Friday, December 2, 2011
Manila (Platts): Indonesian coal prices continued to soften Friday as reports trickle in that that barging is now being allowed at the Mahakam river and Chinese importers are not serious about chasing spot cargoes.
A trader said his Chinese associates are still asking him to offer Indonesian coal in China, but added that he is not trading as he feels that Chinese importers will only buy at prices lower than what they have been offered.
He said he received a Chinese bid for 5,000 kcal/kg GAR Kalimantan coal at $76.50/mt FOB for blended material.
An Indonesian coal producer previously offered to sell at $77/mt FOB.
The producer has not yet responded to the Chinese bid and may likely agree to lower the price, he said.
"I am trying to close something for 5,000 kcal/kg GAR," the trader said, adding that Indonesian coal prices continued to remain soft.
Meanwhile, the supply disruption caused by the November 26 collapse of a public suspension bridge at the Mahakam river failed to give support to Indonesian coal prices, industry sources said.
On Friday, a north Asian buyer said coal-carrying barges have been now allowed to pass through the portion of the Mahakam river where the bridge collapsed.
Separately, Mahakam Sumber Jaya, or MSJ, a unit of Tanito Coal, which declared a force majeure on its December shipments after the bridge collapsed, has lifted the declaration Thursday.
A second trader said there are hardly any buyers for Indonesian cargoes, adding that Kalimantan prices are edging lower.
Another trader said there continued to be very few bids out of China, describing bids by Chinese importers as all over the place.
"The same is true for Indonesian coal price offers," he said.
He added that Indonesian CFR price offers for 4,000 kcal/kg NAR coal for south China delivery were between $65/mt and $82/mt.
Platts assessed Thursday the FOB Kalimantan 5,900 kcal/kg GAR at $98.00/mt, a $0.25/mt decline from a day earlier and FOB Kalimantan 5,000 kcal/kg GAR at $76.00/mt, down $0.25/mt day on day.
(Courtesy sourced Platts)
* First shipment on track for end of 2011
* Receives first prepayment from Glencore
LONDON Dec 2 (Reuters) - London Mining Plc said it has started production of iron ore from its Marampa operation in Sierra Leone and that the first shipment is on track to be completed by the end of this year.
Production will ramp up during the first half of 2012 to over 160,000 tonnes a month, with 1.8 million tonnes of production still targeted for 2012.
"The production of high specification iron ore product from our plant at Marampa after decades of mine inactivity marks the beginning of our Phase 1 ramp up and forms the basis for our phased expansions to 16 Mtpa (million tonnes per annum)," said Chief Executive Graeme Hossie.
The miner said it has received its first prepayment from Glencore for its scheduled December shipment and expects to receive a further prepayment for its January shipment later this month.
FRANKFURT/DUESSELDORF Dec 2 (Reuters) - ThyssenKrupp , Germany's largest steelmaker, called a snap news conference for 1300 GMT on Friday following a meeting of the group's supervisory board, it said.
German business daily Financial Times Deutschland reported on Friday that Steel Americas chief executive Hans Fischer would leave the company after arriving in February from domestic rival Salzgitter.
The FTD and Handelsblatt both said the board was unhappy with continued problems in the new Brazilian carbon steel slab mill, which have already cost the job of senior steel manager Karl-Ulrich Koehler.
The slab plant near Rio de Janeiro known as CSA, with an annual capacity of over 5 million metric tonnes, chose the cheaper Chinese firm Citic over ThyssenKrupp's own plant engineer to build the steelmill's three coking plant batteries -- a move that lead to mistakes in the construction, Handelsblatt said.
The coking plant, which produces coking coal used to make pig iron in the blast furnace, generates coke oven gas in the process. This byproduct is typically used to drive turbines that then fuel the steel mill.
As a result of CSA's coke plant battery problems, the energy-intensive slab production may need to buy electricity.
Citing sources at ThyssenKrupp, Handelsblatt reported Citic agreed to pay damages, but the two companies have not agreed on the amount.
PRAGUE Dec 2 (Reuters) - The world's top steelmaker ArcelorMittal will lay off 10 percent of its staff in the Czech Republic due to weaker-than-expected demand amid an economic downturn, a union leader said on Friday.
The steel producer, which makes between 6 and 7 percent of global steel, said in early November a summer dip in demand is deepening into a second-half slump and customers were increasingly cautious due to economic uncertainties.
In the Czech Republic, the company employs about 6,000 people including subsidiaries and trade union member Roman Bacica, who sits on the Czech ArcelorMittal unit's supervisory board confirmed a local agency report that roughly 10 percent of the workers will be let go.
"Demand is not as expected, there are some units in western Europe already idle," he told Reuters. He added workers can apply for a voluntary leave including severance pay by Jan. 20. next year. The plan is for them to leave by the end of the first quarter, he said.
ArcelorMittal in September launched a plan to focus production at its lowest cost steel plants aimed at boosting earnings.
It intends to close steel facilities in Liege, Belgium, and has temporarily idled blast furnaces in France, Germany and Poland as well as arc furnaces in Luxembourg and Spain.
KATHU, South Africa Dec 2 (Reuters) - Life is about to get a lot better for people like Christopher Mocwane, a worker at one of the world's largest iron ore mines outside this dusty town in the middle of the Kalahari desert.
Thanks to an employee share ownership scheme, the 47-year-old, who earns 7,000 rand ($835) a month, is about to receive a 576,045-rand ($68,700) windfall.
"I'm going to buy myself a house. The one where I live now, I'll fix it and give it to my mother," he told Reuters, wiping the sweat off his forehead in the scorching heat. "She was very happy when I told her."
"My children are still small, but I will now be able to send them to school when they grow up," he added with a nervous smile.
Mocwane is one of 6,200 workers at Kumba Iron Ore due to benefit from the plan aimed at ensuring all its workers share the profits of the iron ore producer over the past five years.
A unit of global miner Anglo American, Kumba has already paid out 279 million rand in dividends to the same employees, an average of 55,000 rand per person over five years.
The lump sum to be paid out between Dec. 15 and 17 is linked to the share price on Nov. 17, and comes to around 345,000 rand per employee after taxes. Those who have not been with Kumba for the full five years will get less.
"I've tried to fix my house. We had a problem with water, and now we have water," said Mocwane, who has worked at the open-pit mine for 17 years, first as a cleaner and now driving trucks.
"For many years I didn't have a car, but I have one now. I can see a lot of difference in my life," he said.
A SUCCESS FOR EMPOWERMENT SCHEME
Kumba's "Envision" programme has become a poster child for South Africa's much-maligned Black Economic Empowerment scheme aimed at giving blacks a stake in the economy after apartheid was dismantled in 1994.
Under the scheme, companies are required to meet quotas on black ownership, employment and procurement. Many have invested millions to build houses, hospitals and schools, but unions say Kumba's solution is unique.
"Every benefit the company is earning, (the workers) are part of it ... and it's not just a one-off," said Tebogo Chakapedi, a shopsteward at the National Union of Mineworkers.
"We would like that at a national level all companies adapt this," Chakapedi added.
Kumba's scheme was established when the iron ore assets of then Kumba Resources were unbundled in the Sishen Iron Ore Company (SIOC) in 2006.
Luckily for the employees, the company's share price has since soared thanks to rising prices of iron ore -- a core ingredient in steel -- from 120 rand in 2006 when the scheme was launched to 502 rand on Friday.
Many empowerment schemes have been criticised as only benefiting a small and politically-connected elite in a country where millions of black South Africans still live in poverty and more than a quarter of the workforce is jobless.
Critics, including some in South Africa's ruling African National Congress calling for the nationalisation of mines, also contend that mining houses have done little for the communities that sit atop the minerals.
This has sparked a drive by unions and the government to push for more broad-based deals like Kumba's.
GOOD BUSINESS SENSE
Kumba chief executive Chris Griffith said Envision made business sense as well.
"We haven't had a strike in years. Employees are thinking all the time about how to continue to deliver what we are expected to deliver ... that also brings a lot of comfort for investors," he said.
Kumba today boasts one of the lowest staff turnover rates in the industry at around 3 percent and has launched another 5-year scheme bringing more dividends and another lump sum in 2016 as an incentive to stay on instead of cashing in and leaving.
