Industry Updates 19.07.2012


INDUSTRY UPDATES
19 July, 2012
STEEL, METALS AND MINING
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COAL
Western coal fields limited looking for new coal bloacks in other states: Sriprakash Jaiswal
Western Coalfieds Limited (WCL) is looking at expanding in other states to augment its resources, Union Minister for Coal, Sriprakash Jaiswal said here today. The Nagpur-headquartered WCL has limited scope for expansion and hence the government is exploring ways to expand its base by allocating new coal blocks, Jaiswal told a press conference here today.

Jaiswal was all praise for WCL saying that despite several odds, it was doing extremely well and and would meet its target during the current fiscal.

"I have asked the management and trade unions to make all out efforts to go beyond theier target and achieve more. We are hopeful that WCL does better than last year," Jaiswal, flanked by Minister of State for Coal Prateek Patil said.

On non-operation of coal blocks alloted to private parties and necessary action, Jaiswal said the process of show cause notices have begun and Ministry was examining why the private parties have not started the work.

On the alleged 'Coalgate' scam, Jaiswal dismissed allegations, saying that the CBI was investigating it and none will be spared. He said that the allotment of coal blocks to the private sector was not new but started in 1993 and continued by successive governments.
(Economic Times)

IRON ORE
Iron ore giant Sesa Goa closing steel plants on iron ore shortage

India's largest exporter of iron ore Sesa Goa is planning to close down its pig iron and metallurgical coke plants at Amona in Bicholim taluka due to lack of supply of iron ore from within and outside Goa.

Mr PK Mukherjee MD of Sesa Goa said “Due to lack of transportation of iron ore within Goa, our stocks at Amona are getting exhausted and closure of the plants is imminent.”

He said “For the last one year, the supply of iron ore from Karnataka has also become scarce and very costly due to closure of all mines in Karnataka as per a court order and stocks getting sold in E auction. Now the stoppage of transportation of ore from Codli, has hit us very badly. Sesa's plants are running since 1992 without stopping for a single day.”

The possible closure of the two plants will have implication on Sesa Goa's power plant which is based on gases from its blast furnace and met coke plant.
(Steel Guru)
Indian iron ore mining mess - Goa panel recommends cap on iron ore extraction

Committee of experts constituted by the Goa government has recommended a cap on extraction of iron ore in the coastal state to 20 million tonnes to 25 million tonnes which is almost half the existing exports.

The panel headed by renowned scientist Mr Raghunath Mashelkar in their Goa Vision 2035 report submitted to the state government yesterday has recommended the cap on mining should be between 20-25 million tonnes per year, exclusive of the mining dumps.

Mining dumps are low grade ore rejects which are piled up in the mining leases and outside it, and now become marketable because of its international demand.

The Goa Golden Jubilee Development Council which was formed last year, has suggested that the cap should be imposed from 2012-2017, to be reviewed thereafter, to reduce the ecosystem and social stress in the region due to mining activity.

The document, which was presented to Chief Minister Manohar Parrikar yesterday, also speaks of appointing the high powered committee on the issue of mining, comprising experts from various fields, which can advise the government on how much the cap should be.

He said that "The HPC should advice on the cap after examining evolution of mining in Goa and identifying the stress that have existed from time to time due to enhanced mining.”

Goa, India's biggest iron ore exporting state, shipped 43.5 MT ore during the last fiscal, much less compared to the 54 MT exports in the earlier financial year. This is mainly because the mining industry is rigged with several illegalities and irregularities, which has put this trade in a tight spot.
(Steel Guru)
CEMENT
Pak to increase cement exports to India, reduces export price 
India can now get Pakistani cement at reduced rates as cement manufacturers in that country have decided to decrease export prices for India by 13 per cent due to appreciation of the dollar against the rupee. 
Pakistani cement manufacturers are keen on capturing the Indian market despite many hurdles in transportation and the strict certification norms of the Bureau of Indian Standards (BIS), market sources said. 
Following the fall in the value of the Pakistani currency, cement manufacturers reduced prices by $9 per tonne and will be able to export to India at an average price of $60 per tonne as compared to $69 earlier. 
"Pakistan can export over one million tonnes of cement to India if BIS certification is allowed for 5 years and two train interchanges per day, besides development of another loop road network for transhipment at the Wagah border," market sources stressed. 
At present, some four Pakistani cement companies are awaiting Indian inspection to obtain licence and commence exports to India. BIS officials are, however, reluctant to visit Pakistan citing security threats, they added.
(Exim India)
AGRICULTURE
Agro Trade: India’s policies have boosted Pakistan’s earnings at the cost of Indian exports
India has unwittingly pursued policies and actions that have helped and promoted Pakistan's foreign trade in agro commodities. Since 2006, trading trends in non-basmati rice, wheat, sugar, soymeal and onions lend confirmation to this fact.

