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Friday, June 24, 2011

Iron ore Holdings: Resource Upgrade and Positive Metallurgical Results at Iron Valley Project

Friday , 24 Jun 2011


· JORC compliant Mineral Resource at the Iron Valley Project increased from 240Mt* to 259Mt (an 8% increase).

· The total Indicated Resource is now 216.3Mt (83% of total Resource) and the Inferred Resource is 42.8Mt, with an average grade over the deposit of 58.3% Fe at a 50% Fe cut-off grade.

· Metallurgical test work completed for the bedded Brockman mineralisation at Iron Valley indicates potential to deliver approximately 37% of production as lump ore, and for potential product upgrade by wet processing.

· This Mineral Resource increase and positive metallurgical test results will further support the mining pre-feasibility study activities currently underway.

· The total IOH Mineral Resource in the Central and Western Pilbara is now 709.1Mt.

(sourced :mineweb)

Iron Ore-Key indexes at 3-month lows on thin Chinese buying

Fri Jun 24, 2011

* Some traders selling at losses as downtrend seen intact
* Lean China steel demand keeping ore buyers at bay
By Ruby Lian and Manolo Serapio Jr

SHANGHAI/SINGAPORE, June 24 (Reuters) - Spot iron ore prices lost more ground on Friday as steel mills in top buyer China continued to limit purchases in anticipation of slackening steel demand, dragging down key global iron ore indexes to their lowest in nearly three months.

Weaker steel demand in the summer as well as high iron ore inventories at Chinese ports have dampened steel mills' interest to build up stockpiles.

"Chinese buyers remain hesitant in the face of looming power cuts to the steel industry over China's peak summer power demand season in July and August," Commonwealth Bank of Australia said in a research note.

Offers for Australian Newman iron ore fines with 62 percent iron content dropped to $173-$175 a tonne, including freight, on Friday from $174-$176 on Thursday, Chinese consultancy Umetal said.

Offers for Indian 63.5/63 percent iron ore fines were steady at $176-$178 a tonne.

"Some traders are trying to clear some inventories by selling at losses because they expect the market's downward trend to continue," said an iron ore trader in eastern China's Shandong province.

Two Australian 165,000-tonne cargoes of 61-grade iron ore fines were sold in the spot market on Wednesday, traders said.

The first was sold at $169.75 per tonne, for loading in China's Qingdao port on July 5-14, and the second at $169.25 a tonne, for loading on July 7-16 also in Qingdao, traders said.

Key iron ore indexes, tracking spot Chinese transactions and used by global miners in pegging supply contract prices, fell on Thursday.

Platts 62 percent iron ore index IODBZ00-PLT declined 75 cents to $170.75 a tonne and a similar gauge by Metal Bulletin .IO62-CNO=MB eased 7 cents to $169.62, both the lowest since March 29.

The Steel Index's 62 percent benchmark .IO62-CNI=SI fell $1 to $170.90.

Tighter supplies from India, the world's No. 3 iron ore supplier, during the monsoon season that lasts through September are expected to limit declines in spot prices, traders said.

Gains in iron ore swaps <0#SGXIOS:> on Thursday, after recent losses, reflect investor optimism that losses in spot prices could be in check.

Prices for swaps cleared by the Singapore Exchange all rose from the June 2011 through the December 2013 contracts, with the biggest gains seen in swaps from July through December 2011.

(Reporting by Ruby Lian and Manolo Serapio Jr.;Editing by Ed Lane,Thomson Reuters)

Costly coking coal eats SAIL profit; net down 27% in FY'11

Fri, Jun 24, 2011 |Source:PTI

Costlier coking coal has hit the bottomline of Steel Authority of India as the state-owned firm today posted 27% dip in consolidated net profit at Rs 4,937.73 crore for 2010-11 financial year.

The company had posted a net profit of Rs 6,790.78 crore in the previous fiscal, SAIL said in a statement. Raw material consumption of the company grew to Rs 20,069 crore during the year, up 27% over Rs 15,805 crore in
2009-10 mainly on account of exuberant price of coking coal, which climbed up to USD 330 a tonne in the first week of March.

The raw material prices were up last fiscal on account of short-supply from the Quuensland province of Australia, the world's largest exporter in both coking coal and iron ore. SAIL, however, meets its entire iron ore requirement from
captive sources.

It requires around 15 million tonnes coking coal a year. Only 4.5 million tonnes is met through domestic sources and the remaining 10.5 million comes from imports, around 60% of which comes from Australia.

Income from operations of the company during the year stood at Rs 47,103.09 crore compared to Rs 43,993.09 crore in 2009-10.

A significant rise in the employees' cost also impacted SAIL's net profit. Compared to Rs 3,518 crore expenditure on the account in previous fiscal, it went up to Rs 3,750 crore in last fiscal.

Tags: coking coal, Steel Authority of India, Quuensland, iron ore, coal (By MoneyControl)

Athena Resources high grade magnetite hits support FE1 iron ore model at Byro Project

Friday, 24 Jun 2011

Athena Resources has intersected high grade magnetite from the first phase of reverse circulation and diamond drilling at its highly prospective Byro Iron Ore Project supporting the FE1 Ore Model.

Intersections from the infill drilling for an Inferred Resource at the FE1 prospect, within the project in the Mid-West region of Western Australia, include 84 metres magnetite from 72 metres down hole from diamond core.

RC chip highlights include:

1. 80 metres magnetite from 98 metres down hole
2. 72 metres magnetite from 106 metres down hole
3. 50 metres magnetite from 130 metres down hole

The FE1 Ore Model now covers an area of over 164,000 square metres. The company said feed Assay and Davis Tube test work by Amdel and further grind optimization above 109 microns is underway.

The Byro Iron Ore Project is strategically located 100 kilometres west of the proposed Midwest Iron Ore Railway which is planned to link existing and future iron ore projects in the Mid-West Region to the proposed Oakajee deep water bulk shipping port north of Geraldton.

The 2,893 metre drilling program comprises of 17 RC drill holes and 1 PQ Diamond core hole. Drilling at FE1 now totals 28 RC holes and 1 PQ/NQ diamond core hole. Average drill collar spacing at FE1 are now inside a 100 meters by 100 meter grid advancing the project with a high level of confidence.

Readings are of similar high value to last season’s drilling at FE1. Average grain size is coarse, up to 1.5mm also similar to previous samples from last year. Ore intersected is being tested as part of the beneficiation and metallurgical test work that will form part of the scoping study for the project.

All results will be passed on to AMC Consultants for Inferred Resource Assessment.

Iron ore mine plans on hold in northern Wisconsin

Friday, 24 Jun 2011

It is reported that the company looking to build a USD 1.5 billion iron ore mine in northern Wisconsin has stopped the project until state lawmakers agree on a new set of rules for reviewing such projects.

State Senator Mr Robert Jauch D-Poplar said this week that Gogebic Taconite is turning its attention toward sites in Michigan and Minnesota after a bid to push through new legislation failed recently.

He said that "I hear they would come back if there was a law in place. I have told the company to shoot for getting a new bill in the fall session which would give the public a full discussion on this issue."

Mr J Matthew Fifield Gogebic managing director did not immediately return calls Wednesday, but according to the Associated Press Company officials have confirmed the project is on hold.

Gogebic proposed building the mine in Ashland and Iron counties in the Penokee Range, the headwaters of the Bad River which flows into Lake Superior. A study commissioned by the company showed the open pit iron mine would support 2,834 jobs in a 12 county region of northern Wisconsin and Michigan's Upper Peninsula and have a total economic impact of USD 604 million a year.

Gogebic wants to speed up the state review process which it feels is onerous and costly.

Officials with the Department of Natural Resources have said the amount of time required to obtain a mining permit depends on a project's complexity. The shortest time, officials said, is about three and a half years.

A permit application by Crandon Mining to build zinc and copper mine in northern Wisconsin however was under consideration for 10 years, costing the company some USD 70 million before Crandon dropped its request.

Under a proposal pushed by Gogebic which never made it to the full Legislature, the Department of Natural Resources would have had to make a decision within 300 days of receiving a company application. That would not count the time needed to consider exploratory permits and other preparatory work.

(sourced from

Indian PM to review coal and power projects on July 1

Friday, 24 Jun 2011

PTI reported that concerned over delays in execution of projects due to inter-ministerial differences, Prime Minister Mr Manmohan Singh has called a high level meeting to resolve issues like coal shortages and environment clearances with the respective ministers on July 1.

A senior Power Ministry official said "The meeting will be held on July 1 to assess the progress made in the first four years of the current Plan and resolve the differences among the ministries."

He said this will include the power capacity addition targets achieved between 2007-08 and 2010-11 and projects stranded due to coal shortages and environment clearance.

(sourced from PTI)

Strengthening China coal demand lifts largest shipping costs

Friday, 24 Jun 2011

It is reported that strengthening Chinese demand for power station coal helped bolster charter rates for capsize vessels that can carry the fuel.

According to the Baltic Exchange in London Charter rates for the vessels which also transport iron ore rose 2% to USD 10,453 a day. That was the biggest gain of the four vessel sizes tracked by the bourse Baltic Dry Index which fell 0.2% to 1,406 points. Coal used by power stations is also called thermal coal.

Mr Jeffrey Landsberg president of New York based shipping analysts Commodore Research & Consultancy said “You still have unbelievable strength in the thermal coal market. That has helped demand for capesize ships the most because they are cheaper than other vessels.”

Owners are contending with a fleet that growing faster than seaborne trade in raw materials. Seaborne trade in bulk commodities will expand 3.9% to 3.4 billion metric tons this year while the fleet transportation capacity will swell 13% to 612.9 million deadweight tons estimates the research unit of Clarkson Plc the world largest shipbroker.