Aware of the potential negative effects of sudden windfalls, the company has organised workshops, industrial theatre performances and distributed comics over the past year to teach workers about how to pay off debt and invest in housing.
They were also taught how to pay taxes -- a new experience for some given their incomes range between 5,000 and 20,000 rand a month, excluding benefits.
The arid Northern Cape province all around Kathu is sparsely populated and impoverished, a sprawling rural area where carts are still drawn by donkeys.
But there is lots of building activity in Kathu and new businesses like hair salons and car washes are springing up, partially supported through programmes organised by Kumba.
In a country with one of the world's highest crime rates, there are concerns that the next pay day will be a magnet for criminals. Kumba said it was working with the local police to make sure people would not be targeted by thieves.
"I'm afraid (you) will see people knocking on your door saying 'oh, I'm selling this...', maybe coming to rob us," said Patricia Andries, a health and safety officer at the mine.
For now workers are just counting the days.
"It's like a kid waiting for Christmas ... my wife can't wait," said Ian van den Heever, a boiler maker at the mine.
HANOI (Reuters) - Vietnam plans to reduce its coal exports next year by 18.2 percent from this year's projected shipments to 13.5 million tonnes, a senior official in top coal miner Vinacomin was quoted on Thursday as saying.
Vietnam is a net coal exporter but it is expected to turn into an importer by 2015, when a series of thermal power plants start operation. It has already started reducing exports to save supplies for domestic consumption.
Annual exports will fall to 8 million tonnes in 2013 and between 4 million and 5 million tonnes a year from 2015, based on an Industry and Trade Ministry masterplan, Vinacomin Chairman Tran Xuan Hoa told the state-run Tuoi Tre newspaper.
Annual imports would be 5 million tonnes from 2015, Hoa said.
Hoa could not be reached on Thursday for comments.
Vietnam has imported coal from Australia and has been looking to buy from Russia.
In June, Vietnam received 9,570 tonnes of its first thermal coal shipment from Indonesia, officials said.
Japan's Marubeni Corp has agreed in principle to sell Vinacomin up to 2 million tonnes of Australian or Indonesian coal a year and hopes shipments can start in 2015-16.
Two sources at Vinacomin said on Thursday the group did not have specific annual import targets until 2015, but small imports will take place.
"We do not have a plan for coal imports next year," a Vinacomin executive said.
"Our subsidiaries may import small volumes in preparation for future imports and that's not our plan... Maybe they will look at nearby suppliers to buy coal," he said without naming any buyers.
By allowing such imports, Vinacomin wanted its subsidiaries to become familiar with the process, another source said.
Hoa said Vietnam could still maintain its exports if the price was in line with global prices.
"In the long run, if our coal prices follow international prices, it is beneficial for the southern region to import coal, while the northern region will run production to meet its demand and export will be more efficient," he told the daily.
Quang Ninh province in the north is Vietnam's main coal mining and processing zone.
The northern Red River basin is also believed to contain significant coal reserves but they are mostly untapped as the region is the country's largest rice growing area after the Mekong Delta in the south.
Vietnam exported 15.11 million tonnes of coal between January and November, down 12.3 percent from the same period last year, government statistics show.
* No fixed price trades, API4 index deals at -$1-1.20
* Macros continue to be main driver
LONDON Dec 1 (Reuters) - Physical prompt coal prices were little changed on Thursday despite a fall in oil as signs of further economic slowdown in Europe and a weaker factory sector in China outweighed encouraging U.S. manufacturing data.
No fixed price trades were reported but there were several indexed trades for South African cargoes.
Unless supported by strong oil, equities and a weaker dollar, coal prices could drift lower between now and January because short-term fundamentals are bearish, traders and end-users said.
World stocks edged higher on Thursday while the euro gained for the fourth day and a Spanish debt sale saw good demand, keeping hopes alive that the euro zone debt crisis may be contained.
Further ahead in 2012 the outlook is less grim for coal and other bulk commodities.
"We continue to favour the fundamentals for copper, coal and iron ore," Credit Suisse said in its Metals and Mining research note.
Lack of spot demand from China and India has left suppliers struggling to place prompt cargoes already unwanted in Europe and there are almost no bullish fundamental factors.
South African exporters have sold their December cargoes but some players further down the cargo chains formed when cargoes trade multiple times are still battling to find buyers.
A South African prompt cape was being offered on Wednesday with no takers.
Global stocks rallied and the dollar slid on Wednesday after the world's leading central banks acted jointly to ensure financial markets rocked by the euro zone's escalating debt crisis have enough funding.
The banking measures bolstered the appetite for risk, lifting assets such as stocks and commodities while leading investors to dump safe-haven dollar and government debt.
No fresh fixed price trades were reported.
A February South African cargo traded at $1.20 a tonne below the API4 index.
A Q2 API4 index trade also took place at $1.00 a tonne below the index.
A January South African cargo was bid at $103.25, unchanged.
A February South African cargo was bid at $95.00. A January delivery DES ARA cargo was offered at $112.00, down $1.00.
A February DES ARA cargo was bid at $112.50.
RANCHI: Expressing dissatisfaction with the performance of government-run Central Coalfields Limited (CCL), Mahanadi Coalfields Ltd (MCL) and Bharat Coking Coal Ltd (BCCL), Union coal minister Sri Prakash Jaiswal on Thursday warned of taking action against the officials of these companies, including those serving in the coal ministry found responsible for poor performance.
Talking to newsmen after a review meeting at the CCL headquarters, he said, "It was only because of the poor performance of CCL in terms of coal off-take and production that he is reviewing it on a regular basis. We are concerned because of the increasing demand of coal from all over the country in the wake of the rising demand for power. The demand of existing power plants is growing each day and there is a long queue of new power sector units waiting for our commitment to fulfill their requirement of coal."
According to him, "Though we have asked the upcoming power production units to fulfill their demands by importing coal, we also have to augment our production to meet the demands," he said.
He admitted that while some projects are pending
because of forest clearance, environmental clearance and many other issues, a large number of allotted coal blocks have been cancelled because they failed to become operational within the given timeframe.
When asked about the cancellation of coal block allotted to Jharkhand, Jaiswal said chief minister Arjun Munda met him in New Delhi over the issue and his ministry is looking into the matter.
"As far as the cancellation of the coal blocks allotted to the state government and the state-owned enterprises are concerned, a review committee has been constituted under the coal ministry to look into the matter," said Jaiswal. He also admitted that along with the state government even officials of National Thermal Power Corporation ( NTPC) approached the ministry to apprise them of some practical difficulties because of which mining could not be started in the allotted coal blocks.
Answering yet another question on companies obtaining coal linkage and illegally selling it to non-coal traders at the higher market rate as unearthed by CBI recently, Jaiswal initially expressed ignorance about such incident and prompted CCL CMD R K Saha to chip in and clarify this. Saha said the company is trying to figure out such companies and is canceling supply to them. "A certificate is provided by the state government to a non-coal company for coal linkage, following which we verify at our own end but owing to lack of manpower, the process has been partially affected," he said.
Jaiswal admitted that the coal sector has been hit by
corruption for the last 15 years and the ministry is trying to tighten its noose around people, including officials of the companies.
India’s biggest power producer NTPC is seeking fresh bids for 4 million metric tonnes of coal from overseas after scrapping a previous tender.
Mr Arup Roy Choudhury chairman of NTPC said that the utility has taken steps to promote competition this time after a disappointing response to the previous invitation.
Mr Choudhury said that NTPC previously invited bids by May 26 for a single contract to supply 4 million tonnes of coal needed at 14 of its power plants. This time, orders may be awarded to as many as five suppliers.
Coal production growth in India has slowed after delays in environmental approvals and land acquisition for mines. The commodity is used to fire more than half of the electricity generation capacity in Asia’s second-biggest energy consumer.
(Sourced from Bloomberg)
Mr Pratik Prakashbapu Patil minister of state in the ministry of coal while replying a question in Rajya Sabha said that the government proposes to set up a Coal Regulatory Authority for coal sector. In this regard, a draft Cabinet Note along with draft Bill, 2010 on setting up of a Coal Regulatory Authority was circulated to various Ministries/Departments for their comments.
