Industry Updates 14th August,2012

India ministry of coal allocates 195 coal blocks

Mr Pratik Prakashbapu Patil minister of state in the ministry of coal informed that government has allocated a total of 195 coal blocks stand allocated to various public and private sector companies. Out of the allocated coal blocks, 30 coal blocks have started production.

The remaining coal blocks which have not started production so far, are in various stages of obtaining statutory clearances and mining lease, preparing mining plan, acquisition of land, procuring machinery and equipment etc for both mining as well as end-use project.

The Minister further stated that the development of coal blocks involves a gestation period of 3 to 5 years for reaching the production stage and another two to three years for reaching the optimal production capacity. As per the guidelines, coal production from captive coal block should commence within 36 months (42 months in case the area falls in forest land) in case of open cast mines and in 48 months (54 months in case the area falls in forest land) in case of under ground mine, from the date of allocation. If the coal block is not explored, additional two years are allowed for detailed exploration and three months for preparation of geological report.

Mr Patil said that the responsibility of developing the coal block as per the prescribed guidelines and milestone chart attached with the allocation letter rests entirely with the allocatee company. In the terms and conditions of the allocation letters, it is categorically mentioned that in the event of willful delay in the development of coal blocks and in setting up of the end use project, the Government will take appropriate action to de-allocate the said block.

Further, the allocatees have to submit Bank Guarantee which remains valid at all the times till the production from the coal block reaches its peak rated capacity. The Coal Controller's office monitors on regular basis the achievement of different milestones. Government periodically monitors and reviews the development of allocated blocks as well as end use plants by the allocatee companies in the Review Meetings. As on date, based on the recommendations of review committee meetings held, the Government has de-allocated 25 coal blocks. Further, an Inter-Ministerial Group (IMG) under the Chairmanship of Additional Secretary (Coal) with representatives from the Ministries of Power, Steel, Law & Justice and Departments of Economic Affairs and Industrial Policy and Promotion has been constituted on 21.06.2012 which inter-alia would undertake periodic review and monitor the progress of allocated coal/lignite blocks and make recommendations on action to be taken including de-allocation, if required.
(Steel Guru)
Sail approaches government for more coal blocks
In an effort to get at least 25-30 per cent coking coal from indigenous sources, Steel major SAIL has approached the government seeking allotment of more coal blocks. "We want to source at least 25 to 30 per cent coking coal from indigenous sources. Our target is to get 7/8 million tonne coking coal from indigenous sources," SAIL Director (raw materials & logistics) A K Pandey told PTI here.

At present, out of its total requirement of 14 mt, the company has managed to source about 3.5 mt of coking coal mainly from Coal India Ltd besides its own mines. Pandey said, at present, the company has to spend a whopping Rs 12,000 crore for importing around 11 mt coking coal.

SAIL's requirement of coking coal would go up to 21 mt when its capacity would increase to around 24 mt from the existing 14 mt by next year.

Higher input cost was one of the reasons which has affected the company's bottom-line as SAIL reported 18 per cent dip in net profit at Rs 696 crore for the first quarter ended June, 2012.

Stating that SAIL had got two coal blocks at Jharia coal belt in Jharkhand, Pandey said the company has approached the government for some more coal blocks in Jharia.

"Being a PSU, we have requested the government to allot us a few more coal blocks through government disposition route and we are expecting it," he said.
Govt not to reconstitute GOM on opening up of coal sector
The government has decided not to reconstitute the Group of Ministers (GoM) which was formed to evolve a consensus on opening up of coal sector for commercial mining.

The group was being headed by former Finance Minister Pranab Mukherjee.

"The Cabinet Secretariat has said that the GoM (constituted to obtain a general agreement on opening of coal sector for commercial mining) is not being reconstituted," a top official in the Coal Ministry said.

The Cabinet Secretariat had conveyed this to the Coal Ministry almost a fortnight back, the official said.

At present, only PSUs are allowed to undertake mining. Private firms are permitted to extract coal for captive use.

The six-member ministerial panel, formed in 2009, consisted of former Finance Minister Pranab Mukherjee, Coal Minister Sriprakash Jaiswal, Mines Minister Dinsha Patel, Planning Commission Deputy Chairman Montek Singh Ahluwalia among others.

Earlier, Coal Minister Jaiswal had said the government, as part of the energy sector reforms, is trying to evolve a consensus on commercial coal mining to promote development of the sector.

Several meetings of the GoM, to consider re-introduction of a bill to amend the existing Act governing coal mining were postponed earlier. The bill to amend the Act to allow private participation has been pending in Parliament for the last 10 years for want of political consensus amid opposition by trade unions.

The private sector is allowed coal mining for meeting their captive requirements in sectors like power, steel and cement etc.

The need to liberalise the sector was also felt in the wake of widening demand-supply gap of the dry-fuel.

According to government estimates, India faced a supply shortage of 161.5 million tonnes of coal in the last financial year.
(Economic times)
Paradip Port’s iron ore berth project in limbo?
DESPITE the fact that Paradip Port's build-operate-transfer (BOT) iron ore berth has managed to cross the final hurdle by getting environment clearance after a long wait, the future of the project still hangs in balance.
The Hong Kong-based Noble Group, which was awarded the project by the Paradip Port Trust (PPT) for construction and operation of a 10-million tonne per annum (mtpa) iron ore berth on BOT basis three years ago, is now said to be having second thoughts. 
The project was to be executed by Blue Water Iron Ore Terminal Pvt. Ltd, the special purpose vehicle floated by the Noble Group-led consortium (MMTC and Gammon India being the other partners). PPT officials have expressed concern that the Noble Group has not yet made known whether it would continue with the project or withdraw from it. 
Suspecting that the group may not be keen to continue with the project given the not-so-satisfactory situation on the iron ore front, they point out that the three-year delay has pushed up the project cost to around Rs 800 crore from the original estimate of a little less than Rs 600 crore.
(Exim India)
Indian iron ore mining mess - Goa going soft on extraction limit

After making a vocal case for sustainable mining, Goa Chief Minister Mr Manohar Parrikar's much awaited draft mining policy appears to have turned its back on a crucial recommendation of a government committee on capping iron ore extraction.

