Saturday, November 19, 2011
Bloomberg reported that Chinese power plants face the smallest profit margins in at least five years as government mandated caps on electricity prices prevent utilities from passing along coal price increases.
According to data from Sanford C Bernstein & Co the CHART OF THE DAY shows the cost of coal in yuan per tonne as a percentage of what three benchmark plants in the cities of Taicang Changshu and Chaozhou can charge on average for their power supplies. Fuel expenses are 95.5% exceeding the proportion in 2008 when record coal prices contributed to blackouts in China. The lower panel shows YoY gains in China consumer price index.
Mr Michael Parker a senior analyst in Hong Kong at Bernstein said these plants highlight the difficulties that the entire sector is facing with high coal prices. The positive side for power producers is that inflation seems to be cooling, so there’s a good chance the government may increase tariffs.
China has kept electricity prices unchanged for more than five months as the government focused on fighting inflation which Premier Mr Wen Jiabao said last month was his top economic priority. The CPI in October rose 5.5% from the same period a year earlier compared with 6.1% in September. The MoM drop was the steepest in almost three years.
China State Council is reviewing a plan to increase electricity prices paid to power plants to ensure supplies after generation companies suffered losses because they had to shoulder rising costs. China is the world biggest coal user.
The nation power shortage may peak at 40 gigawatts in the winter and spring as demand growth outpaces supply, the China Electricity Council said last month. That would be about 4%of the country capacity and more than 20% of the generating power in India, the world second-most-populous nation. China suffered blackouts in 2008 as utilities curbed generation amid benchmark coal prices of as much as USD 168 per tonne. The price was at USD 156.20 on November 11 this year.
(Sourced from Bloomberg)
Jatenergy has announced that it will mine its first coal this week, after entering a JV with a currently producing coal mine, Jongkang II in East Kalimantan in Indonesia. The company expects its first sales of high quality thermal coal to Asian customers to occur this year.
JV partner CV Karya Putru Bersama has already sold about 40,000 tonnes of coal from Jongkang II. This milestone realizes Jatenergy's goal of diversifying its energy business.
Jongkang II is Jatenergy's third JV agreement in East Kalimantan, but the first to enter production, with partnerships for the Jongkang and Atan Bara projects.
Jongkang and Atan Bara are both considered to be short to production and Jatenergy expects to follow up in the near future with development of the two projects, once production licenses are granted.
Under the latest agreement, Jatenergy is required to provide working capital in order to earn 30% of the net margin of the coal, as well as to undertake full marketing and sales rights to the coal.
Cash flows from these projects will be used to advance the evaluation and eventual development of the company's showcase Katingan coal project in Central Kalimantan.
In addition to its Indonesian operations, Jatenergy recently executed binding agreements to purchase eight coal exploration permits and permit applications in Queensland's Bowen and Galilee Basins.
Guildford Coal has confirmed an initial JORC Resource of 63.1 million tonnes of coal with coking potential at its South Gobi project in Mongolia. The maiden resource comprises 38.2 million tonnes in the Indicated category and 24.9 million tonnes in the Inferred category.
A boost to the South Gobi project, which comprises five exploration licenses, is that it is located approximately 60 kilometers from the Chinese border station town of Ceke, where coal from Mongolia is currently transported through to China. The maiden resource underpins the potential start up of a 1 to 2 million tonnes per annum open cut mining operation.
Guildford Coal has lodged mining license applications for EL13780X and EL5262X and both are expected to be granted prior to the end of 2011.
The company is also in the process of completing Scoping Studies for the start up operation with the goal of beginning mining from the North Pit by the June quarter of 2012.
Drilling will continue on the other key tenements in the South Gobi Project to define a JORC Resource for the Central, West and East Pits.
Friday, November 18, 2011
Shares in Adani group company Mundra Port rose 3.7 percent on expectations that bulk cargo and containers handled by it to become group's key growth drivers over the next two years, an institutional sales person with a local brokerage said.
In May, Mundra Port agreed to buy Abbot Point Coal Terminal (with handling capacity of 50MMT) in Australia for $2 billion in an all-cash deal to tap into growing coal traffic in overseas market, which in analyst view was a good deal for Mundra port.
"Mundra Port handled 16.9 million tonnes of cargo in Q2 FY12 and management expects the port to handle 80 million tonnes in FY12 and 100 mn tonnes in FY13. In line with the strong growth in its cargo volumes, Mundra Port's revenue and net profit is expected to grow 39.1 percent and 16.6 percent respectively in FY12," First Global said in a note.
At 1.29 p.m., the stock was at 136.70 rupees, up 3.29 percent, bucking the trend in a weak Mumbai market, which was down 1 percent.
Coal inventories at the four major harbors around Bohai Sea witnessed a fall after rising for five weeks in a row.
Coal stockpiles at the four major harbors decreased to 11.951 million tonnes in the week ending November 13, down 2.24 percent or 274,000 tonnes from 12.225 million tonnes in the previous week.
Coal Stocks at Major Ports around Bohai Sea During Nov.7-13, 2011
Coal Stocks (in 10,000 tonnes)
Up/Down (in 10,000 tonnes)
SDIC Caofeidian port
Industry sources said that coal stocks at the four ports will edge up next week given the weakening demand from downstream sectors and correspondingly thermal coal prices will show slight rise.
BHUBANESWAR: As if the February hike was not enough, the Mahanadi Coalfields Limited (MCL) is seriously contemplating second hike in coal prices. And this is at a time when Odisha is passing through a power crisis triggered by acute shortage of coal.
Industries sources said MCL, a fully-owned subsidiary of Coal India Limited (CIL), is all set to go for it when the company has failed to meet the linkage coal supply as per the fuel supply agreement. MCL now proposes to increase the price of different grade of coal by about 20 per cent, the sources said.
At present, the average cost of the thermal grade linkage coal is ` 740 per tonne and the landing cost comes to about 1,200 per tonne.
While power tariff is decided by Odisha Electricity Regulatory Commission on cost plus basis as per the national electricity policy, another 20 per cent hike in the coal price will further jack up the cost of generation which will be ultimately passed on to the consumers. The domestic consumers will be the worst victim, sources in Gridco said.
‘’Unless the captive power plants (CPPs) are given adequate coal supply as per the fuel supply agreement, the CPPs will not be able to meet the� shortage scenario presently existing in the State,’’ said Sanjib Das, vice-president of the Confederation of Captive Power Plants.
MCL is able to meet 45 to 50 per cent of the guaranteed offtake of the CPPs. These plants have to meet their requirement by buying coal from MCL through e-auctioning. The price difference between linkage coal and coal provided through e-auction is huge.
The common complaint against MCL is that the coal supplied through e-auction route is much inferior quality despite the fact that the price of auction coal is more than double. Mostly coal coming from Hingula and Lingaraj mines go for e-auctioning and it contains high ash, a senior executive of an independent power producer said.
Even national PSUs like Nalco and NTPC are facing shortage of coal.
A senior executive of Nalco said power generation of the CPP at Angul suffers due to poor quality of coal.
BC Iron expects ongoing volatility in the iron ore price, but said that the market will remain healthy.
The spot iron ore price has softened in the past few months, but recently began tracking upwards, BC Iron chairman Tony Kiernan noted at the company's annual general meeting yesterday
Iron ore prices climbed to USD 139 a tonne earlier this week, after hitting a low of USD 115.85 in late October.
Record highs near USD 200 a tonne were reached earlier this year.
He said that "We will get the ups and downs of iron ore pricing in the next three to four years, but in general terms, we would expect a healthy market for the sale of our product.”
(sourced from Herald.com)
Margaret River residents may have to wait until after Christmas for a decision from the Western Australian Government on whether a proposed coal mine near the town can go ahead.
A proposal by LD Operations to mine coal at Osmington was deemed environmentally unacceptable by the Environmental Protection Authority.
The company appealed against the decision, which went to one man appeals committee Garry Middle before being handed back to the environment minister Mr Bill Marmion more than a week ago.
Mr Marmion says he cannot guarantee he will decide before Christmas. He added that "That's obviously up to me. The appeals conveners provided me with a report and that's something that I'm considering at the moment. I don't really want to put a time frame on it but I will try and make a decision as soon as I can."
(source from www.abc.net.au)
Fri, Nov18, 2011
A CONSORTIUM of Glencore and Cyril Ramaphosa’s Lexshell will make a mandatory offer to Optimum Coal shareholders next year after it agreed to buy shares in the thermal coal company, lifting its stake to 65,14%, Optimum said yesterday.