The government virtually granted special status to Pakistan when it first restricted and then prohibited export of Indian non-basmati rice in 2007.

Pakistan was then free to exploit and substitute 3-4 million tonnes - of the seven million tonnes of its milled rice output - of west Asian and African markets fostered by India for four years. Today, it is well established as a competing country. Non-basmati rice is not the staple food of Pakistan; only 45% is consumed locally, and the rest is exported. Basmati rice is their preferred cuisine.

Likewise, our neighbour also developed new capacities for parboiled rice to cater to special requirements of Bangladesh and South Africa. After India's aggressive re-entry in September 2011, Pakistan's export of parboiled rice is down to a trickle; parboiled rice capacities are shut, but capabilities to reinvent them at a short notice do exist.

Now an established competitor, Pakistan is desperately seeking to match Indian prices of white rice, suggesting that their trading operations may either become more efficient or less profitable. Indeed, a unique parallel where the absence of competition provides market access and business rivalry contributes to greater adaptability.

In 2008, India crossbred a new hybrid basmati variety of Pusa 1121 with 8.2-mm grain length (against 6.2 mm of parmal range) that became an elite acquisition of Iranian market consuming 0.8-1 million tonnes per annum at almost $1,000 per tonne fob - which is double the valueof non-basmati rice. No patent exists for 1121. Pakistan has cloned its strain. Surely, Pakistan will improve upon this hybridisation and effectively compete incoming years.

Likewise, five years of prohibition on Indian wheat export enabled Pakistan to ship around two million tonnes wheat in two years (2010-11 and 2011-12). After lifting of India's embargo in September 2011, their business has declined significantly. USDA estimates Pakistan wheat export reduced to merely 0.3 million tonnes in 2012-13. A continued prevarication on subsidised export of Indian wheat may be advantageous to the competing origins in general.

On a request from Bangladesh in 2010, the government notified export of 0.5 million tonnes of FCI's wheat and rice to Bangladesh on a government-to-government basis. India and Bangladesh failed to arrive at mutually-acceptable commercial conditions. Indian exports were abandoned. Pakistan substantially filled the gap by private exports and made good Indian failure.

India's wheat gift of 0.25 million tonnes to Afghanistan in 2011-12, most of which was recently loaded from Kandla to Karachi port and then dispatched to Kabul via road, enabled Pakistan handling and transportation earnings. Due to grossly insufficient milling facilities in Afghanistan, Pakistani flour millers would have also been remunerated for tolling wheat flour by government of Afghanistan.
(Economic Times)
FERTILISERS
ENERGY 
Iran slashes quarterly crude prices to Asia 
IRAN has slashed prices in its quarterly formulas for three grades of crude it sells to Asia. Price formulas for Iranian Light, Iranian Heavy and Forozan Blend to Asia in the third quarter have been cut by 2 to 8 cents a barrel, after holding steady during the first half of the year. The move came just before Western financial sanctions began targeting Tehran's oil exports. 
The marginal price cuts are seen as a concession to buyers in India, China, Japan and South Korea who have struggled to find alternate shipping insurance from July 1 after European insurers stopped covering tankers ferrying Iranian crude.
(Exim India)
SHIPPING, TRADE AND TRANSPORT
Anil Agrwal attempts to create global natural resources monolith by merging Sesa Goa and Sterlite Industries
Anil Agarwal can't forget that day in the mid-70s when he came to Mumbai and didn't find it easy entering one of the city's five-star hotels. Reason: the 19-year-young scrap dealer from Patna couldn't speak English. Today, the 58-yearold chairman of the $11.4 billion, London-headquartered Vedanta Resources is fluent with the Queen's language and uses it effectively to illustrate his ambition of becoming a diversified natural resources conglomerate, with a presence in metals, oil and gas, power and mining.

