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Saturday, October 29, 2011

Europe's bailout an unexpected bargain for China

Sat, Oct 29, 2011

BEIJING (Reuters) - China might just be about to strike the deal of the decade. For a fraction of the trillion euros needed to clean up Europe's debt mess, Beijing could score huge diplomatic kudos for helping end the crisis while satisfying a domestic agenda of reducing dollar dominance in world trade and further loosening its currency straitjacket.

Any contribution to the rescue of the euro zone is fraught with risks -- and no sum has yet been declared -- but for many analysts the upside for China far outweighs the danger of failure.

Among multiple motivations China has for contributing to a euro zone bailout -- such as supporting recovery in its single biggest export market and protecting the value of the 600 billion euros of sovereign debt in the bloc it already owns -- being hailed as the banker to the world is a strong one.

Beijing already enjoys that status in Asia, largely because no country in the region has any desire to ask the IMF for help again after the bruising experiences of the 1997-98 financial crisis, while they would be more than willing to seek assistance from their principal trading partner.

"If you step that up a notch, China in an IMF-type role, then this is simply a soft-power projection on the global economic stage," says Tim Condon, head of Asian economic research at ING in Singapore.

"It's the world's second-largest economy helping avoid another Lehman-like panic."

A SMALLER PILE OF CASH

China has revelled in the role of saviour before, earning plaudits during the Asian financial crisis for not devaluing the yuan as the currencies of regional competitors crumbled, and again at the height of the 2008 global downturn when it unveiled a 4 trillion yuan domestic stimulus package that many observers say kept the world economy moving.

China's contribution to any rescue this time around would likely be far smaller.

That's because while China officially has a pile of $3.2 trillion of foreign exchange reserves, there isn't nearly so much money on hand.

Excess reserves -- the amount of foreign currency above and beyond that needed to cover short-term trade and sovereign debt purposes -- are calculated closer to $1.5 trillion.

Some of that has already been channelled to China's sovereign wealth fund and much of the rest could easily be spent if Beijing chose to clean up a pile of bad debt accumulated by its local governments, meaning free reserves might be as low as $500 billion.

That doesn't leave a huge amount of money to divert towards the euro zone rescue, which could easily explain official Chinese reticence on the size and scale of any commitment.

Beijing also would be reluctant to make a massive bet having watched for two years as Europe has limped from crisis summit to crisis summit, with each successive meeting hailed beforehand as the breakthrough event, only to disappoint.

And there are domestic risks for China's leaders, who face constituencies pessimistic about Europe and wary of buying its debt, something many Chinese see as a bad investment.

"China won't want to be seen as part of a failed effort, but as part of a success and that's probably why there's been so much to-ing and fro-ing," ING's Condon said.

SOMETHING TO GAIN

Chinese officials were customarily cautious on Friday.

Vice Finance Minister Zhu Guangyao told a Beijing news conference that while Europe clearly saw China as an important investor, China wanted more detail about plans to boost the euro zone rescue fund before deciding whether to commit more capital.

Li Daokui, an academic member of the monetary policy committee of China's central bank summed up the quandry.

"It is in China's long-term and intrinsic interest to help Europe because they are our biggest trading partner, but the chief concern of the Chinese government is how to explain this decision to our own people," Li told the Financial Times.

"The last thing China wants is to throw away the country's wealth and be seen as just a source of dumb money."

A big Chinese investment bolstering the existing 440 billion euro European Financial Stability Facility -- even one far more modest than China's 2008 intervention -- would be a clear signal of closure for the crisis that Europe's leaders are desperate to send.

It also would advance several of China's own goals.

First, an investment fits China's need to diversify its foreign exchange holdings in euro-denominated assets. Investing via the proposed special purpose investment vehicle could be a much more favourable way of increasing Chinese holdings of euros rather than buying debt direct.

"Every major reserve currency has its own problems, so for China it comes down to choosing the right balance," said Song Xinning, a professor of European studies at Renmin University in Beijing.

Second, it might also help China deliver on its ambition to internationalise the yuan to unseat the dollar as the world's main unit of cross-border trade settlement.

"It allows China to hold fewer dollars in reserve while preventing a European meltdown that would also have affected their U.S. market," says MES Advisers President Paul Markowski, a long-time external adviser to China's monetary policy makers on international financial markets.

"The debt is cheap and, since the Chinese had already bought some Greek debt, preserves their position and more on an average cost basis," Markowski added.

With so many details still absent for how China might contribute to the funding of a leveraged EFSF, it's conceivable that part of the funding comes with strings attached to accelerate yuan trade settlement efforts, or outright issuance of yuan bonds to national central banks in the euro zone, analysts say.

Finally, it will inevitably grant China some political leverage over its biggest trade partner.

China often grumbles about its lack of access to Europe's markets and about the EU's long-standing arms sales ban on China. It has also been pushing Europe to recognise it as a market economy, something that would shield it from certain trade actions.

Some Chinese intellectuals argue that now is the time to negotiate hard, securing access to, control over, or even ownership of some of Europe's best brand names, companies and intellectual property.

A tilt in the balance of economic power is a price Europe may find it has to pay, however reluctantly.

"Do we really think that China would come to the rescue of the euro zone without getting something in return?" said French Socialist Party challenger Fran├žois Hollande, who leads Sarkozy in polls for the 2012 election, on Thursday.

"Do we think that by putting ourselves, even if only partially, in the hands of these nations with which we also have to negotiate on monetary and trade issues, we will be able to get positive results for Europe?"

(sourced Reuters)

Japan's Sept coking coal imports by source

Sat,Oct29, 2011

TOKYO(Reuters) - Following is a table of coking coal imports for September released by Japan's Ministry of Finance on Friday.

Figures are converted from yen to dollars using Japan Customs' official conversion rate. Volumes are in tonnes.

Country          Sept       Sept          Aug        Aug      M/M   Yr/Yr            YTD        YTD   YTD (Yr/Yr %)
Name Tonnes $/Tonne Tonnes $/Tonne % % Tonnes $/Tonne Tonnes
China 3,287 274.62 98,740 153.31 -96.7 952,382 256.03 101.7
Mongolia - - - -100.0
Indonesia 1,154,996 146.21 1,190,021 139.47 -2.9 -8.7 10,923,282 129.18 -21.6
India - - 1 7,663.54 -100.0
Russia 265,332 269.28 228,585 305.84 16.1 85.8 1,963,922 246.26 21.0
Canada 440,902 313.80 848,777 303.11 -48.1 -13.4 5,388,836 264.89 -21.8
USA 227,390 264.14 500,651 279.37 -54.6 -37.1 4,300,965 257.58 123.2
Mexico - - 75,764 301.31
Columbia - - 61,844 296.64
Australia 3,285,048 273.16 3,153,109 285.38 4.2 -4.2 27,226,212 241.95 -16.5
New Zealand - - -100.0 253,020 245.66 -27.2
Total 5,376,955 248.65 6,019,883 257.15 -10.7 -6.8 51,146,228 222.20 -11.6


(sourced Reuters)

Preventing financial crisis "true test" for G20: Zoellick

Sat, Oct29, 2011

WASHINGTON, (Xinhua) -- The true test for the G20 will be whether it can prevent a future financial crisis, World Bank Group President Robert Zoellick said Friday ahead of the upcoming G20 summit in Cannes.

"The world economy is hobbled not only by large deficits and troubled banks, but by joblessness and slow growth," Zoellick noted in an article carried on the website of the Washington Post Friday.

At the G20 summit to be held in France this coming week, the euro zone will present its new plan to recapitalize and strengthen European Union banks, using its new European Financial Stability Facility to enable Italy and Spain to roll over government debts, while assisting Greece, Portugal and Ireland, and easing the debt load on Greece to give it a chance of recovery, he added.

"Developing countries' economic growth has helped compensate for the lackluster performance of developed nations, but they are hardly immune to the shocks coming out of industrialized countries, " Zoellick noted.

He warned that all nations must at least agree "not to do dumb things" which includes a retreat to protectionism or trade wars.

The G20 also must help offset the damage to the poorest countries, which do not sit at the G20 table, Zoellick urged.

(sourced Xinhua)

US finding bodes ill for China's exporters

Sat, Oct29, 2011

CHONGQING - The US Commerce Department on Friday said Chinese companies are dumping steel wheels and moved to set duties on the items, a decision one senior commerce official said foreboded increased trade protectionism.

"Another round of trade remedy cases against made-in-China goods from around the world is coming, for which we have to be ready," Zhou Xiaoyan, director of the Bureau of Fair Trade for Imports and Exports of the Ministry of Commerce, said on Friday.

"It (trade protectionism) always happens when the global economy is gloomy. But unfortunately, China is always a major target," she told China Daily on the sidelines of a forum in Chongqing municipality marking the 10th anniversary of China's entry into the World Trade Organization.

Zhou's comments come as US economic growth falters and European nations are dealing with severe debt woes, and as Chinese exporters of chemicals, equipment and solar energy have either encountered or will face investigations.

China also faced a series of investigations when the financial crisis first broke in late 2008, one result of which was a tariff levied on Chinese tires by the Obama administration.

Leaders from European nations are currently struggling and quarreling over how to contain a sovereign-debt crisis in the region that started in Greece and is threatening to engulf Spain and Italy. On Thursday, the Eurozone leaders struck a deal with private banks and insurers on lowering Greek's debt burdens.

Despite any progress, economists are still pessimistic about the bloc's economy. Martin Wolf, chief economist of the Financial Times, said recently in a column that even if the immediate crisis were overcome through such measures, it wouldn't promise a sunlit future for the euro.

"The European debt is one part of the story," Zhou said. "The high unemployment rate and the upcoming election campaign will also push the US to transfer its own economic and political pressures onto Chinese goods through various trade remedy tools," said Zhou.

In the third quarter, the US returned to solid economic growth of 2.5 percent, alleviating fears that its economy was falling into recession.