The offer to buy the remaining shares in Optimum it does not own will be made at not less than R38 per share. In September, Glencore announced an expression of interest to acquire a controlling interest in Optimum with Mr Ramaphosa in a deal that valued Optimum at R34 per share.
The consortium told Optimum’s board that it was moving away from a general offer to buy the company to making a mandatory offer for the shares it does not own once it has regulatory approval to do so in the first quarter of next year.
"The consortium informed the board that it believes that it will be preferable to make the mandatory offer as opposed to the general offer, because the mandatory offer will be unconditional and capable of immediate implementation once accepted by Optimum shareholders," Optimum said.
Glencore, the world’s largest commodity trader, will assume marketing rights for Optimum’s coal after the consortium agreed to buy a 6,45% stake in Optimum held by Mercuria Energy Asset Management, which had the marketing contract.
This should take place from the middle of next year.
"Not only does Glencore have a strong balance sheet, but we believe the Ramaphosa interests will have benefited from the sale of Shanduka Resources’ Assore stake," said Imara SP Reid’s Steve Meintjes, referring to the R2,6bn raised by Shanduka from the sale of its 11,7% stake in Assore, a JSE-listed manganese, chrome and iron ore miner.
"We believe this deal is therefore beneficial for the company as it introduces shareholders with strong balance sheets capable of funding the available organic and acquisition growth opportunities.
An initial investigation conducted by the Railways revealed that the company caused huge revenue loss to it by making false or misleading declaration about the end use of the iron ore lifted from mining sources.
New Delhi, Nov. 16:
CBI is investigating a scam worth at least Rs 780 crore by a mining firm which allegedly defrauded the Railways in transportation of iron ore meant for commercial activities by making false declaration about its end use.
Official sources said the alleged irregularities were carried out in connivance with certain senior officials of South Eastern Railway (SER) for wrongfully transporting the goods from its Chakradharpur division which were exported through Haldia Port in West Bengal.
An initial investigation conducted by the Railways revealed that the company caused huge revenue loss to it by making false or misleading declaration about the end use of the iron ore lifted from mining sources.
It detected that certain industrial units were transporting iron ore through the Chakradharpur Division of SER declaring the material was for domestic consumption or internal use. “Actually the iron ore was being exported through Haldia Port. The investigations initially revealed a loss of revenue of about Rs 50 crore for a period of nine months in the year 2010 by a private company,” a source said without divulging the name of the company.
Later, the scope of investigations was widened to cover three years from 2008-09 to 2010-11.
“The recoverable amount worked out by the Railways in mis-declaration of goods is Rs 749.50 crore,” he said.
Officials have got evidence of similar modus operandi being opted by other companies active in mining activities in Jharkhand and Orissa and they are now being separately investigated.
The case was referred to the CBI for an in-depth probe by the Central Vigilance Commission.
“The scam is huge and there is a possibility of involvement of certain railway officials who colluded with certain mining firm owners,” the official said.
Keywords: CBI probe, iron ore transportation scam, irregularities, South Eastern Railway,
Kolkata: Inland Waterways Authority of India (IWAI) is exploring the possibility of transporting coal to Assam by the river route on a big scale.
“NTPC wants about one million tonnes of imported coal transported annually by the river route to meet the requirements of its Bongaigaon thermal plant”, Ms Bhupinder Prasad, Chairperson of IWAI, told Business Line.
“We’re examining how to do it. The coal is to be unloaded from barges at Jogigopa for onward movement by road to Bongaigaon thermal plant”.
Located at Salakati, the Bongaigaon thermal plant is about 60 km from Jogigopa.
To invite bids
IWAI would invite bids from intending firms for undertaking the entire operation once the detailed project report was ready, she said.
The river route to Assam is through Bangladesh. “But it should pose no problem as there already exists a trade and transit treaty between the two countries”, she added.
The river transportation of coal, as Ms Prasad pointed out, would steadily pick up in coming years and IWAI would play a critical role in it.
According to one estimate, about 70 million tonnes-80 mt of imported coal would have to be transported by the river route by 2017, the terminal year of the 12th Plan.
By that time the country would be required to import about 250 mt of coal for the power sector and the railways would be able to handle about 160/180 mt of it.
11 thermal power plants
A spokesman for IWAI said already 11 thermal power plants could be accessed from the National Waterway Number 1, i.e, Ganga-Bhagirathi-Hooghly river system, and another nine plants, some with huge capacity, were due to come up along the river system.
“The potential for barge movement of coal by the river route, therefore, is huge”, he said. “Virtually sky is the limit”.
The existing plants are located at Kolaghat, Budge Budge, Bandel, Sagardighi, Farakka, Kahalgaon, Barauni, Barh, Muzaffarpur, Anpara and Opra and proposed plants are to be located at Katwa, Pir Painty, Bhagalpur, Lakhiseari, Buxar, Mirzapur, Meja, Bara and Karchhana.
Barring unforeseen developments, the barge movement of imported coal from the Sandheads, the mouth of the Hooghly river, to Farakka plant of NTPC, covering a distance of 650 km or so, should start within a year or so.
The Jindal ITF, the spv floated by the Jindal Group to implement the project, is to invest an estimated Rs 650 crore on acquisition of vessels, creation of handling facilities and construction of two-km long conveyor system from the Farakka jetty to the coal stacking yard of the plant to transport about three million tonnes annually.
“We’ll guarantee minimum required draft in the river to facilitate barge movement”, the spokesman added.
Keywords: Inland Waterways Authority of India, IWAI, coal transportation, river route, Ganga-Bhagirathi-Hooghly river system, Bongaigaon thermal plant,
Creating a favourable macro-environment in the area of iron ore trade and co-operation in the field of mining exploration can help achieve the ambitious India-China trade target of $100 billion by 2015, a top Chinese diplomat said here Thursday.
Speaking at a Conference on International Iron Ore Steel Making Raw Materials at a resort near Panaji, Economic and Commercial Counselor of the Embassy of China Peng Gang said the target set during Premier Wen Jiabao's New Delhi visit last year was a challenge against the backdrop of the ongoing global financial crisis.
'Our two sides should continue to deepen mutual trust, strengthen communication, promote mutually beneficial cooperation, properly handle differences so as to enhance the development of China-India Strategic Cooperative Partnership...,' the diplomat said.
Peng also called for preferential foreign direct investment (FDI) policies and creating a better investment opportunity had helped China in its long 30 year phase of opening up and reform.
'We would like to encourage more Chinese competent enterprises to establish more joint ventures in iron ore and steel-making sector with their Indian peers to increase the capability of iron processing and steel production of India,' he said.
Peng said the $1 trillion thrust in India's 12th Five Year Plan on infrastructure development would also open up new opportunities for development of mines in India. He said it was 'important to keep a transparent and stable policy system of mining, trading and export'.
'The companies of both countries might strengthen cooperate and investment with each other in mining supporting transport, logistics, ports construction and improvement with a purpose of creating favourable infrastructure conditions of mining development and trade between the two countries,' he said.
He said that both sides might also try to establish long-term iron ore trade agreement with a new pricing system.
Peng also advocated green innovative technologies to produce green and clean steel and other products.
The international conference comes against the backdrop of uncertainty in the mining sector as well as a potential ban on iron ore exports from Goa.
source: Bombay News
China has expressed concern over the recent dip in iron ore exports from India to its shores.
Speaking at the International Iron Ore & Steel Making Raw Materials conference near here Thursday, Economic and Commercial Counselor of the Embassy of China Peng Gang said efforts made by China and India were complementary, as far as the ore trade sector was concerned.
"India has been China's second largest source of imported iron ore till 2008 with the largest quantity of 107 million tonnes in 2009 and the largest market share of 25 percent in 2005,” he said.
“However, due to some reason, India’s exports of iron ore was continuing to drop while the share of Indian iron ore in China’s market was dropping accordingly in recent years," he added.
He said that in the first half of this year, Indian iron ore exports to China decrease to 15 percent from 25 percent in 2005.
Peng said that India was ranked as the third largest producer and exporter of iron ore in the world with more than 20 billion tonnes of rich ore reserves.
“China and India are complementary to each other in many ways, especially in ore trade sector,” he said.
The international conference comes against the backdrop of uncertainty in the mining sector as well as a potential ban on iron ore exports from Goa.
Source: India Vision
India’s IDBI Bank Ltd. (IDBI) says it cut a percentage point off its dollar funding costs by going to Hong Kong’s Dim Sum bond market, where appetite for a strengthening Chinese yuan is offsetting concern over emerging-market risk.