The comments of concerned Ministries/Departments have been received. However, it was noticed that some major changes/suggestions have been made by various Ministries/Departments. At present, suitable incorporation of these changes/suggestions is being examined in consultation with the Ministry of Law. Once finalized the draft Bill would be submitted for the approval of the competent authority.
Setting up of a regulatory Authority for coal would require appropriate legislation to be passed by the Parliament. Hence, it may not be possible to indicate the exact time frame for setting up the said authority.
Bloomberg, citing India Coal Market Watch, reported that India’s coal production fell by 9% in October from a year earlier and the country may miss output targets for a second year.
Output totaled 39.59 million tonnes in October from 43.51 million tonnes a year earlier and a state set target of 47.1 million tonnes.
However, production rose 33.5% from September when rains disrupted output.
Production during the first seven months of the year ending March 2012 was about 11% lower than a state set target of 259.37 million tonnes and 5.5% lower than a year earlier.
The target for the 2012 fiscal year is 554 million tonnes. Last year, India’s coal production was 533 million tonnes compared with a targeted 573 million tonnes.
(Sourced from Bloomberg)
It is reported that the National Development and Reform Commission hiked power prices raising non-residential power tariffs by CNY 0.03 per kilowatt hour effective today.
The on-grid tariff for distributors was raised by CNY 0.025 per kWh, while the hike in the on-grid tariff for coal fired power plants was CNY 0.026 per kWh. Though the NDRC released a draft plan for a tiered pricing mechanism for residential power usage, residential power prices will remain unchanged at the moment.
For the 80% of households which will fall under the first tier, the NDRC is proposing unchanged power prices.
According to the draft plan, low income families in both urban and rural areas are to be offered 10 to 15 kWh of free electricity per month. The second tier which is expected to cover 95% of all households will see a slight increase in tariffs while the final tier will have to pay significantly higher prices for electricity.
In addition, the NDRC rolled out a plan to control coal prices to help power generation companies suffering from high coal prices allowing a maximum 5%YoY rise in 2012 contract coal prices for coal produced for own use.
The NDRC imposed a cap on market coal prices with a price ceiling of CNY 800 per ton for 5,500 kilocalories coal at Qinghuangdao Port, Tianjin Port, Jingtang Port, Guotou Jingtang Port, Caofeidian Port, Yingkou Port, Jinzhou Port and Dalian Port. In order to lower the operating costs of coal producers, the NDRC will eliminate various types of charges levied by local governments.
Except for mineral resource compensation fees, and charges for the coal sustainable development fund imposed by the central government, local governments will have to waive all other charges on coal producers by the end of 2011.
The NDRC said capping coal prices at CNY 800 per ton will still result in considerable profits for coal producers and will not affect market supply.
According to the China Electricity Council, power prices had risen by a cumulative 32% since 2003 while the cost of coal had surged 150%. The China Electricity Council predicts a power supply shortage of 30 million to 40 million kilowatts this winter and next spring.
Thermal power producers generated total profits of CNY 10.4 billion during the first three quarters down by 50%YoY. Third-quarter profits fell 58% to CNY 1.7 billion.
(Sourced from yicai.com)
Three Indian companies are in the race for a Coal India contract that called bids for exploration of its 200 odd square km block in Mozambique.
The world largest coal miner, which opened the price bids of Mining Associates, Indu-CBS Joint Venture and Kartikeyan Pvt Ltd last week, won the block two years ago. It is now expected to award the contract within 45 days.
Mr AK Singh CMD at the Central Mine Planning and Design Institute which is CIL's technical arm that finalizes and floats tenders said that "We have asked the parties concerned to justify the price bids following which we will scrutinize them and finalize the lowest bidder.”
Coal India Africana Limitad, a wholly owned subsidiary of CIL, won a 5 year licence for exploration and development of two coal blocks in Mozambique in August 2009.
In February, it invited exploration bids for A1 and A2 mining blocks in the northwestern province of Tete. During May, three parties submitted their financial bids. The final selection was to be completed by July. However, there were some issues with respect to the currency in which the bank guarantees were submitted by the bidders. This forced CIL to scrap the bids and call for fresh ones.
Nevertheless, Coal India hopes to start the first phase of production by 2013-14. With an initial estimated reserve of 1 billion tonnes, the coal will be imported to cater to domestic demand from customers in Western India. It is an exploratory block with an area of about 205 square km and preliminary estimates suggest that it could have a reserve of about 1 billion tonnes.
About 20% of the deposits are expected to be coking coal while the remaining is expected to be thermal coal that can be used as fuel in power plants. Exploration will be done in two phases. The first phase will include finding out the tentative concentration of reserves at various locations in the block. The second phase will include estimation of the exact quantum of coal in these probable areas with high reserves.
(Sourced from ET)
Whether it is the Karnataka mining crisis or the coal sector issue where E auction coal was diverted to power or the first of its kind online hair auction, Kolkata based MSTC is always a silent partner of the rescue act for Indian industry.
Mr SK Tripathi CMD reveals his plans about the company to Shine Jacob.
Q - MSTC was on the limelight, when the Supreme Court entrusted you to hold E auction of iron ore lying in Karnataka, after and export and mining ban. How is the process going and what sort of a revenue are you expecting from this?
A - After the ban on export and mining in Karnataka area, the local industry had approached the Supreme Court for a relief and we were entrusted with its E auction to domestic-end users. Our Bangalore office is closely working with 3 member monitoring panel appouinted by Central Empowered Committee for conducting E auction of iron ore in the three districts Bellary, Chitradurga and Tumkur in Karnataka. The court has directed MSTC through CEC to hold E auction of 1.5 million tonne of iron ore per month against a total quantity of 25.88 million tonne. We started the procedure on September 14 and has conducted six auctions so far, with a total quantity of 3.72 million tonne and fetched a revenue of INR 850 crore to the state. Out of the 50-55 people who registered, 40 to 45 succeeeded in getting iron ore. If the present trend continues, the state will be getting a revenue of more than INR 8,000 crore with in the current financial year. As the prices are high, mine owners are happy and the government will get higher duties too.
I believe that this model can be followed in other states like Goa, Jharkhand, Chhatisgarh and Orissa, where there are issues with iron ore mining. It will be of huge savings for the country.
Q- -You are also conducting E auction for Coal India. Recently, the government has diverted E auction coal for the month of October to power sector. How is it going to affect the business of the company?
A - I feel this is a temporary phenomenon and with the improvemnt in the coal availability scenario, CIL will be able to provide coal for E auction. Coal is also required for non-core consumers of coal and they should also not be deprived of their coal for a long time. Through the development, there will be a revenue loss for CIL, as well as MSTC. I belive that things will improve in a couple of weeks and we will be able to resume auction soon.
(sourced Business Standard)
ET reported that steel ministry has set up a committee to look into the need for rationalising the procedure followed by steel PSUs for procurement of coking coal.
Mr Beni Prasad Verma steel minister said that "A committee has recently been constituted in the ministry for looking into the need for rationalising the procurement procedure for coking coal, acquisition of mines abroad and optimising the use of coking coal by steel PSUs.”
Replying to a question on whether the government was aware that during the last two years, SAIL and RINL have made purchases of coking coal at a time when the price was very high in international markets, he said this was a commercial decision of the companies.
The minister said that "This (procurement) is done as per their requirements under a laid down policy through long term agreement. As per international market practice, quantities under LTA are settled annually by the empowered joint committee which comprises representatives of both Steel Authority of India and Rashtriya Ispat Nigam.
"While negotiating quantities and prices with long-term suppliers, EJC takes the FOB (free-on-board) prices settled by Japanese steel mills and others as reported in the international journals as the benchmark.”
The minister added that "The annual requirement is tied up at the beginning of the year and the same is confirmed and received quarter-wise throughout the year.”
Mr Verma said prices of imported coking coal were up by 75 per cent in 2010-11 vis-a-vis the previous fiscal, affecting the profit margins of steel-makers.
(Sourced from ET)
PTI reported that Chhattisgarh chief minister Dr Raman Singh has called on steel minister Mr Beni Prasad Verma and sought doubling of iron ore supply to 5 million tonnes from National Mineral Development Corporation to state based steel units.
