INDUSTRY UPDATES On 1st November, 2012

On 1st November, 2012
Odisha to allow mining for captive use only, gives miners three days to comply
The iron-ore mining industry in Odisha is facing its worst ever crisis, after 10 large iron-ore mines in the state were directed to either stop or curtail mining operations. The state has decided that mining will henceforth only be allowed for captive use and has told miners whose leases are up for renewal that they have three days to comply.

Of the 10 large mines in Joda district, two mines belong to Aditya Birla Group's unlisted mining arm - Essel Mining, which has no steel plant. The other two on the list, belong to SAILBSE -0.37 % and Tata Steel, who as per the new orders, will only be allowed to mine what they need, so that the life of the mines can last for the next 30 years.

The notice gives them three days to comply. The Birla Group spokesperson declined to comment, stating that Essel Mining is not a listed company. An email questionnaire sent to Tata SteelBSE 0.34 % went unanswered.

According to those close to the steelmaker setting up a greenfield plant in the state, its reserves are already depleting and it has informed officials that its mining within the imposed limit.

The state government's recent moves since the beginning of this month to reserve all standalone mining to the state firm through notifications is nothing but 'posturing,' an industry representative said. The recent moves by the state government assumes significance, as a central commission, under former Justice M B Shah, is currently investigating illegal mining across the country and is to submit its first status report on mining in Odisha.

"These special conditions are outside the legislative ambit. Restrictions or special conditions cannot be imposed arbitrarily, without prior approval from the centre," said a policy maker who didn't want to be identified. However, Deepak Kumar Mohanty, director Mines, contested this view: "I don't think we need any central approval for this (26 October order)," Mohanty said.

Following two resolutions, one dated October 3 and the other 12 October, the government has stipulated that leases awaiting second and subsequent renewals and are operating under a deemed extension, will have to restrict production for exclusive captive use till a decision is taken for renewal of part or whole of the lease.

The 26 October notice, from the office of the Deputy Director of Mines of Joda circle said: "In case of first renewals of a mining lease granted for captive purpose, no mineral shall be put to non-captive use. Any such use (non-captive) amounts to violation of lease condition."

Earlier this month, Odisha announced all future mining leases of iron ore, bauxite, chrome and manganese will be handed over to Odisha Mining Corpration. It has even turned down Rashtriya Ispat Nigam Ltd, a state-owned steel maker, a captive mine citing this decision, despite the fact that any such reservation for a state PSU (invoking Section 17 A (2) of Mines and Minerals (Development & Regulation) MMDR Act-1957) requires prior central approval. According to steel ministry officials, no such approval has been sought recently.
(Economic Times)
Essar Power secures forest clearance for Mahan Coal Blocks
Essar Power today said it has received 'stage 1' forest clearance from the Ministry of Environment and Forests for its Mahan coal block in Madhya Pradesh. "Essar Power, pursuant to group of minister's recommendation, has secured stage 1 forest clearance from the ministry of environment and forests (MoEF) for its Mahan coal block," the company said in its statement.

This stage 1 clearance of Mahan coal block will help expedite supply of fuel to Essar Energy's nearby 1,200 MW Mahan phase I power project, which is due to be commissioned shortly, it said.  The block was allocated in 2006 to Mahan Coal, a joint venture between Essar Energy and Hindalco.

"The approval from the ministry enables us to accelerate development at the Mahan coal block to provide fuel for our power plant and deliver much needed electricity for the people of the country," Essar Energy CEO Naresh Nayyar said.

He said this was a major step forward in the company's strategy of providing full fuel security for all of its power generation assets, thereby eliminating price and delivery risks.

"We also intend to set the best standard we can in protecting the rights and livelihoods of nearby villagers, restoring forest cover following mining work and conserving wildlife," he added.
(Economic Times)
Iron ore prices may drop 10pct as China shifts gear

Iron ore prices may drop nearly 10% over the next 3 years as top consumer China's economic growth shifts to a slower gear, threatening to squeeze profits at global miners Vale, Rio Tinto and BHP Billiton.

Closely tied to the fate of the steel intensive Chinese economy, iron ore prices and China's gross domestic product growth both hit 3 year lows this year. Beijing's shift to a more balanced growth model after a decade of investment driven expansion could curb the increase in steel demand.

According to the median estimate in survey of 12 analysts, iron ore is forecast to average USD 120 per tonne in 2013, down from an estimated USD 126 this year as China's crude steel production growth weakens.

The poll said that the price average should slip further to USD 119 by 2014 and to USD 115 by 2015.

Mr Ian Roper commodities strategist at CLSA said that "China continues a structural shift away from fixed asset investment-led growth, which means steel demand growth will remain below GDP growth rates in the future."

The most bearish among those polled, CLSA's Roper expects iron ore prices to average USD 85 and USD 75 in 2014 and 2015, respectively.

Mr Roper said that "Most forecasters are still in blind bullish mode thinking Chinese steel demand will grow and grow forever."