Panamax vessels, the largest to pass through the Panama Canal, declined 1.7% to USD 14,580 a day. Supramax and handysize ships carry grains, coal and ore. Supramaxes rose 0.04% to USD 13,789 a day while handysizes fell 0.5% to USD 10,738 the 23rd consecutive decline.
(sourced from Bloomberg)

Maharashtra utility seeks 3 million tonnes of steam coal

Friday, 24 Jun 2011

Bloomberg quoted India Coal Market Watch citing an unidentified company official said India Maharashtra State Power Generation Co may issue a tender this month to import 3.35 million tonnes of power plant coal.

The newsletter said the utility purchased 2.3 million tonnes of the fuel in the year ended March compared with a 3.35 million tonne target.

India Coal Market Watch said, citing an unidentified industry official said Shree Cement Ltd has contracted to buy 700,000 tonnes of South African coal between September and March. It may also purchase as much as 500,000 tons of high sulphur Illinois Basin steam coal from the US.

(sourced from Bloomberg)

Centaurus Metals upgrades resource estimate for Jambreiro iron ore project

Friday, 24 Jun 2011

Centaurus Metals has upgraded the JORC Resource estimate for its 100% owned Jambreiro Iron Ore Project following the completion of successful in fill drilling on the main Tigre Prospect area.

In the meantime the company is continuing to drill the south east extension zone to prove up additional strike length to the main Tigre Prospect outside the current resource estimate. Drilling and scoping study results are expected in July.

The JORC Resource estimate for the project located in the State of Minas Gerais, Brazil now stands at 70.6 million tonnes at an average grade of 28.0% iron. This upgrade and recent beneficiation test work at Jambreiro, demonstrate that the friable mineralisation can be upgraded to a +65% Fe hematite product and confirms the potential of the project to become a cornerstone of the company’s domestic iron ore production business in Brazil.

Importantly, more than 50% of the resource a total of 35.2 million tonnes grading 28.3% Fe has now been classified in the Measured and Indicated categories, providing a substantial increase in the Company’s overall confidence level in the resource base. This is the first time Centaurus has been able to define both Measured and Indicated Resources as part of the overall resource base at Jambreiro.

Mr Darren Gordon Centaurus managing director said the project has progressed rapidly over the last 12 months and we are now close to completing a Scoping Study which we expect will demonstrate the financial robustness of the Project as a cornerstone of our emerging domestic iron ore business in Brazil.

He said that “The interim Resource upgrade provides us with great confidence that the main Tigre Prospect at Jambreiro will form the foundation for our first production opportunity as we progress our development plans to be producing 3 million tonnes per annum of high grade hematite for the Brazilian domestic steel industry by the end of 2013.”

In-fill drilling is continuing on the Cruzeiro, Galo and Coelho Prospects at Jambreiro as well as the South East Extension Zone of the main Tigre Prospect. This drilling is expected to underpin a further upgrade to the resource classification and lead to an overall increase in the resource tonnage by September 2011.

Importantly, the Jambreiro Project has very good access to existing local infrastructure and is well located approximately 130 kilometres from the city of Ipatinga, home to Usiminas existing 4.5 million tonnes per annum steel mill.

Online auction showers Coal India with profit

Friday, 24 Jun 2011

Online auction was introduced by the government five years back as a tool to help coal consumers in the small non-core sector, has turned out to be a cushion for the largest coal producer in the world against flat production.

The contribution of spot sales of coal or e-auction, to Coal India’s overall revenues has seen a sharp rise from 11.9% in 2007-08 to 17.5% last financial year, even as its contribution to overall volume of coal sold remained stagnant at 10% over the four year period. This is a result of an over 37% jump in the average sale price at e auction from INR 1,346 a tonne to INR 1,846 during the same period. Thanks to the historic coal shortages, which marked this phase, forcing buyers to opt for the costly e-auction coal

In the last financial year (2010-11), Coal India sold coal through e-auction at a premium of a whopping 81 per cent over the average notified price of INR 920 a tonne. E-auction coal had fetched at a premium of 63% over the same average notified price in 2009-10.

The company contributes over 80% of India's domestic coal production of 530 million tonnes annually. While its production remained flat at 431 million tonnes last financial year, the company posted a 12.9% jump in net profit in 2010-11 at INR 10,867 crore owing to higher realisation from selling coal at market price. E-auction accounted for INR 8,810 crore or 17.5% of overall sales of INR 50,233 crore.

Experts believe with shortages in coal availability unlikely to subside soon, the boost to Coal India’s profitability as a result of increased realisation from e-auction sales is here to stay. Mr Kuljit Singh partner at accounting and consultancy firm Ernst & Young said that "This is a challenging situation because increased e-auction prices are a result of the current supply deficit created by the delay on the part of the government to sort out critical issues surrounding the coal sector in India. In a strange fashion, therefore, e-auction route has ended up boosting profitability despite reports of supply shortfalls under the linkage route.”

He said the trend has likely to continue in the short to medium term as developing a new coal mine takes five-seven years in India.

(sourced from BS)

Ord River Resources eyes 10pct stake in coal producer Caledon Resources

Friday, 24 Jun 2011

Ord River Resources stands to gain a 10% stake in coal producer Caledon Resources holding an option to acquire up to 10% of Caledon post close of the acquisition by China Guangdong Rising Assets Management Co Limited.

Recently GRAM and Caledon reached agreement on the terms of a recommended cash acquisition of Caledon by Bidco a wholly owned indirect subsidiary of GRAM. The offer price remains at EUR 1.12 per share in cash. This values the existing share capital of Caledon at approximately EUR 313.1 million.

Caledon is a coking coal producer and explorer in the Bowen Basin of Queensland, Australia. It acquired the mothballed Cook Mine in late 2006 and has since recommissioned the operation and introduced an innovative new underground mining methodology.

GRAM announced an intention to make the offer after having received Chinese regulatory approval and secured full cash funding. The acquisition will be effected via a scheme of arrangement. The offer was recommended by Caledon board.

GRAM has secured irrevocable undertakings and letters of intent from shareholders and directors representing a total shareholding of 53.52% in Caledon.

Recent figures show that Caledon raw coal production from operation rose 35% to 174 million tonnes of raw coal in the three months to the end of June. Caledon has targeted saleable output of 700,000 tonnes this year.

(sourced from ProactiveInvestors)

Indian Utilities’ May Coal Imports Climb 43%, India Coal Says

Friday, Jun 24, 2011
By Dinakar Sethuraman

Electricity utilities in India increased imports of coal by 43 percent in May to 2.97 million metric tons from a year earlier, reported India Coal Market Watch, which is published by Kolkata-based online trading company mjunction Services Ltd. Imports in April were at 2.34 million tons.

The Central Electricity Authority, a supervisory body, has set a target of 35 million tons of imported power-plant coal for the year ending March 2012, the newsletter said. Domestic coal supplies to power plants fell 7 percent to 28.54 million tons in May from a year earlier. (By Bloomberg)

Vale seeks to build coal port in Australia as output gains

Friday, 24 Jun 2011

Bloomberg reported that Vale SA, the world biggest exporter of iron ore is seeking to build its own coal terminal in Queensland State as it expands production from three to nine mines in Australia.

Mr Steve Badenhorst Vale director of operations for Australia said Vale plans to apply to build one of the four new export terminals being planned as part of AUD 6.2 billion expansion at the Abbot Point coal port.

The North Queensland Bulk Ports Corp said Vale is spending USD 24 billion globally this year on resources investments including developing coal mines in Colombia and Mozambique. The deadline to lodge expressions of interest to build the Abbot Point terminals closes on August 1.

Mr Badenhorst said “We want coal to be the third-biggest revenue stream at Vale, behind iron ore and fertilizer. Much of our investment is in infrastructure.”

Morgan Stanley last month forecast a buoyant pricing environment for coal for most of the next five years as economic growth in Asia boosts demand and rail and port bottlenecks keep supply tight. (sourced from Bloomberg)

Largest ever iron ore ships can enter three Chinese ports - Vale

Friday, 24 Jun 2011

According to Vale SA the world largest producer of the raw material used to make steel and owner of the vessels, the biggest iron ore carriers ever built will be able to enter three Chinese ports.

The company said the northern Chinese ports of Dalian and Dongjiakou and Majishan near Shanghai have the capacity to receive the so called Valemaxes that are able to haul 400,000 tonne cargoes.

Vale said “The decision to receive the ship is taken by the port. The vessels right to enter will depend on berth capacity, the draft the space to maneuver the ship, and the security of the mooring operation.” (sourced from Bloomberg)

Euro Coal-Prices dip 50c to $1/T with oil steep fall

Jun23,2011 4:58pm GMT

* Aug S.African trades at $118/T, down 40 cents
* Coal shows minimal reaction to oil price crash

LONDON, June 23 (Reuters) - Prompt physical coal values softened by around 50 cents to $1.00 a tonne on Thursday in a limited reaction to oil's $8 a barrel price dive, traders and utilities said.

Oil crashed by more than $8 to a four-month low on Thursday after the world's consumer nations said they would band together to aid the global economic recovery by releasing emergency oil reserves for the third time ever.

"Coal swaps for both API2 and API4 did fall but it was a marginal reaction considering the extent oil dropped," one European trader said.

"There were some key players absent from the market today which may explain the lack of trades, bids and offers in Europe," another trader said.

European coal burn by utilities has risen during the past week because the profit to be made by generating power by burning coal is higher than profit to be made by burning gas, utilities said.

But they added that the burn was only marginally higher in most cases and most generators are fully covered through the summer, with the exception of one large utility which has been an active spot buyer.

Few spot trades were reported on Thursday, most were banks buying rather than end-users.

Although many market players readily acknowledge the fundamental weakness of the European market and what appears increasingly as weak demand in Asia, sellers of either swaps or physical are finding ready buyers.

So many players have long positions still and they would buy to defend them, regardless of the lack of end-user demand, traders and utilities said.

The idea of using capesize vessels as coal floating storage is being considered by at least one Asian player because of the lack of Pacific demand .

Although this may prove economically unviable, the fact that it is being given any kind of thought is indicative of the impact China's current buying hiatus is having.

Not everybody is relentlessly bearish, however. Producers who are still receiving enquiries from China, Taiwan and South Korea, albeit at prices $10/T below trades a week ago, said they do not expect prices to drop more than $5 at most in the near-term because oil or fresh supply disruptions will support prices.