IDBI Bank sold 650 million yuan ($102 million) of three- year notes to yield 4.5 percent on Nov. 11, converted the proceeds to dollars and used swap contracts to eliminate any exchange-rate risk, said Melwyn Rego, an executive director at the state-backed lender. The yield on IDBI’s dollar bonds due February 2016 rose 101 basis points in the past three months to 5.17 percent, Royal Bank of Scotland Group Plc prices show.
“We have been able to raise money, on a swapped basis, 100 basis points finer than what we would have got had we accessed the regular dollar bond market,” Rego said on Nov. 16 in Mumbai.
Yuan deposits in Hong Kong more than quadrupled to a record 622 billion yuan in the last four quarters as the currency strengthened 4.8 percent versus the dollar, the best performance among 25 emerging-market currencies tracked by Bloomberg. Expectations for further appreciation are spurring demand for assets denominated in yuan.
The average yield of 3.65 percent for Dim Sum bonds compares with the maximum one-year deposit rate of 0.6 percent offered on the website of HSBC Holdings Plc’s Hong Kong unit.
IDBI Bank’s debt is rated BBB- at Standard & Poor’s, the lowest of 10 investment grades, and Rego said it’s become more costly for the lender to borrow dollars directly “because of very difficult conditions in international markets and the general flight to safety.”
The average yield on emerging-market companies’ dollar debt climbed 38 basis points, or 0.38 percentage point, in the past three months to 6.09 percent, JPMorgan Chase & Co. data show. It reached a two-year high of 7.14 percent on Oct. 4 as the MSCI Emerging Markets Index of shares sank to the lowest level since September 2009. The yield on 10-year U.S. Treasuries touched a record-low 1.70 percent on Sept. 22 the worsening debt crisis in Europe prompted investors to seek OUT the safest dollar- denominated assets.
IDBI Bank was the first Indian issuer of Dim Sum bonds and Rego said the lender will tap the market again, though “not in the immediate future.” Infrastructure Leasing & Financial Services Ltd., an Indian lender to road and power projects, plans to raise about $100 million through yuan-denominated bonds, Milind Patel, the deputy managing director, said on Sept. 20 in Mumbai.
“It makes sense from a financial engineering point of view that you can raise money in yuan if conditions are favorable,” Edmund Harriss, who oversees a $92 million Dim Sum bond fund as a London-based Investment Director at Guinness Atkinson Asset Management Inc. “You can do a very clever swap and get a pickup that way.”
IDBI Bank was able to secure cheap funds in the Dim Sum bond market in part because of its state backing, said Diederik Werdmolder, head of fixed-income portfolio management at SinoPac Securities (Asia) Ltd. in Hong Kong. The government owns 65.1 percent of IDBI, according to data compiled by Bloomberg.
Lafarge Shui On Cement Ltd., a joint venture between Lafarge SA (LG) and SOCAM Development Ltd., paid a 9 percent coupon on 1.5 billion yuan of Dim Sum bonds sold last week. Paris-based Lafarge, the world’s biggest cement maker, guaranteed the securities and has a BB+ credit rating at S&P, one level below investment grade. The company’s ratings were downgraded to junk by S&P, Moody’s Investors Service and Fitch Ratings this year.
“The bond market is still more interested in investment- grade issues and below-investment-grade issues require a relatively large risk premium, certainly in industries that are facing their own set of difficulties,” Werdmolder said. “The cement business is not very popular these days with the Chinese government trying to slow down the real-estate sector.”
China’s cabinet raised minimum mortgage rates and down- payment ratios for some home purchases in April last year, saying “more forceful” steps were needed to cool speculation. Authorities imposed housing purchase restrictions in about 40 cities in 2011. Premier Wen Jiabao said on Nov. 7 that the government won’t rein in efforts to cool the property market.
Five-year credit-default swaps protecting China’s sovereign debt fell two basis points yesterday to 146 basis points, according to data provider CMA, which compiles prices quoted by dealers in the privately negotiated market. The contracts pay the buyer face value in exchange for the underlying securities or the cash equivalent should a government or company fail to adhere to its debt agreements.
The yuan weakened 0.16 percent this week and 0.03 percent today as of 10:44 a.m. to 6.3526 per dollar in Shanghai, according to the China Foreign Exchange Trade System. The currency will gain 4.7 percent to 6.07 by the end of 2012, based on the median estimate of 21 analysts surveyed by Bloomberg. The yield on the 3.26 percent government bond due in June, 2014, added two basis points to 3.13 percent.
Lafarge Shui On’s coupon matched the highest rate paid since the Dim Sum bond market began in 2007. Credit China Holdings Ltd. sold 100 million yuan of two-year bonds with a 9 percent coupon on Sept. 1.
The yield on China Shanshui Cement Group Ltd. (691)’s 6.5 percent Dim Sum bonds due in July 2014 was 9.53 percent yesterday, down from a record 15.63 percent on Oct. 6, RBS prices show. The rate on Guangzhou R&F Properties Co.’s 7 percent notes due April 2014 has declined to 20.55 percent since peaking last month at 25.51 percent. The average yield in the Deutsche Bank AG Offshore Renminbi Bond Index dropped two basis points to 3.65 percent yesterday, up 11 basis points this month and 191 in 2011.
“Clearly, as more issues come to the market, people are going to be more selective,” said Harriss at Guinness Atkinson. “The trend will surely be for higher yields and more robust structures.”
for more read article at sourced Bloomberg
Painting a bleak picture, the steel ministry said that iron ore exports will be under pressure and overall growth of the industry may be affected due to global competition and market forces over the next five years.
Dr AS Firoz chief economist ministry of steel economic research unit said that it is not government policy but market forces that will result in a decline in iron ore exports from the country, which are currently pegged at 120 million tonne.
He said that "It (iron ore export) would decline to 30 to 40 million tonne by 2016.”
Dr Firoz said the steel and raw material industry was passing through a tough phase and new ideas are required to steer it ahead. He added that "Global economies are not doing well. The Chinese economy will also come under pressure, resulting in the reduced demand of iron ore, as it will also affect growth of the steel industry.”
The official claimed that "Even if there is a demand, the exports would be an unviable proposition, considering the infrastructural costs. If the price is USD 100 per tonne of iron ore, most of the mining companies could able to achieve only a break even adding that taking into consideration current road and railway freight charges, nobody would be making money.”
(Sourced from ET)
Thermal coal prices at major ports around Bohai Sea headed down for the first time since September 7.
The latest Bohai-Rim Steam-Coal Price Index or BSPI indicates that the average price of thermal coal with calorific value of 5500 kilocalories per kilogram dropped by CNY 1 per tonne to CNY 852 per tonne in the week ending November 16.
Industry sources reported that the price showed continuous rise from early September to late October and kept flat for three weeks in a row thereafter. At Qinhuangdao port, the price of 4500 kilocalories per kilogram and 5500 kilocalories per kilogram thermal coal was down CNY 5 per tonne from a week earlier to CNY 645 per tonne to CNY 655 per tonne and CNY 845 per tonne to CNY 855 per tonne respectively, the first drop in several weeks, and that of 5000 kilocalories per kilogram and 5800 kilocalories per kilogram reached CNY 745 per tonne to CNY 755 per tonne and CNY 900 per tonne to CNY 910 per tonne.
Analysts said that the sharp decline in coal inventories at Qinhuangdao port, caused by the overhaul of Daqin railway, triggered growing concerns about coal supply at China main ports and pushed up coal prices. After the rail line resumed full operations, coal stockpiles at the ports recovered and alleviated coal supply tension, which as a result cooled down coal prices. What’s more, China key power plants currently have high stock level, sufficient for 20 days of consumption.
Energio is developing a world class iron ore opportunity at the Agbaja Iron Ore Exploration Project in Nigeria, which has resource potential of 1 to 2 billion tonnes of iron ore.
Kogi State is home to the largest iron and steel factory in Nigeria with the full backing of The Federal Government of Nigeria. The licenses have close proximity to existing rail road and power infrastructure provides potential advantages in reduced capital expenditure and allows fast track project development.
Energio aims to complete field programs and drilling program in 2011 with a target of maiden JORC resource in first quarter 2012. Energio has a strong cash position of USD 4.729 million which is sufficient to complete the current round of drilling and take Agbaja to initial resource estimation in mid 2012.