The draft policy, which was tabled on the last day of the monsoon session of the Goa assembly Thursday by Mr Parrikar, who is also mines minister, advocates a 45 million tonne annual cap on the extraction of iron ore, even as the Goa Golden Jubilee Development Council chaired by eminent scientist Mr Raghunath Mashelkar, has recommended a 20 million tonne cap.

The draft said that "No strain on any infrastructure will be created as the existing infrastructure has proven incapable of crossing 45 million tonnes.”

The chief minister had earlier said that he was in agreement with the findings of the Mashelkar report, which was submitted to the Goa government earlier this year.

The 45 million tonne cap is not only more than double that recommended by the Mashelkar committee but is more than 10 million tonnes to 15 million tonnes higher than Parrikar's earlier state figure of 30 million tonnes to 35 million tonnes.

Mr Parrikar said a few days after coming to power in March said that "We cannot allow extraction of 55 million tonnes like it has happened earlier. Something like 30 million tonnes to 35 million tonnes can be all right.”

But for all intents and purposes, the unbridled extraction will continue when the mining season begins in September after the monsoon recedes because a law on the issue, in whatever form it takes, will not be in place by then.

The draft policy will be put in the public domain for 15 days after which the cabinet will take a call on the suggestions received. This process will take about 45 days. However, the assembly, which will consider the bill cleared by the cabinet, is scheduled to meet only in October-November
(Steel Guru)

Goa may cut Iron ore output by 18 per cent
Goa plans to cap its iron ore output at 45 million tonnes per annum due to its limited infrastructure, the mining department head said, down 18 percent and likely to cut India's depleted exports further.

India used to be the world's third-biggest supplier of the steel-making material and counted China as its biggest client. But a 30 percent export tax aimed at keeping the resource for domestic use, high freight rates and lack of demand from China, have halved overseas sales.

"This limit was arrived at after taking infrastructure facilities into account to mine so much output," said Prasanna Acharya, director of mines and geology in Goa's mines department.

Vedanta's Sesa Goa has most of its mines in Goa. Goa lacks exclusive roads for mining traffic and jetties at ports to handle the steel-making ingredient.
(Steel Guru)
Indian iron ore mining mess - Karnataka scam pegged at INR 50000 crore

The scale of the Karnataka mining scam seems to be getting bigger with the estimates of an expert committee suggesting that the alleged robber barons who engaged in illicit mining may have cheated the state of INR 50,000 crore in taxes and other levies.

The mining syndicate which thrived across regimes claimed that it was taking out just 50 million tonnes of iron ore every year whereas inspections showed that in reality, another 30 to 40 million tonnes of ore was illegally mined and siphoned off.

Considering that the recent e auction for just 26.58 million tonnes brought in INR 1,496 in various levies, the loss to the state exchequer works out to INR 7,000 crore every year over the last one decade.

The Supreme Court's environment panel, Central Empowered Committee submitted its report to a bench of Justices Aftab Alam, KS Radhakrishnan and Swatanter Kumar on Thursday and said till July 31, 26.58 million tonnes of iron ore was sold through e auction for INR 6,416 crore.

The report submitted to the court by CEC's member secretary MK Jiwrajika said that "In addition to the sale price, about INR 1,496 crore has been recovered and paid by the monitoring committee to the government INR 606.24 crore as royalty, INR 594.06 crore as forest development charges, INR 270.65 crore as VAT and INR 25.11 crore as CST.”

CEC sources said if the private lease holders had sold the iron ore for INR 6,416 crore, then they would have paid income tax of over INR 2,100 crore to the government. So, along with the various levies, the government would have got almost INR 3,600 crore from the entire transaction.

Before the apex court banned mining completely, private lease holders had declared sale of 50 million tonnes of iron ore per year on an average and inspection showed that another 30 to 40 million tonnes of ore was illegally mined and siphoned off.

If sale of the total 80 to 90 million tonnes of iron ore was shown as legal by the private parties every year, then they would have earned around INR 18,000 crore, over which income tax would have been INR 6,000 crore. In addition, the government would have got nearly INR 1,500 crore as royalty, FDC, VAT and CST. This means the government would have got around INR 7,500 crore every year. But what the government actually got was only around INR 500 crore from the private parties.

Thus, an estimated loss of INR 7,000 crore to the exchequer per year happened for nearly a decade and CEC sources said the entire illegal extraction of iron ore and under-reporting of sale and extraction could have cost the exchequer INR 50,000 crore.
(Steel Guru)
Govt likely to ban wheat exports by pvt. traders 
THE government is likely to ban wheat exports by private traders under the open general licence (OGL). 
Sources attribute the move to the 20 per cent surge in wheat futures in a month, triggered by concerns about high global prices and the drought-like situation prevailing in the country. The fear was that private traders could divert all the available wheat in the market, released at subsidised rates for roller mills and fair price shops, for exports to make the most of the global rally in prices. 
As this could create a shortage of wheat, resulting in a surge in domestic prices, it is likely that the government would impose a ban on wheat exports under OGL. 
India has shipped over 1.8 million tonnes of wheat under OGL since the revocation of the four-year ban on exports in September 2011, while export prices have surged to $ 290-$ 310 per tonne from around $ 220 a tonne around three months ago.
(Exim India)

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