An August loading South African cargo traded at $118.00 a tonne via brokers, down 40 cents.
Two September loading South African cargoes traded at $118.80 via brokers, down 35 cents.

An August delivery DES cargo was bid at $119.50 and offered at $122.00, down $1.50.
A September delivery DES cargo was bid at $120.00 and offered at $122.25, down $1.00.
(Reporting by Jackie Cowhig;Editing by Alison Birrane,Thomson Reuters)


Three Chhattisgarh coal blocks can be opened: Ramesh

Friday,Jun24,2011, TNN

NEW DELHI: The first signs of Jairam Ramesh easing his stand on the `go no-go' policy came on Thursday with the Union environment minister clearing three coal block projects in the dense forests of Hasdeo-Arand region of Chhattisgarh against the repeated recommendations of his Forest Advisory Committee.

In a speaking order explaining why he had not accepted the FAC's advise, Ramesh accorded the forest clearance to Tara, Parsa East and Kante Basan coal blocks.

In his order he gave six reasons for doing so. He said the projects were on the fringe of the thick forest block that he had earlier made his icon for the `go no-go' policy. He said the project had been curtailed from their earlier versions and the proponent had accommodated the ministry's concerns which he was reciprocating. He noted that the wildlife conservation concerns could be addressed with the help of expert organizations such as the Nature Conservation Foundation, Wildlife Trust of India, Indian Institute of Science and the government run Wildlife Institute of India.

He cited the importance of the mining linked supercritical thermal power plant, which would help the country deal with climate change. He also put on record that the chief ministers of Rajasthan (where some of the coal would be used) and Chhattisgarh have been pursuing the case for mining ardently with him and the Prime Minister.

Ramesh recorded that he was taking a wider picture than what the FAC is mandated to do and keeping the 'developmental picture' in mind while taking the decision.

The FAC had pointed out that the state government had under-reported the health of the forests suggesting it was diseased saal forests whereas it was a dense healthy one. The FAC had pointed out in its report that the state government and project proponents claimed they would transplant nearly 70,000 trees which was not found feasible. The Committee had also taken into consideration while showing the red flag to the coal blocks that the forests were important for elephant conservation.

TOI had earlier reported how the Chhattisgarh government, after the insistence of Confederation of Indian Industry, had withdrawn its proposal to declare the region an elephant reserve because there was exploitable coal reserves under the patch of green.

The FAC had twice reviewed the case, the second time on the suggestion of the environment minister to take up the proposals again, but given the same decision.

Ramesh has while clearing the three coal blocks said Chhattisgarh should be compensated financially for not exploiting the rest of the rich forest area with a kind of `green bonus'. He has said opening of any more coal blocks in the belt will severely disturb the fragile ecosystem of Hasdeo-Arand forests. (sourced TOI)

Maamba Collieries plans to procures coal handling processing equipment from South Africa

Friday, 24 Jun 2011

Maamba collieries Limited, the country's leading coal producer, procured a coal handling and processing plant for USD 23 million to boost operations at its plant in Sinazongwe in Southern Zambia and meet demand for the heating product.

In an advertised statement on June 23, Maamba Collieries, 65% owned by Nava Barat of Singapore the procurement of the processor bought from South Africa was part of the restructuring of the mine which started mining activities last May and sees to ramp up its production by July 2011.

The handling and processing equipment which is part of the modernizing of the plant sent up in the early 1970s has environmental friendly features and technology which is expected to contribute immensely to the anticipated coal production at the company, the country’s key supplier of the ehating product to the mines and industries.

The statement added that the processing equipment which is currently being testing in South Africa would be expected to be commissioned by mid September when the company is expected to be fully operational. The company, bought for USD 26 million by Singapore’s diversified miner in 2009, NBS and Zambia's largest coal producer of coal is Zambia’s coal life-line because of its vast deposits that the company expected to maximize to meet the increasing demand for coal in the mines local industries and export needs.

The company which seeks to generate its own thermal power plant at 330 MW to sustain operations at the mines projects to be fully operational by July 2011 and increase its capacity in the subsequent months. Plans are underway to undertake major refurbishment to the plant especially the ropeway by the end of July this year and commissioned by the end of October for a total cost of USD 5 million. An estimated USD 33 million has already been ploughed into the plant as part of the restructuring process and secure the future for the mine which once supplied mining companies in Zambia and neighboring countries.

Its failure to meet demand locally and outside markets, prompted many coal consumers to start importing the product from Wankie in Zimbabwe, among other foreign markets to meet mining and production demands in the copper industry and the private sector.

According to data, Maamba Collieries, once a key supplier of coal to the country's copper mines, produced about 600,000 tonnes of coal per year in the 1980s, but production slumped due to years of undercapitalization and operational losses.

Nava Bharat Singapore with a major stake seeks to spend USD 108 million on modernizing the mine which started revival activities in April 2010. Presently Nava Bharat Pte has ploughed in USD 33 million into the revival process, meeting salary arrears for workers and other debt obligations to suppliers and other creditors, that once seqized equipment at the mine for defaulting.

After selling off 65% equity in the mines by government, the State run Zambia Consolidated Copper Mines Investment Holdings reserved 35% of Maamba mine shares. The mine with estimated reserves of 70 million tonnes to 100 million tonnes of coal forecasts to produce 360,000 tonnes of coal for the first year.

The miner further projects to hit a hallmark capacity of 2 million tonnes of coal production per annum in the short-medium and long term. Chinese run collum coal mine, located within the same area is another producer of coal with a production capacity of 100,000 tonnes per annum.

(Filed by Mr Kapembwa Sinkamba SteelGuru Correspondent Zambia, Thomson Reuters)

Rio Tinto cuts Q3 iron ore prices a bit as spot drops

Friday, 24 Jun 2011

Reuters reported that world's No 2 iron ore miner Rio Tinto Ltd will drop its prices by up to 3% for Chinese steel mills for the third quarter.

Rio has asked some Chinese steel mills to pay USD 2.7234 per dry metric tonne unit for iron ore fines and USD 3.0109 per dmtu for lump ore for the July to September period.

Those compare with Rio's second quarter price of USD 2.7638 for fines and USD 3.1063 for lumps.

The price puts Rio's 62% Pilbara Blend fines at USD 168.85 per tonne, compared with USD 171.35 in the second quarter.

The modest price cut is in line with a decline in spot prices.

Global miners have been using spot values as the basis for setting contract rates since the industry moved to a more flexible quarterly system after scrapping a decades old annual pricing scheme. (sourced from Reuters)

Sinosteel suspends iron ore project in Australia

Friday, 24 Jun 2011

It is reported that state owned Chinese metals producer and trader Sinosteel suspended work on its AUD 2 billion Weld Range iron ore mining project in Australia's Midwest region due to setbacks in developing port and rail infrastructure.

Mr Julian Mizera COO of the Sinosteel subsidiary Sinosteel Midwest Corp said in an email “We are certainly not closing the door on Weld Range, however, we must make the right business decisions in order to protect our assets and ensure a realistic future for our organization.”

He said “Unfortunately we have now had to draw a line in the sand.”

Mr Mizera, citing expectations of further delays to the development of the Oakajee port and rail project beyond a revised completion date of 2015, added that it would cost the company's Australian unit AUD 100 million per year.

The project took years to set up and Sinosteel was one of only a handful of miners seen pioneering a second iron ore belt in Australia beyond the vast Pilbara region 1,500 kilometers to the north.

The midwest region of far west Australia is viewed as fresh hunting ground for foreign prospectors, many from Asia, hungry to tap Australia's abundant cache of minerals but virtually barred from the ore richer Pilbara by sector heavyweights Rio Tinto and BHP Billiton .

Sinosteel is one of the foundation customers for the planned Oakajee deepwater port, a venture operated by Australia's Murchison Metals and Japan's Mitsubishi Corp. Sinosteel's withdrawal leaves Gindalbie Metals Karara iron project and the Jack Hills mine owned by Murchison and Mitsubishi, as the two remaining customers for Oakajee. (sourced from Reuters)

Jindal ITF may get NTPC contract to move steam coal

Friday, 24 Jun 2011

It is reported that the contract for creating and operating the infrastructure to transport 3 million tonnes to 8 million tonnes of imported coal through the Hooghly to NTPC power plants in Farakka in West Bengal may go to Jindal ITF, a fully owned subsidiary of Jindal Saw Limited.

A part of the cargo will be re transported to NTPC’s Kahalgaon power station through the company's merry go round rail network.

It has come to light that Jindal ITF has emerged as the lowest bidder for the project, which is a maiden attempt on the part of any power utility in India to ease dependence on the overstretched rail network. On NTPC’s behalf, the bids were invited by the Inland Waterways Authority of India, the sole authority for ensuring navigability and navigation through the inland waterways.

Although there has been no word from the Jindal ITF side that the company will be creating and running the facilities for seven years at a consolidated charge of "close to" INR 1,000 on the transportation of every tonne of coal. The proposal is presently awaiting clearance from NTPC.

The clauses in the tender make it clear that the company will have to invest in transloading facilities at Sandheads in the Bay of Bengal for transfer of coal from large bulk carriers to barges set up a jetty at Farakka, and conveyor belts for transfer of the coal from the jetty to the NTPC plant. (sourced from Exim News Service)

Krishnapatnam Port sets record in discharging steam coal

Friday, 24 Jun 2011

Krishnapatnam Port has set an all India record for discharging 95,528 tonnes of steam coal in just 24 hrs using the conventional unloading system in the form of advanced Mobile Harbor cranes.

The Vessel MV, Grand Clipper carrying 132,953 tonnes berthed at Krishnapatnam Port at 10:48 HRS on June 17 and the commencement of discharging the coal started from 14:00 hrs the same day. The discharging was completed at 22:15 HRS on June 19.

This feat surpassed Krishnapatnam Port's previous record of discharging 72,527 tons of steam coal in just 24 hrs which was also an all India record then and was established barely a couple of months earlier on April 12 for vessel MV Welhero.