But economists warned that the recovery is precarious, with the unemployment rate remaining at more than 9 percent since April.

Cases targeting China have already been growing. Earlier this month, the US Senate passed legislation that would allow the government to impose tariffs on Chinese goods to compensate for an undervalued currency.

The US also recently filed a WTO case over Chinese blocks on US poultry exports and has questioned more than 200 Chinese domestic subsidy programs.

"We are going to keep pushing and use all the tools we have," Demetrios Marantis, deputy US trade representative, said on Wednesday.

"Undoubtedly, new challenges are rising for Chinese exports," said Sun Zhenyu, the former Chinese ambassador to the WTO.

"The US will diversify the tools to charge duties on Chinese exporters and strengthen its efforts, and so will European nations."

Last week, the US SolarWorld Industries America Inc and six other solar cell and solar panel makers filed trade complaints, accusing China of illegally dumping silicon solar cells and panels through massive subsidies.

Yet it's not only about developed nations. Chinese exports are also challenged by emerging markets including India, Argentina, Pakistan, South Africa and Brazil, which recently launched a wide range of investigations into Chinese goods including bolts, shoes, glasses and paper.

"We are much busier than before, dealing with the increasing cases," said Zhou.

Trade protectionism has hurt Chinese exports, with annual export growth falling to 17.1 percent in September, the lowest since February.

"While they promise to combat trade protectionism, many foreign nations do something different. It's troublesome," said Lu Chang-jiang, a WTO liaison with the China Petroleum & Chemical Corporation.

Because of its quick growth in exports for more than a decade, China has been a major target of trade protectionism worldwide. Globally, one-third of the anti-dumping cases targeted China, and half of the anti-subsidy investigations were conducted on Chinese goods, although the value of the cases accounted for only a tiny part of China's total exports.

"Trade protectionism will be a long-term sore for Chinese exports," said Sun.

The Chinese government has vowed to expand imports in the next five years to balance trade, and also to reduce the risks of trade protectionism.

"We imported a lot of parts and components from worldwide. This helped us strengthen competitiveness in technology and avoid trade remedy cases," said He Zhenlin, vice-president of Sany Group.

"Adding investment and setting up more factories overseas to create jobs locally is another way."

The Chinese government is encouraging local companies to invest abroad, and from January to September, the nation's overseas direct investment grew by 12.5 percent year-on-year to $40.8 billion.

Investment into developed nations saw remarkable growth. In the first half, investment in Europe hit $3.3 billion, exceeding the total for all of last year, according to a report by the US Rhodium Group.

If some large proposed deals in the energy, gas and PC sectors are completed, the total could be as high as $8 billion this year, it predicted.

(sourced China Daily)

ArcelorMittal Announces the Publication of Q311 EBITDA Sell-Side Analyst Consensus Figures on

Press release

Oct.29, 2011

LUXEMBOURG: ArcelorMittal today announces the publication of sell-side analysts' consensus forecasts for ArcelorMittal's Q3'11 EBITDA. The consensus figures are based on sell-side analyst estimates recorded on an external web based tool provided and managed by an independent company called Vuma Financial Services Limited (trade name:Vuma Consensus). The consensus figures together with the full list of sell-side analysts who submitted their forecasts are available on our website.

View consensus figures

ArcelorMittal does not express any opinion as to the accuracy or relevance of this consensus or any component thereof. Any use of or reliance on this data is purely at the risk of the user.

About ArcelorMittal:

ArcelorMittal is the world's leading integrated steel and mining company, with a presence in more than 60 countries.

ArcelorMittal is the leader in all major global carbon steel markets, including automotive, construction, household appliances and packaging, with leading R&D and technology. The Group also has a world class mining business with a global portfolio of over 20 mines in operation and development, and is the world's 4th largest iron ore producer. With operations in over 22 countries spanning four continents, the Company covers all of the key industrial markets, from emerging to mature, and has outstanding distribution networks.

Through its core values of sustainability, quality and leadership, ArcelorMittal commits to operating in a responsible way with respect to the health, safety and well-being of its employees, contractors and the communities in which it operates. It is also committed to the sustainable management of the environment. It takes a leading role in the industry's efforts to develop breakthrough steelmaking technologies and is actively researching and developing steel-based technologies and solutions that contribute to combat climate change. ArcelorMittal is a member of the FTSE4Good Index and the Dow Jones Sustainability World Index.

In 2010, ArcelorMittal had revenues of $78.0 billion and crude steel production of 90.6 million tonnes, representing approximately 6 per cent of world steel output. The Group's mining operations produced 47 million tonnes of iron ore and 7 million tonnes of metallurgical coal.

ArcelorMittal is listed on the stock exchanges of New York (MT), Amsterdam (MT), Paris (MT), Brussels (MT), Luxembourg (MT) and on the Spanish stock exchanges of Barcelona, Bilbao, Madrid and Valencia (MTS).

For more information about ArcelorMittal visit: www.arcelormittal.com .

source: ArcelorMittal

Jindals' Salboni project faces iron ore crisis

Sat,Oct29,2011 |TNN

KOLKATA: Supply crunch of iron ore has cast a shadow on Bengal's showpiece project - Sajjan Jindal's integrated steel and power plant at Salboni in West Midnapore.

JSW officials have informally requested the state to help them procure iron ore from National Mineral Development Corporation's mines in Orissa and Jharkhand. JSW Bengal got three coal blocks in state dispensation route, Kulti, Ichapur and Sitarampur in Raniganj belt and the estimated combined reserve is over 600 million tonne.

Incidentally, the project is also facing land hurdle as mutation for the entire land (4,334 acres) is still pending. The company officials would meet state industries minister Partha Chatterjee and West Bengal Industrial Development Corporation (WBIDC) managing director Nandini Chakraborty on Saturday where the issue is likely to be discussed.

However, the only silver lining is that NMDC has not ruled out the possibility of limited iron ore linkage for the project. JSW Group is now planning to set up a 3 million tonne steel plant and a 300 MW power plant with an investment of Rs 20,000 crore in the first phase. NMDC chairman and MD, Rana Som, told TOI that it has got a couple of mines in Orissa where the production is not fully tied up. It has also got prospecting license for a big mine in Jharkhand. "There is no request so far from JSW for its Bengal project. We are supplying iron ore to other JSW projects," he added.

It's not only the JSW Group alone. Several other steel firms across the country have been facing iron ore shortage for the last few months. The Vijaynagar plant of JSW Steel is running at less than 50% of installed capacity of 10 million tonne.

Incidentally, WBIDC had sought clarification from JSW Bengal Steel regarding issues relating to the size of Salboni project for sourcing iron ore in September. JSW Group had given a reply to that letter

a couple of days ago. There were indications that WBIDC would start processing necessary clearances for Salboni project once it receives the clarifications. However, sources added that some grey areas still remained even after the reply.

JSW made this request to the state after the WBIDC asked it to specify how it would source iron ore and location of handling and

whether it is planning to set up any pallet plant in Bengal. It has also raised question about the location of the power plant proposed by JSW Bengal Steel. "The power plant was originally planned in Andal. As per the the approved feasibility report, the capacity of the Salboni project would be 6 million ton. The Expert Committee of Steel of the state government approved this quantity earlier," a source said.

(sourced TOI)

Iron ore exports under-invoiced

Sat,29 Oct, 2011

NELLORE: The CBI team that investigated iron ore exports by the Obulapuram Mining Company owned by Gali Janardhan Reddy through the Krishnapatnam port has reportedly found several irregularities.

According to sources, it found that 2,000 trucks ferried ore from Obulapuram in Anantapur district to the port in Nellore district daily, each carrying 40-55 tonnes of ore as against the permitted load of 15 tonnes.

However, CBI officials were tight-lipped on how many companies were involved in iron ore export from Krishnapatnam between 2007 and 2009 and what OMC’s share was. They simply said investigation was complete and a charge sheet would be filed in a day or two. It is learnt that the CBI found that 42 lakh tonnes of ore was exported from the port by 80 companies since 2007 but only 14 lakh tonnes was recorded.

It seized some crucial documents during its visit to the customs office after questioning its assistant commissioner K Ranga Rao on Thursday.

Not satisfied with the answers given by the port authorities, the CBI has issued notices seeking a written reply.

CBI joint director V V Lakshminarayana met SP BV Ramana Kumar Thursday and discussed road accidents involving iron ore trucks on the national highway from Kadirinaidupalle in Marripadu to the port that lies in the district.

As per police records, 200 people died and 500 were maimed in 350 accidents involving iron ore lorries during 2007-09.

sourced IBN Live.in

Euro Coal-prices rise despite weaker oil

Oct29, 2011

LONDON (Reuters) - European prompt physical coal prices rose slightly on Friday, shrugging off falls in oil and coal swaps.

Physical demand remained thin, because some players with long positions lack the capacity to burn coal and many utilities are burning down their stockpiles before ordering new deliveries.

A December FOB Richards Bay trade was heard at $110.25 a tonne, which was on the upper end of the previous day's bid/offer range of $105/$110.25 a tonne and 65 cents higher than the last heard deal.

Coal futures were also up, with the API2 2012 swaps contract rising to $120 a tonne for the first time since Oct. 13.

Because of the previous downtrend, the 50 exponential daily moving average (DMA) remained below its longer-term 100 and 200 DMAs.

Traders said that strong figures from China Shenhua Energy Co Ltd , the country's largest coal producer and the world's most valuable coal producer, had encouraged the coal market.

Despite its strong figures, Shenhua Energy warned of a slowdown in economic growth, which could drag on energy demand.

The strength came despite a fall in crude oil prices, as traders cashed in on strong rises the previous few sessions.

ICE Brent December crude fell $2.14 to $109.94 a barrel by 1310 GMT, having traded from $109.71 to $112.23.

TRADES

A South African delivery for December was heard at $110.25 a tonne.

PRICES

A South Africa November cargo had a bid at $106 and an offer of $107.50 a tonne.