The company will seek approval at the Annual General Meeting to be held on 30 November 2011, for a change to its activities. Energio has exercised its call option with TGP to acquire 100% of the fully paid ordinary shares in KCMH Australia from TGP. KCMH Australia is the holding company of KCM Nigeria which owns of a package of iron ore licenses in Kogi State, Nigeria.
KCMH Australia holds 75% of the shares in KCM Nigeria having recently exercised an option to acquire a further 5% shareholding in KCM Nigeria in return for making cash payment of USD 412,000.
KCMH Australia is an Australian privately owned company which has been focused on acquiring iron ore Licences in Nigeria since 2007. TGP holds 100% of the shares in KCMH Australia.
Exploration activity in the Galilee Basin is hotting up due to its potential to host large coal deposits and Baru Resources is well placed to take advantage of this with drilling soon to commence at West Galilee.
Baru Resources is off the starting block at its north Queensland Coal Project with preparations for the first round of drilling at the West Galilee Project well advanced and negotiations with local farmers progressing.
The West Galilee Project comprises six contiguous, granted exploration coal permits and one application exploration coal permit covering an area of 6,732.4 square kilometres.
The project area is some 375 kilometres east of Mt Isa and 16 kilometres west of the town of Richmond, close to the northern margin of the Eromanga basin, which overlies the coal bearing Galilee Basin and in part the newly defined Millungera Basin.
It is located 110 kilometres west of Guildford Coal’s 1.036 billion tonne Hughenden Project, which lies at the northern end of the Galilee Basin.
Historically there has been very little exploration for coal deposits within and around the project area and a majority of the drilling in the surrounding areas were either targeted at petroleum or stratigraphic (geological) holes.
However, there has been increasing interest in the northern portion of the Galilee basin over the last 12 months.
The potential of the Galilee Basin to host large coal deposits is evidenced by Linc Energy’s project area in a similar basin margin stratigraphic setting, 120 kilometres to the east, with Indicated and Inferred Resources of thermal coal respectively of 161.4 million tonnes and 78.3 million tonnes.
Perth Now reported that Fortescue Metals Group has claimed BHP’s crown for shipping the biggest load of iron ore to ever leave Port Hedland.
Chinese iron ore behemoth MV Wugang Innovation was loaded with 247,906 tonnes of iron ore recently.
According to the Port Hedland Port Authority, FMG topped the previous record, set by BHP in June, by around 48 tonnes.
Mr N Power CEO of FMG said that the company had been breaking records across the port in recent weeks loading the highest number of tonnes in a 24 hour period through a single ship loader (210,981 tonnes) breaking the record for the highest number of tonnes loaded through a single shiploader over a seven day period (1.365 million tonnes).
Mr Power said the record setting is an examples of the company’s “can do” attitude.
(sourced from perthnow.com.au)
Reuters reported that Ghana will seek to boost revenues from its mining industry next year by hiking taxes, according to a text of the 2012 budget delivered to parliament.
The corporate tax rate on miners will increase to 35% from 25% and a separate 10% tax on windfall profits will be introduced.
The move follows talks between Ghana's government and gold miners last month, in which the government proposed new ways for the country to benefit from the soaring price of the precious metal.
Ghana is Africa's second-biggest gold producer nation and the International Monetary Fund said in October it had recommended the country consider increasing taxes or introducing new ones to boost revenue.
Ghana, also the continent's newest oil producer and the world's No 2 cocoa grower, expects GDP growth of 9.4% in 2012 from 13.6% in 2011.
(Sourced from Reuters)
Thursday, November 17, 2011
Mumbai: JSW Steel had plans to transfer thermal coal mine to the power arm, but the boards have yet to discuss the transfer.
Sajjan JindalJSW Steel had plans to transfer thermal coal mine to the power arm, but the boards have yet to discuss the transfer.
One may call it the curious case of the coal mine in Mozambique for the $7-billion diversified JSW Group.
At a time when its power arm, JSW Energy, is severely hamstrung due to the lack of captive coal resources to fire its thermal power portfolio, analysts and company shareholders are puzzled at the delay in transferring an existing coal mine within group companies.
Two years ago, during launch of the Rs 2,700-crore JSW Energy IPO, Sajjan Jindal, chairman of the group, had said JSW Steel was looking at selling the Mozambique coal mines to group company JSW Energy for Rs 300 crore. The decision was taken after it was discovered the majority of coal in the mine was thermal, more suited for power production.
Steel companies use coking coal. Considering JSW Energy did not possess any captive resources, the Mozambique mines were considered strategic.
But in the last two years, neither board has been able to finalise the transfer of the crucial asset.
When asked, Pramod Menon, CFO, JSW Energy, said the respective boards were yet to take up the transfer. "It is an issue which has to be considered by the boards," he said.
When asked why the two boards hadn’t discussed the issue, he said, "They are two separately-listed entities and one of them has an asset which belongs to them. Today, we have not yet considered the asset from the (JSW) Energy's perspective, nor have we got anything from (JSW) Steel if they would like to sell."
A corporate lawyer, who isn't allowed to speak to the media, said, "Since it is a non-core asset there should not be an issue in the deal, provided both boards agree upon the sale and the pricing, etc."
He said it was normal for companies to have such transactions within group companies. "There are a lot of asset transfers that happen within companies. But they have to take care that the deal is at arms-length."
JSW Energy said there were logistic challenges in Mozambique and the company would look at the merits of the projects before it is offered to them. Sajjan Jindal is the chairman and managing director of JSW Steel, as well as JSW Energy.
JSW Steel also has its own captive power plant of 300 Mw, which would be commissioned soon. The company might be keeping the coal block for their own use, Menon said.
Questions sent to JSW Steel remained unanswered.
An analyst tracking the sector and the company, said, "JSW Energy has been looking to acquire coal assets abroad and the Mozambique coal block transfer was definitely a positive story. However, we are yet to see the two companies make the deal."
Volatile coal prices have been consistently denting the profitability of JSW Energy, as even now the company predominantly relies on spot market deals to source raw material, having no long-term fuel security.
Imported coal prices have risen 30 per cent in the last one year and availability from Indian sources like Coal India have become extremely unreliable.
But what seems more odd is the fact, when the resource crunch is severely hurting the company's growth, there is no work ongoing also to develop the Mozambique mines and they are lying idle.
For the quarter ended September, the company's fuel costs grew 86 per cent on soaring spot coal prices, resulting in a net loss ofRs 109 crore, even as its income grew 18 per cent. A depreciating rupee further hit the company's earnings.
In the last one year, JSW Energy stock was down 60 per cent. On Wednesday it closed at Rs 46.4/share.
However, L K Gupta, deputy managing director, JSW Energy, said the company will definitely spring back to profitability in the third quarter as coal prices were coming down and its various expansion plans were getting commissioned.
Talking about efforts being undertaken to identify new sources of coal. Menon said that there is a drop in coal indexes in North and South America and the company is finding very attractive rates to tie up coal. "In terms of acquisitions, we are still looking out for opportunities. As and when we come across any asset which is making economic sense and in terms of size which we can chew, we will look at it. At this point in time we are evaluating assets but there is nothing that we can talk about.""For acquisitions, the question is what kind of landed cost of coal we are looking and if the acquisition can be a long term one.
Our balance sheet is very strong. Our consolidated net debt gearing is 1.7 times. So, in terms of leveraging and buy-outs it will not be an issue. We can look at an acquisition in the region of $250-$500 million," Menon added. Earlier this year, the company made a failed attempt at buying Canadian coal miner CIC Energy's asset in Botswana for $418 million. The company even extended the deadline to complete the deal once but decided to call off the deal. There have been rumours that JSW Energy might bid for New Hope of Australia. However, the company denied the news categorically.
New Delhi: Markets were trading on a flat note in the noon deals on back of the selling pressure visible in oil & gas, PSU and power stocks. The Sensex was down 25 points at 16,750, and the Nifty was at 5,015, down 14 points.
Meanwhile, on the economic front the government released the inflation data for the week ended November 5. The primary article inflation eased to 10.39% versus 11.43% on a weekly basis. Food article inflation came in at 10.63% versus 11.81% and the fuel group inflation was at 15.49% compared to 14.5%.
Back to markets, Coal India was the top loser among the Sensex stocks. The stock was trading lower by 2.4% near its 8-month low price of Rs 305. Maruti Suzuki was down 2.2% at Rs 969 and the index heavyweight Reliance Industries was at Rs 833, down nearly 2%. Wipro. ITC, Tata Motors, J P Associates, ONGC, Jindal Steel, BHEL and Tata Power were also among the losers down 0.5-1.2% each.
