INDUSTRY UPDATES On 2nd November, 2012

On 2nd November, 2012
Arcelormittal gets 2569 acres in Bellary to set up a six million TN steel plant at an investment of Rs. 30K CR
A day after it posted its first ever quarterly net loss due to slowdown in China and a weak market in Europe, ArcelorMittal, the world's largest steel producer has some reason to cheer. ArcelorMittal has received allotment of 2,569 acres in Bellary, Karnataka, where it proposes to set up a six-million tonne steel plant at an investment of Rs 30,000 crore.

"We have made progress on land acquisition in Karnataka. The state government has transferred the 2,569 acres of private land in the company's name and the process to transfer another 136 acres of government land is underway. The process of getting various clearances including crucial environment clearance is underway. We have also applied for mining leases which are critical for the project. We are focusing on getting all relevant clearances," an official spokesperson of ArcelorMittal India said.

However, in the absence of raw material linkages, particularly without assured supplies of captive iron ore, it is uncertain whether ArcelorMittal will be able to go ahead with construction of the plant anytime soon.

Alongwith the steel plant, ArcelorMittal also plans to set up a 750 MW power plant as part of the project.

"It's still a long way to go before the project breaks ground. This is just the first step. For large integrated steel projects like these, apart from regulatory approvals, adopting an appropriate model of sustainable development will also emerge a key issue," a senior research analyst at Emkay Securities said
(Economic Times)
India to become second largest steel producer soon – Minister

As per government estimates, India will soon become the second largest steel producer in the world

Indian steel minister Mr Beni Prasad Verma while chairing a meeting of a parliamentary consultative committee to review the functioning of RINL said “India will soon become the second largest manufacturer of steel in the world. Steel capacity in the country has increased from 66 million tonne in 2009 to 90 million tonne in 2012.”

The Steel Minister said that the per capita steel consumption in the country has risen from 38 kg to 59 kg.

China is the number one producer of steel, followed by Japan and the US at second and third places, respectively. India slipped one rank to become the fourth largest steel producer in 2010, with 68.3 million tonne of output.
(Economic Times)
Coal India may have to pay more penalty as demands go up
Coal IndiaBSE 0.95 % may have to cough up a penalty upwards of Rs 300 crore in 2015 as
the government has directed the state-run firm to supply additional fuel to the power sector.

Following a new directive from the Prime Minister's Office, CILBSE 0.95 % will have to sign fuel supply agreements (FSA) with power generators who have signed power purchase agreements for more than one year now. This was earlier at least seven years. This will, now require additional coal to be supplied every year by the coal producer than anticipated before.

The company was asked to meet coal requirement of 60,000 mw of new capacity that comes up between April 2009 and March 2015. CIL is to supply 65% of the requirement of these power plants from domestic production.
(Economic Times)
Iron ore to be as restricted as Coal : Orissa Official
India faces the risk of iron ore supplies getting as tight as coal, as Orissa, the eastern state that’s the country’s largest producer of the key raw material for steel-making, reinforces regulations to curb illegal mining and conserve mineral reserves. Orissa, ruled by the Biju Janata Dal (BJD), wants to cap production of iron ore at 52-55 million tonnes (mt) a year, said director of mines Deepak Kumar Mohanty. That’s a significant reduction from the peak production of 76 mt in 2010-11 estimated by the Eastern Mining Association, an industry body.
The Orissa government has issued a series of notifications in the last few months, all designed to curtail the mineral output from the state. On Tuesday, a notification said the government was forming a ministerial committee to formulate policy on the distribution of iron ore and other minerals, and will make its recommendations in three months.
Earlier notifications have said there will be reservation of areas for prospecting and mining through Orissa Mining Corp. Ltd, the state-owned mining firm. An inter-departmental committee will consider the cases of renewal of mining leases, and ore will be sold via e-auctions.
Mohanty said the state wants non-captive mining of minerals to be done only by Orissa Mining. When operators of non-captive mines fail to renew their permits, they will be taken over by the state-run firm, he said.
“We are not entertaining non-captive capacities for mining,” said Mohanty, who functions under the department of steel and mines of Orissa. “We now want to see what are the linkages (for iron ore) that emerge (in a new policy).”
Orissa’s drive to curb mineral output comes on top of restrictions on iron ore mining elsewhere. Karnataka, the second-largest, iron-ore producing state, had to shut production by all private mines by an order of the Supreme Court last year on an environmental case and is likely to reopen just a few of them in some time. In Goa, the Supreme Court recently banned mining, also in an environmental case, curbing India’s exports of iron ore fines (powdery grades of iron ore).
Mohanty said the state was also looking to curb exports of iron ore and may take a decision on it in a few months.
“We are trying to make sure that iron ore is used in a sustainable way and mining is done in a responsible way,” Mohanty said. “We may allow exports in a restrictive way.”
Orissa’s curbs on iron ore will be bad news for India’s steel industry; a trader and an analyst said they expect imports of iron ore pellets from Europe, the Middle East and Australia to rise as a consequence.
The country is already battling a severe scarcity of coal, leading dependence on expensive imports to increase. India’s total coal production was 540 mt in 2011-12, but demand was around 696 mt, the coal ministry’s data show.
Typically, India’s annual iron ore production has been around 200 mt, with half meant for exports, but analysts say this year, owing to the actions on illegal mining, production itself may halve.
“For steel companies that are not integrated (don’t have captive mines), iron ore sourcing has become difficult especially as production from other states has also fallen,” said Chirag Shah, director of research at Barclays Capital. “Already, a lot of imports are taking place on the west coast. I anticipate imports on the east coast as well.”
The government is veering towards conserving India’s natural resources—be it coal or iron ore—especially after allegations about illegal mining and exposes of an alleged nexus between politicians and businesses.
In a recent ruling, a Supreme Court judge said India’s natural resources belong to the public of the country.
Coal India Ltd, the world’s largest coal miner, is facing opposition from its board members over allocating its production at low prices under much sought-after linkages and pacts.
The state-owned company sells most of its production via linkages with consuming industries such as power, metals, cement and fertilizer. Given the constraints in boosting production, companies have been vying with each other to get linkages and sign fuel supply agreements.
“Yes, it has to be,” said Mohanty, when asked if iron ore supply linkages will be along the lines of coal linkages. “There have to be long-term linkages and we are trying to see what will be the requirement of the industry.”
India’s production curbs will be to the benefit of overseas iron ore suppliers such as Australia, which are seeking to supply more mineral resources—coal, iron ore and uranium— to India as its economy expands.
In the last eight months, India imported about 600,000 tonnes of iron ore pellets, according to a trader’s estimate. Coal imports in 2011-12 were at 50-80 mt, varying traders’ estimates show.
“Iron ore is coming from Bahrain, Ukraine, Russia and even Australia,” said Ranjan Chhibba, vice-president of Sino Star Minerals Ltd, a commodities trading outfit based in Hong Kong. “Now even the smaller steel-making companies are getting together and importing consignments and then sharing it.”
The turmoil in Orissa’s mining sector will mean much lower production this year compared with the cap of 52-55 mt set by the government, said R.L. Mohanty, president of Eastern Zone Mining Association.
“Orissa is expected to produce 40 mt of iron ore in 2012-13,” he said. “Many of the hundreds of sponge iron companies in eastern India will be hit because of this fall in production.” Barclay’s Shah ruled out any sharp jump in steel imports this year as domestic demand is subdued. In 2013-14, to compensate for any drop in production, particularly of sponge iron, there will be bigger capacities from Tata Steel Ltd, Essar Steel Ltd and Bhushan Steel Ltd coming into play, Shah said.
(Live Mint)