"The Australians love BHP Billiton," Agarwal tells this writer via a call from his office on Berkley Street. "They say this is 'our' company. Likewise Sesa Sterlite will be India's ambassador in the global market, and will make Indians tremendously proud."

You can excuse Agarwal for making Sesa Sterlite sound like a Sachin Tendulkar; but the entity he is talking about packs as much punch as the master blaster.

Towards the end of June, the founder of Vedanta Resources- which is the holding company of the group-crossed a crucial barrier in his quest to assemble all his Indian assets under one roof. The approval of shareholders of Sesa Goa and Sterlite Industries to merge the two companies paves the way for Agarwal to make Sesa Sterlite the main operating company-or, as the chairman puts it, "the growth vehicle of the group."

The merger, which is expected to receive all regulatory nods by December 2012, is not just of two companies; it collapses all the assets of Vedanta's listed and unlisted companies in India-Sesa Goa, Sterlite, Vedanta Aluminium (VAL), Malco, Balco and Hindustan Zinc-into Sesa Sterlite. The new company will also own the group's majority stake in Cairn India, the oil & gas company whose acquisition was finally completed in December 2011.
(Economic Times)

Essar Paradip Coal Berth receives final environmental and forest approval
Paradip Port Trust has received Ministry of Environment & Forest approval for the All Weather Deep Draft Coal Berth which had been awarded to Essar Ports on Build Operate and Transfer basis on a 30 year concession. Essar Ports has now received formal intimation from Paradip Port Trust to commence mobilization towards construction activities.

Essar Ports will build a mechanized berth of 370m length which will be one of the most advanced port facilities of its type in India. This would give the facility an effective handling capability of 14 to 18 million tons per annum.

This project is a part of Paradip Port Trust's plans towards mechanization of coal imports. Last year, Paradip Port Trust handled approximately 12 MMT of imported coal. As per the concession, this volume, along with any incremental volume, will shift to the mechanized berth which would be built by Essar Ports.

Speaking on the development, Mr Rajiv Agarwal MD of Essar Ports said that "We are extremely happy with the approval finally coming through. We would be looking forward to commencing construction activities at the earliest, and target commissioning in 18-24 months time, which will add significantly to our third party volumes."

Essar Ports currently operates 88 MMTPA of port capacity between Vadinar and Hazira. The company is expanding its total capacity to 158 MMTPA by 2014. The Deep Draft Coal Berth at Paradip is expected to add 14 to 18 MMTPA of third party cargo volumes to Essar Ports.
(Steel Guru)
P&I cover for ships carrying Iranian cargo gets IRDA nod 
THE Insurance Regulatory Development Authority (IRDA) has given the green signal for protection and indemnity (P&I) cover of up to $50 million for ships carrying Iranian cargo. 
While United India Insurance (UII), one of the four public sector insurers, will offer the cover, designed exclusively for Iranian voyages, sources apprised that the policy would make the cover available for third-party claims up to $50 million. 
The move is expected to facilitate resumption of Indian tanker sailings to and from Iran, suspended from July 1 on the back of Europe-based insurers denying P&I cover to Iranian shipments. 
While confirming IRDA clearance, a UII official apprised that details pertaining to the cover would be communicated to Indian shipping companies soon. 
Under the proposal, the minimum premium for a voyage varies from $15,000 to $ 25,000, depending on the size of the vessel. The premium for the following vessels would be as follows: Aframax ($15,000), Suezmax ($20,000) and VLCC ($25,000). 
Pointing out that the cover would be initially extended only to Indian flag carriers, the UII official added that vessels chartered by domestic firms would also be eligible subject to the Reserve Bank of India's foreign exchange regulations. 
Sources point out that though international P&I clubs provide annual insurance cover of up to $1 billion for a vessel, the risk is normally shared by the club members, i.e. shipping lines. However, in the case of the proposed Indian cover, the cost of the claim will be borne by the insurer. 
The official disclosed that a meeting of shipping lines and charterers may be convened soon to discuss the issue. 
Sources said that UII is also open to offer hull and machinery (H&M) cover to Indian ships separately, which has been generally partly reinsured with European insurers.
Industry analysts are confident that domestic tankers would now be able to carry Iranian crude without a hitch, especially following UII's decision to offer both P&I and H&M covers. 
It may be recalled that the Union government had allowed domestic oil companies to use Iranian vessels to ship crude to India, after Indian tanker operators expressed their aversion to carrying Iranian crude without insurance.
(Exim India)



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