On the other hand, Hindalco, Tata Steel, Sun Pharma, SBI, Cipla, DLF, Hero MotoCorp and ICICI Bank were among the gainers.
Among the individual stocks, Kohinoor Foods has gained nearly 4% in morning trades after the company posted a sharp jump in its net profit at Rs 212 crore for the quarter ended September 30, on account of sale of part of its business.
Patni Computer Systems has rallied 18% to Rs 459 after its promoter - iGate said it plans to delist shares of its Indian unit to obtain full ownership of the company. iGate holds around 80.4% stake in the company.
On the sectoral charts BSE Oil & Gas index was the top loser, down 99 points to 8,490. PSU index was at 7,023, lower by 32 points. FMCG, Power, Consumer Durables, Healthcare and Auto index were also among the losers. At the same time, realty, banking, metal, IT and capital goods stocks witnessed some bit of buying.
From the realty space, HDIL was the top gainer, up 3.3% to Rs 77. Sobha Developers, Anant Raj Industries, Indiabulls Real Estate, DLF, Phoenix Mills and Parsvanath Developers were also among the prominent gainers.
The broader markets was also flat. The BSE mid-cap index was up 8 points at 5,859 and the small-cap index was at 6,377, up 2 points.
The overall breadth was negative as 1,404 stocks declined while 1,151 stocks declined.
* Says Q3 group production up 35 pct to 23 mln tonnes
* Berau Coal sales up 20 pct to 5.5 mln tonnes
* Realised prices for Q3 of $94 per tonne, up 32 percent
LONDON, Nov 17 (Reuters) - Coal miner Bumi Plc , a joint venture between Nat Rothschild and Indonesia's influential Bakrie family, said it was on track to hit its output target of 86 million tonnes in 2011 after a 35 percent rise in production in the third quarter.
Over the first nine months of the year, the group's production has totalled 62 million tonnes.
Realised prices for the group over the quarter were $94 per tonne, up by almost a third on the same period a year ago.
Subsidiary Berau Coal saw sales rise 20 percent compared with the same period last year while coal output increased 23 percent. Berau's 2011 output target is on track and its longer term expansion plan is on schedule, the group said.
Bumi Plc also owns a 29 percent stake in Jakarta-listed PT Bumi, which controls the KPC and Arutmin coal mines.
Relations between Rothschild and his Indonesian partners have deteriorated in recent weeks, with a leaked letter for Rothschild last week calling for a "radical cleaning up" of corporate governance at PT Bumi in a show of frustration.
The Bakries have since gone public themselves with their own criticism of Rothschild's broadside.
Bumi Plc, which began life as Rothschild vehicle Vallar, gained a premium London listing earlier this year.
Its shares have since dropped more than 20 percent, slipping below 850 pence in September in a dip that triggered the mandatory repayment of a loan and almost forced the Bakries into default, before they signed a deal earlier this month to sell half their stake.
Europe’s current economic woes are weighing heavily on the steel industry. Tata Steel is closing a facility in Wales, while ArcelorMittal has idled and closed a number of European mills and furnaces. ArcelorMittal’s chief financial officer says that it is aiming for a global production capacity of around 71% in Q4, and that they are seeing “more drops in shipments in Europe than in North America.” The impact of lower steel output in Europe is already being felt in the seaborne market. Brazil exported 4.7 MT of iron ore to Europe last month, a 12.2% year-on-year decline. In the years before the 2008 recession, around 30% of Brazil’s iron ore exports went to Europe. After plummeting in 2009, demand recovered enough last year to bring Europe’s share back up to around 20%. Based on the current slowdown in European import demand, however, it is possible that both the volume and share of Europe’s iron ore imports from Brazil will be lower than in 2010.
Source: ICAP Shipping
The South African Coal benchmark price, API4, has recently been trading below $110/t, after spending most of the year closer to $120/t, due to weak global demand for seaborne thermal coal. Many market participants have expected that dangerously low utility coal stocks in India would provide some support to prices, but Indian utilities have not picked up their pace of buying, which, might take a while to recover unless, see more states increase power tariffs, said Barclays in a research note.
According to the ICMW, an especially wet monsoon season has caused Indian coal production in August to fall by more than 15% y/y and flooded coal stocks. October was then marred by regional political protests and industrial action that further hampered the recovery of domestic production. The reduction in production and lack of imports have led to domestic coal shortages, which in turn has resulted in endemic power shortages.
According to a CEA report, as of 7 November, 38 thermal plants in the country have coal stocks at highly critical levels (less than 4 days). While a lack of imports has contributed to the shortfall, there is an incongruity in that India still boasts high port stocks, currently at more than 10mt. One of the reasons is that power generators are reluctant to burn the expensive seaborne Coal to resolve the power shortage since they are currently negotiating with the state governments for an increase in power tariffs.
Moreover, power utilities are also reluctant to burn the expensive coal since the regulated power prices have not fully kept pace with the high level of coal prices seen this year. In FY 2010-11, average power rates rose 6.5%, while the cost of generation increased by 16.5% in the period.
Moreover, with Coal India raising domestic coal prices, the squeeze on power plant profits has strengthened. Recently, news of state-specific increases in power prices has started to appear. At least 8 out of the 28 states and 1 territory (Delhi) have either implemented or proposed power tariff hikes in the past three months.
Most notably, Maharashtra, the state with the largest thermal generation capacity, has announced power tariff hikes of roughly 10% in early November. Nonetheless, despite these hikes, the scale of increase in input costs still outpaces current power prices in most of the country.
As a result, although the recent power tariff hikes, in theory, should provide some incentive to re-open the window for imported coal in India, there is still some way to go for those tariffs to rise before the utilities break even, and thus the increase in imports could be slow to materialize.
Source: Commodity Online
Iron ore rose to its highest in nearly a month as spot prices gained for a 12th day in a row, with firmer steel prices in top consumer China encouraging more buying of the raw material and helping it recover from last month's slu
Iron ore with 62 percent iron content climbed nearly 6 percent to $146.30 a tonne on Tuesday, the highest since Oct. 19, according to the Steel Index .IO62-CNI=SI.
It has now gained 25 percent in the past 12 trading days, after sliding nearly 31 percent in October when Chinese mills cut purchases of iron ore as lower steel prices reflected weaker demand.
Steel prices in China's spot market rose last week, with rebar rising 0.7 percent to average 4,364 yuan ($688) a tonne and hot-rolled coil increasing 0.2 percent to 4,230 yuan, based on estimates by Bank of America-Merrill Lynch.
Profit margins at Chinese steel mills have similarly improved, with the industry average margin for rebar rising to 162 yuan a tonne from 135 yuan the previous week and 61 yuan in late October, according to the BoA-Merrill Lynch data.
"As long as steel mills' margins are positive, it makes economic sense for them to continue to produce and if they're eating into their iron ore inventories that means they need to keep buying ore, even if it's only hand to mouth," said an iron ore physical trader in Singapore.
"Based on current steel prices and with margins staying positive, we believe iron ore can go beyond $150."
Offer prices in China rose further on Wednesday, with cargoes from No. 1 producer Australia up $2-$3 a tonne, according to Chinese consultancy Umetal.
Australian Newman iron ore fines increased $3 to $148-$150 a tonne and Pilbara fines were also quoted $3 higher at $144-$147, Umetal said. The prices include freight cost.
BHP Billiton sold Newman fines at $149.20 a tonne at a tender on Tuesday, while Rio Tinto sold Pilbara fines at $144.50, also at a tender, traders said.
Limited availability of spot cargoes has also been supporting the current run-up in iron ore prices, with Indian exports restrained by logistical problems and higher production costs.
The cost of producing higher grade iron ore in India, the world's No. 3 iron ore exporter, stands at around $120 a tonne, free on board basis, more than double the cost in Australia and Brazil, the two biggest producers.
"But traders and mills have been very keen to buy for some time, and the sharply improved levels achieved on cargoes offered is a reflection of that pent-up demand," said Oscar Tarneberg, senior iron ore analyst at Steel Index in Shanghai.
Steep gains in prices of iron ore forward swaps investor optimism spot rates will move higher further in the near term.
The Singapore Exchange-cleared December contract rose the most on Tuesday, up $5.37 to $143.37 a tonne. The January contract gained $3.87 to $142.87 and February climbed $4.08 to $142.25.
Source: Reuters via hellenicshippingnews
BS reported that Odisha has again sought an immediate ban on exports of the mineral ore, saying such a move would bring down prices of ore and help regulate mining activities.
