P (equities), Motilal Oswal Securities. "This added momentum to cement counters after relatively lacklustre performance recently."

Against the Sensex's 8.7% return so far this year, companies like Ambuja and ACC have posted a mere 1.4% and 4.4% return, respectively , ETIG data shows. Fund managers are upbeat on the prospects of the larger cement makers such as UltraTech, ACC and Ambuja, especially after the government said recently it would kick-start infra projects to revive a sagging economy and on expectations of lower energy costs.

Mirae Asset Global Investments CIO Gopal Agrawal said, "Cement companies' results in the fourth quarter matched expectations .... a decline in international coal and fuel prices augur well for the sector."

Investors prefer large cement companies over their smaller peers despite cheaper valuations fearing difficulty in exiting if markets fell sharply. "Infra spends on things like road projects will be positive for large cement companies, which at 15 times forward earnings are costlier than mid-caps but are still good picks for the long term, especially as capacity addition will remain muted for two years after the end of the current financial year," said a fund manager who requested anonymity.

"Small and mid-cap stocks, on the other hand, are trading at singledigit valuations but could be risky bets if the global situation worsens. If our market tumbles taking cues from others, investors could find an exit out of such stocks difficult as they are not too liquid."
(Times of India)
AGRICULTURE

FERTILIZERS

ENERGY 

SHIPPING, TRADE AND TRANSPORT
India gets temporary relief from the US sanctions against Iran
 Indian refiners need to further cut import of Iranian oil even though it has been exempted from US sanctions, oil industry executives said a day after Washington said it won't penalise countries that have cut purchases from Teheran.

For the moment, Indian refiners are breathing easy as the threat of severe supply disruption from July has ebbed and the US decision helped Brent crude oil prices drop to $97.5 a barrel. But industry officials say US pressure to reduce the use of Iranian oil continues and the country needs to keep exploring alternative sources of oil.

The US government said late on Tuesday that it had exempted seven importers of Iranian oil including India from sanction to reward them for significant cuts in import of Iranian oil. Other countries are Turkey, Malaysia, South Korea, South Africa, Sri Lanka and Taiwan. China, a large importer has not been exempted.

"Today's announcement underscores the success of our sanctions implementation. By reducing Iran's oil sales, we are sendindg a decisive message to Iran's leaders: Until they take concrete actions to satify the concerns of the international community, they will continue to face increasing isolation and pressure," the US government statement said.

The exemption has been granted "for a potentially renewable period of 180 days", the statement US Secretary of State Hillary Clinton said. The US sanctions are aimed against Iran's nuclear programme. India has already cut purchases of Iranian crude oil, although the oil ministry says it has not issued any directive to oil companies. The reduction is due to commercial decisions by refiners, officials said.

The US decision has calmed oil markets, which were bracing for a spike on prices due to the potential disruption in supplies. Crude oil prices have dropped from about $120 a barrel in April to $97.5 on Wednesday, building a case for a further cut in petrol prices, which were raised by a record Rs 7.5 per litre in Delhi last month.

The exemption from sanctions will help Mangalore Refinery and Petrochemicals Ltd ( MRPL), which is the biggest Indian importer of Iranian crude oil. Other large importers include Hindutan Petroleum Corp Ltd and Essar Oil Ltd. These companies have already reduced the import of Iranian crude oil. The largest refiner, Indian Oil Corp, which processes 66 million tonnes of crude oil a year, imports barely 1 million tonnes of Iranian crude oil a year. Reliance has already stopped using Iranian oil.
(Economic Times)
MbPT’s offshore container terminal to be ready by December 
THE government, while admitting to delays in the construction of Mumbai Port Trust’s (MbPT) offshore container terminal (OCT), is hopeful of the initial phase of the project being completed by December. It attributed the delay to problems with contractors.
"The construction of offshore container terminal in Mumbai Port is going on. Due to delays by the build, operate and transfer (BOT) operator and dredging contractor, the project got delayed. The work is likely to be completed by December 2012," an official statement said. "Both the Ministry of Shipping and Mumbai Port Trust are monitoring the progress of the work," it added.
MbPT has reportedly appointed an independent engineer for the approval of designs, quality control and to monitor progress of the BOT operator.
As per the licence agreement between MbPT and the Indira Container Terminal, the project was scheduled to be commissioned by December 2, 2010.
(Exim India)


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