Krishnapatnam Port has a draft of 16.5 metres, capable of handling cape size vessels. Dredging is in progress to further increase the draft to 18.5 metres by October.(sourced from Business Line)

Thursday, June 23, 2011

Strengthening China Coal Demand Lifts Largest Shipping Costs

By Alaric Nightingale

Strengthening Chinese demand for power station coal helped bolster charter rates for capesize vessels that can carry the fuel.

Charter rates for the vessels, which also transport iron ore, rose 2 percent to $10,453 a day, according to the Baltic Exchange in London. That was the biggest gain of the four vessel sizes tracked by the bourse’s Baltic Dry Index, which fell 0.2 percent to 1,406 points. Coal used by power stations is also called thermal coal.

“You still have unbelievable strength in the thermal coal market,” Jeffrey Landsberg, president of New York-based shipping analysts Commodore Research & Consultancy, said by phone. That has helped demand for capesize ships the most because they are cheaper than other vessels, he said.

Owners are contending with a fleet that’s growing faster than seaborne trade in raw materials. Seaborne trade in bulk commodities will expand 3.9 percent to 3.4 billion metric tons this year while the fleet’s transportation capacity will swell 13 percent to 612.9 million deadweight tons, estimates the research unit of Clarkson Plc (CKN), the world’s largest shipbroker.

Panamax vessels, the largest to pass through the Panama Canal, declined 1.7 percent to $14,580 a day. Supramax and handysize ships carry grains, coal and ore. Supramaxes rose 0.04 percent to $13,789 a day; while handysizes fell 0.5 percent to $10,738, the 23rd consecutive decline.

Demolition of aging capesizes rose to a record in the year’s first five months as rental rates for the vessel slumped, said Braemar Shipping Services Plc, the U.K.’s second-largest publicly traded shipbroker. Rising metal prices enabled some owners to get as much as $10 million, an amount it would take three years to earn in the current charter market, by selling capesizes for scrap this year, Braemar estimated. (By Bloomberg)

Vale to convert coal to liquid fuel in Mozambique

Thursday, 23 June 2011

Brazil-based Vale plans to join with Portugal's SGC Energia, a company involved in renewable energy projects, to build a facility in Moatize in Tete, Mozambique that will convert coal produced at Vale's Moatize coal mine to liquid fuel.

Thermal coal will be used a power station to create 300 megawatts of electricity; higher quality coking coal will be used for export, and lower grade coking coal will be converted into liquid fuel.

Tags: coking coal , Brazil , Portugal , Mozambique , Vale , raw mat , Africa , South Africa , European Union , East Africa , South America , Europe , mining , production , investments (sourced steelorbis)

CIL gets 18 tenders from international companies

Thursday, 23 Jun 2011

State-run Coal India Ltd has got 18 tenders from international companies for long term thermal coal offtake agreements.

The Maharatna company will shortlist and strike a deal from this based on the price and quantity of coal to be supplied within five months.

Mr NC Jha CMD of CIL said that "CIL has got 18 proposals to import about 360 million tonnes of coal for a period of 10 years. We will shortlist from these, once we finalize the price and the quantity of coal to be imported. It is expected to happen within five months.”

The world's largest coal producer and India's second largest company in terms of market capitalization had invited expressions of interest from global companies at a discounted price for long term offtake agreements early this year. It received 27 proposals from 16 companies and later the PSU had sent them requests for proposal and they were advised to give proposals on quality and quantity of coal to be supplied. The last date to submit bids was May 25.

Mr Jha added that "The deal would be to import coal from four countries South Africa, Australia, Indonesia and the United States," Jha added. Though he refused to reveal further details about the proposals, an official close to the development said the proposals included some of the global coal giants.

According to reports, the companies which submitted the EoIs included Rio Tinto, Xstrata, Peabody, Massey Energy and Sinarmas. (sourced from Business Standard)

Teck sees lower coal sales as Japan mills defer shipments

Thursday, 23 Jun 2011

It is reported that Teck Resources Ltd the world’s second largest exporter of steelmaking coal second quarter sales will be at the low end of guidance after customers in Japan deferred shipments due to the earthquake and tsunami.

Vancouver-based Teck said in a statement that Teck had forecast sales at between 5.5 million tonnes and 6 million tons for the three months ending June 30.

Teck joins other coal producers including Australia Whitehaven Coal Ltd in cutting output as Japan steel mills repair damage caused by the earthquake and tsunamis that struck in March. Teck said its average selling price in the quarter will be about USD 270 a ton compared with previous guidance of USD 280 to USD 290 a ton.

Teck said “This is due to changes in the sales mix related to the deferred shipments to Japan. It said mining costs in the quarter may rise to between USD 80 and USD 84 a ton. Costs for the year may be USD 71 to USD 76 a ton, because of labour settlements and increased costs for mining contractors and diesel. (sourced from vancouversun)

Coal India to invite fresh bids at Mozambique blocks

Thursday, 23 Jun 2011

Reuters reported that Coal India will call for fresh bids for exploratory drilling at two coal blocks in Mozambique likely delaying the development process by a few months.

The official, who declined to be named said "There were some issues with the earlier bids. Any cancellation leads to delays, but we hope not much."

The Indian state run firm had secured exploration rights at two blocks in Mozambique Moatize region late last year and planned to start exploration work by July or August. It hopes to start mining coal at the site within five years.

Coal India plans to export 10 million tonnes of coal from the two blocks to India in the next 10 years. The blocks are estimated to hold reserves of a billion tonnes of coking and thermal coal. It will invest USD 400 million in the project.

The miner has been scouting for overseas assets and supplies to feed rising demand from Indian coal, steel and power firms. The country is likely to import 135 million tonnes of coal in the financial year that began on April 1. (sourced from Reuters)

Further strikes planned at BHP coal mines

Thursday, 23 Jun 2011

It is reported that workers at BHP Billiton Queensland coal mines are planning rolling strikes later this week which may further inflate the already high price of coal.

The strikes will occur during the night shift at six mines run by BHP Billiton and Mitsubishi and will continue with two day shift stoppages early next week.

Reuters reports that the mines have a production capacity of 58 million tonnes which is about a fifth of global trade in metallurgical coal used to make steel. The Construction, Forestry, Mining and Energy Union says the action is not a full-blown strike.

Mr Steve Smyth Queensland president of the CFMEU said "From our members' perspective, it's about causing some disruption otherwise you wouldn't take the action."

The unions representing the workers are calling for better pay for apprentices and a reduction in contractors as part of a claim to secure more of the record profits from the mining boom.

Workers had already engaged in several six hour stoppages last week. (sourced from ABC )

Tata Steel, Jindal Steel, JSW along with PSUs to bid for Afghan's Hajigak mines

Thursday, June23, 2011, ET Bureau

NEW DELHI: Tata Steel, JSW and Jindal Steel have joined hands with staterun units SAIL, NMDC and Rashtriya Ispat Nigam to form a consortium that will bid for the Hajigak iron ore deposits in Afghanistan, considered to be the second largest in the world.

Fourteen Indian firms, of the total 22, had been short-listed to bid for the mines estimated to contain about 1.8 billion tonnes in reserve. Nearly as many firms had met in Delhi last month to discus the formation of the Indian consortium, according to people familiar with the development.

The public sector undertakings will own 60% with the three private steelmakers sharing the remaining equity. Seshagiri Rao, a joint managing director of JSW Steel , a key member of the consortium, confirmed the development. He, however, declined to comment on the equity stakes that was still being worked out.

The Hajigak deposits are widely believed to be larger than the conservative estimate of 1.8 billion tonnes made by Russian experts during their occupation of Afghanistan in early eighties. The mine has been broken into four independent blocks that is scheduled to be opened for bidding on August 3.

But some of the smaller firms are not convinced about the progress of the bid. Ramanuj Dutta Roy, a vice-president at Rashmi Metaliks, one of the companies shortlisted for the consortium, visited the site independently and made a representation to SAIL. Roy said he was disappointed with the situation.

"One cannot work without government support. They could have considered three separate consortiums and accommodated smaller companies like us with 10-25% interest," he said. According to Pradeep Mittal, managing director of Essar Minerals, the group is currently reconsidering its interest and weighing the political risks of doing business in Afghanistan. The six-member consortium bid is likely to build a 3 million-tonne steel plant that SAIL proposes to set up in Afghanistan.

For that, it could also bid for nearby coking coal assets. According to one of the persons directly involved in the preparation of the bid, while some companies have captive iron ore supplies in India, the consortium is trying to balance their needs with firms that have no mines so that such firms can benefit.

SAIL and Tata Steel have comfortable iron ore supplies in India, while JSW buys all its ore. The high quality iron ore in Hajigak is the second significantly large mineral asset that the wartorn country is putting on the block. In 2008, the Aynak copper mines were taken by China Metallurgical Group Corp for nearly $3 billion. Production at Aynak, according to international media reports, has been delayed by five years due to threat of violence.

The uncertainty in the local situation has discouraged foreign players. But Bamiyan is relatively peaceful; say those who have visited the site as guests of Afghanistan mines ministry in January. The locals belong largely to the Sunni Hazara tribe and the province is also home to the country's first and only woman governor. The challenge is mainly in the evacuation of iron ore or finished steel.

"The Indian consortium could offer to pay a part of the cost of rail linkages proposed by Asian Development Bank," said another consortium member. As part of their bid agreement, the China Metallurgical Group was to connect Hajigak to Mazari-i-sharif as well as with the Pakistan border. There is also the Af-Pak trade route agreement, signed only last week, to look forward to.

Facilitated by the US, it allows a one-way route for goods from Afghanistan to reach India, or Pakistan's Gwadar port on the Persian Gulf. The challenge for iron ore may be a rail gauge mismatch at the border. Once European sanctions are lifted, the new critical Iranian port of Chahhbahar can be considered. The India-built Zaranj-Delaram highway stretch, as part of a $2-billion assistance grant, can be used.