The state chief minister Mr Naveen Patnaik has reiterated his demand for ban on iron ore exports, seeking intervention of prime minister Dr Manmohan Singh on the matter.
Mr Patnaik said in his letter to the PM that “The boom in iron ore prices in the last decade has created perverse incentives for mining activities to be carried out in an unregulated manner. A ban on the export of iron ore should be immediately imposed. This will not only bring down domestic prices of iron ore but also encourage local industries to invest in technologies to utilize the iron ore prices presently being exported, besides ensuring that mining activities are regulated and sustainable.”
He said “The ban on iron ore exports is necessary as the demand for steel and its production in the country are both expected to grow at an annual rate of 10% or more on an average in the coming years.”
Mr Patnaik had earlier urged the Prime Minister to announce a ban on iron ore exports and had also raised this demand at the meeting of the National Development Council held on October 22.
(Sourced from BS)
China’s coal imports fell 18 percent in October from the previous month after an increase in stockpiles at power plants, according to the China Coal Transport and Distribution Association.
China, the world’s biggest coal consumer, imported 15.7 million metric tons of the fuel last month, the association said in a statement on its website today, citing the General Administration of Customs. That was 28 percent higher than a year earlier. The customs bureau is scheduled to release official October coal import data Nov. 21.
The nation bought record amounts of coal in September to replenish inventories at heating plants and power stations and to meet winter demand. Power generation, which is more than 70 percent fueled by coal, fell to the lowest in eight months in October.
Stockpiles at China’s largest power stations rose 6.3 million tons from the end of September to 70.9 million tons as of Oct. 18, the equivalent of 20 days of consumption, according to the National Development and Reform Commission.
The nation’s industrial production growth of 13.2 percent last month was the least in a year and missed economists’ median estimate of 13.4 percent. Factories consume more than 70 percent of the nation’s electricity.
South African freight logistics group Transnet said that it was rolling out a scheduled railway service that would stick to strict timetables, replacing its current system in which trains only depart when they are loaded.
Transnet plays a key role in Africa's largest economy, moving crucial coal exports to the Richards Bay Coal Terminal for movement to growing Asian markets.
Transnet in a statement said that "Given the fact that Transnet Freight Rail is running without much excess capacity, better planning and scheduling tools are needed to effectively manage the scarce resources, in order to cope with the rapidly increasing demand for railway transportation.”
Spokesman Mr Sandile Simelane said the group was aiming to have the schedule in place across the board by the middle of next year but it has launched fixed scheduling for four corridors: Phalaborwa/Maputo & Richards Bay for magnetite, Welgedag/Palmford for Majuba Coal, Uitkyk/Komatiepoort for TCM Coal and Phalaborwa/Richards Bay for rock phosphate.
The current system, known as tonnage-based dispatching, was aimed at minimising the total number of trains needed by maximising their size but Transnet said that “In practice it disrupted the efficient utilisation of crews, locomotives and equipment."
Mr Simelane said the new system would be run like an airline: customers would have to be on time or else the plane would leave without them instead of waiting until it was full.
(Sourced from Thomson Reuters)
Brazilian magazine Exame reported Wednesday that Latin American steelmaker Ternium has offered to pay 40 reais (US$22.6) per share to current stakeholders Camargo Correa and Grupo Votorantim to acquire their combined 26 percent stake in Brazilian flat rolled steelmaker Usiminas.
Ternium's reported offer price is an approximately 70 percent premium of the current value of Usiminas' shares as of Wednesday evening. Exame's reports also indicate that Camargo and Grupo Votorantim have already voiced their willingness to sell their stakes at Ternium's offer price.
Tags: coated , hrc , crc , galvanized , Luxembourg , Brazil , flats , European Union , Europe , South America , steelmaking , M&A
Reuters, citing two sources familiar with the matter, reported that a unit of the Bank of China, one of the country's top four banks, is planning to kick off an iron ore swaps business next year in a bid to tap growing demand for hedging from steel mills and traders.
BOC International, the investment banking arm of the state owned bank, aims to provide brokerage services, proprietary trading of iron ore swaps as well as physical trading.
As per report “The bank plans to start an iron ore swaps business in the first half of next year, with the aim of providing hedging services for domestic players first. It also plans to apply for clearing membership in the Singapore Exchange SGX next year.”
The source said that BOC International has also applied for category two membership on the London Metal Exchange, which would give it access to all types of LME business except ring trading.
BOCI was approved as a clearing member of CME Group in March. The CME and SGX both offer clearing of iron ore swaps, with the bulk of globally traded volumes cleared on the SGX.
The entry of a major bank from the world's top iron ore buyer could bolster liquidity of the nascent swaps market, and signal a further warming to derivatives in China's state dominated steel sector as prices of the main raw material become more volatile.
Launched in May 2008, iron ore swaps are cash settled contracts that allow steelmakers and traders to hedge price risks. The volume of globally traded swaps soared to an all-time high above 9 million tonnes in October, with Singapore Exchange clearing a record 7.5 million tonnes, as prices gyrated wildly.
(Sourced from Reuters)
St. Louis, Missouri-based Peabody Energy, the world's largest private-sector coal company, announced Wednesday that its subsidiary PEAMCoal Pty Ltd has acquired over 90 percent of all of the shares of Australian metallurgical coal producer Macarthur Coal. By acquiring 90 percent of the shares, PEAMcoal is compulsorily able to purchase the remaining shares.
Other shareholders such as South Korea's POSCO, which owns a 7.25 percent stake, will be forced to sell its shares to Peabody. The purchase price will also increase to A$16.25 (US$16.39) per share, up from A$16.00 (US$16.14) per share--Peabody had previously agreed to increase its offer price per share if it was able to acquire a 90 percent stake.
Tags: Met Coke , Korea S. , USA , Australia , Korea , Macarthur Coal , POSCO , raw mat , East Asia and Pacific , Oceania , Far East , North America , mining , M&A
It is reported that the awarding of a coal exploration license to a former union leader by the disgraced former labor minister Mr Ian Macdonald is set to be investigated by the corruption watchdog after an independent report found there was 'a circumstantial case of wrongdoing'.
The energy and resources minister Mr Chris Hartcher introduced a resolution to Parliament requiring the Independent Commission Against Corruption to investigate the circumstances surrounding the granting of the license. He told Parliament the report showed there was a clear departure from proper practice. He added that "There have been serious errors of judgment on the part of Ian Macdonald, with a cloud hanging over the dealings between him and his union mate."
In July 2011, the Department of Resources and Energy commissioned Clayton Utz to review the circumstances surrounding the awarding of the license by Mr Macdonald, who was minister for mineral resources in the former Labor government.
Mr Macdonald, who resigned from Parliament last year over an expenses scandal, awarded the license to Doyles Creek Mining, a company chaired by Mr John Maitland, a former national secretary of the Construction, Forestry, Mining and Energy Union who also had an 11% shareholding. Doyles Creek Mining was taken over by NuCoal resources last year and floated on the stock exchange for USD 100 million, eventually inflating Mr Maitland's shareholding from USD 165,000 to about USD 10 million.
The report, revealed by the Herald, found that there were other companies interested in an exploration license at Doyles Creek, in the upper Hunter. But Mr Macdonald invited Doyles Creek Mining to apply for the license, failing to put it to tender as required under departmental guidelines.
The report finds that Mr Macdonald's decision 'may well be voidable on the basis of it being in excess of jurisdiction, bad faith or manifestly unreasonable. It recommends the government establish a special commission of inquiry into the granting of the license.
The resolution, which passed the Legislative Assembly but has yet to be considered by the upper house, requires the ICAC to investigate the circumstances surrounding the application and allocation of the license and the making of profits, if any, by the shareholders of NuCoal Resources NL as proprietors of Doyles Creek Mining Pty Limited.
It asks the ICAC to advise on action the government should take and whether it should begin action against any individual or company. The government has chosen to ask Parliament to refer the case to the ICAC as it ensures that the commission must ''fully investigate'' the matter.
(sourced from www.smh.com.au)
According to the Lake Carriers' Association, iron ore shipments on the US Great Lakes fell in October, dropping 11 percent from September to 5.7 million nt. Nonetheless, year-on-year iron ore shipments were still up 13 percent. Shipments from US ports totaled 5.1 million nt, an increase of 18 percent compared to a year ago. However, loadings at Canadian ports slipped 16.3 percent from a year ago. Through October the iron ore trade stands at 48.8 million nt, an increase of nearly 11 percent compared to year ago levels.