A December DES ARA cargo was offered at $123.75 a tonne.

(sourced Reuters)

This con fund raised more money than Coal India IPO!

Sat, Oct29, 2011

India's paradox of savings and investments is not just unique but also one that has takeaways for other emerging markets. Despite being an economy with high savings rate, the country is starved for funds when it comes to infrastructure or corporate investments. The steep interest rates not only reflect high inflation but also demand for funds from government and corporate sectors. The missing link here is that most of the saving is unbanked. Also there is very little coordination between a large part of the savers and the major investors. Result being that small and ignorant savers often get lured towards unsafe investments that neither benefit them nor the economy.

The latest case of the Sahara Group duping rural investors of a whopping Rs 240 bn (US$ 4.9 bn) is a case in point. Although everyone from the government to the central bank is harping about financial inclusion, the outcome leaves a lot to be desired. But the case highlights the fact that very large quantities of savings in rural India is looking for lucrative investment options. The catch here is that most of the savings is in cash and the investors are either illiterate or with very limited financial literacy. Most are therefore averse to documentation necessary for bank transactions. As a result schemes that offer high returns with little entry barriers lure the cash rich rural investors. No wonder, the Sahara Group's bond issue raised more money than the Coal India IPO - the country's largest public issue ever. Moreover, its 30 m investors exceed the total number of retail investors in India's entire universe of listed stocks! This by no means is a small feat for a fund that offers little transparency or safety of capital. Moreover, since the bond issue was not under the purview of Securities and Exchange Board of India (SEBI), the group may even escape the SAT (Securities Appellate Tribunal) verdict to repay the funds to investors.

Hence despite having a young and pro-savings population, India runs a substantial risk of losing out on investment opportunities. Unlike India other fast emerging economies may be able to access large pools of domestic savings through better financial literacy. Data from the National Council of Applied Economic Research (NCAER) shows that 81% of rural households save but only half keep their savings in bank deposits. In fact, 36% prefer to keep cash in hand. Also only 2% of households opt for any kind of insurance. With such kind of disarray in the financial system, India's economic future could remain in the shadow of its emerging market peers.

sourced EquityMaster

Coal ministry to display list of 54 coal blocks for allocation within 15 days

Sat,Oct29, 2011

PTI reported that the coal ministry will display within 15 days the list of 54 coal blocks to be allocated through competitive bidding and government nomination.

A 3 official said that "In another 15 days, we will come out with the list of 54 coal blocks to be given away through competitive bidding and government dispensation route." He added that the list of blocks will be displayed on the ministry's website.

He further said that these 54 blocks will be hopefully allocated in 2011.

Earlier the ministry had indicated that certain blocks out of 54 acreages that were tipped to be put up for competitive bidding will be awarded on a nomination basis. The government had not identified the reserves to be given either through nomination or competitive bidding.

The official said that "The exercise for identifying the blocks is under way."

In September 2011, the ministry had said it would allocate five blocks to NTPC through the dispensation route to help the state run power generating company meet requirement of its four thermal projects.

Mr Sriprakash Jaiswal coal minister had said in May 2011 that the proposed competitive bidding round for coal blocks in the country would be held soon. The proposal for auctioning the blocks through competitive bidding was first mooted for the first time over two years ago.

(Sourced from PTI)

Power plant's coal crisis, coal rakes rush to power stations

Saturday, 29 Oct 2011

Indian Ministry of Coal is regularly reviewing the coal stock position with the power plants of the country. During 21st to 27th October, 2011, the total average railway rake loading was 169 rakes per day, out of which 134 rakes were for the power sector.

In addition, on an average, 6 MGR rakes and another 153,000 tonnes were also dispatched through MGR to the power stations during this month so far.

During October, till 27th October, 2011, the overall average rail loading from CIL sources was 156 rakes, out of which 127 rakes were dispatched to the power stations.

The coal stock position in the power stations where there is less than 4 days stock has also been continuously reviewed. Out of 32 power stations which are having less than 4 days stock as on 26.10.2011, 4 plants are located in Andhra Pradesh and 8 plants are located in West Bengal. Due to strike in Singareni Collieries Company Ltd, the coal supplies to the power plants of Andhra Pradesh were affected and now that the strike has been called off, regular coal supply from SCCL has been restored. However, it will take some more time for these plants to build up coal stocks. The power plants of West Bengal have been regulating their coal supplies from ECL due to huge outstanding payments payable to the coal company and increase in the cost of higher grade of coal being supplied to these plants.

There are three power plants located in Tamil Nadu having less than 4 days coal stock. During the period of strike in SCCL, railway rakes from MCL and other coal companies were diverted to Andhra Pradesh, which has resulted in reduced availability to the plants of Tamil Nadu. The coal supplies from MCL /ECL to these plants has now picked up and it is expected that the coal supply to the ports, from where the coal is evacuated by TNEB through ships, would improve shortly.

There are five power pithead plants where there is coal stock of less than 4 days. Coal is being moved to these plants through Merry-Go-Round (MGR) and are nearer to the mines. Therefore, building of huge stocks in such power stations is generally not done.

As on 26.10.2011, the power plants had 8.13 MT of coal stocks, which is equivalent to 7 days stock.

The coal companies have been advised to ensure priority movement of coal to the power stations of the country so as to improve the power generation and to build up coal stocks.

sourced steel guru.

Australia Newcastle thermal coal falls to USD 117 per tonne

Saturday, 29 Oct 201

Bloomberg reported that power station coal prices at Australia Newcastle port, an Asian benchmark dropped 0.2% in the week ended today.

According to the globalCOAL NEWC Index coal prices at the New South Wales port declined to USD 117.89 per ton from USD 118.10 the previous week.

Xstrata Plc the world largest exporter of power-station coal, BHP Billiton Ltd and Rio Tinto Group are among mining companies that ship coal through Newcastle.

(Sourced from Bloomberg)

Eurozone seeks bailout funds from China

Sat, 29 October 2011

The head of the eurozone's bailout fund is beginning attempts to persuade China to invest in a scheme to help rescue member countries facing debt crises.

After meeting Chinese leaders, Klaus Regling said there were no formal negotiations and would be no deal now.

It is thought China may pay about 70bn euros ($100bn) into the fund, which is expected to be boosted to 1tn euros.
Meanwhile French President Nicolas Sarkozy said debt-ridden Greece's entry to the eurozone was a mistake.
Greece was "not ready" when it joined in 2001, he said, adding that it could be rescued thanks to a new deal on the debt crisis.

European leaders worked into the early hours of Thursday in Brussels to secure an agreement aimed at preventing the crisis from spreading to larger eurozone economies.
The deal triggered a worldwide shares rally.
'Regular buyer'
Beijing has made it clear that it will demand strong guarantees on the safety of any contribution it might make.

Mr Regling, who is chief executive of the European Financial Stability Facility (EFSF), said he was not negotiating with China as a potential investor but holding consultations to decide the terms for raising the money.
"Don't expect any precise outcome of our talks," he said, quoted by AFP news agency.
"I cannot say today, and it's certainly far too early to say what kind of amounts might be envisaged."

He said China had been a regular buyer of EFSF bonds in the past.
He would present the fund's bonds as a potential commercial investment to China, he said, adding that Beijing regularly needed to find safe investments for its trade surpluses.
"I am optimistic that we will have a longer term relationship," he said.
Chinese Vice Finance Minister Zhu Guangyao said there was work still to be done.
"We need to wait for the technicalities to be clear and also to carry out serious studies before we can decide on investment," he said, quoted by AFP.
"We hope that all these technical and specialised arrangements can be thrashed out at an early date and can be implemented and feasible. That will be very important for the effectiveness" of the fund.

The President of the World Bank, Robert Zoellick, has said he believes China will invest in Europe only if there are incentives for it to do so.
"I don't think that China will just come in as a white knight to try to provide money just to bail out Europeans," he told the BBC.
But investor Jim Rogers said China was prepared to help.
"From China's point of view, it's cheap foreign aid. They'll buy goodwill. I guess they'll put up some money," he said on BBC Radio 4's Today programme.

The main provisions of Thursday's deal are:
The framework for the new EFSF bailout fund is to be put in place in November.
Germany, as the largest economy in eurozone, is expected to be the largest contributor.
Asian markets rose for a second day on Friday and bank stocks in Europe continued to rally, a day after the deal was reached.

source: HellenicShippingNews

Vale appoints new coal boss

Saturday, 29 Oct 2011

Brazilian mining giant Vale has appointed a new boss for its coal division to be based in Brisbane.

Mr Mauro Neves replaces fellow Brazilian national Mr Decio Amaral whose resignation was suddenly announced in August after nearly two years in the job.

Mr Amaral spoke of a desire to make Vale one of the four largest coal players in Australia through the 10,000 square kilometres of coal tenements it owns in Queensland's Galilee and Bowen basins.

He has quit Vale and is moving back to Brazil.

Mr Neves was Vale's director of planning, development and continuous improvement and will move to Australia from Brazil.

Vale said in a statement that he came to the role with a mandate to oversee the growth of Vale global coal business and existing operations in Australia, Mozambique and Colombia.

The company wants to be Australia's fourth-biggest coal producer by 2021.

(sourced smh.com.au)

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Iron Ore-Spot price on course for worst week ever

Sat, 29 October 2011

Spot iron ore prices are headed for their worst week ever as miners continued to ship cargoes even as demand from top consumer China remained slack.

But stabilising prices of forward swaps and growing inquiries from Chinese steel mills suggest the freefall in iron ore -- which has lost 34 percent of its value since early September -- may soon hit a bottom.

Iron ore with 62 percent iron content fell more than 6 percent to $120 a tonne on Thursday, according to Platts IODBZ00-PLT, its lowest since July 2010.
The steelmaking ingredient has dropped 16.7 percent so far this week, its steepest decline on record.