"Its not quid pro quo for assistance for India, but the country does have political capital here," said a senior government official who didn't want to be quoted. The two governments and ministries have very good relations. "All failing, road transport through the 508 km stretch from Hajigak via Wagah to Hazira, in Gujarat will work out to Rs 2,000-2,500 per tonne and that can still be beneficial to steelmakers on the western coast," says Roy of Rashmi Metaliks. (By ET)

Iron Mining Group Announces a 300,000 Metric Ton FOB Iron Ore Sales Contract

June 22, 2011

Iron Mining Group Announces a 300,000 Metric Ton FOB Iron Ore Sales Contract with One of the World's Largest Commodities Trading Companies.Initial Iron Ore Contract Deliveries to Begin Thursday, June 23, 2011 and Will Continue Daily Through Complete Contract on or before December 31, 2011

Iron Mining Group, Inc. (otcqb:IRNN) announced that, through its wholly-owned subsidiary IMG Iron Ore Trading, S.A. ("IMG Trading"), it has agreed to an Iron Ore Sales Contract for 300,000 metric tons ("MT") of minimum 63 percent Fe iron ore to be delivered on FOB terms to the port of Manzanillo, Mexico (the "Contract"). IMG's counter-party to this contract is a leading global physical commodities company that completed nearly $80 billion worth of commodities transactions in 2010. Per the Contract, delivery of the initial 100,000 MT is due before August 31, 2011 with the balance of 200,000 MT due before December 31, 2011.

IMG Trading is scheduled to complete delivery of its first 1,250 MT tomorrow, June 23, 2011, with a production ramp through the July 1, 2011 where we will average 2,500 MT daily through the balance of the contract. Based on current production schedules, IMG anticipates delivering the first 100,000 MT on or before August 15, 2011 and looks to fulfill the Contract in full within a 120-day period. The Contract's FOB terms provide IMG Trading an advance revenue payment equal to 65 percent of the contract price for iron ore delivered during each previous week. IMG Trading will receive another 30 percent upon the successful delivery of each 100,000 MT with the final balance paid within 30 days thereafter.

"Iron Mining Group's management team as a whole has worked painstakingly to ensure the ability to consistently deliver high-quality iron ore to its customers on an ongoing basis," said Chief Executive Officer, Garrett K. Krause. "Tomorrow's initial iron ore delivery, which will begin immediate and ongoing revenue, is the much anticipated fruit of that labor. With nearly all foreseeable production and delivery hurdles cleared at this point, we are confident that today marks the beginning of a steady ramp in our daily iron ore production volumes, leading to immediate revenue and projected consolidated earnings growth for Iron Mining Group."

About Iron Mining Group, Inc.
Iron Mining Group, Inc. is a diversified global iron ore company with its initial focus in Latin America. The Company has entered this marketplace at a time when the largest iron ore customer, China, seeks to alter the status quo by shifting power away from the traditional iron ore producers. Iron Mining Group has recently launched a global iron ore trading group along with its direct mining operations in Mexico and Chile, where it owns a number of iron ore projects in various stages of development.

source: Iron Mining Group, Inc.

NMDC may exit JV with ArcelorMittal

Thu, Jun23 2011

Hyderabad: Iron ore producer NMDC may pull out of the joint venture to develop iron ore mines of global steel giant ArcelorMittal in Senegal finding it unviable to invest heavy amounts on evacuation infrastructure.

“While NMDC wants to begin the mining works on a small scale and invest on evacuation infrastructure at a later stage in phases, the Senegal government is insisting on developing the infrastructure as a condition to begin mining works,” said a person close to the development, on the condition of anonymity.

Further, the same person said, “There has been no positive response from the Senegal government for nearly two years for the request of NMDC to allow small scale mining first and allow developing infrastructure later. The issue is yet to be resolved.”

NMDC had early last year entered into a joint venture agreement with ArcelorMittal to develop the Faleme iron ore mines in the West African country for which the steel giant had entered into a pact with the Senegal government in 2007. The mines were estimated to have iron ore reserves of around 750 million tonnes (mt) and the joint business plan of NMDC and ArcelorMittal was to produce 15-25 mt of iron ore a year at peak operations.

While NMDC and ArcelorMittal had agreed to invest around $1 billion each towards developing the mines, the project also required infrastructure for evacuating the iron ore production that includes a port and a 750 km railway track, which involved further investment of around Rs 10,000 crore, or $2.23 billion.

As the Senegal government was not responding positively on the issue of evacuation infrastructure, NMDC had last year asked the Indian government to help it by creating a fund similar to South Africa Fund to develop the port and railway infrastructure. However, the Indian government did not respond favourably to the repeated requests of NMDC till date.

When contacted, NMDC chairman Rana Som said, “There is no progress in the project and it is now in hibernation. The government of Senegal has to give its consent to the model of development.”

On the large amounts of around Rs 10,000 crore required for developing the port and railway infrastructure for iron ore evacuation, Som said, “It is also not the world’s best project. It is just a modest project and we are not interested in spending such huge amount of money on the infrastructure.”

Som said, “Of course, there is no progress for the past two years but we are still in discussions and prefer to wait for the final outcome.”

Further, he said NMDC is going to shortly take up the matter with ArcelorMittal, who is also waiting for the outcome. “We are always there for being a partner of ArcelorMittal but at the same time we don’t want to go for a commitment of more than a $1 billion investment in the project, at least for now. Committing such large amounts could be difficult now.”(By MyDigitalfc)

Rio Tinto sets July-Sept iron ore prices for China steel mills -sources

Thu Jun 23, 2011

SHANGHAI, June 23 (Reuters) - World No.2 iron ore miner Rio Tinto Ltd has asked some Chinese steel mills to pay $2.7234 per dry metric tonne for iron ore fines and $3.0109 per dry metric tonne unit for lump ore for the July-September period, sources familiar with the situation told Reuters.

An iron ore buying official at a mid-sized steel mill in northern China said the company had received the pricing details from Rio Tinto on Tuesday.

Another market source familiar with steel mills said a few more steel mills in eastern China had received notice of the same pricing details.

Vale SA , Rio Tinto and BHP Billiton Ltd last year scrapped a 40-year-old system for pricing iron ore contracts annually in favour of an index-based quarterly pricing mechanism to capture sharp swings in spot prices.

Prices for quarterly contracts are largely based on average index prices over a three-month period ending a month before the start of each quarter.

The mill official said the company had not yet received a price notice from Vale. (Reporting by Ruby Lian and Jacqueline Wong; Editing by Chris Lewis, Thomson Reuters)

Indian PSU steel makers agree to monthly prices of coking coal - Report

Thursday, 23 Jun 2011

BL reported that one of the largest global metallurgical coal supplier BHP Billiton has pressured Indian public sector steel makers into accepting monthly price revision for at least 50% of the imported figure.

BHP, which supplies around 60% of coking coal required by SAIL and RINL, insisted on a complete changeover to monthly revisions instead of quarterly revisions, but finally relented to a compromise formula thrashed out last week.

Ahead of its benchmark price deal with the Japanese steel mills, at a meeting with SAIL and RINL on June 15 and 16, the Australian prime hard coking coal exporter dictated its latest terms. Coking coal imports for SAIL and RINL is negotiated by 8 member empowered joint committee.

Mr TK Chand director commercial of RINL who is also on the EJC told Business Line that from July to September quarter BHP would supply metallurgical coal under both quarterly and monthly price terms. He told that “The exact price for hard, medium and soft coking coal would, however, be finalized after the Japanese deal is through by the end of this month.”

At the EJC meeting in New Delhi it became apparent that the suppliers wanted to hold the price line in the context of marginal drop in demand from Japan as aftermath of earthquake and tsunami as also from China owing to an economic soft landing going forward.

SAIL imports a total of around 17 million tonnes of coking coal a year, while RINL imports 6 million tonnes a year. All Indian steel majors are import dependent and have very little bargaining power.

The new stance of BHP is significant as private sector steel makers, such as TATA Steel, JSW and Jindal Steel and Power Ltd, also generally follow the terms worked out by the suppliers and public sector importers. (sourced from BL)

Wednesday, June 22, 2011

Spot iron ore slides further to $177-178 cfr

Wednesday, June 22, 2011

Shanghai : Spot iron ore prices dropped $2 on Wednesday, continuing its slide after a two-week rally, as Chinese buying dried up with the domestic steel market declining. Prices of 63.5% Indian fines have dropped further to $177-178 per tonne cfr main Chinese ports, with mainstream offers at around $178 cfr. "The market seems to be filled with gloom, and any price support from high contracted prices in the third quarter and the....for more details visit Metalbulletin

Tags : China , India , spot iron ore

Posco MoU: No decision yet on ore export

22 Jun, 2011, 06.50PM IST,PTI

Bhubaneswar: Orissa Steel and Mines Minister Raghunath Mohanty today said the state government is hopeful of renewing the MoU with Posco India by June-end but a decision on the controversial iron export clause has not been taken yet.

When asked Mohanty said his department is examining whether to delete the provision.

"The renewed MoU with Posco-India will have retrospective effect. We are hopeful of renewing the MoU by end of June," he said.

While according final forest clearance for the Posco project on May 2, Environment Minister Jairam Ramesh in his order had said he was 'deeply uncomfortable' with the provision of iron ore export in the MoU with Posco-India.

Ramesh had said he would expect the revised MoU (between the state and Posco) be negotiated in a such a manner that export of raw material is avoided.

The MoU, for establishing a 12 mtpa steel plant near Paradip in Jagatsinghpur district signed on June 22, 2005, lapsed a year ago on June 21, 2010.

Chief Secretary B K Patnaik, however, said, "The Ministry of Commerce has no restriction on the export of iron ore."

The commerce department which deals with such matters has not raised any objection to the export clause, he said.

The Minister said that Posco had meanwhile agreed to include the state government's job reservation provision in the new MoU. It would also have many important issues like water supply and mining lease.