Mr Singh after meeting Mr Verma said “Chhattisgarh is facing a crisis. Our iron and steel mills are on the verge of closure. We have sought the Centre's intervention for doubling it to 5 million tonne from present 2.5 million tonne on priority basis.”
He said “All major iron ore deposits in the state are with NMDC, which is producing about 30 million tonne per annum, but a major part is either exported or supplied to industries outside Chhattisgarh while the industry in state is on the verge of closure.”
He said “Also, there is a substantial increase in the capacity of all units over the years in the state.”
Dr Singh added Mr Verma had assured that the concerns of the industry in the state would be addressed.
(Sourced from PTI)
Thermal coal prices at major ports around Bohai Sea edged down further in the week ending November 30, marking its third consecutive week of declines, market sources said.
The latest Bohai-Rim Steam-Coal Price Index, or BSPI, indicates that the average price of thermal coal with calorific value of 5500 Kcal/kg dropped to CNY 847 per tonne, down CNY 3 per tonne from a week earlier when the price was down CNY 2 per tonne.
At Qinhuangdao port, the price of 4500 kilocalories per kilogram, 5000 kilocalories per kilogram, 5500 kilocalories per kilogram and 5800 kilocalories per kilogram thermal coal came to CNY 635-645, CNY 735-745, CNY 840-850 and CNY 895-905 per tonner respectively, decreasing CNY 5 per tonne as compared to the previous week.
The continuous fall in thermal coal price was mainly attributed to the high levels of inventory at power plants and main ports despite of the favorable factors that may somewhat stimulate the market demand, such as increasing coal consumption in winter season.
The thermal coal market was hurt again by rumors that the National Development and Reform Commission would put a cap on spot coal prices. It was reported that the NDRC ordered, in a statement released recently that benchmark spot prices with a heating value of 5,500 kilocalories per kilogram to be capped at CNY 800 per tonne.
China steel information centre and industry database
Wednesday, November 30, 2011
Reuters reported that iron ore will continue to sell in the range of USD 120 to USD 180 per tonne in the near term, while China, a driver of Asian steel consumption, constrains its economy in the face of inflationary threats.
Mr Jose Carlos Martins, Vale's executive director for iron ore and strategy told Reuters that but the market for the key ingredient for steel manufacture is expected to grow as Asia builds up its infrastructure and Western steelmakers stagnate.
He added that "For the bigger part of this year, the price was around USD 180. I don't believe in the next year the price will go above 180 or below 120. The scenario is moderate to good."
Earlier, Vale slashed its capital spending budget for 2012 by 11% and pushed back its largest iron ore project by two years in the face of falling commodities prices and environmental delays.
During an interview at the New York Stock Exchange where the company's executives met Wall Street investors, Mr Martins said global steel production was a tale of two halves of the world since the 2008 recession.
He added that "In Europe and America, in the western world, the market has kind of stagnated. Steel production in the western world is 15% to 20% below pre crisis levels. So the western world has never recovered. Those countries don't have enough space to promote growth, so we do not see the western world moving, probably it will be stable."
But in contrast, he said China was the main factor behind steel consumption growth in Asia. He added that "China is facing an inflationary environment, so they put a lot of constraints in the economy to prevent inflation going up. The whole scenario is not that good as far as steel production is concerned or iron ore."
But on the other hand, when the price reaches that low level of USD 120, many high cost Chinese mines cannot keep operating, so steelmakers will buy iron ore from abroad.
Mr Martins said that "I believe USD 180 is the limit on the upside, but I believe the price will move more in the downside area than the upside. But it's very difficult to say, as China is very unpredictable. That's the reason I am moderately optimistic. Before the crisis, steel production in Europe and the western world was down by 20%, but in Asia it was up by 30%. It's very simple, it's demographics."
He said that "In the west, you can improve the infrastructure, but it's already there. In the west, steel production is very much linked with the economy. If the economy is doing well, because of consumer goods, then you will have more steel consumption. But in Asia, even if consumer goods are not doing well, you still have to build infrastructure."
(sourced from Reuters)
* Iron ore has lost over 11 pct in 6 days
* Weaker steel demand limiting Chinese buying interest
SINGAPORE/SHANGHAI, Nov 30 (Reuters) - Offer prices for iron ore fell further on Wednesday as spot rates dropped to three-week lows with steelmakers in top producer China largely staying out of the market amid thin demand.
Iron ore with 62 percent iron content dropped 0.9 percent to $130.80 a tonne on Tuesday, said the Steel Index .IO62-CNI=SI, the lowest since Nov. 8. Iron ore has lost more than 11 percent in the last six consecutive trading days, trimming this month's gain to 10.5 percent. A 14-day rally earlier this month saw prices surging more than 26 percent after a slump in September and October.
"The buying activity from steel mills has been falling this week and I don't see any improvement in the iron ore market till the end of this year since demand for steel, particularly from the construction sector, is shrinking sharply," said an iron ore trader in Tangshan city in Hebei province, China's top steel producing region.
"The overall market is worried about the European debt crisis." The most-traded May rebar contract on the Shanghai Futures Exchange fell 1.2 percent to close at 4,075 yuan a tonne, more than wiping out Tuesday's gain and tracking weakness in other commodities spurred by the lack of bolder measures to resolve a two-year-old sovereign debt crisis in Europe.
Euro zone ministers agreed to ramp up the firepower of their rescue fund and may turn to the International Monetary Fund for more help as a stunning leap in Italy's borrowing costs pushed the region closer to financial disaster.
"The situation in Europe and the world has significantly worsened over the past few weeks. Market stress has intensified," said Christian Noyer, France's central bank governor and a governing council member of the European Central Bank.
"We are now looking at a true financial crisis -- that is a broad-based disruption in financial markets," he said at a conference in Singapore. Amid thin demand, sellers cut prices of iron ore cargoes further, with Australian Pilbara fines down a dollar to $131-$133 a tonne and Newman fines $2 lower at $135-$137 a tonne, said Chinese consultancy Umetal.
"Some traders are worried that iron ore prices will be very likely to fall further, so they have started selling more at lower prices," said an iron ore trader in China's eastern Shandong province. "But this isn't large-scale activity as the buying remains weak," he added.
But Steel Index said with spot steel and billet prices in China edging up this week, some mills in Hebei may return to the market next week to replenish their iron ore stockpiles.
As industry pricing mechanisms continue to change, Rio Tinto's iron ore sales portfolio has evolved to a balance of spot, monthly and quarterly price mechanisms during the fourth quarter of 2011.
Rio Tinto continues to see an attractive long-term demand picture for iron ore, with Chinese steel production per capita not forecast to peak until circa 2030 at 750kg per capita (500kg per capita today). Other growth economies such as India should still be on an upward demand trajectory at this point.
In the medium term, Rio Tinto forecasts that industry supply will need to increase by 100 million tonnes per year for each of the next eight years to meet demand growth and replace high cost supply. Rio Tinto expects to supply around 25% of this industry growth.
Rio Tinto's Pilbara expansion remains on time and on budget (AUD basis). There are options to increase capacity further from 353 million tonne per annum to 453 million tonne per annum. Capital intensity of expansion from 220 million tonne per annum to 353 million tonne per annum is expected to be around mid USD 150 per tonne on a 100 per cent basis (Rio Tinto share around mid USD 130 per tonne). Expansion beyond 283 million tonne per annum is subject to Board approval.
The development of Simandou is progressing as planned, with the early works already underway. Rio Tinto is adopting a phased approach to constructing the infrastructure to ensure delivery of first commercial production by mid 2015. Rio Tinto recently approved a further USD 211 million in study funding and USD 1.1 billion of early commitments for the next stage of the project.
Mr Pratik Prakashbapu Patil minister of state in the ministry of coal informed the Rajya Sabha that following steps are being taken by Coal India Ltd to enhance coal production and productivity:-
1. Improving capacity utilization by improvement in efficiency and modernization.
2. Implementation of ongoing projects in a time bound manner to achieve targeted production as per schedule.
3. Efforts being made by all the subsidiaries for obtaining Environment/ Forest Clearance (EC/FC) within the scheduled time frame so that projects could start production in time.