Top iron ore producer Vale is waiting to sell around 10-15 capesize cargoes, with each shipment at around 150,000 tonnes, while second-ranked Rio Tinto needs to liquidate around 15 million tonnes of Australian material, said a Singapore-based trader.

Vale, Rio and BHP Billiton , which together control more than two thirds of the global seaborne iron ore market, continue to produce at full capacity despite the slump in iron ore prices because they are betting on China's long-term demand remaining strong.

"All these are putting pressure on the market so the slide will continue for at least three more days including today. But if the paper market continues to go up it will give confidence to the mills and they'll start buying, maybe later part of next week," he said.
"But if the iron ore prices goes up, it won't be so fast because a lot of new tonnage will come into the market," he added.

Prices of forward swaps cleared by the Singapore Exchange <0#SGXIOS:> rose on Thursday after recent heavy losses, with the November and December contracts gaining $2 each to $118.83 and $118.17 a tonne, respectively.

The volume of SGX swaps hit a record 1,736 lots, or 868,000 tonnes, on Thursday. Open interest also reached an all-time high of 10,487 lots, or 5.2 million tonnes, according to the SGX website.

Rising inquiries from Chinese mills and more stable steel prices also spurred hopes iron ore prices could rebound soon.

"More mills have started inquiring so the market may find a bottom soon. They are showing interest and talking numbers while before they have simply dismissed offers," said a purchasing manager for an iron ore trading firm in Shanghai.

Shanghai steel futures rose 2 percent to close at 4,123 yuan a tonne on Friday, gaining 4.2 percent for the week, its first gain in seven weeks. The recent falls in steel prices saw Chinese mills curbing output with average daily crude steel production dropping to 1.7998 million tonnes over the Oct. 11-20 period, the first time it has fallen below 1.9 million tonnes since February, data from the China Iron & Steel Association (CISA) showed on Thursday.

source: Reuters

Coal miners allowed collective negotiations for Dudgeon Point

Saturday, 29 Oct 2011

Australian Competition and Consumer Commission has granted interim authorisation for coal miners to collectively negotiate with Dudgeon Point terminal management.

Carabella Resources, Macarthur Coal, Middlemount Coal, New Hope, and Peabody are all seeking port capacity to export from the terminal. This authorisation allows the miners to begin negotiations with the port while the ACCC assesses their applications. However it does not allow them to enter into any contracts or agreements.

The ACCC added that the granting of interim authorization in no way binds the ACCC in its consideration of the substantive application for authorization.

It provides immunity from court action for conduct that might otherwise raise concerns under the competition provisions of the Competition and Consumer Act 2010. Broadly, the ACCC may grant an authorization when it is satisfied that the public benefit from the conduct outweighs any public detriment.

Dudgeon Point will be built near the existing Hay Point and Dalrymple Bay coal ports. The Greens have recently raised fears over the development of the coal terminals in the area, senator Ms Larissa Waters stating that the community is saying their homes are being blanketed with coal dust and they need to keep their windows shut through the whole of summer.

She said "The noise of the trains, conveyor belts and helicopters is quite unbearable, I am told, and they're already doing an awful lot of dredging."

A draft decision on the miners' applications will be released in December.

sourced from Miningaustralia

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Rising Coal Prices to worsen China's winter power crunt- CRI English

Sat, 29 October 11

CRI English reported that, the rising price of coal is fueling concerns about a power crunch set to plague China this winter, analysts said.

The rising price of coal is fueling concerns about a power crunch set to plague China this winter, analysts said.

A 26-million-kilowatt power shortage is expected during peak periods in the coming winter and spring, said Tan Rongyao, chief supervisor of the State Electricity Regulatory Commission.

The power squeeze situation will be grim, especially in Guangxi Zhuang autonomous region and the provinces of Guangdong, Guizhou, Yunnan and Hunan, Tan said.

The country's recent moves to support small and medium-sized enterprises will increase power demands because of resumed production, which will then push up demand for coal, said Xing Lei, a professor at the Institute of China Coal Economy of the Beijing-based Central University of Finance and Economics.

The continuing rises in coal prices and the supply shortage will make the situation even worse as coal is China's cornerstone of power generation, analysts said. About four-fifths of China's electricity comes from thermal power plants.

However, the current coal output is not enough to support the growing appetite for power in the world's second largest economy, and the supply strain may worsen in the future, said Zhang Lizi, principal assistant of North China Electric Power University.

Power shortages have been a persistent headache for China. In 2008, many southern provinces were hit by the worst power crunch in five years, with these regions' power-generating capacity going underutilized due to the coal shortage and soaring prices.

Li Chaolin, an industry analyst, expects the country's coal prices to hit the highest level since 2008 in the coming winter because of the supply shortage.

By Oct. 26, the average price of thermal coal rose 14 percent from a year earlier to a record high of 853 yuan (134.33 U.S. dollars) per tonne following eight consecutive weeks of increases, according to the Bohai Rim Steam Coal Price Index, China's government-run coal price gauge.

The expectation of a coal supply shortage and surging demand will further push up prices, Zhang said.

"The vicious circle, if left unchecked, will hurt the country's economic development," she said.

Meanwhile, higher coal prices increase power generators' financial pressures, making them reluctant to boost production because of the widening gap between the government-set electricity price and the market-oriented coal price, Li said.

Analysts have long called for a reform in the mechanism distortion, which they cite as the major reason for repeated power crunches in the country.

Zhang also advised the government to promote energy-efficiency and industrial structure readjustment to ease power demand growth while boosting supplies by stepping up coal imports.

As the world's largest coal consumer, China consumed 2.28 billion tonnes of coal in the first nine months of this year, up 10.3 percent year-on-year.

It has become a net importer of coal in the first nine months, with a net import of 111 million tonnes. In September alone, the country imported 19.12 million tonnes of coal, up 25.1 percent year-on-year.

Source: CRI English via coalspot

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Australian coal assets are overpriced - Mr Mende

Saturday, 29 Oct 2011

Bloomberg quoted AMCI Capital LP a private equity investor in coal, iron ore and base metals said Australia coal assets are expensive making acquisitions challenging.

Mr Hans Mende president of Greenwich, Connecticut based AMCI said “We’re always looking but it’s difficult. Australian assets are overpriced.”

He said “Our business model is basically greenfield development. He added that I believe Aquila will get their funding for their share.”

AMCI owns stakes in Australian resources companies including Aquila Resources Ltd and Whitehaven Coal Ltd. AMCI held shares in Felix Resources Ltd which China Yanzhou Coal Mining Co Ltd bought in 2009 for AUD 3.5 billion.

AMCI isn’t interested in buying Australia New Hope Corp a coal producer with mines in Queensland State that last month said it’s starting a formal process for sale after receiving several offers.

AMCI is an equal partner with Aquila in the AUD 5.2 billion West Pilbara Iron Ore Project that includes a mine and port development to ship the steelmaking ingredient from Western Australia Pilbara region. Aquila is selling two projects and is seeking to raise USD 2 billion in debt to help pay for its share in the venture.

(Sourced from Bloomberg)

Indonesia to India Freight likely to remain soft

Saturday, 29 October 11

The market continued to slow down and all segment were down this week.

The biggest drop was in the Cape Index down by 8.19 pct followed by Panamax index down by 4.29 pct. The Supramax and handy size index was marginally down by about 1 pct. The BDI was down by 6.27 point and closed at 2,018 points.

“The short period rates for Panamax remained firm at around $ 14,000 per day. However no short period candidates reported on Supramax”, said Capt. Reddy, Director of Vistaar Shipping Singapore. Vistaar shipping is an experienced ship operator, operating out of Singapore.

Charter rates for Supramax delivery N. China for trips via Indonesia were reported around $ 9,000-10,000 per day. The freight rate from Indonesia to India likely to remain soft next week.

According to Vistaar Shipping of Singapore, the average charter rates was at Cape/$ 28,214 per day , Panamax/$ 15,521 per day , Supramax/$ 16,155 per day and Handy size/$ 11,254 per day.

The Supramax index in the feast (S6 route) was down by 10.30 pct and closed at $ 12,086 per day (last week $ 13,474 per day). The EC India/China (S7 route) was also down by7.92 pct and closed at $ 10,142 per day (last week $ 11,015 per day). The S6 and S& route likely to remain soft next week.

The futures for three years (2011-2013) was at around Cape/$ 16,000 per day, Panamax/$ 13,500 per day, Supramax/$ 13,500 per day , Handy size/$ 10,500 per day.

The congestion in EC Australia increased to 100 vessels this week (last week 92 vessels). The vessels waiting at main coal loading ports were at Hay point/7, DBCT/22, Gladstone/12, Abbot Point/Nil, New Castle/49, Port Kembla/9 vessels. On the WC Australia iron ore vessels waiting was at 37 vessels (last week 44 vessels).

The Brent crude oil prices was almost at same level and closed at $ 110.05 per barrel (last week $ 109.75 per barrel). However bunker prices moved up by almost $ 20 pmt and closed $ 692.00 pmt (last week $ 674.50 pmt) for IFO 380 CST ex Singapore on 28th Oct 2011.

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sourced coalspot

Iron ore price slump nearing floor on China restock - UBS

Saturday, 29 Oct 2011

Bloomberg quoted UBS AG said iron ore prices down 30% this month are nearing a floor as Chinese buyers replenish stocks and shipments from India dwindle.

UBS analysts led by Sydney based Mr Tom Price said the price may rebound as much as USD 30 per tonne to near USD 150 a ton in coming weeks. The benchmark Asian price has dropped 16% this week heading for its biggest such decline on record.

UBS said “The scale & speed of this week’s correction has little to do with trade fundamentals. The reported collapse in trade liquidity instead suggests a buyer strike with consumers deferring purchases until prices stabilize.”

According to The Steel Index iron ore for delivery to the port of Tianjin in China a benchmark for Asia fell 5.7% to USD 120.20 per tonne recently. That’s the lowest since July 19 2010.