Chennai Port resumes operations post Nilam 
Operations at Chennai Port, which had been completely halted on Wednesday (October 31), in the face of the fury of Cyclone Nilam, have resumed on Thursday. The Port, however, berthed fewer vessels, it is learnt. 
The storm has now crossed the Tamil Nadu coast, according to reports. The regional meteorological centre has, however, warned of more rains for another two days in and around Chennai. 
Meanwhile, the cyclone resulted in an oil tanker, with 37 crew members, running aground near Elliott's Beach in South Chennai, with tragic consequences, under the impact of high velocity winds. One crew member drowned after a lifeboat carrying him and 21 colleagues capsized in choppy waters off the Besant Nagar locality. 
Fifteen sailors were rescued on Thursday and a search was on for six other missing crew who were on board the oil tanker that drifted and ran aground. The search involves the Navy and Coast Guard. 
The vessel, Pratibha Cauvery, belongs to Mumbai-based Pratibha Shipping Company.
(Exim india)
NMDC to pick up majority stake in Andhra Pradesh’s New Port
Iron ore miner NMDCBSE 1.61 % will become the majority owner of a major seaport in Andhra Pradesh, marking one more attempt at diversification by the cash-rich state-owned company. NMDC will invest in a port project in Ramayapatnam in Prakasam district, about 350 km north of Chennai, making the fishing village only the country's fourteenth major port, people familiar with the development said.

Andhra Pradesh's only other major port is in Visakhapatnam. With over Rs 20,000 crore in cash on its hands, NMDC announced a diversification binge as part of a plan to invest more than Rs 30,000 crore in the next five years. Apart from aggressively pursuing coal, iron ore and rock phosphate assets abroad, it will set up two integrated steel plants and diversify into power generation as well.

A senior NMDC official said the new seaport will help the company import coal for its integrated steel project coming up in a joint venture with Russian steelmaker Severstal near Bellary in Karnataka, and also to export the steel.

But some analysts were sceptical if NMDC should own a majority stake in a port project. "It makes sense only if they have control over the entire evacuation logistics including rail and road connectivity," said Sanjay Jain of brokerage Motilal OswalBSE 0.86 %.

The Andhra Pradesh government will hold a 11% stake in the new port company in exchange for about 4,500 acres and the relief and rehabilitation package, National Shipping Board chairman PVK Mohan said.

Of the rest, NMDC will have a majority holding while public sector enterprises like the Vizag Seaport, Cochin Shipyard and Indian Farmers Fertiliser Cooperative Ltd (Iffco) will also be given shares. Mohan said Cochin Shipyard is interested in setting up a shipyard with two berths at Ramayapatnam.

NMDC, which is owned 90% by the government, posted sales of Rs 11,262 crore and net profit of Rs 7,265 crore in 2011-12. It is also part of a consortium developing a vast iron ore mine in Afghanistan.

"The ownership in the first phase of the seaport project, consisting of six berths involving an investment of around Rs 8,000 crore, will be confined to the government-owned entities," said Mohan. "We will consider roping in the private sector players in the next phase of the project."
(Economic Times)

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