4. Continuous liaisoning with the State Government agencies to acquire land for identified & expansion projects.
As per available information, the coal imports by various consumers, during the last three years, were as under:-
The following steps were taken/are being taken by Coal India Limited to encourage private investments for coal development and to acquire new technologies:
1. Seven green field underground coalmines / blocks have been identified for development, construction and operation at high capacity with state of the art technology on turn-key basis.
2. 18 abandoned / derelict underground mines with estimated reserves over 1600 MT, not been worked for reasons of safety and economy, have been identified for salvaging, rehabilitation and operation with risk-gain sharing basis.
Thrust on automation and use of Information Technology in opencast mines. 11 existing mines are to be equipped with Operator Independent Truck Dispatch System for which tendering has been done.
* Consortium plans to build 6 mln T steel plant in Afghanistan
* Was awarded rights to develop three blocks of huge Hajigak mines
* Steel plant to cost $7 bln-$7.5 bln-SAIL chair (Adds details)
NEW DELHI, Nov 30 (Reuters) - A consortium of Indian companies led by Steel Authority of India will need a total investment of $11 billion in a planned steel plant and to develop iron ore mines in Afghanistan, the steelmaker's chairman said on Wednesday.
The Afghan government awarded the rights to develop three blocks of the huge Hajigak iron ore concession in central Afghanistan to the consortium, while a fourth block at the deposit was won by Canada's Kilo Goldmines Ltd.
The Indian consortium plans to build a steel plant in Afghanistan with an annual capacity of 6 million tonnes, SAIL Chairman C.S. Verma told reporters in New Delhi, adding the plant would need investment of $7 billion to $7.5 billion and the remainder would be for developing the mines.
State-run SAIL is the biggest steelmaker in India, with an annual capacity of about 15 million tonnes.
The other members of the consortium are: state-run miner NMDC Ltd and steelmaker Rashtriya Ispat Nigam Ltd (RINL), and private sector steelmakers JSW Steel Ltd, JSW Ispat Steel Ltd, Jindal Steel & Power Ltd and Monnet Ispat & Energy Ltd.
"We'll need to borrow some from financial institutions. We'll need some facilities and assistance from both the Indian and Afghan governments," Verma said.
The Hajigak deposit contains an estimated 1.8 billion tonnes of ore, with an iron concentration of 64 percent, the Afghan mines ministry has said. The figures are based on a survey carried out in the 1960s.
The huge investment necessary to develop Hajigak will be welcomed by the cash-strapped Afghan government, but the deal could cause problems with neighbouring Pakistan, which fears closer cooperation between India and Afghanistan.
The United Nations said this year violence across Afghanistan is at its worst since the Taliban regime was toppled 10 years ago, although the NATO-led alliance of foreign troops says attacks on its forces by insurgents are now falling.
Under the present import policy of the Government, Coal is placed under Open General Licence and can be freely imported by anyone in the country on payment of applicable import duty. During the process of formulation of Annual Plan, Ministry of Coal/Planning Commission assesses the overall demand of the country and finalises the supply plan from indigenous sources, the details of which are as under:
|All India Coal Demand||550.00||597.98||656.31||696.03|
(In Million Tonnes)
Supply Plan to meet Coal Demand
|Other Indigenous Sources||50.79||52.83||65.87||56.00|
|Gap to be met through Import||52.71||62.75||82.89||137.03|
(In Million Tonnes)
The gap between indigenous availability of coal and estimated coal demand to be met through imported coal is increasing over the years from 52.71 million tonne in 2008-09 to 137.03 million tonne in 2011-12.
While the details of country-wise imports by various consumers are not available, as per available information, the coal imports during last three years were as under:
|Year||Coking coal Quantity||Value||Non Coking coal Quantity||Value||Total Quantity||Value|
|2010-11 (Upto Nov '10) (Provisional)||14.658||157161||33.700||140756||48.358||297919|
(Quantity in million tonnes & Value in INR million)
Singapore Exchange's AsiaClear service will clear more varieties of over the counter coal and naphtha swaps from next month.
Clearing of OTC CFR South China Coal Swaps and CFR Japan Naphtha Swaps is available from 5 December 2011 while Balance of Month CFR Japan Naphtha Swaps and Balance-of-Month FOB Korea Benzene Swaps clearing will be offered from 1 February 2012.
Ms Julie Heng Head of Commodities at SGX said "We are extending our OTC product suite in response to market demands, offering greater breadth of trading tools to our customers. These products offer traders and market participants additional risk management tools which will help to support the growth of the coal and petrochemical markets in the region. We are continuing with our strategy of building AsiaClear, Asia's first and only clearing service for OTC commodities and financial derivatives."
Tuesday, November 29, 2011
TOKYO, Nov 29 (Reuters) - Following is a table of coking coal imports for October released by Japan's Ministry of Finance on Tuesday.
Figures are converted from yen to U.S. dollar using Japan Customs' official conversion rate. Volumes are expressed in tonnes.
Country Oct Oct Sept Sept M/M Yr/Yr YTD YTD YTD (Yr/Yr %)
Name Tonnes $/Tonne Tonnes $/Tonne % % Tonnes $/Tonne Tonnes
China 44,482 287.83 3,287 274.62 1253.3 -23.5 996,864 258.15 87.9
Indonesia 1,142,354 151.42 1,154,996 146.26 -1.1 6.5 12,065,636 131.24 -19.6
India 2 6,043.02 - 3 6,407.87 -99.9
Russia 223,174 293.21 259,476 272.16 -14.0 -26.1 2,181,240 251.13 13.3
Canada 853,930 312.26 440,902 313.80 93.7 177.6 6,242,766 270.58 -13.3
USA 379,980 294.53 227,390 264.14 67.1 10.4 4,680,945 260.72 106.1
Mexico - - 75,764 302.91
Colombia - - 61,844 298.22
Australia 3,150,070 276.35 3,285,048 273.25 -4.1 -19.8 30,376,282 245.34 -16.8
ew Zealand - - -100.0 253,020 246.97 -46.7
Total 5,793,992 258.94 5,371,099 248.83 7.9 -5.6 56,934,364 225.78 -11.0
JAKARTA Nov 29 (Reuters) - Indonesian miners Harum Energy and Bayan Resources said on Tuesday that they expected delays to their coal deliveries from Borneo island after a bridge collapsed at the weekend, blocking a river used for barge shipments.
"For now ships are not allowed to go across the collapsed bridge area," said Harum Energy spokeswoman Alexandra Mira, adding that the company had notified buyers about the possibility of rescheduled shipments.
She did not give any estimate regarding the volume or length of the likely delay.
Harum's share price fell 5.5 percent on Monday on concerns it would be affected. It rose 0.7 percent on Tuesday.
The delays from the world's top exporter of thermal coal are not seen lifting regional coal prices, given an oversupplied market and concerns about weak demand.
Bayan's coal barging of 20-25,000 tonnes per day along the river from its mine to a port was affected, said Jenny Quantero, a director at Bayan.
An eyewitness said barges were unable to cross the area on Tuesday because of rescue team efforts after the 700-metre suspension bridge on the Mahakam river in Kalimantan collapsed on Saturday, killing at least 18 people.
Indonesia's major coal firms Bumi Resources and Adaro Energy said their shipments were not affected because they did not use the river, though Bumi warned it could be a problem for the industry if the delays continued.
"This may significantly impact transportation of coal at many coal producing mines in the area," Bumi said in a statement.
Brokerage CIMB said that the disruption would only be clear after a safety review in a week's time.
The Mahakam river accounted for around 15 percent of Indonesia's production, so a three-week stoppage could cut three million tonnes, it said.
It said the river each week carried all of Harum's volume of 200,000 tonnes, 158,000 tonnes from Indo Tambangraya Megah and 180,000 tonnes from Singapore-listed Sakari Resources.
CLSA put the potential volume at 20 percent of Indonesia's output, though said firms usually carried three to four-week stockpiles at mines and ports.
"Any outage beyond four weeks could affect Indonesia's coal production by up to 5.7 million tonnes per month," CLSA said in a report.
Billionaire Nathan Tinkler proposed building a A$2.5 billion ($2.47 billion) coal export terminal in Newcastle, Australia, to compete with one proposed by Port Waratah Coal Services Ltd.