(Sourced from Bloomberg)

Vale to compete on iron ore spot market

Saturday, 29 Oct 2011

Dow Jones reported that Brazilian mining company Vale SA prepared to compete on the iron ore spot market rather than sell ore on contracts if that's what clients want.

Mr Jose Carlos Martins Vale executive strategies director said however we can't work with a system whereby if iron ore prices fall they want spot prices and if they go up they want fixed contract prices.

He said that "We've got no dogma at Vale on this. We're not high cost producers. We're prepared to compete at spot market prices."

Mr Martins said spot market prices plunged mainly due to credit restrictions in China which are making it more difficult for steelmakers and traders to purchase iron ore supplies.

He said that “Vale is negotiating on an individual basis with its clients to ascertain what kind of pricing system they prefer following recent market turbulence. The Chinese steelmakers are quite aggressively showing their preference for a system nearer the spot price while the Europeans and Japanese tend to prefer contracts which may give greater stability.”

He added that "Our tendency is to accompany market movements. We're going to accept what our customers decide."

Mr Martins said "The Chinese prefer a price nearer the market situation. The market is trending more to spot market prices in what is an almost irreversible move and a return to the annual benchmark system is now completely out of the question."

He said that however Vale isn't prepared to give discounts to customers if they change to a spot-price basis. He said that "It's not a free ride, if customers want spot prices and they must guarantee they will take the volumes already agreed."

He added that "Quarterly contracts are meanwhile bearable for both sides."

Iron ore producers and steelmaking customers worldwide agreed to adopt a quarterly contract pricing system for iron ore in April 2010 after the 40 year old annual benchmark pricing system fell apart during the global economic crisis due to Chinese pressure for cheaper prices near spot market prices.

Sourced from Dow Jones

CMC: Major drop in US scrap prices not “unreasonable”

Sat, 29 October 2011

During Irving, Texas-based Commercial Metals Company's (CMC) quarterly conference call, President and CEO of CMC, Joe Alvarado, acknowledged that after a drop in US domestic scrap prices in October, the expectation that scrap prices could drop as much as $40/mt in November is "unreasonable." Other global raw materials prices such as iron ore have already declined significantly in recent weeks and months, but US scrap prices have been pretty steady over the last nine months. Alvarado noted that "2011 was an unprecedented period of scrap stability," but he wouldn't count on the same scenario for 2012 given the long history of scrap pricing.

CMC's Americas Recycling segment had an operating profit of $10.8 million in Q4 2011, a $5.6 million increase compared to the same period in 2010 due to higher average selling prices and higher shipments.

Tags: scrap , USA , raw mat , North America , steelmaking , fin. Reports

sourced: steel orbis

Iron ore spot stretches losses as cargoes flood market

Saturday, 29 Oct 2011

Reuters reported that iron ore price offers fell further on Thursday as slow Chinese demand and hefty spot supplies extended the losing streak of the steelmaking raw material whose value has fallen by more than 30% since September.

Chinese consultancy Umetal said sellers of Australian, Brazilian and Indian ore to top importer China cut prices by USD 5 per tonne to USD 8 a tonne from Wednesday, as miners many of whom continue to produce at full capacity and tried to clear shipments that have piled up.

A Singapore based iron ore trader said "Miners are flooding the market with cargoes and that's putting a lot of pressure on the spot market and rates are coming off."

Traders said despite the sharp fall, spot iron ore prices are still more than double miners' production cost of around USD 50 a tonne for the big producers in Australia and Brazil.

Top iron ore producer Vale said on Wednesday it expected prices to remain high for a long period of time driven by solid demand from emerging economies.

Second ranked Rio Tinto this week blamed Vale for the steep drop in iron ore prices, saying its bigger rival was diverting Europe-bound shipments to China. But Rio said it was producing at record rates.

European trader said "I think there is more space for prices to fall. There are a lot distressed cargoes around."

Traders said Indian suppliers are subject to higher costs and therefore not able to lower their offers as much as the big three producers.

An iron ore trader in Shanghai said "Bids are too low. I think the mills are not in a hurry to buy so they bid very low, hoping they can catch a bargain, adding he saw a bid for the Indian 63.5/63 grade at as low as USD 126.”

He said "Mills expect the market to dip a bit further so they want to try their luck to get some cheap deals."

China appetite for iron ore has weakened sharply because of slowing demand for steel in the country dented by uncertainty in the global economy and Beijing's monetary tightening campaign.

(Sourced from Reuters)

Brazil Vale diverting some iron to China - Mr Jose Carlos

Saturday, 29 Oct 2011

Reuters cited Mr Jose Carlos Martins executive director said the Brazilian miner Vale is diverting some iron ore shipments to China.

(Sourced from Reuters)

US DOC sets duties on steel nails from the UAE

Sat, 28 October 2011

The US Department of Commerce (DOC) announced Friday preliminary antidumping duties on all imports of certain steel nails from the United Arab Emirates. These duties, which range from 19.23 percent to 61.54 percent, are the result of an investigation that was requested March 31, 2011 by Mid Continent Nail Corporation.

Dubai Wire FZE has been assigned a preliminary antidumping duty margin of 27.73 percent of the entered value of the goods. Precision Fasteners LLC has been assigned a preliminary antidumping duty margin of 19.23 percent of the entered value of the goods. Tech Fast International LLC has been assigned a preliminary antidumping duty margin of 61.54 percent of the entered value of the goods. Exports from all other UAE producers are subject to a dumping duty margin of 23.48 percent of the entered value of the goods.

The investigation covers certain steel nails up to 12 inches long that are produced from any type of steel. The steel nails covered by the petition can have a variety of finishes, heads, shanks, points and sizes, and may be sold in bulk or collated into strips or coils using materials such as plastic, paper or wire. Commerce's final determination in this case will be announced no later than March 13, 2012.

Certain steel nails subject to this investigation are currently classified under the Harmonized Tariff Schedule of the United States (HTSUS) subheadings 7317.00.55, 7317.00.65 and 7317.00.75.

Tags: USA , UAE , longs , Middle East , North America , steelmaking , trading , quotas & duties

source: steel orbis

Murchison shipped 357831 tonnes iron ore in Q1

Saturday, 29 Oct 2011

Dow Jones reported that iron ore shipped by Murchison Metals Ltd 50-50 Crosslands joint venture with Mitsubishi Corp fell 16.7% on the quarter in the three months to the end of September with the JV shipping 357,831 tonnes during the period.

The company cash, liquid investments and undrawn debt facilities also fell 28% to AUD 58.7 million giving it around nine months' worth of remaining cash at current burn rates.

The miner said that its cash costs during the quarter were USD 135 per tonne while its average realised selling price was USD 159 per tonne.

Murchison announced ambitious plans in 2008 to build an iron ore mine and export infrastructure in Western Australia Mid West region in joint venture with Mitsubishi, but the poorer-than-expected quality of the ore body and problems with major infrastructure customers have seen the mine and Oakajee infrastructure project languish, driving Murchison shares down 90% since April.

(Sourced from Dow Jones)

Ukrainian pig iron exports decline in first nine months

Sat, 29 October 2011

According to the data released by metal trading enterprise Ukrainian Mining and Metallurgical Company (UGMK), in January-September of the current year Ukrainian exports of pig iron decreased by 0.6 percent year on year to 1.133 million mt.

In September alone, exports of pig iron from Ukraine decreased by 78 percent compared to August, declining to 51,100 mt.

In January-September this year, Ukrainian imports of pig iron increased by 14.5 percent year on year to 38,600 mt.

Tags: pig iron , Ukraine , raw mat , CIS , steelmaking , imp/exp statistics |

sourced: steel orbis

Friday, October 28, 2011

C @Limited enters agreement to acquire eight Mongolian coal licenses

Friday, 28 Oct 2011

Perth based C@ Limited will acquire eight highly prospective Mongolian coal licenses for USD 7.8 million after it signed a conditional Share Sale Agreement with Peabody Winsway Resources to acquire all of the issued capital in its subsidiary BDBL.

Importantly, the eight coal licenses cover 625 square kilometres in a major emerging coal province. The region is characterized by a number of recent major black coal discoveries on the doorstep of the expanding Chinese steel and energy markets.

A number of the licenses are close to existing producing assets and infrastructure with close proximity to major energy markets like China and Russia, which make the economics of this project very favorable.

Four of the licenses are located in the Ongi River Basin in the Ovorhangay province and four are located in the South Gobi Basin in the South Gobi province. As part of its technical due diligence on these licenses, C @ undertook an exploration drilling program which intersected three coal seams on the Ovorhangay licenses. Initial raw coal quality tests at both Mongolian and Australian laboratories have confirmed high quality coking properties both near surface and at moderate depth likely to be enhanced by washing.

All of the licenses have had limited exploration but offer considerable potential. C @ will now undertake a capital raising of up to AUD 28 million including a USD 3 million priority issue to eligible shareholders.

Upon completion of the acquisition, C @ will immediately undertakes Phase II of its exploration program which will include geophysics and a substantial drilling program. Priority will be given to the Teeg licence located in Ovorhangay which intersected two significant coal seams during the company Phase I exploration program.

C @ will undertake a geophysical survey to identify the potential black coal extensions concealed on the licence to support key targets of the drilling program.

(sourced from ProactiveInvestors)

Iron ore prices continue to crumble

Friday, 28 Oct 2011 | Sourced SMH

Iron ore prices have continued to crumble, potentially wiping more than USD 10 billion from annual export earnings should the lower levels be sustained to the end of next year.

Prices for the steel-making raw material have now plunged by USD 55 a tonne or 30% in the past eight weeks in response to what the Pilbara industry hopes is a temporary slowdown in demand from the world biggest consumer, China.

The price dump threatens to bring to a halt the rapid growth in mining company profits of the past two years as much as it squeezes federal government revenue expectations from the booming sector. Treasury does not disclose the commodity price expectations used in the budget process but it is believed to be no different from most forecasters in assuming an iron ore price reduction from a forecast 2011 average of USD 162 a tonne to a more modest USD 150 a tonne for 2012.