Prior to renewing the MoU, the Orissa government has taken the views of departments like water resources, forest and environment, energy, transport and commerce. (sourced ET)

South China Investment fails to acquire 100 percent of Brockman Resources

Wednesday, 22 June 2011

Chinese investment company South China Investment has announced that it has failed in its bid to acquire 100 percent of Australian iron ore company Brockman Resources, and currently holds just a 55.33 percent interest in Brockman.

According to the relevant purchase agreement, South China Investment planned to exchange one Brockman share with 30 shares of its own common stock. The acquisition process began in November 2010, at which time South China investment was already the largest shareholder in Brockman with a 22.63 percent stake.

Tags: Australia , China , Oceania , East Asia and Pacific , Far East , steelmaking , M&A
(sourced steel orbis)

SAfrica small coal miners urged to eye local market

Wed Jun 22, 2011

JOHANNESBURG, June 22 (Reuters) - Junior coal miners in South Africa should focus on supplying the domestic market as access to lucrative exports is likely to remain constrained for some time to come, an industry official said on Wednesday.

Coal miners in South Africa have been unable to export all their coal due to infrastructure bottlenecks at the ports and especially rail lines linking mines with the export terminals.

Andre Boje, chief executive officer of junior miner Wescoal Holdings Ltd , said there was sufficient demand in the domestic market, ranging from the electricity sector to other industries such as chemicals and cement manufacturing.

"The country needs coal. Accessing the export market for junior miners is very difficult and that is not going to change for the foreseeable future ... (but) there is life beyond the export market," he told the Coaltrans conference.

The main domestic users of coal are power utility Eskom, which relies on coal for almost all of its power generation, followed by petrochemicals group Sasol .

Boje said beyond Eskom and Sasol there was other domestic demand of up to 16 million tonnes per year on the back of the country's growing cement, iron ore, steel, paper and other industries. (Reporting by Yumna Mohamed,Editing by James Jukwey, Reuters)

Japan coal buyers drive hard bargains in China

June 22, 2011

By Mari Iwata

(Recasts lead, adds analysis, information on falling Japan coal demand, outlook for coking coal price talks)

TOKYO (Market Watch) - Conventional wisdom has it that Japan will import more thermal coal to make up for lost nuclear power output stemming from the catastrophic March 11 earthquake and tsunami, and more coking coal to boost output of steel for use in reconstruction efforts.

However, this isn't happening for a variety of reasons. Japanese importers of thermal coal used to make electricity and coking coal used by the steel industry are instead dragging their feet in a series of price and volume negotiations with global mining companies, and appear reluctant to clinch new deals.

Japan, the world's biggest coal importer, is witnessing falling demand for the fuel, which normally produces 17% of its power, and the poor state of the economy and caution by consumers of autos and other products has meant that steel companies are seeing reduced demand for their output.

That said, thermal coal buyers and Chinese suppliers belatedly agreed recently on the retroactive price of coal exported to Japan under long-term contracts for delivery for 12 months starting in April, at $145.75 a ton, a person with first hand knowledge of the deal said Wednesday.

The buyers are still negotiating volumes, but these are likely to be around 700,000 metric tons in total, far less than the 6 million tons that Japanese utilities potentially could claim, with this due to what they consider to be high prices, and also weak domestic demand, the source said.

The decision came more than two months after the start of the delivery period, but "it's not been a big problem, we don't need much coal this year anyway," a coal trader with a Japanese utility said on Wednesday.

Japan typically buys 180 million to 190 million tons of coal annually from overseas, and the price it pays in term deals are a benchmark against which many other contracts around the region are set.

Since the quake, Japan's coal imports have tumbled, falling 12% from a year ago in April and 22% to 13 million tons in May, government data show.

The nuclear power deficit--about two-thirds of 54 reactors that normally would be working are now offline due either to damage or because of security worries--has been met mostly by higher imports of liquefied natural gas.

Also, roughly 15% of Japan's coal-fired generating capacity still remains offline due to quake-related damage.

Japan is forecasting its real GDP will remain flat in 2011, which is another element in coal buyers' calculations.

The March disaster will cut Japan's thermal coal demand by more than 6 million tons this financial year, or roughly 7% of Japan's annual thermal coal use, the Institute of Energy Economics said in a recent report.

Japan's May on-year crude steel output was down 7.0%, marking the third straight month of on-year falls, due mainly to weak steel demand from automobile manufacturers, The Japan Iron and Steel Federation said.

This reduced steel output translates into lower coking coal use, which is a factor influencing July-September 2011 coking coal price talks which have been underway for several weeks.

None of the term buyers have yet completed a deal, sources close to the negotiations said Wednesday, although some have come close to accepting $315 a ton in talks with Anglo American PLC (AAL.LN) and Teck Resources Ltd. /quotes/zigman/18171/quotes/nls/tck TCK -1.22% .

Japanese steel makers have said they would agree "if the South Koreans accept this price," while South Korean buyers have said they would agree only if the Japanese accepted the price, coking coal traders said.

This would be $15 down on the $330 a ton agreed between the same parties for the April-June quarter, but a little higher than spot Australian coking coal prices which have been hovering around $300-310 recently.

"Nobody is in a hurry to make any deal. We have large inventories and are getting deliveries under contracts made before the quake and tsunami," said a Japanese steel mill spokesman who asked not to name his company.

Similarly, Japanese power utilities and sellers of Australian thermal coal haven't yet set prices for a year-long delivery contract that starts in a week's time, traders with some of the utilities said.

A delegation of Xstrata PLC (XTA.LN) visited Japan last week and suggested a price around $125 a ton, but Japanese buyers think a price below $120 is appropriate, said the traders. The delegation is due to return for more talks next week. ( sourced market watch)

Coal India to Invest $223.3 Million in Mutual Funds

June 22, 2011

By Saurabh Chaturvedi, ET

NEW DELHI -- Coal India Ltd., which has cash reserves of about 430 billion rupees ($9.6 billion), plans to invest up to 10 billion rupees ($223.3 million) in mutual funds this year as part of a new strategy to get better returns on its surplus cash, the company's finance director said.

The world's largest coal producer plans to initially invest in liquid debt mutual funds on a "trial basis," later graduating to fixed maturity plans, Asok Kumar Sinha siad in a recent interview.

"We are testing the waters and have already invested 2 billion rupees from the earmarked amount [since January]," Mr. Sinha said by phone from Kolkata, where the company is headquartered.

"Returns from mutual funds are better and tax-free."

Coal India, which listed on India's stock exchanges on Nov. 4 2010, will invest the 10 billion rupees in four mutual funds--UTI Asset Management, SBI Mutual Fund, LIC Mutual Fund and Canara Robeco, Mr. Sinha said.

The latest preference for mutual funds is a break from the past for the state-run company, which has traditionally invested most of its surplus cash in fixed deposits with government-owned banks.

In 2007, India's federal government allowed state-run companies to park up to 30% of their investible cash surplus in mutual funds.

Investible cash surplus is the amount left after provisioning for capital expenditure.

Kalpana Jain, senior director at Deloitte Touche Tohmatsu India, said investment in mutual funds by Coal India is a sign of the company's "progressive attitude." It has so far not been able to utilise the huge cash reserves to buy stakes in coal mines overseas and bridge India's coal demand supply gap, which is estimated to be 142 million tons for this fiscal year which started April 1.

"In my view, Coal India is trying to harness the true potential of the cash reserves it is sitting on [by making such investments]," Ms. Jain said.

Mr. Sinha said the investment by Coal India in mutual funds is now standalone as the company's board is yet to approve a similar plan for its units.

Coal India has eight units, including Bharat Coking Coal Ltd. and Eastern Coalfields Ltd.

"We started with a small amount. Going forward, our share of investment in mutual funds should rise further," Mr. Sinha said.

But fixed deposits in state-run banks will continue to be the primary route for Coal India to invest its surplus cash.

"We are not allowed to invest in equities," he said.

The company's board, in consultation with the federal coal ministry, bars investments in equity mutual funds.

(sourced ET)

Coal India to invite fresh bids at Mozambique blocks-official

Wed Jun22,2011

MUMBAI, June 22 (Reuters) - Coal India , the world's largest coal miner, will call for fresh bids for exploratory drilling at two coal blocks in Mozambique, likely delaying the development process by a few months, a senior company official said on Wednesday.

"There were some issues with the (earlier) bids. Any cancellation leads to delays, but we hope not much," the official, who declined to be named, told Reuters.

The Indian state-run firm had secured exploration rights at two blocks in Mozambique's Moatize region late last year, and planned to start exploration work by July or August. It hopes to start mining coal at the site within five years.

Coal India plans to export 10 million tons of coal from the two blocks to India in the next 10 years. The blocks are estimated to hold reserves of a billion tonnes of coking and thermal coal. It will invest $400 million in the project.

The miner has been scouting for overseas assets and supplies to feed rising demand from Indian coal, steel and power firms. The country is likely to import 135 million tonnes of coal in the financial year that began on April 1. (Reporting by Prashant Mehra; Editing by Aradhana Aravindan, Thomson Reuters)

Reliance and Tata seek govt help on imported coal price

Wed, June22, 2011 | PTI

NEW DELHI: Private power producers, including Reliance and Tata, have sought the government intervention to tackle the possible spurt in imported coal prices, apparently making a case for increase in power tariff for consumers.

The plea of the private power utilities comes at a time when Indonesia's -- the largest coal supplier to India -- mining laws are making it mandatory that coal prices be based on international market rate.

In a letter to Power Secretary P Uma Shankar, the 14-member Association of Power Producers (APP) has called for setting up of an "expert committee" to find an appropriate solution to price issues related to imported coal.

Apart from Reliance Power and Tata Power, other association members include Essar Power , Adani Power, GMR Energy and Jindal Power.

Many private utilities have won projects via competitive tariff-bidding route and the imported coal supply was based on bilateral agreements with fuel suppliers, mainly from Indonesia.

"Current contractual framework does not protect power companies from coal price changes triggered by any 'change in law' event in the coal exporting country," the letter written by AAP Director General Ashok Khurana said.