Economists said that the new norm for China's GDP growth is likely to be 7% to 8%, as Beijing seeks sustainable expansion after years of double digit rises. For 2012, the world's No 2 economy is forecast to grow 7.7%, the slowest pace since 1999.

A slowdown in the Chinese economy which grew by 7.4% in the Q3, the weakest since January to March 2009 dragged down iron ore prices in September to below USD 87 per tonne, their weakest in about 3 years.

Slower steel demand had forced Chinese producers to limit their iron ore stockpiles, prompting top miners to review expansion plans that were pinned on hopes Beijing will continue to suck in all the raw material they produce.

China's iron ore imports are forecast to grow 6% to 774 million tonnes in 2013 from a projected 730 million tonnes this year, the poll showed, slowing from last year's 10.9% increase. Annual import growth is seen falling to less than 5% in 2015.

According to the poll, crude steel production may rise 3.5% to 735 million tonnes from a predicted 710 million tonnes in 2012. In 2011, output grew 8.9% and by 2015, the annual increase is seen dwindling to 2.6%.
(Steel Guru)
Indian iron ore mining mess - Odisha not keen on full ban on exports

Odisha’s steel & mines department is not in favor of a complete ban on export of iron ore to help curb illegal mining activities.

A source at steel & mines department said that “We are not in favour of a complete ban on iron ore export as it will not be in the interest of the state government as well as leaseholders. The department is of the opinion that a limit on exports can be fixed. But nothing has been decided yet and a final decision will be taken at the highest level.”

The MB Shah Commission of enquiry probing into large scale mining activities without lawful authority had recently sought the views of the state government on whether export of iron ore should be prohibited to control illegal mining.
(Steel Guru)
Iran delegation in India to seal wheat import deal 
AN Iranian delegation is on a week-long visit to India, to resolve quality issues and finalise wheat imports into Iran. 

Iran has refrained from importing Indian wheat since 1996 citing the presence of a fungal disease called 'karnal bunt' in the grain. The two countries have initiated talks over the past few months to sort out the quality issues. 
"Hopefully, the wheat export deal will be finalised this week itself for the initial 2 lakh tonnes," a senior government official said. 
An Indian delegation had visited Tehran earlier this month to discuss the terms of exports and relaxation in quality guidelines for Indian wheat. 
India had offered to Iran wheat at $340 a tonne, to be loaded from the Kandla and Mundra Ports, with the 'karnal bunt' tolerance limit set at 0.25 per cent. 
Iran wants to initially buy two lakh tonnes of wheat at $325 a tonne during the December-January period. It has also shown interest in importing 2-3 million tonnes of the grain on long-term basis.
(Exim India)
Govt may lift future trading ban on guar
The six-month-old ban imposed by the government on future trading in guar seed and gum may be withdrawn soon as prices of the commodity have fallen significantly in this period. 
A newly formed advisory committee, comprising 45 members representing exchanges, farmers, commodity experts and other stakeholders, has requested the futures market regulator, the Forward Markets Commission (FMC), to re-launch future trading in guar subsequent to the steep fall in prices, sources said. 
"The advisory committee is in favour of re-launching guar futures. We will soon take a decision based on its recommendation," said Mr Ramesh Abhishek, Chairman of FMC. In March, traders were barred from taking fresh positions in guar futures after the price of guar gum shot up to Rs 100,000 a tonne. Prices have dropped sharply to Rs 24,000 a tonne currently. 
There were allegations of price rigging when the prices soared to record highs. A government panel had penalised 20 brokers for irregularity in margin funding. However, no strong evidence of price rigging was found. 
Incidentally, gaur gum, extracted from guar seed and used as a sealant in oil and natural gas drilling, has in the last two fiscals emerged as one of the biggest foreign exchange earners, with exports jumping 14-fold to Rs 16,523.83 crore. Meanwhile, the Minister of State for Food, Prof. K. V. Thomas, recently commented that the steep rise in guar seed and gum prices was due to strong export demand.
(Exim India)
Gujarat State Fertiliser Corporation awaits urea policy to set up Rs. 8 Cr Petrochem complex
The Gujarat State Fertiliser Corporation (GSFC) has drawn up Rs 8,000 crore investment for setting up an integrated fertiliser and petrochemicals complex at Dahej.

"We are setting up 2,250 tpd ammonia, 3,500 tpd urea along with melamine and caprolactum manufacturing unit at Dahej near Bharuch at an estimated cost of Rs 8,000 crore. We have already acquired land and ready with the detailed project report (DPR)," GSFCBSE 0.00 % Executive Director (Finance) B M Bhorania told.

However, the company is waiting for the government's urea policy, before going ahead with the project, Bhorania said.

After rolling out a slew of reform measures, the government is likely to approve the much-awaited urea investment policy, aimed at attracting an investment of around Rs 45,000 crore to boost urea production in the country.

The draft policy floated by the fertiliser ministry has got the nod of concerned ministries such as finance, commerce and agriculture ministries as well as the Planning Commission. Now it will be sent to the Cabinet for final approval. The policy aims adding production of 7-8 million tonne to country's existing urea production capacity of 22 million tonne against the annual demand of 30 million tonne.