The terminal will add 100 million metric tons of export capacity if approved by the New South Wales state government, Tinkler’s Hunter Ports Pty said today in a statement on its website. That would double the amount being shipped annually from the world’s biggest thermal coal port. Port Waratah has proposed a A$5 billion plan to add 120 million tons of capacity.
“Port Waratah’s view is that this just does not fit with the broader plan, and not only that, it seriously risks jeopardizing the broader Hunter Valley coal industry export plan,” Matthew Watson, a spokesman for the operator of two export terminals at Newcastle, said by phone. “Port Waratah has started entering into contracts with Hunter Valley coal producers.”
Resource companies are planning A$430 billion of projects in Australia, the world’s biggest exporter of coal, iron ore and alumina, to meet demand from Asia. Coal exporters are facing bottlenecks as railroads and ports have struggled to cope with the increased demand, resulting in regular queues of ships waiting to load.
The planned terminal, subject to state government approval to use the proposed site, may start exports from 2015 “or sooner,” Steve van Barneveld, managing director of Hunter Ports, told reporters today in Sydney.
Existing coal mines and projects in and around the Hunter Valley, where Rio Tinto Group and Xstrata Plc own mines, would support additional annual exports of 65 million to 90 million tons of coal “if there is the infrastructure,” Hunter Ports said.
Japanese trading houses and Chinese parties have shown interest in providing “equity backing” for the project, Mark Rowsthorn, head of Tinkler’s International Ports & Logistics, said at the meeting. Rowsthorn joined in August after his previous role as chief executive officer of Asciano Ltd. (AIO), Australia’s largest port operator.
Tinkler, an electrician-turned-resources entrepreneur, is also chairman and largest shareholder of Brisbane-based Aston Resources Ltd. (AZT), which is developing the Maules Creek coal mine in New South Wales. Tinkler, who’s other business interests include a rail developer and racehorses, said Nov. 17 that he plans to buy more coal assets in the region. Aston plans to export coal from Maules Creek through Newcastle.
Port Waratah plans to lodge its environmental assessment with the state Department of Planning and Newcastle Port Corporation tomorrow, it said in a statement on its website.
Hunter Ports, which is based in Newcastle, aims to start a community engagement program and information sessions during the next two weeks. Following assessment of the proposal by the NSW government, Hunter Ports will prepare an environmental impact statement, it said.
Newcastle Port Corporation considers Koorangang Island, the site of Port Waratah’s proposed terminal as the best location for an additional loader, it said in an e-mailed statement. Newcastle Port said it has a lease agreement with Port Waratah built on the back of the Hunter Coal Export Framework that is supported by the coal industry and the Australian Competition and Consumer Commission, the e-mail said.
A spokeswoman at the New South Wales Department of Planning wasn’t immediately able to comment. The port of Newcastle is located about 125 kilometers (70 miles) north-northeast of Sydney.
NEW DELHI (Commodity Online): India will meet its shortfall of Coal at the end of the Twelfth Five Year Plan period through imports of coal by end users as per their requirement as coal is an item under Open General Licence (OGL), according to the Pratik Prakashbapu Patil , Minister of State in the Ministry of Coal.
Main reasons for shortfall in production include delay in environmental & Forestry Clearance of major projects, R&R issues & land acquisition problems, inadequate availability of railway wagons in different coalfields, Law and order problems and Excessive rainfall during the current year in major coalfields.
Production target and achievement during the Eleventh Five Year Plan i.e. from the year 2007-08 to 2011-12 (April – October 2011) is as under:-
During the 2007-08 fiscal, target was 460.50 mt (achieved 457.08 mt), in 2008-09, it was 497.29 mt (492.76 mt), in 2009-10, 532.33 mt (532.04 mt), for 2010-11, 572.37mt (533.08 mt), for the current fiscal 554mt (262.03 upto oct 2011).
Mean while the India Government has allocated 43 coal blocks during the last three years and the current year. But none of these coal block allocated have come into production, according to the Minster.
The Minister said that one of the conditions of allocation of coal block is that coal production from the blocks shall commence within 36 months (42 months in case the area is in forest land) in case of open cast mines and within 48 months (54 months in case the area is in forest land) of the date of issue of letter of allocation in case of underground mines. Further 24 months time would be allowed in case of unexplored blocks.
The allocation letter also stipulates that the allocation of coal block may be cancelled, interalia, on the ground of unsatisfactory progress in the development of coal mining project. In order to expedite the development of the coal blocks, various review meetings were held from time to time with the representatives of allotee companies. Based on the recommendations of various review meetings and also keeping in view the facts and circumstances, action is taken against the coal block allotees where progress is unsatisfactory.
As per the assessment made by the Central Electricity Authority (CEA), the coal requirement for the power plants designed on indigenous Coal has been estimated at 457 Million Tonnes during 2011-12. Against this requirement, the coal availability from the indigenous sources has been estimated at 405 Million Tonnes and the balance has to be met through imports by power utilities. Ministry of Power has fixed import target of 35 Million Tonnes, which is considered equivalent to about 52 Million Tonnes of indigenous coal due to higher calorific value of imported coal, for import by the power utilities during 2011-12. Pratik Prakashbapu Patil informed Rajya Sabha.
To ensure that targets are met, the coal supplies to the power utilities are monitored regularly by an Inter-Ministerial Sub group constituted in Ministry of Coal which also issues necessary directions for meeting any contingent situations relating to coal supplies to power utilities. Further, the Secretary (Co-ordination), Cabinet Secretariat periodically reviews the position of coal supplies to power utilities.
Demand and supply of coal
Central Government does not import coal. Under the present import policy of the Government, Coal is placed under Open General License (OGL) and can be freely imported by anyone in the country on payment of applicable import duty, according toPratik Prakashbapu Patil , Minister of state in the Ministry of Coal.
The minister said that the Coal Regulatory Authority is proposed to be set up to regulate and conserve resources in the coal sector; protect the interests of consumers and producers of coal and for matters connected therewith or incidental thereto. The proposed Regulator is expected to create a level playing field for all players in the coal sector and facilitate faster resolution of issues relating to economic pricing of coal, bench marking of standards of performance etc.
At present, suitable incorporation of these changes/suggestions is being examined in consultation with the Ministry of Law. Once finalized, the draft Bill would be submitted for the approval of the competent authority.
The coal demand of various sectors is finalized by the Ministry of Coal/Planning Commission on annual basis, after discussions with all the stakeholders. The production and supply position of the Government coal companies are periodically monitored at the coal company level and reviewed by the Ministry of Coal.
Mundra Port and Special Economic Zone rose 2.77% at Rs. 129.75 at 11:06 IST after the company said that its West Basin bulk coal handling terminal has delivered a record 62,718 tonnes a day coal to Adani Power's plant located adjacent to the port.
The announcement was made after market hours on Monday, 28 November 2011.
Meanwhile, the BSE Sensex was down 46.46 points, or 0.29%, to 16,120.67.
On BSE, 1.13 lakh shares were traded in the counter as against an average daily volume of 2.12 lakh shares in the past one quarter.
The stock hit a high of Rs. 130.55 and a low of Rs. 125.30 so far during the day. The stock had hit a 52-week low of Rs. 115.25 on 25 November 2011. The stock had hit a 52-week high of Rs. 169.75 on 28 October 2011.
The stock had underperformed the market over the past one month until 28 November 2011, sliding 22.50% compared with the Sensex's 9.20% decline. The scrip had also underperformed the market in past one quarter, falling 9.95% as against 2.01% rise in the Sensex.
The large-cap private port and special economic zone has an equity capital of Rs. 400.68 crore. Face value per share is Rs. 2.
This large tranche of coal was delivered through a world class high speed conveyor belt at a speed of 6,000 tonnes per hour. The belt runs across 20 kilometre from the port to the power plant, a statement by Mundra Port and Special Economic Zone (MPSEZ) said.
Adani Power, one of the country's largest private thermal power producers, is setting up a 4,620 megawatts (MW) power plant in Mundra, Gujarat while Tata Power is constructing a 4,000 MW ultra mega power project at the same location.