Similarly, Australia is planning to collect taxes on general additional revenues from exports of coal and iron ore as well as impose carbon tax on Australian coal production.

According to the letter, these laws would push coal prices by USD 20-25 per tonne.

India imports about 50 per cent of its imported coal from Indonesia and around five per cent from Australia.

The letter has said that there should be a suitable tariff structure that would "allow pass through of fuel prices to the power purchasers".

Out of the 43,000 MW capacity worth power projects awarded through competitive bidding, about 13,000 MW generation is dependent on imported coal.

Power project developers should get protection in the power purchase contracts for coal price changes triggered by legal and regulatory changes in coal exporting nations, the letter said.

The utilisation of imported coal is expected to rise in the coming years, especially since domestic coal production has slowed down mainly on account of environmental issues.

India is expected to see a capacity addition of 80,000 MW in the 12th five-year plan period (2012-17), with majority of contribution from private power utilities. (sourced ET)

Eskom could run out of coal in the long term

Wed, 22 June 2011

Johannesburg : South African national power utility Eskom Holdings could run out of supplies of domestic coal in the long term if no infrastructure development takes place along the way.

Making this statement at the Coaltrans SA conference here, Anglo American head of regional strategy Ian Hall said new, largely underdeveloped coal resources in South Africa ‒ the Waterberg, Tuli in Limpopo and the Soutpansberg ‒ needed adequate infrastructure if they were to be tapped. “These are large resources but they are pretty much stranded in terms of infrastructure,” he added.

Hall said that while Eskom generally used 20 megajoules (MJ) of coal, if there was no further investment in the central basin that provided its coal, and no infrastructure linking new sources of coal, Eskom could run out of supplies.

Eskom also sees export of coal as a risk to domestic supply.

Should Eskom change its coal grade or mix of coal used in its power stations, it might call on local producers to supply coal they usually exported,” Hall continued. Exporters could also start exporting lower grade coal depending on the price.

Hall said Eskom had estimated that R100 billion of mine investment was needed before 2020 if it was to meet its supply needs.

But even for the exporters, there was clearly a disconnection between export production, rail and port capacity, said Hall, adding that South Africa needed investment in new corridors.

“The market is there, we have the resources. The question is how do we put it all together to optimise our potential as a region?” he asked. (By ESI-Africa)

Vale diverts China ore ship for commercial reasons

Wed Jun 22, 2011 2:38pm GMT

* No political, technical problems - Vale
* Vale Brasil directed to Taranto to supply Italy's Ilva
* Vessel first of Vale's mega bulkers to launch

By Silvia Antonioli and Jonathan Saul

LONDON, June 22 (Reuters) - Brazilian miner Vale (VALE5.SA: Quote) rerouted its China-bound giant bulk carrier Vale Brasil to Italy on its maiden voyage for commercial, not political, reasons and to allow time to finalise talks for future port deals, it said.

Vale said it rerouted 391,000 tonnes of iron ore aboard Vale Brasil, the world's largest dry-bulk vessel, to Taranto, Italy to supply steelmaker Ilva, from its original destination of Dalian, China.

"There is nothing related to technical or political problems," Vale's global director of marketing Pedro Gutemberg told Reuters on Wednesday. "This is purely a commercial issue."

There had been speculation among traders that the Vale Brasil was unable to berth at Dalian due to pressure from China's domestic steel industry who had urged the authorities to protect their commercial interests.

Gutemberg said some details were yet to be finalised between Vale and the port authority of Dalian to grant Vale Brasil access to the port, adding that Taranto was the first and so far only port to have granted formal access for the vessel.

"Rerouting the ship to Italy was also a symbolic move, to show to our customers in Europe and worldwide that the Valemax ships were not built only for China but have got tremendous flexibility," he said.

"With this move, Vale will improve performance of iron ore delivery to Europe in this quarter."

The Vale Brasil was last off South Africa's east coast and due to arrive in Cape Town on Thursday, AIS live ship tracking data showed on Reuters Freight Views.

"The lengthened voyage from Brazil to Durban and then back into the Atlantic and onto Italy had not been in the original plan. There will be considerable additional bunker fuel consumption and that will have a financial impact," a ship industry source said.

"At the moment the (freight) market is waiting to see what will happen with voyage number two and whether the ship, after it discharges, goes back to Brazil and then on to China."


With the introduction of the first 400,000 deadweight tonne (dwt) dry bulk freighter last month, Brazilian mining giant Vale has broken a 25-year-old record in operating the world's biggest bulk carrier.

"It potentially makes things even worse for capesizes because they will have to compete in more areas not just the Brazil-China route," said George Lazaridis, head of research with Greek shipbroker Intermodal.

"But on the other hand it's only the first vessel. We have to see what other trades it will do."

The outlook for dry bulk rates has been grim because ship supply has outpaced demand to ship commodities. The situation has been compounded by the deployment of the Vale Brasil, the first very large ore carrier (VLOC) to enter the fleet.

The mega-vessel overshadows standard capesizes at 175,000 to 180,000 dwt, which had been the biggest vessels carrying coal and iron ore loads.

Peter Sand, chief shipping analyst with ship association BIMCO, said according to the orderbook Vale had another seven owned VLOCs due for delivery in 2011 and a total of 35 owned and chartered VLOCs to be delivered before the end of 2013.

"The impact on capesize freight rates ... is likely to be of significance to the duration of the low freight rate environment in the capesize market which is already massively oversupplied," Sand said in a report this week.

Vale expects at least ten ports worldwide will be able to receive its maxi-sized ships and it is also building a moving transhipment station that will be located in Southeast Asia.

(Additional reporting by Singapore, Shanghai and Beijing bureaux; Editing by Sue Thomas, Thomson Reuters)

Booming Indonesian Coal Exports - Bleeding Indian Power Industry

Wednesday, 22June,2011

Indonesia shipped 28.962 Million tons of coal in May 2011, up by 15.86 percent compared to April export of about 24.995 million tons, Indonesian coal industry sources said. 56.30 percent up year-to year.

China's Indonesian coal imports have jumped up drastically in May by 2.105 MMt compared to its April imports. Chinese coal imports from Indonesia in May was higher than India's imports from Indonesia. India has imported 6.368 million tons in May where’s China has imported about 8.21 MMt which was 1.841 million MT higher.

India has lost its largest Indonesian coal importer status to China first time in the last five months. India was the largest Indonesian coal importer since January 2011 followed by China and other Asian countries. China is expected to import more coal in this month and coming months to increase energy supplies to prevent a worsening of its summer power shortage in seven years.

According to analyst, China faces a power shortfall, and that may extend to 40GW this northern summer, surpassing its 2004 power shortfall. China’s benchmark power-station coal prices rose to the highest since October 2008 as summer electricity demand increased in the world’s fastest-growing major economy, as quoted by Bloomberg its report early this week.

According to Indian coal minister, Indian coal imports may be at 250 million tons per annum by 2016. Coal imports is unavoidable option for Indian utilities due to non availability of economically viable coal from domestic mines. However, according to Indian UMPPs, due to Indonesian government regulation that forces all coal producers must sell coal at government declared monthly prices, would cost them at least US$ 30 per ton higher than they previously budgeted.

"Implementation of this proposed new rule by the Indonesian government ( I.e., the law mandates all coal producers to sell coal at government declared prices) will adversely impact all existing and future imported coal-based power plants in India, including UMPPs," Ashok Khurana, the Director General of the Association of Power Producers, said as reported by an Indian paper.

“When Indian companies invest in Indonesia, they tend to have the intent to sell coal at cost, so that Indonesian business unit remained at no or negligible profits. Taking a holistic view, however, the cash flows in an integrated Indonesian coal mining and Indian power generation unit after this regulation will continue to be similar, except that income taxes will be paid in Indonesia, and the cash flows will need to be brought on the books on Indian power project after paying taxes in Indonesia through appropriate and innovative business structuring,” said Dipesh Dipu, director, at Deloitte, mydigitalfc reported.

Indonesia has introduced bench mark pricing mechanism for its coal since February 2010, and it has implemented for the domestic supplies as well export market. The pricing was done on very transparent way using four internationally acceptable coal indices to generate monthly Indonesian coal reference prices for about 62 types of coal including 8 types of bench mark qualities.

The regulation also requires miners to report sales volumes, prices, and buyers every month to the government, allowing it to ensure that the rules are being followed. Violations can lead to revocation of mining permits. The price benchmark aims to prevent firms selling coal to affiliates at low prices to avoid taxes that hurts Indonesia's efforts to collect revenues from its massive commodity exports.

Ministry of Energy and Mineral Resources of Indonesia has set the June 2011 Indonesian Coal Reference Price for thermal coal at US$ 119.03 per ton per ton, which was 1.20 percent higher than May 2011 price of US$ US$ 117.61. Assessment basis of coal price reference was calculated considering coal with GCV (GAR) 6,322 kcal/kg, Total Moisture (arb) 8.00%, Total Sulphur (arb) 0.8%, Ash Content (arb) 15.00% and delivery free on Board (FOB) Vessel basis and applicable for spot contract, delivery between 1 – 30 June 2011.

Indonesian bituminous coal of 5,500 kcal/kg NAR was offered at between $ 108 - 110 a ton, FOB vessel basis this week, slightly up from last week price, traders said.

According to Indian power industry sources opined that Indian UMPPs ( ultra-mega power project) suddenly caught in between as the concept of UMPP was implemented 4 to 5 years back. The large scale industrial houses in India have bided and secured UMPP licenses based on the open market prices /long term coal contracts from Indonesian producers (I.e., pre regulated Indonesian market). Now that Indonesian coal reference price mechanism is in place all the UMPP's are seeking Indian government’s assistance in revising the Power Tariff of UMPP.

Now, the bankers who have funded the projects are bit worried about the rising Indonesian coal costs versus the power sales price which was pegged at pre-regulation prices, Indian banking industry sources said. Now, we need to see whether Indian Government allows the UMPPs to revise the power sale prices based on Indonesian coal reference price mechanism.