But USD 150 a tonne has quickly become a possible high-side expectation, with iron ore plunging 7.2% to USD 128.50 a tonne on Tuesday. Should the lower price level prevail as an average for 2012, there would be a USD 10 billion shortfall on a USD 150 a tonne expectation. At the corporate tax rate, that would punch a USD 3 billion hole in federal taxes. But the industry remains upbeat that stronger iron ore prices will return, and is eager to remind investors that operating costs of less than USD 50 a tonne in the Pilbara mean that even at the lower prices, the margins in iron ore remain fat.

Mr Nev Power Fortescue Metals chief executive officer added his name to the upbeat list. He said Chinese steel mills were going through a period of destocking that, once completed, should see pricing and demand return.

Mr Power said ''We are still selling all of the product that we are producing so there doesn't appear to be any major issues in that sense. We might see a couple of months of some volatility but then we would expect strength to continue.''

He was speaking after announcing that Fortescue had completed a well-flagged junk-bond raising in the US market that pulled in USD 1.5 billion.

Mr Power said the raising gave absolute certainty to the group's previously announced USD 8.4 billion expansion from annual production of 55 million tonnes to 155 million tonnes of iron ore. He said that “There was an opportunity to do more of the funding by internally generated cash flow. However, we wanted to remove any funding issues going forward. This raising has given us the balance sheet capacity to cover any eventuality in terms of timing.''



MahaGenco to increase steam coal import

Friday, 28 Oct 2011

BS reported that amid rising constraints in the availability of coal from Coal India Limited and its associate companies, state run Maharashtra State Power Generation Company has decided to increase the import of coal.

To start with, MahaGenco, whose plants faced a decline in generation, has floated a tender for the import of 0.2 million tonne of coal.

The company may also consider an additional import of up to 1 million tonne of coal.

MahaGenco, with an installed capacity of 7,500 MW, has a total requirement of 45 million tonne, of which it imports 4 to 5 million tonne.

A MahaGenco official told Business Standard, “We are aware that the supply of coal is expected to become a major issue in the days to come and therefore, we are looking at the possibility of more imports. New plants can absorb more quantity of imported coal, unlike old plants, which have limitations in this regard.”

He, however, added increased coal prices and restrictions imposed by several coal rich countries, including Australia, South Africa, Mozambique and Indonesia, are issues which needed to be considered while deciding to import additional coal.

The official also said domestic coal was priced at Rs 1,600-2,000 per tonne, while imported came at a price of Rs 5,000 per tonne.

(sourced from Business Standard)

Fortescue and NCC granted leave to appeal for rail network access in Pilbara

Friday, 28 October 2011

Australian miner Rio Tinto has announced that the High Court of Australia has granted Fortescue Metals Group Ltd and the National Competition Council (NCC) permission to appeal the decision of the Full Federal Court regarding third party utilization of the Pilbara rail lines in Western Australia.

As SteelOrbis previously reported, the Full Federal Court has endorsed the decision of the Australian Competition Tribunal not to open Australian miner Rio Tinto's Hamersley rail network in the Pilbara region to third party utilization.

Rio Tinto stated that no date has been set for the hearing of these appeals but it is expected that they will be listed in the first half of 2012. Rio Tinto said it will take all appropriate steps against the appeals in question.

Tags: iron ore , Australia , Rio Tinto , Fortescue , raw mat , Oceania , mining

sourced steelorbis

Sudan exports first shipment of iron ore to China

Friday, 28 Oct 2011

The Ministry of Minerals has announced that 22,000 tons of iron ore are to be shipped to The Peoples Republic of China from Bioda region at North State as the first shipment since 1967.

The first shipment of 4,000 tonnes will take place by sea within the next two days.

On his part Dr Abdel Bagi Al-Jailani Minister of Minerals said the step comes within the policy of his Ministry aiming at investing in all other minerals. He added export of iron ore will continue and that the Chinese exporting company has been granted permit to export 40,000 tons of iron ore.

He also said regulations adopted recently provide that environment is given utmost care at mining areas and that the new clean technological, environment-friendly methods and means are used in the industry. On other hand, the Minister said geological teams will be sent to South Darfur State and North Kordofan State for carrying out geological surveys for evaluating gold and fluoride ores as well as fodder components.

Dr Abdel Bagi said the Ministry has agreed in the last visit with the government of South Darfur State that the regional geological office at South Darfur State be provided with the necessary equipment and staff Meanwhile, in his meeting with the Minister of Finance Mr Ali Mahmoud, Dr Abdel Bagi said his Ministry welcomed Chinese investments and directed experts and technicians at the joint committee composed of the ministries of Minerals, Finance and Petroleum to provide the necessary information to Chinese companies for facilitating Chinese investments.

On his part, Mr Ali Mahmoud has lauded the efforts of the Republic of China in supporting investments in the country in the field of agriculture, electricity, and minerals. He added, minerals will be a strong element in supporting the Sudanese economy, highlighting the Chinese experience and capabilities in upgrading these investments.

sourced from Sudanvisiondaily

Serbia’s Sirmium Steel to continue to export billet through DP Trade

Thursday, 27 October 2011

Swiss-based international trader and distributor DP Trade SA and Serbia-based billet producer Sirmium Steel DOO have agreed to extend their exclusive marketing agreement for the sales of steel billets to the export markets.

Under the agreement, which came into effect at the beginning of this year, all the available export volume of billets produced by Sirmium Steel will be sold exclusively through DP Trade, which will be acting as the commercial arm of the mill. DP Trade will also provide working capital financing for Sirmium Steel.

Currently, Sirmium Steel is producing approximately 26,000 mt of concast steel billets per month with 7-8,000 mt delivered to the domestic market, while the rest is exported. The company expects to reach its maximum output capacity of 35,000 mt of billets per month during the first half of 2012. This production growth may allow Sirmium to export billets also outside of the Mediterranean market which has been its main focus up to the present.

Tags: billet , Switzerland , Serbia , semis , Europe , Non-EU Countries , European Union , steelmaking , imp/exp statistics

Thursday, October 27, 2011

Coal miner Consol's Q3 profit rises, beats Street

Thu Oct 27, 2011

* Q3 net profit 73 cts/shr v Wall St view 68 cts/shr
* Revenue of $1.4 billion is company's highest Q3

Oct 27 (Reuters) - Coal and natural gas producer Consol Energy Inc's third-quarter profit beat Wall Street estimates, more than doubling on higher prices for its steel-making coal.

The company also raised its annual dividend 25 percent.

Net income was $167 million, or 73 cents per share, compared with $75 million, or 33 cents per share, a year earlier, the Pittsburgh-based company said on Thursday.

Analysts on average were expecting earnings of 68 cents per share, according to Thomson Reuters I/B/E/S.

Revenue rose to $1.4 billion -- Consol's highest ever for a third quarter. Most of the increase came from much higher average realized prices from steel-making metallurgical coal sales. The average was $209 per ton, compared with $165.61 per ton a year earlier.

For the second consecutive quarter, Consol generated more cash from its metallurgical business than from thermal, or steam coal, which is used to power electricity generation.

But Consol said profitability in its natural gas business division slipped from the 2010 quarter, despite 13 percent higher gas volumes. Unit gas margins fell, primarily due to a decrease in realized gas prices, it said, while unit gas costs declined, mostly because of higher proved reserves.

Consol said it expects overall unit costs to continue to decline over time as the company increases its emphasis on low- cost drilling in the Marcellus Shale region of the northeastern United States.

In the third quarter, Consol produced 14.7 million tons of coal -- in line with its estimate -- and it anticipates fourth-quarter production of 14.7 million to 15.3 million tons.

Two weeks ago, Consol said production at two of its Appalachian mines was affected by structural problems, but it still expects to hit its targets for the year.

Last month, the company raised its 2011 coal export forecast, saying it sees higher shipments to Asia and expects overall export markets to remain strong this year.

Consol's board of directors increased the regular annual dividend 25 percent, or 10 cents per share, to 50 cents per share. The regular quarterly dividend of 12.5 cents per share, is payable on Nov. 25, to shareholders of record on Nov. 11.

(sourced Reuters)

New World Resources Quarterly Coking Coal Price Falls 9%

Thu,October 27, 2011

Oct. 27 (Bloomberg) -- New World Resources Plc, the biggest Czech producer of coking coal, said the average agreed price for coking coal and coke delivery in the fourth quarter declined because of weaker European demand.

The price of coking coal fell 9 percent from the previous quarter to 171 euros ($239) per ton, the Amsterdam-based miner said today in a Regulatory News Service statement. Coke prices for the last three months of the year are seen at 341 euros a ton, down 13 percent from the previous quarter, the company said.

The thermal coal price for 2011 is unchanged at 71 euros a ton, the company said. The miner cut its 2011 coke sales estimate to between 525 and 575 kilotons, from a previous forecast of 720 kilotons.

The figures show continued weakness in coking coal prices and a decline in the price premium over Asian markets, Ceska Sporitelna AS analyst Petr Bartek wrote in a report to clients. The production mix of the company remains “weak,” wrote Bartek who recommends investors “accumulate” shares in the company.

NWR produces coking, or steelmaking, coal and thermal coal and owns four mines and two coking facilities in the Czech Republic. It sells coal to customers including the Czech unit of ArcelorMittal, the world’s largest steelmaker.

NWR, which reiterated its full-year production targets, fell 1.38 koruna, or less than 1 percent, to 143.62 in Prague trading as of 10:30 a.m.

(sourced Business Week)

Brazil Vale in client talks to alter pricing model

Thu Oct 27, 2011

RIO DE JANEIRO Oct 27 (Reuters) - Giant Brazilian miner Vale said on Thursday it is in negotiations with its clients to change the pricing mechanism for its iron ore shipments.

Executive director Jose Carlos Martins said most clients in China are interested in moving toward a spot market model for pricing ore, and he expects increased volatility in prices of late to only support that trend in the future.

