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.