As such India cement and steel industries were used to buy coal from South Africa and Australia on index base pricing mechanism since last four to five years. in view of the attractive profit margin levels, entire Indonesian coal producers migrated to Index based pricing for coal contracts . “Where's still many of the Indian utilities and private consumers are still procuring the coal on firm delivered basis. This concept is creating lot of confusion in the Indian trade circles” a Indian trader commented.

77.12 percent of total coal exports in May goes to China, India, South Korea, Japan and Taiwan respectively.

Click here for complete details of Indonesian coal reference prices since Feb 2010.(cs)

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(sourced coalspot)

Mongolia Energy gains most in 2 years as coal deposits rise

Wednesday, 22 Jun 2011

Bloomberg reported that Mongolia Energy Corp a mineral and energy explorer advanced the most in more than two years in Hong Kong trading after announcing a 5.4% increase in its coal deposits.

The shares rose 27% to HKD 1.18, the biggest gain since May 20 2009. That compares with the 1.2% increase in the benchmark Hang Seng Index.

The energy explorer which operates in Mongolia and China western Xinjiang province said in a statement dated June 17 that coal resources rose to 141,456 metric tons as of last month from 134,170 tons in June 2008.

Mongolia Energy said on June 1 that it may report a loss for the year ended March 31 because of increased staffing, financing costs and losses from trading investments. The energy explorer reported a loss of HKD 317 million in the previous year. (sourced from Bloomberg

20 million tonnes coal reserve storage facility to be built in Chongqing

Wednesday, 22 Jun 2011

It is reported that 20 million tonnes capacity coal reserve storage facilities are to be built at Lidu port in Poulin, Chongqing, China.

Local power supply company Chongqing Jiulong Electric Power Co Ltd has an installed power generation capacity of 2,143,500 kilowatts, including thermal power generation of 1.67 million kilowatts. In the January to May period of the current year, the company purchased 2.74 million tonnes of coal.

It is predicted the coal stocks of the company will total 720,000 tonnes by the end of June accounting for over 4% of coal inventory in Chongqing.

(sourced from Chongqing Daily)

Flinders Mines drilling moves Pilbara Iron Ore Project closer to Measured Resource

Wednesday, 22 Jun 2011

Flinders Mines is making strong progress with its drilling program at the Pilbara Iron Ore Project in Western Australia, with over 50 kilometres of drilling completed since the previous resource update.

The drilling program is aiming to provide a sufficient Measured Resource to complete the recently approved Definitive Feasibility Study and to extend the Resource of high quality direct shipping ore through drill testing of newly identified Brockman Iron Deposit zones.

The drilling during 2011 has been carried out on schedule and on budget and is due for completion in mid July 2011. Highlights include 70 metres at 59.9% iron, 66 metres at 59.7% Fe and 60 metres at 60.6% Fe.

With such high iron contents the corresponding combined silica and alumina levels of these intersections is around 6%. The majority of assays have now been received from drilling on the north arm of the Delta deposit.

The company said validation of the results and geology is underway and indications are that the infill drilling to Measured Resource status is consistent with the distribution of known mineralisation. This confirms the robust nature of the geological and resource models which saw the conversion of the Inferred mineralization in Delta to Indicated status at a very high 98%.

Reverse circulation drill rigs have been operating at the project since the previous resource estimate in October 2010 to complete the program of Indicated and Measured status infill drilling as well as the initial testing of newly identified BID zones.

Since October 2010 a total of 963 holes have been completed for 50,467 metres. Of these holes, 688 holes have been drilled in the 2011 drilling campaign to define the Measured Resource in the Delta deposit, representing 83% completion.

Opposition pushes for progress on coal terminal

Wednesday, 22 Jun 2011

Opposition Leader Mr Jeff Seeney has accused the State Government of walking away from any role in the development of the Wiggins Island coal export terminal near Gladstone in central Queensland.

Mr Seeney says Premier Anna Bligh needs to tell the coal industry exactly when the terminal will be constructed. He also says the coordinator-general should be pushing the project along so it is built on time.

Mr Seeney said "The coordinator-general as his name would suggest has a very definite coordination role, but it's a role this government has totally abandoned. He said that because of that we have a string of major projects that haven't proceeded on time and therefore the economic benefits to the state have not flowed."

But the State Government has rejected claims it is responsible for ensuring the terminal is built on time.

Finance Minister Rachel Nolan says the terminal is being funded by the private sector and will be delivered in the coal industry's own timeframe.

Ms Nolan says Mr Seeney seems unaware it is being funded by the private sector. She said "The timeframe for the project has shifted because the private sector has not been ready yet to invest in its own economic infrastructure."

Ms Nolan said "The suggestion that the Government can somehow compel people to invest in things they are not ready to do is frankly absurd."

The terminal is owned and being developed by a consortium of coal exporters with the first shipments due in 2014.

(sourced from ABC)

Rising coal costs drive China power producers into the red

Wednesday, 22 Jun 2011

Xinhua reported that China five biggest power companies have reported increasing losses in their thermal power business ventures as they continue to struggle with rising coal costs and capped electricity prices.

The China Electricity Council said combined losses for the five companies thermal power ventures reached CNY 12.16 billion in the first five months of this year and almost triple that of last year.

The CEC said these losses translated to an overall decrease in profits for the companies with a total of CNY 5.57 billion in combined losses for the companies during the first five months of this year.

The five power magnates include the China Huaneng Group, China Datang Corp China Huadian Group, China Guodian Corp and China Power Investment Corp. These companies provide about half of the country power.

The council warned that these companies' financial woes will make it more difficult to ensure adequate supplies of power for the summer, when electricity usage peaks.(sourced from Xinhua)

Coal companies and mine workers reach pension deal

Wednesday, 22 Jun 2011

The United Mine Workers of America reached a deal with a coal industry association to preserve pensions for nearly 120,000 current retirees, their dependents and active miners, but it agreed to a shift toward 401 plans for miners hired in 2012 and beyond.

Industry experts said the contract with the Bituminous Coal Operators Association attempts to address the underfunding of the mine workers pension program which was hurt by the 2008 stock market drop. The plan had assets of USD 4.3 billion and paid out USD 650 million a year in 2010 and it was less than 80% funded. The pension program includes 70,000 UMWA retirees and 25,000 miners who are still active or who have yet to begin drawing pension benefits.

Under the new deal announced by the union, coal operators will continue to contribute USD 5.50 per hour worked to the existing pension plan. But beginning January 1 companies will contribute USD 1 per hour worked to 401 plans for newly hired miners. Beginning in 2014, the contribution will increase to USD 1.50 an hour for that group of workers.

Mr Jim Thompson editor of Coal and Energy Price Report an industry trade publication said "Putting the new miners on a 401 plan relieves the pressure that they were going to have to jack way up the funding of the old plan."

The pension changes will apply to all US coal operators with union miners because they were agreed to by Consol Energy Inc of Pittsburgh, the primary member of the Bituminous Coal Operators Association. Federal law requires companies that are part of the UMWA Health and Retirement Funds to follow pension terms agreed to by the association.

A spokesman for the coal operators association said the group was pleased that the agreement was ratified.

The UMWA contract that Consol agreed to also includes pay and health-care terms. Other coal operators can negotiate those terms separately, but the union hopes to use the agreement as a pattern for the other operators.

Consol, which has 3,000 unionized miners covered by the contract, agreed to wage increases of $6.00 per hour from July 1 through the end of the contract in December 2016. The contract also preserves health benefits for current unionized workers and retirees.

A Consol spokeswoman couldn't be reached to comment.

The union called the pay increase the largest in dollar terms over the life of a single agreement in the union 121 year history. (sourced from WSJ)

Coal mining begins in Galilee Basin

Wednesday, 22 Jun 2011

The first coal from the Galilee Basin in Queensland central west is being mined and transported to port this month.

Hancock Coal has approval to truck coal from a test pit near Alpha to the Ensham mine near Blackwater where it'll be railed to the Gladstone port for export to Asia. The seven-day a week operation will involve type one roadtrains and will last for about 15 weeks.

Mr Rob Chandler Barcaldine mayor says it's an indication plans for massive coal projects in the region are moving ahead. He said that "The companies that are right there, the three or four sites there at Alpha are talking about 20 billion tonnes of thermal coal and are talking about pulling it out at 120 million tonnes per year."

He added that "It's a massive deposit. It's the tryanny of distance, though, to get it to port, but while the coal price is like it is, I think these mines seem to be viable and these companies are moving forward."

Wah Nam in money talks on how to develop Pilbara Marillana

Wednesday, 22 Jun 2011

Brockman Resources new controlling shareholder says it is in talks with potential financiers and partners over the Marillana iron ore asset but is open-minded about how the Pilbara asset should be developed.

In Wah Nam International first public comments about Brockman since securing a 55% stake, chief investment officer Mr Hendrianto Tee recently tried to quash market perception that his Hong Kong group was financially constrained.

Mr Tee said Hong Kong stock exchange listing rules meant companies could not raise cash on a whim, which was why Wah Nam did not have a big cash pile. Whenever Wah Nam had to raise cash, it had no difficulty and in the process attracted some of Hong Kong's senior families and conglomerates onto its register.

He said Wah Nam had an open mind on financing for Marillana which in turn would determine how much cash his group would have to provide. He added that Wah Nam talks with potential funders, offtake or joint venture partners and infrastructure providers were preliminary only and had occurred during its Brockman pursuit.

Mr Tee and Perth corporate adviser Warren Beckwith on Friday joined Brockman as non-executive directors representing Wah Nam, expanding the Perth company boardroom to eight.

(sourced from SMH)

MMK wins rights to iron ore deposit

Wednesday, 22 Jun 2011

Reuters reported that Russia Magnitogorsk Iron & Steel Works won the right to explore and extract iron ore at the Kulmyakovsky deposit in the Chelyabinsk region.

The company also known as MMK, did not say how much it paid for the rights to the deposit which has about 80 million tonnes of various grades of iron ore. (sourced from Reuters)