(sourced Reuters)

Vale Profit Misses Analysts’ Estimates As Currency Fall Boosts Dollar Debt

Thu, Oct27, 2011

Vale SA (VALE5), the world’s largest iron- ore producer, posted its first decline in quarterly profit in two years and missed analysts’ estimates after a weaker Brazilian real boosted dollar-denominated debt.

Third-quarter net income fell to $4.94 billion, or 94 cents a share, from $6.04 billion, or $1.13 a share, a year earlier, Rio de Janeiro-based Vale said late yesterday. The company was expected to post per-share profit of $1.17 excluding some items, the average of 12 analysts in a Bloomberg survey. Vale had a financial loss of $2.19 billion related to the real’s drop, while sales rose 16 percent to $16.4 billion.

Vale dropped to its lowest in more than two months on Oct. 20 after iron-ore prices slumped on concern about slowing demand in China and fear the European debt crisis will spread. ArcelorMittal, the world’s biggest steelmaker, is idling some plants in Europe and South Korea’s Posco will cut spending and reduce costs on weaker demand for the alloy used in cars.

The foreign exchange loss “was a bit higher than originally estimated,” Rafael Weber, an equity analyst at Geracao Futuro Corretora, said in a telephone interview from Porto Alegre, Brazil. “With the appreciation of the real, it will be recovered in the following quarter.”

The real slumped 17 percent in the third quarter, the second-worst emerging market performer after Poland, increasing the value of Vale’s dollar-denominated debt in local currency.
Rising Revenue

Earnings before interest, tax, depreciation and amortization, or Ebitda, climbed 9.2 percent to a record $9.63 billion in the quarter, driven by higher iron-ore, nickel and copper revenue, the company said. Vale said it sold iron ore during the period at an average of $151.30 per metric ton, 18 percent more than the year-earlier period.

The company said it’s confident in the long-term outlook for mineral and metals markets amid global financial turmoil. The recent fall in iron-ore prices is related to higher seasonal supply from Brazil and Australia and China’s credit policy, which affects iron-ore traders by not giving them the option of using their stocks as credit guarantee, it said.

“We foresee prices to remain high for a long period ahead as the global iron-ore market is very likely to continue to show strong fundamentals,” Vale said in the statement. “The main reason for the decline in the net income was the depreciation of the real against the dollar.”

“It’s not that you are taking on more debt, it’s that your liability is going up because of the exchange rate,” Rene Kleyweg, an equity analyst at UBS AG, said in a telephone interview from London Oct. 25. “From a reporting numbers standpoint it means your net income gets dragged back.” He rates the stock a “buy.”
Record at Carajas

This is the first time since the third quarter of 2009 that Vale’s quarterly net income fell from a year earlier.

Third-quarter iron-ore output rose 6.4 percent to a record 87.9 million metric tons, after Carajas, the world’s biggest iron-ore mine, recorded record production of 30.9 million metric tons. Nickel output rose 30 percent to 58,000 metric tons, while copper production climbed 46 percent to a record 84,000 metric tons, the company said. Potash production rose about 7.3 percent to 166,000 tons.

Iron-ore and pellet volumes sold during the quarter fell 1.4 percent to 77.5 million metric tons, the company said, adding that the gap between production and sales was explained by lower iron-ore demand in Brazil, the need to rebuild stocks and the start of a distribution center in Oman.

“Vale needs to continue with its sales at a normal level because accumulating inventories to a high level is bad,” Geracao Futuro’s Weber said.

The company’s net debt as of Sept. 30 rose to $15.4 billion, from $11.2 billion at the end of the previous quarter.

Vale invested $4.53 billion, excluding acquisitions, during the quarter, about 19 percent of its $24 billion spending plan until the first quarter of 2012.

Vale, the world’s second-largest mining company by market value, plans to pay a record $12 billion in dividends and share buybacks this year, boosting capital returns to investors as it faces project delays and cost increases.
Sliding Prices

The company is forecast to post a record $26.5 billion in net income excluding some items during 2011, up from $17.3 billion last year, according to 16 analyst estimates compiled by Bloomberg.

Iron-ore prices for immediate delivery extended their slump this week and fell below $130 for the first time since July 2010 yesterday. The price of ore with 62 percent iron content delivered to the Chinese port of Tianjin declined 3.3 percent to $127.40 a metric ton, its 13th-consecutive drop, according to The Steel Index Ltd.

The cash price fell $10.20 yesterday, or 7.2 percent, its biggest slump since Aug. 20, 2009.

The Chinese economy grew 9.1 percent during the third quarter from a year earlier, the slowest pace since 2009. Vale sold about 45 percent of its iron-ore and pellets to Chinese customers during the third quarter, or about 35 million metric tons, it said yesterday. Europe represented 20 percent of the company’s shipments.

Vale gained 99 centavos, or 2.5 percent, to 40.73 reais in Sao Paulo yesterday. The stock has declined about 16 percent this year, compared with an 18 percent for Brazil’s benchmark Bovespa Index.

(sourced Bloomberg)

CBI focuses on iron ore exports by J Reddy

Hyderabad, October 27, 2011

The Central Bureau of Investigation (CBI), probing illegal mining by former Karnataka minister Gali Janardhana Reddy, is now focusing its attention on the export of iron ore by the mining baron.

A team of CBI officials led by Joint Director VV Lakshminarayana Thursday reached Nellore
district and began the probe at Krishnapatnam port, from where the maximum quantity of iron ore was exported by Obulapuram Mining Company (OMC) owned by Janardhana Reddy.

"Iron ore was exported from various ports and the maximum percentage was from Krishnapatnam port. We want to know how much was exported from here and what procedures the port authorities followed," Lakshminarayana told reporters.

The federal agency will also gather information from customs officials with regard to exports from the private port.

"The port authorities had already sent some documents to us. We have examined them and have come here as part of the investigations," he said.

According to the Karnataka Lokayukta report, the maximum export of illegal iron ore took place from Krishnapatnam port. Out of the total iron ore exports of 3,31,04,866 tonnes from seven ports since 2006-07, Krishnapatnam accounted for 1,11,70,994 tonnes.

Lakshminarayana, who is also leading the investigations into alleged illegal assets of MP Y.S. Jaganmohan Reddy, said their main concentration was on illegal mining as the arrests had been made in the case and "we have to soon file the charge sheet".

Janardhana Reddy and his brother-in-law and OMC managing director B.V. Srinivasa Reddy are currently lodged in Chanchalguda Central Jail here.

The CBI arrested the duo from Bellary in Karnataka Sep 5 in connection with illegal mining in Andhra Pradesh's Anantapur district bordering Karnataka. The probe was ordered by the Andhra Pradesh government in 2009.

The Supreme Court last month ordered the CBI probe into illegal mining in Karnataka.

(sourced Hindustan Times)

Reliance Steel's Q3 profit up, but sees Q4 lower

Thu Oct 27, 2011

* Q3 profit $1.13/shr vs year-ago 65 cents/shr

* Sees Q4 EPS 70-80 cents v analyst view of 88 cents

Oct 27 (Reuters) - Metals processor Reliance Steel & Aluminum Co's third-quarter profit rose on strong demand, but it said the fourth quarter will be lower than expected because of volatile metal prices and lower sales.

Net earnings were $84.9 million, or $1.13 per share, compared with $48.7 million, or 65 cents per share, in the same quarter of 2010, the Los Angeles-based company said on Thursday.

Reliance Steel, which buys metal from manufacturers and processes it for specific industry needs, said sales rose 29 percent to $2.14 billion.

Looking ahead, the company said it estimates earnings for the fourth quarter will be in the range of 70 cents to 80 cents per share. Analysts currently expect 88 cents per share, according to Thomson Reuters I/B/E/S.

(sourced Reuters)

Iron Ore-Spot stretches losses as cargoes flood market

Thu Oct 27, 2011

* Iron ore falls more than 3 pct to lowest since July 2010
* Operating at full capacity, miners continue shipments
* Iron ore price offers drop another $5-$8/tonne
By Manolo Serapio Jr

SINGAPORE, Oct 27 (Reuters) - Iron ore price offers fell further on Thursday as slow Chinese demand and hefty spot supplies extended the losing streak of the steelmaking raw material whose value has fallen 30 percent since September.

Sellers of Australian, Brazilian and Indian ore to top importer China cut prices by $5-$8 a tonne from Wednesday, said Chinese consultancy Umetal, as miners, many of whom continue to produce at full capacity, tried to clear shipments that have piled up.

"Miners are flooding the market with cargoes and that's putting a lot of pressure on the spot market and rates are coming off," said a Singapore-based iron ore trader.

Despite the sharp fall, spot iron ore prices are still more than double miners' production cost of around $50 a tonne, for the big producers in Australia and Brazil, traders said.

Top iron ore producer Vale said on Wednesday it expected prices to remain high "for a long period of time", driven by solid demand from emerging economies.

Second-ranked Rio Tinto this week blamed Vale for the steep drop in iron ore prices, saying its bigger rival was diverting Europe-bound shipments to China. But Rio said it was producing at record rates.

Iron ore with 62-percent iron content fell 3.3 percent to $127.40 a tonne on Wednesday, its weakest since July 23, 2010, according to the Steel Index .IO62-CNI=SI.

Iron ore has shed nearly 11 percent so far this week, on track for its steepest weekly decline ever.

Australian 61.5-percent grade Pilbara iron ore fines were quoted at $121-$123 a tonne, including freight, on Thursday, down $7 from Wednesday, said Umetal.

Offers for Indian 63.5/63-grade fines fell $8 to $136-$138 a tonne.

"Bids are too low. I think the mills are not in a hurry to buy so they bid very low, hoping they can catch a bargain," said an iron ore trader in Shanghai, adding he saw a bid for the Indian 63.5/63 grade at as low as $126.

"Mills expect the market to dip a bit further so they want to try their luck to get some cheap deals," he said.