Additionally, shipments of coal on the US Great Lakes totaled 3 million net tons (nt) in October, an 11 percent decrease from September and 9.6 percent less than in October 2010. The trade slumped even more--20.7 percent--when compared to the five-year average for October. Year-to-date, the coal trade stands at 22.1 million nt, a decrease of 14.1 percent compared to a year ago.
Tags: Met Coke , iron ore , Canada , USA , raw mat , North America , trading , freight
The movement of wagons, both empties and loaded, has remained suspended in iron ore rich Joda-Barbil area in Odisha since Monday following agitation by truck owners.
They are protesting against the Odisha government’s decision clamping restriction on the movement of goods vehicles carrying exports and instead favouring larger rail movement.
The Government decision should impact only the movement of iron ore for exports but the agitators have stalled all freight movement by rail, it is learnt. As a result, the loading and movement of iron ore for TATA Steel at Joda and Steel Authority of India Ltd at Bolani believed to have been hit.
TATA Steel loads about four rakes a day and SAIL about three rakes in the area.
The Odisha Government’s objective appears to be pious. The sharp rise in the number of vehicles in the Joda-Barbil area, particularly clogging the National Highway 215, has thrown up a plethora of problems.
Since 2006-09, according to one estimate, the number of six wheelers operating in the area has increased 100% and 10 wheelers more than 70%, many times more than the permissible limits.
The roads are getting damaged, the environment polluted and, more important, others, ie other than those involved in transporting iron ore from that area, are unable to use the road. There is no way even a medical unit can move in an emergency.
Capping it all, the road transportation of ore means that a much costlier fuel is being burnt to carry a much cheaper mineral.
On the other hand, one additional rake loading of ore, it is estimated, will reduce traffic snarl by at least one kilometre, if not more.
Interestingly, the Odisha Government’s decision favoring larger rail movement of ore for exports has brought little cheer to two zonal railways, namely, South Eastern Railway and East Coast Railway, active in the area.
(Sourced from BL)
Wednesday, November 16, 2011
Thailand's biggest coal miner Banpu Plc expects average coal prices in 2012 to be higher than the price of USD 97 per tonne in 2011, thanks to higher regional demand.
Ms Somruedee Somphong CFO of Banpu Plc said that the company would secure 50% of next year's coal sales contracts by next month. The company this year expects to sell 40 million tonnes of coal, with 25 million from its five mines in Indonesia. Of the 15 million tonnes sold in Australia, 35% is exported.
Ms Somruedee said that the target next year would be 16 million tonnes with 40% exported. She added that "This will cause average selling prices to increase, as export prices are higher than prices in the domestic market."
Banpu, which last year acquired Australia's Centennial Coal Co, expects a minimal impact from Australia's new clean energy act, which will impose carbon taxes starting in July. It estimated the law would add only 30 cents a tonne to Centennial's cost of production.
Meanwhile, Banpu expects its most recent acquisition of Perth based Hunnu Coal to be finalized by December 2011. Production will start in 2013 at 3 to 5 million tonnes per year initially.
Banpu's net profit in the third quarter of this year totaled THB 4.21 billion, dropped by 68.4% YoY from THB 13.28 billion. However, last year it had an extraordinary gain from selling an 8.72% stake in PT Indo Tambangraya Megah Tbk worth THB 11.7 billion. Net profit in the third quarter was down 33% from the second quarter.
Nine month consolidated net profit was THB 16.53 billion as compared with THB 19.76 billion in the same period last year. Sales revenue in the third quarter totaled THB 30.69 billion, a rise of THB 16.99 billion or 124% from the same period last year due to a 117% increase in volume to 10.94 million tonnes.
The average selling price of coal from the company's Indonesian mines rose by 27% YoY in the third quarter to USD 98.99 per tonne. Revenue from coal sales is 96% of total sales revenue, which includes THB 20.7 billion from sales in Indonesia, THB 8.83 billion from Australia and THB 8 million from Thailand, where the company's mines are almost depleted. Revenue from electricity sales from its three plants in China as well as other revenue totaled THB 1.15 billion or 4% of total sales.
Mr Chanin Vongkusolkit CEO of Banpu Plc said that profit margin in the third quarter for the coal business was 47%, with higher sales in Indonesia and rising prices.
(source from Bangkokpost)
Wed, Nov16, 2011 sourced:India Infoline
India Cements has reportedly acquired a coal mine in Indonesia, which is expected to go on stream by January 2012, for $20 million.
According to reports, India Cements is also in the process of setting up a 50 Megawatt power plant near Tirunelveli in Tamil Nadu. Sluggish growth of cement, increase in fuel and power cost, higher interest rate is the concern of the company and the industry as well. While the input cost have increased 7-8%, output cost rose only 2%.
N Srinivasan, vice chairman and managing director, India Cements was quoted as saying “The coal mine acquisition is a strategic decision, it will reduce our exposure to the fluctuating coal price internationally. Despite a 4% fall in demand across south India, the company managed to post good profit. Its capacity utilisation was around 68%, due to the excess capacity in South India, which is currently around 100 million tonnes.”
Net profit of the company rose 105% to Rs 700mn as compared with Rs 340mn a year ago. The company posted around 30% increase in net sales to Rs 10,920mn as against Rs 8,430mn during the same quarter last year, reports added.
According to data on Bloomberg from researcher IHS McCloskey, coal export prices at Richards Bay, South Africa, the continent’s biggest terminal for shipping the fuel, fell to the lowest level in almost a year.
Prices decreased USD 1.83, or 1.7% last week to an average USD 106.30 a metric tonne, the least since November 26th 2010, following a 1.2% decline in the week ended November 4. The price quoted is on a free on board basis, excluding delivery costs.
(Sourced from Bloomberg)
Baobab Resources has released its full year results statement at midday, as the group's shares were trading up nearly 14%.
The group told investors that the pending Ruoni South resource statement will ensure that Baobab will meet or exceed its 300 million tonne iron ore resource target at the Tete project in Mozambique.
Baobab Resources said that a further resource statement based on current work programs at Tenge is scheduled for early 2012. This is likely to add substantially to the Tete project's existing global resource inventory, pushing it well beyond perceived base requirements.
Mr Ben James MD of Baobab Resources told investors that Baobab is rapidly approaching a watershed in the development of the Tete project.
He explained that following an aggressive 38,000 meter drill program, the group's the 300 million tonne resource base milestone is likely to be met and surpassed in the coming weeks. He said that "A Scoping Study, also due in November, will form the foundation upon which the Pre Feasibility Study will continue to build during 2012."
He added that "Investors may look forward to a regular flow of substantial news over the coming months as the company consolidates its position as a successful Mozambique focused explorer unlocking the country's mineral wealth."
Meanwhile, Mr James said that work is progressing well at the Monte Muande magnetite phosphate deposit, where there is an estimated 200 to 250 million tonne exploration target. This potential resource is estimated to an average depth of 40 meters.
Baobab said it expects to have results from a 2,000 meter drill program in November 2011. This work cements the group's position in the joint venture with North River Resources. By completing the program, Baobab will earn an initial 60% stake in Monte Muande. Additionally the group is also carrying out preliminary coal exploration.
This is taking place on the Rio Mufa area, part of the Muande joint venture, and also to the south of the Tenge Ruoni area of the Tete project.
Mr James said that "These areas represent a very real and exciting opportunity for Baobab to establish a firm footing in the flourishing Mozambique coal sector. The company believes that the development of coal assets will add substantially to its evolving iron and steel aspirations."
According to Mr Baba Kalyani former president of Indian forging association and CMD of India’s largest manufacturer and exporter of automotive components Bharat Forge Limited, the Association of Indian Forging Industry is demanding transparency in iron ore distribution procedures to create more value addition.
Mr Kalyani on the sidelines of the 20th International Forging Congress said that “We find pleasure in exporting our precious iron ore to China rather than converting it into steel. This is where you need a policy perspective where we need transparency.”
Mr Kalyani said “India has a policy that encouraged exports of iron and discouraged steel making. For instance, China has imposed a 40%t export duty on cooking coal because they do not want cooking coal to be exported out of the country.”
Replying to query, he said he was not demanding any policy on steel pricing, but was in favour of creation of a policy for national interest.
Mr Deven Joshi president of AIFI said that the total production of forgings in the country, which was 1.8 million tonne in 2009-2010, increased to 2.3 million tonne during the year ended March 2011 and is expected to touch 4 million tonne by 2014.