We hope that the urea policy should be through, he said. The advantage with GSFC is that it has an integrated complex which helps it in manufacturing caprolactum and melamine at highly cost-effective prices which helps in clocking higher margins.

Meanwhile, the company's joint venture with Coromandel InternationalBSE -1.68 % in Tunisia has commenced Phosphoric acid and the first shipment of the same is expected in December, Bhorania said.

The JV Tunisian Indian Fertilisers (TIFERT) in Tunisia will produce 3,60,000 tpa of phosphoric acid and both GSFC and Coromandel will import 1,80,000 tpa of phosphoric acid each per annum, he added.

GSFC presently produces 9 lakh tonnes on Di ammonium phosphate (DAP) at its Sikka unit in Gujarat and the company requires 4,20,000 tonnes per annum phosphoric acid as raw material, for which it has already tied up.

The company now plans to add 5,00,000 tpa DAP and its production will be met through imported phosphoric acid from Tunisia, he added.

In anticipation of good monsoon during FY 13, the company is hopeful that demand for fertilisers will be higher in the current year.
(Economic Times)
Tata, ONGC to set up fertilizer factory in Tripura
The Tripura government in a joint venture with ONGCBSE -1.04 % and Tata Chemicals would set up a Rs 5,000 crore fertiliser manufacturing unit in north Tripura district by using the natural gas available in the state. Chief Minister Manik Sarkar said, "It was decided that ONGC and Tata Chemicals would jointly set up Rs 5,000 crore fertiliser company and Tripura government would buy 10 per cent equity of the company".

The company would sell equities of Rs 2,000 crore in the market. ONGC has initially selected Khobal in north Tripura district, about 150-km from here for setting up the project considering proximity to Khobal gas field from where natural gas (hydrocarbon) would be supplied, Sarkar told reporters.

Last year, ONGC had discovered huge gas reserves at Khobal near Assam-Agartala National Highway (NH-44). With the commissioning of the project, the demand for fertilizer will be met not only for Tripura but also for the entire north-east region, West Bengal, Odisha and a large chunk of the fertiliser could be exported to neighbouring Bangladesh, he said.

Last year, Chief Minister Manik Sarkar had requested ONGC CMD Sudhir Vasudeva to set up a fertiliser manufacturing company in Tripura to ensure optimum utilisation of natural gas which was welcomed by ONGC. Following the request, ONGC had invited expression of interest for setting up a manufacturing unit and at least three big investors, including Tata Chemicals had expressed their interest.

The oil and gas major has already set up a 726 MW gas based thermal power project in the state through ONGC Tripura Power Company (OTPC) at Palatana in Gomati district.

The project has started generating power on trial basis, but full fledge generation would be started after transmission line is complete and connected with the national grid at Bongaigaon.
(Economic Times)

Diversification plans of KIOCL

In the direction of utilizing its multi skilled manpower and expertise in the fields of mining, iron ore beneficiation and Pelletisation, KIOCL is looking into the following avenues:

1. Trying to explore the possibilities of entering into an arrangement with mining based PSU’s such as NMDC, SAIL, OMDC, MOIL, NALCO, CIL, MMTC etc, for exploitation and extraction of iron ore or any other mineral in their mines under Mine Developer and Operator mechanism or under Contractual Mining mechanism.

2. Aggressively planning to expand its pellet production capacity by setting up the pellet plants in iron ore belt by utilizing the low grade iron ore fines available with PSUs like SAIL, NMDC, OMDC etc. Discussions have been initiated with SAIL, RINL-OMDC, NMDC for setting up of Pellet plants under joint venture mode.

3. Establishing Chemical Laboratory at Sandur, Hospet Taluk, Karnataka for Iron ore quality testing services to outsiders beside own usage while participating in e-auction.

4. Creating of infrastructure for providing ‘E-Commerce facilities’ to potential clients on commercial basis besides meeting company’s own requirement.

5. Proposing to set up Solar Power plant of capacity 25.0 MW in Anantapur District, Andhra Pradesh. Discussions are being held with APTRANSCO, APSIDC and NEDCAP Ltd
(Steel Guru)
Milind Deora given additional portfolio of Minister of State in Shipping Ministry 
Mr Milind Deora, the MP from South Mumbai, has been given the additional portfolio of Minister of State in the Shipping Ministry. 
In his first comments after taking charge, he said his top priority, along with inviting private participation in the sector, would be to utilise the country’s massive coastline by creating economic opportunities. 
"This industry is a barometer of what we can expect from the global economy. In the area of shipping, there are a lot of opportunities, like in shipbuilding, for Indian companies," Mr Deora said, adding his Ministry would look at investment proposals from private companies in the sector. 
He was hopeful of getting final Cabinet approval for constructing two new Major Ports, at Sagar Island (West Bengal) and Ramyapatnam (Andhra Pradesh), in November. 
Another area of focus is the safety of seafarers. How do we protect them and also people who have invested in the shipping sector," Mr Deora said.
(Exim india)

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