China's appetite for iron ore has weakened sharply because of slowing demand for steel in the country, dented by uncertainty in the global economy and Beijing's monetary tightening campaign.

Prices of iron ore forward swaps cleared by the Singapore Exchange <0#SGXIOS:> fell sharply on Wednesday, reflecting investor expectations spot rates could lose more ground.

The November contract lost the most, dropping $8.67 to $116.83 a tonne, followed by December which fell $7.33 to $116.17.

(sourced Reuters)

S.Africa's Transnet says moving RBCT coal at record

Thu,Oct 227, 2011

JOHANNESBURG (Reuters) - South Africa's logistics group Transnet has been moving coal to the Richards Bay Coal Terminal at record rates in recent months, showing the market that it may be turning the corner and reversing years of underperforming infrastructure.

Chief Executive Brian Molefe said on Wednesday that the company had recently managed to move 1.6 million tonnes of coal per week and expected to keep up the pace, while exports from the terminal had been around 1.4 million tonnes.

Coal producers in South Africa, including Anglo American, BHP Billiton, Exxaro, Optimum Coal and Xstrata, have long been eager to export more coal to meet rising demand from India and China.

"In the last three months we had record numbers of trains going to RBCT ... there are stockpiles at the terminal of around 5 million tonnes," Molefe told journalists, adding the company was exploring options to also transport coal to alternative ports around RBCT to ensure more shipments go out.

"Maybe we caught them (coal exporters) by surprise. I'm sure in the next few weeks they will catch their breath and ramp up their export capacity," he said, adding that the allocation of coal export capacity to emerging miners needed to be increased.

Transnet moved 63 million tonnes of coal to RBCT last year, far below the terminal's capacity of 91 million tonnes, but the logistics firm is investing heavily to raise capacity on the rail line to 81 million tonnes by 2015.

SWAZI LINK

The group also plans to free up an additional 14 million tonnes of capacity on the coal line by moving non-coal cargo to a new line via Swaziland.

The Swazi link, expected within six years, will cost around 12.3 billion rand.

Some 7.3 billion of that will be financed by Swazi Rail, and Molefe said its counterpart in the landlocked African state was confident it would find the money to build the link, despite the impoverished country's current economic woes.

Molefe also said a planned rail link to the Waterberg coal fields would be completed within the same six-year period and would carry over 20 million tonnes of coal per year.

Waterberg is expected to become the country's next coal hub and supply domestic power plants and exports as reserves in the Witbank area near depletion.

For years Transnet and the private sector have been discussing the option of using public-private partnerships (PPPs) to up volumes on the coal, iron ore or manganese lines, but Molefe said the company should be able to do it on its own.

"I don't see much scope for PPPs on those lines because our performance is good and we are improving volumes quite rapidly. One shouldn't temper with what is not broken," he said.

The company is working to expand the capacity on the iron ore line to 60 million tonnes from 47 million, and Molefe said the company is already studying the option of expanding the line beyond that, going up to 70-80 million tonnes a year.

Molefe said Transnet had just signed a 6 billion rand loan facility with the African Development Bank, and he saw no problems in raising funds needed for future expansion.

State owned Transnet said its earnings before interest, tax, depreciation and amortisation (EBITDA) for the six months to end-September rose 27 percent to 9.4 billion rand, while revenue was up 20 percent to 22.4 billion rand.

(sourced Reuters)

India, China in line for Afghan mine, oil contracts

Thu,Oct27, 2011

LA HULPE, Belgium (Reuters) - Indian and Chinese bidders are front-runners to be awarded contracts for iron ore and oil projects in coming months, the country's mining minister said on Wednesday.

The winner of the Hajigak iron ore project will be announced in early November, Minister of Mines Wahidullah Shahrani told Reuters on the sidelines of a conference in Belgium.

"Two Indian bidders have emerged as the most potential companies for Hajigak," he said, adding that the bids came from one individual Indian company and one Indian consortium.

The winning bid for oil and gas exploration in northern Afghanistan's Amu Darya field will be decided in early December, Shahrani said.

"China has emerged as the most potential bidder for Amu Darya, and we will announce this in six weeks' time," he added.

(sourced Reuters)

Coal and copper units lift Teck Resources profit

Thu Oct 27, 2011
* Q3 adj EPS C$1.26 vs C$0.77 a year earlier
* Q3 net EPS C$1.37 vs C$0.54 a year earlier
* Q3 revenue up 40 pct to C$3.38 bln

By Euan Rocha

TORONTO, Oct 27 (Reuters) - Teck Resources' third-quarter net income more than doubled, largely because of strength in its coal and copper businesses, the diversified Canadian miner said on Thursday.

Investments in new equipment, plant upgrades and people have resulted in substantial increases in coal production, while investments at Carmen de Andacollo in Chile and Antamina in Peru have boosted copper production from those two operations, the Vancouver, British Columbia-based company said.

Teck said it continued to advance other late-stage copper development efforts, particularly its Quebrada Blanca and Relincho projects in Chile.

The company said net income rose to C$814 million, or C$1.37 a share, from C$316 million, or 54 Canadian cents a share, a year earlier.

Excluding gains from asset sales, foreign exchange losses and other one-time items, earnings rose to C$1.26 a share from 77 Canadian cents.

Teck said the results reflected higher copper and coal sales volumes and favorable prices for all our major products, especially copper and coal.

Negative factors included a stronger Canadian dollar, higher operating costs and a C$113 million after-tax pricing adjustments arising from the decline of copper prices late in the quarter.

Gross profit rose more than 50 percent to C$362 million in the copper business and increased more than 90 percent to C$954 million in the coal business. Earnings from the zinc business rose 35 percent to C$255 million, the company said in a statement.

Quarterly revenue rose 40 percent to C$3.38 billion.

Teck said late on Wednesday that its board has authorized a 33 percent increase in its semiannual dividend.

The company also said it had reached an agreement to sell 5.6 million tonnes of coal to its customers in the fourth quarter at an approximate average price of US$255 per tonne.

Teck said it continued to discuss further coal sales with its customers.

(sourced Reuters)

Desi companies set to feature among world's top 10 coal miners

Tue, Oct 27, 2011,

MUMBAI: What is common between Anil Ambani, Gautam Adani, Madhusudan Rao and GV K Reddy? In a race to secure coal assets to fuel their power plants, these billionaires are fast emerging as global coal barons. The companies that they run - Reliance Power,Adani Power, Lanco Infratech and GVK - will feature among the top 10 coal miners in the world, behind Peabody and Shenhua Energy, once they start coal production in coming years.

Peabody Energy, which claims to be the world's largest private sector coal producer, had registered sales of 246 million mt in 2010 and Shenhua Energy's coal production is pegged at 256 million mt according to its website.

However , government-owned Coal India is the world's single largest coal producer with an annual production in excess of 430 million mt. At peak production, some of these Indian firms will have excess coal production compared to such global miners as Rio Trinto, Anglo American , Xstrata, Russian Suek and Indonesian Adaro. Adani, with a resource base in excess of 8 billion mt of coal, plans to produce 200 million mt per annum at peak production, while others plan to produce over 100 million mt per annum each in the coming years.

Increasing Imports:

In spite of having the world's third biggest coal resources after US and China, Indian firms are aggressively acquiring coal assets overseas as most of Indian coal reserves lie in forest areas and cannot be mined for environmental concerns.

Indian coal imports are, therefore, seen rising against a stagnant output and rising demand. Total coal imports in 2010 were 55 million mt, which is likely to climb to 186 million mt by 2014 because of aggressive ramp-up plans by steel and power companies. Michael Cooper, associate editor, Platts International Coal Report, has another reason.

"The quality of thermal coal in India is of very low calorific value with high ash content compared to imported coal, which has comparably higher heating values and, when burned, increases power station boilers' efficiency."



Global Acquisitions:

Indian firms have already spent over $10 billion to acquire coal mines overseas and are likely to invest a similar amount in coming years. Adani acquired Linc Energy's Queensland coal tenements in a deal valued at $2.72 billion and agreed to pay another $2 billion in cash for the Abbot Point terminal near Bowen to secure coal delivery. Similarly, Reliance Power has acquired three coal mines in Indonesia with total reserves of 2 billion mt.

The company plans to further invest $500 million to ramp up capacity . "With reserves in excess of 4 billion mt in India and overseas , no doubt we will be among the top 10 coal miners in the world with an annual production of 100 million mt in coming years," Jayarama Prasad Chalasani, Reliance Power CEO, told TOI.

G V Krishna Reddy of GVK Group has also joined the premier league of coal barons. His latest $1.26-billion acquisition in Australia will give him access to 8 billion mt of coal reserves to fuel GVK's power projects in India. Another power company, GMR Energy, had in August agreed to buy a 30% stake in PT Golden Energy Mines for $550 million. The firm had earlier acquired an Indonesian coal company PT Barasentosa Lestari for $100 million.

Others like Lanco with captive coal reserves of 2 billion mt are still scouting opportunities. "Recently, we acquired Griffin coal in Australia for $750 million. We are building a pipeline for acquisitions in Indonesia, Africaand Australia," K Naga Prasad, Lanco's CEO (business development) told TOI. Cooper believes that, going forward, Indian firms will continue to acquire overseas coal assets aggressively.

"India has ambitious plans to expand it steel-making and power-generating capacity and, if its domestic production cannot match this, then it will have to source this coal from overseas or otherwise reduce its targets for steel production and electricity generation," Cooper added.



Undervalued Share Prices :

Indian infrastructure companies may secure the the top 10 global positions by chasing the black diamond overseas, but when it comes to valuations , the stocks of these companies have taken a severe blow.

The fact that shares of Lanco Infratech, Adani Power and Reliance Power are available for discounts of 33% to 75% is because the markets have taken a weak view of their overleveraged acquisitions, litigations and regulatory clearances and possible impact of carbon tax abroad.

(sourced TOI)