The Indian forging industry is expected to grow exponentially as the automobile industry is set to triple the output to 10 million vehicles a year in the next 8 to 10 years. The INR 15,000-crore Indian forging industry is set to witness a year on year growth of over 20% besides attracting investments to the tune of USD 3 million by 2015 for capacity expansion.
(Sourced from BS)
In an interview with ET Now, Mr NC Jha CMD of Coal India, talks about the company's performance.
ET Now - Walk us through your quarterly numbers and how things have panned for Coal India for the quarter gone by?
Mr NC Jha - The profit in the second quarter of this year has been about 2593 crore compared to 4143 crore in the first quarter. But compared to the same period previous year it has been about 74% increase. The same period previous year was 1494 crore, so there was an increase of 199 crore and 74% increase. If you consider the half yearly basis then it has increased by about 2717 crore which is 68% increase over the previous year.
ET Now - What about the major factors leading to the decline that we have seen in coal production for the second quarter, your off take of coal that as well has been very low?
Mr NC Jha - Yes, second quarter results have shown depressed coal production as well as offtake and this is largely because of excessive rainfall in the two months of August and September. This year we had much more rainfall compared to the previous year and this increase was from 150% to 300%. So, that had led to drowning of the mines and the off take and both production and off take had come down heavily. That also affected the future production because overburden removal could not take place of the same place. But now things are picking up and we had about 10 million tonnes less production, about 5 million tonne less off take but you can see the financial results have been quite bright.
ET Now - How have realisations move for Coal India for the quarter gone by and one word especially on your spot market trades?
Mr NC Jha - If you compare the realisation of second quarter vis-a-vis the same period previous year the realisation has increased by about 2046 crore which is 18% more. So, sales realisation has increased by 18%, income from other sources like interest etc. has increased by 42% and overall total income has increased by 23%.
India Coal Market Watch citing an unidentified person reported that Ambuja Cements Ltd may secure four Panamax cargoes of South African thermal coal.
The shipments will be delivered between December and January 2012.
(Sourced from Bloomberg)
Limited supplies and sustained buying interest from top consumer China lifted spot iron ore prices for an 11th straight day and the market stayed well bid on Tuesday, suggesting the upward momentum may not lose steam soon.
Firmer Chinese steel futures this month helped iron ore rebound from a more than 30 percent slide in October, encouraging steel mills to replenish run-down inventories of the raw material.
Iron ore with 62 percent iron content rose 0.4 percent to $138.30 a tonne on Monday, the highest since Oct. 24, according to the Steel Index.
Iron ore has gained 18.3 percent over the past 11 trading sessions.
"We're getting regular inquiries from China for cargo, from steel mills and traders and there isn't a lot available out there," said an iron ore trader in Shanghai who sells mostly Indian material to Chinese buyers.
Iron ore supply in the spot market has thinned with fewer tenders from Australia and Brazil, the world's two biggest iron ore exporters, while shipments from third-ranked India remain disrupted by logistical problems and the government's crackdown on illegal mining, traders said.
"Some of the sellers also feel that the market is rising and a lot of people are going to ask them for cargo so they want to hold off for a bit to get better prices," said the Shanghai trader, adding that prices may go up another $5-$10 from current levels.
Some buyers are bidding $148 a tonne, cost and freight for Indian high-grade 63.5/63 iron ore fines, said Dhruv Goel, managing director at Steel Mint in India's eastern Orissa state.
That is well above the offer price on Tuesday of $142-$145 a tonne of the Indian material in China, according to Chinese consultancy Umetal. Offers for Australian and Brazilian ore rose a further $1-$3 a tonne, Umetal said.
Despite rising prices, many Indian exporters, whose costs are inflated by export tariffs and high railway freight rates, are unwilling to sell at current levels, traders said.
Including freight, the cost of producing 63.5/63 grade in India is about $145-$150 a tonne, the Shanghai trader said. "It doesn't make sense to export at a loss. The mine owners can sell it to the domestic market where the return is better," he said.
Signs of easing credit conditions in China, particularly towards small and medium sized enterprises, may be helping steel prices recover some ground with product inventories at Chinese mills back to near recent lows on a days-of-supply basis, Commonwealth Bank of Australia said in a note.
"Declining inventories might reflect a combination of some production cuts, much lower pricing, better access to credit for SMEs and robust underlying demand," the bank said.
"To the extent underlying steel demand remains robust and credit conditions continue to ease in a 'targeted' fashion, we see China's commodity demand and prices as reasonably well supported."
The most-active May rebar contract on the Shanghai Futures Exchange eased 0.8 percent to close at 4,157 yuan a tonne on Tuesday, after two sessions of gains. Despite the loss, rebar is up 0.6 percent so far in November after three months of decline.
ArcelorMittal announced the appointment of Mr Steve Wood as Vice President and Head of Iron Ore Operations for the Americas region. The appointment is effective from 1 November 2011.
Mr Steve will be based in Montreal, Canada and reports to mr Kleber Silva, Vice President Head of Iron Ore and Member of the ArcelorMittal Management Committee.
Prior to his appointment with ArcelorMittal, Mr Steve held various senior management positions in the mining industry. Most recently he was the Director and Head of Mining and Milling for Vale Canada's North Atlantic operations. In this role Steve was responsible for managing 11 copper and nickel mines, 3 mills and a new refinery and mine start up. Mr Steve has also worked in Indonesia as Vice President Operations at PT Inco where he successfully improved the company's environmental and safety performance across its operations.
Mr Kleber Silva commented “The Americas is an extremely important region for ArcelorMittal's global mining business and we are pleased to welcome an experienced operator like Steve to our team. He will ensure that the operational aspects of the Group's iron ore operations and projects in the region are best in class.”
Mr Steve is a member of the Canadian Institute of Mining and has a B Eng Mining from Laurentian University, Canada.
Shipments of coal on the Great Lakes totaled 3 million net tonnes in October, a decrease of nearly 11% compared to September and a drop of 9.6% compared to a year ago. The trade slumped even more 20.7% when compared to the 5 year average for October.
Loadings at Lake Superior ports fell to 1.5 million tonnes, a decrease of 21.6% compared to a year ago. Shipments from Lake Michigan terminals rose 40% for the second straight month. Loadings at Lake Erie docks were essentially on par with a year ago.
Year to date, the coal trade stands at 22.1 million tonnes, a decrease of 14.1% compared to a year ago, and even more, 25.4%, when compared to the 5 year average for the January to October timeframe.
(sourced from marinelink)
The Tamil Nadu Generation and Distribution Corporation is mulling over the option of using imported coal alone for five of its upcoming thermal projects.
An official said that the power utility has been compelled to study the option as Coal India, the major supplier to the TANGEDCO, has pleaded helplessness in providing coal linkage to new projects in view of acute shortage. Environmental clearance, the most important approval for a power project, will be given by the Union government normally after coal linkage is firmed up.
The five projects are awaiting other clearances at various levels. They are: Ennore Thermal Power Station Annexe (600 megawatt)
North Chennai TPS Stage 4 (2 units of 800 MW each)
NCTPS Stage 3 (800 MW)
Tuticorin TPS (800 MW) and
Uppur thermal power project (2units of 800 MW each)
The combined installed capacity of the five projects is 5,400 MW.
In fact, one of the five projects Ennore Thermal Power Station Annexe (600 megawatt) has received environmental clearance after Mahanadi Coalfields, a subsidiary of Coal India, agreed to supply coal. But, now, the coal company is dragging its feet, forcing the TANGEDCO to seek imported coal.
As an initial step, the TANGEDCO floated bids for the appointment of a consultant to study the various factors, such as the exact requirement, suitable coal grade, countries that will supply and the formulation of short-term and long term contracts.
Periodicity of coal to be imported and the cost are among the other issues to be studied.
The last date for submission of bids is November 18. By the end of this month, the contract is likely to be awarded.
(sourced from Hindu.com)
The Federation of Indian Mineral Industries (FIMI) has urged Indian government not to impose a blanket ban on iron ore exports, as it would "affect India's steel industry and result in the closure of captive mines."
FIMI secretary R K Bansal has said that the domestic steel industry has much more iron ore supply than the required volume. A blanket on iron ore export will cause most non-captive mine to close. It is stated that due to mining halt, exploration will also stop preventing further additions to reserves and resources.
FIMI also suggested that steel plants should not be allowed to have captive mines since the domestic iron ore production is already more than the domestic demand and will continue to be so for the next few years.
Tags: iron ore , India , raw mat , South Asia , Indian Subcon , mining , quotas & duties