“The accomplishment of import and time-bound delivery of first such large tranche of coal establishes MPSEZ's prowess in developing world-class port infrastructure in India and abroad. The feat could be achieved by better planning skills, state-of-the-art Mundra Port and Special Economic Zone Limited mechanization and dedication of the port operator, displaying its leadership position in the port infrastructure sector,” said Dr. Malay Mahadevia, Whole Time Director at MPSEZ.
The West Basin is Asia's largest coal import terminal and has been set up to primarily cater to supply imported coal to the power plants in the region. It can handle capsize vessels up to 250,000 deadweight tonnes (DWT) and will have draft of 19.5 meters when fully developed.
Mundra Port is expanding the West Basin terminal and construction for the fourth berth is going on in full swing. The company is also investing heavily in augmentation of the material handling system to cater to additional volumes of imported coal for power plants in the vast North West Indian hinterland.
Last month, Mundra Port also commenced double stack container trains to help control transportation costs. The trains are running from Mundra Port to Patli near Gurgaon, Haryana, thus connected Northern India to the west.
Net profit of MPSEZ rose 29.17% to Rs. 273.42 crore on 44.20% rise in net sales to Rs. 587.76 crore in Q2 September 2011 over Q2 September 2010.
Mundra Port provides cargo handling and other value-added port services. Mundra SEZ is India's first port-based multi-product special economic zone.
Tuesday, November29, 2011
WESCOAL , which is fighting off liquidation applications in a long-running feud with a disgruntled contractor, unveiled a R102m deal yesterday to buy a 51% stake in a sought-after metallurgical coal deposit near Witbank.
The all-share transaction will give Wescoal a controlling stake in the undeveloped Pegasus deposit owned by BHP Billiton Energy Coal SA. Wescoal will issue 140-million shares at 73c each to HSTI, a shelf company set up to house the asset.
It will cost up to R250m more to bring an opencast mine into production there to supply South African users of metallurgical coal such as the ferrochrome industry as well as the export market, CEO Andre Boje said.
"This is very exciting and it will put us into a different league," Mr Boje said.
"You’ll notice we are still trading under a cautionary notice, so there are other deals we are doing," he said.
The deposit has a measured resource of 15-million tons and should be in production from 2014, with low costs due to a low stripping ratio of 1,46, which means there is relatively little waste to move for each ton of coal dug out of the mine, a big cost factor for coal miners.
"There was intense competition from local and international coal-mining companies to secure the Pegasus project, as the reserve is known industry-wide as the last great coal resource available in the Witbank and Middelburg coalfields," Mr Boje said.
An independent assessment had put the value of the deposit at between R593m and R946m, Mr Boje said.
Wescoal made the offer to buy the 51% last Friday from HSTI. It hopes to announce the owner of the remaining 49% in December or January and it is this partner that could be a source of finance to build the mine.
The full deal is expected to be concluded before June next year.
As part of the transaction, Wescoal will pay Bisischi Mining R54m in cash once the licence is transferred, of which the new partner will be liable for 49%. UK-listed Bisischi was one of the former owners of the Pegasus property in an empowerment transaction that went sour.
The transaction, along with a number of others Wescoal is working on, will go some way to offset the risk that has blown up around the Khanyisa colliery, where the owner of the mining right has filed for liquidation of Wescoal for nonpayment of royalties. Wescoal is opposing the application and has said the VAT number provided by owner did not exist.
Lanco Infratech owned Griffin Coal's threat to halt coal supply to the Bluewaters Power Station in Western Australia unless prices are revised upward seems to have worked, with sources close to the development indicating an agreement might be inked within a fortnight.
The sources said there could a price revision in favour of Lanco with respect to the supply contract with Australian firm Griffin Energy's Bluewaters Power Station, besides some upfront fee.
Earlier, Lanco had indicated its intention to hike prices of coal sold to the power plant and said it may suspend coal supply to the Bluewaters Power Station, which accounts for as much as 10% of power generation in Western Australia.
Lanco's move earned the wrath of the local administration, which threatened the Indian infrastructure major with a coal export ban.
However, sources told PTI that "All the issues with Bluwaters Power are settled. The company may formally announce the terms in two to three weeks' time. There will be upward revision of coal price.”
As per the agreement, Lanco will have to supply 1.6 to 1.8 million tonnes per annum to Bluewaters and according to experts, the coal supply price to Bluewaters could be in the range of 40 Australian dollars per tonne.
When contacted, Lanco Infratech CFO Mr J Suresh, without confirming the development, said talks are moving in a positive direction and the company cannot comment at the moment.
The Bluewaters power station was set to be sold to Sumitomo Corp and Kansai Electric Power Co for an enterprise value of around USD 1.2 billion.
(Sourced from PTI)
It is reported that Afghanistan government has offered India a new strategic role in Afghanistan by awarding mining rights for the country’s biggest iron deposit to a group of Indian state run and private companies.
Mr Karzai president of Afghanistan and his cabinet awarded three of four blocks at the Hajigak ore deposit to seven companies that bid with support from India’s government and offered the final block to Canada’s Kilo Goldmines Ltd
The Afghan Ministry of Mines announced “The Afghan Iron and Steel Consortium (AFISCO) which comprises SAIL, NMDC, Monnet Ispat & Energy, RINL, JSW Steel, Jindal Steel & Power, JSW Ispat has been awarded three blocks.”
India’s government backed the group, led by state owned Steel Authority of India Ltd Limited and NMDC Ltd, to widen the country’s strategic presence in Afghanistan, which Prime Minister Manmohan Singh has said is essential for Indian security.
Hajigak, a series of rugged mountain ridges 100 kilometers west of Kabul, holds an estimated 1.8 billion tonnes of ore and is the biggest mining project on offer in a country that the US government estimated last year holds USD 1 trillion in untapped minerals.
The Afghan government had invited bids to award development rights for four mines in Hajigak earlier this year and the last date for submission of bids was September 4.
(Sourced from Bloomberg & NDTV)
Iron ore traders say prices will continue to slide this week as lean steel demand in China may limit appetite for the raw material.
Reuters reported that spot iron ore prices are likely to extend losses this week as lean steel demand in top consumer China may limit appetite for the raw material, with sellers cutting prices further on Monday.
Iron ore with 62% iron content dropped half a percent to USD 140.40 a tonne on Friday, according to the Steel Index, putting its weekly loss at 4.8%. It was iron ore's first weekly drop in four weeks.
An iron ore trader in Shanghai said that "The price will continue to slide this week. Sentiment hasn't really changed much, steel demand in China is still very limited.”
Chinese consultancy Umetal said that offer prices of imported iron ore in China fell by another dollar per tonne on Monday, with Australian Neman fines quoted at USD 139 to USD 141 a tonne, cost and freight and MAC fines at USD 133 to USD 135
Australian Pilbara iron ore fines were offered at USD 135 to USD 137 a tonne and Indian 63.5/63 grade fines were quoted at USD 143 to USD 146.
But traders said prices are unlikely to go into freefall again as supplies remain tight.
(Sourced from Thomson Reuters)
Kilo Goldmines Ltd while responding to press reports that it has been awarded one of four concession blocks comprising the Hajigak iron ore deposit in Afghanistan by the Afghan Ministry of Mines confirmed that it has submitted a bid in response to a request for proposals from the MOM for the mining rights to the four concession block Hajigak iron ore deposit.
The company has not been notified by the MOM of the outcome of the bidding process.
It said “If selected, Kilo would have the exclusive right to negotiate with the MOM for the mining rights to the concession block for which it was selected as a preferred bidder before a final award is made.”
Although the bid was submitted in the name of the Company, the bid was prepared by an independent group, led by David Buckle, a UK based corporate financier, who would be responsible for the financing and management of the project. If awarded, the project would be held in a new entity with Kilo receiving an initial 20% interest, subject to dilution but with no funding obligation. The independent financing and management structure was presented in the bid documents submitted to the MOM. The Principals are required to reimburse Kilo for expenses incurred in the bidding process and to indemnify it for any losses sustained.
The bid was initiated earlier in the year and the Board determined that it would be in the best interests of the Company to continue with the bid given the potential financial benefits and limited downside risk following the agreement of the Principals to reimburse the Company for expenses and provide it with indemnification.
The Hajigak iron ore deposit is situated in the mountainous Bamyan province, 130 km west of the capital, Kabul. It is one of several iron deposits within this area and is the largest located to date.
Kilo Goldmines Ltd is a Canadian gold exploration company operating in the Democratic Republic of Congo. The Company has over 7,000 square kilometers of favorable Archaean Kabalian greenstone in the Kilo Moto area in north eastern DRC. Kilo recently announced an inferred resource on the Adumbi Deposit of the Somituri Project of which the Company owns a 71.25% interest in the DRC entity that holds the Somituri Project Exploitation Permits. The Company is also working on a number of other prospective areas which contain historical workings in the same region. It also has a joint venture with Rio Tinto Ltd. on potential iron ore licences in north eastern DRC.
Spot iron ore prices are likely to extend losses this week as lean steel demand in top consumer China may limit appetite for the raw material, with sellers cutting prices further on Monday. Iron ore with 62 percent iron content dropped half a percent to $140.40 a tonne on Friday, according to the Steel Index .IO62-CNI=SI, putting its weekly loss at 4.8 percent. It was iron ore's first weekly drop in four weeks.
"The price will continue to slide this week. Sentiment hasn't really changed much, steel demand in China is still very limited," said an iron ore trader in Shanghai.
Offer prices of imported iron ore in China fell by another dollar per tonne on Monday, with Australian Neman fines quoted at $139-$141 a tonne, cost and freight and MAC fines at $133-$135, said Chinese consultancy Umetal.
Australian Pilbara iron ore fines were offered at $135-$137 a tonne and Indian 63.5/63 grade fines were quoted at $143-$146, said Umetal.
Iron ore prices fell to 22-month lows below $117 a tonne in late October when thin Chinese steel demand slashed the appetite for the steelmaking ingredient.
But traders said prices are unlikely to go into freefall again as supplies remain tight.
"The big miners are not putting too many cargoes in the spot market, supply from India has been reduced dramatically and a lot of traders are holding on to their cargoes, waiting for prices to recover before they sell," said a physical iron ore trader in Singapore.
Rio Tinto , the world's No. 2 iron ore miners, warned on Monday that further cracks may be emerging in global commodities markets as the economies of Europe and the United States waver, with its customers increasingly cautious on the outlook.
Prices of iron ore, copper and aluminium -- among Rio's biggest income earners -- have tumbled by more than 20 percent each since August as stockpiles of unused metal swell in warehouses from Rotterdam to New Orleans to Shanghai.
BHP Billiton , the third biggest iron ore producer, expects China's steel output to continue at current rates, below historical highs, for some time.
"When we talk to our Chinese customers there is not a sentiment that the operating rate in the steel industry will improve or change dramatically over the next little while," Chief Executive Marius Kloppers said on a conference call.
In a regulatory filing Monday, Belo Horizonte, Brazil-based flat rolled steelmaker Usinas Siderurgicas de Minas Gerais SA (Usiminas) said that it will acquire Brazilian iron ore producer Mineracao Ouro Negro SA for US$367 million. Mineracao owns approximately 200 million tons of iron ore reserves.
Additionally, Usiminas' subsidiary Mineracao Usiminas SA has completed negotiations for the acquisition of iron ore miner Mineracao J. Mendes Ltda, SOMISA--Siderurgica Oeste de Minas Gerais Ltda and Global Mineracao Ltda with an additional payment of US$100 million. The acquisition agreement previously began in February 2008.
Mineracao Usiminas SA has also signed an agreement with Ferrous Resources do Brasil SA for the companies to jointly explore Ferrous' Santanese mine in Southeast Brazil.
Tags: iron ore , hrc , crc , galvanized , coated , raw mat , flats , Brazil , South America , investments , M&A , steelmaking , mining
BHP Billiton expects steel output in China to continue at current rates, below historical highs, for some time.
Mr Marius Kloppers CEO of BHPB said that "When we talk to our Chinese customers there is not a sentiment that the operating rate in the steel industry will improve or change dramatically over the next little while.”
Mr Kloppers also said that the company has no exposure to the euro, with all of the company's transactions settled in US dollars and its loans and bonds in US dollars.
(Sourced from Thomson Reuters)
Chinese ports are not yet ready to receive Vale's mega iron ore carriers due to a few "small issues" in handling the world's largest dry bulk vessels, an official with the National Development and Reform Commission said on Monday.
Vale, the world's largest iron ore producer, is spending billions of dollars to build an unprecedented fleet of very large ore carriers (VLOCs) to transport the steel-making ingredient to China and other major consumers.
The Brazilian mining firm has received at least three of the huge ships this year, sending them to Italy and Oman as it awaits the lifting of travel restrictions to its biggest market, China.
"Chinese ports are not entirely ready for accepting Vale's carriers due to some facilities and technical issues," said Luo Ping, head of the transportation planning division at the NDRC's Institution of Comprehensive Transportation.
Among the issues still unresolved is how the VLOCs will be safely guided into the ports.
Vale can also submit applications for each mega ship to local maritime authorities, who will then decide on whether the ports can receive them or not, Luo said on the sidelines of an industry conference.
Vale plans to operate as many as 35 VLOCs before the end of 2013, as it ramps up iron ore production to 469 million tonnes by 2015 from 308 million last year.
China, which buys around two thirds of seaborne iron ore cargoes to feed the world's largest steel industry, will add 390 million tonnes of large-scale iron ore port capacity and build an extra 440 deepwater berths by 2015, the NDRC official said.
According to new guidelines issued by the China National Coal Association (CNCA) for China's 12th five-year plan period, by the end of the period the number of large-scale coal enterprises in China is to be reduced to 4,000, including 12 super-large coal enterprises with annual output capacity above 100 million mt and a further 16 super-large coal enterprises with annual output capacity between 50 million mt and 100 million mt.
Meanwhile, according to the guidelines, the overall number of coal mines in China is to be kept below 10,000.
Tags: coking coal , raw mat , China , Far East , production , mining , East Asia and Pacific
Monday, November 28, 2011
Shares of Harum Energy and other Indonesian coal miners that operate in East Kalimantan province fell on Monday on concern that the collapse of the Kutai Kartanegara bridge into the Mahakam River would affect their profitability.
“The Mahakam River is the largest river in East Kalimantan and has one of the most crowded coal-barging traffic activities,” said Herman Koeswanto, an analyst at Mandiri Sekuritas, in a report sent to clients on Monday. “This will affect almost all listed coal companies that are located in East Kalimantan.”
He said that “the most-affected listed coal companies” would be Harum Energy, Indo Tambangraya Megah (ITMG), Sakari Resources and Bayan Resources.
These companies, which do a lot of business in resource-rich East Kalimantan, use the Mahakam River to transport coal for distribution at a port from their facilities.
Shares of Harum dropped 5.4 percent to Rp 6,950 at the Indonesia Stock Exchange (IDX). ITMG slipped 2.3 percent to Rp 37,800, and Bayan lost 0.3 percent to Rp 18,150. Sakari, which trades in Singapore, shed 1.8 percent to 1.895 Singapore dollars.
The mining index, which measures the movement of coal miners on the IDX, fell 1.4 percent to 2,487.96 on Monday, compared to a 0.3 percent gain for the benchmark Jakarta Composite Index (JCI).
Coal miners including Harum, Bayan, ITMG and Bumi Resources have notified the exchange and investors as to whether the collapse of the bridge would affect them. Most of the coal miners said they would not be affected by the disaster.
“The closure will prevent us from transporting coal from our Separi port to our transshipment points in Muara Jawa and Muara Berau,” said Harum Energy spokesperson Alexandara Mira in a statement.
“Our coal shipment for the month of November 2011 should largely be unaffected since almost all of the coal due to be loaded for the month has been barged past the affected section of Mahakam River. We have notified our customers of potential delays of future shipments resulting from the river closure.”
Dileep Srivastava, Bumi Resources’ investor relations director, said on Monday that the disaster would have no impact on the company.
“We expect to maintain normalcy of coal shipments from our dedicated ports to our valued clients,” Dileep said in a statement.
Jenny Quantero, corporate director at Bayan, said that there would not be any impact on the company in the short term.
“For now, we are not affected,” she said in a statement. “We hope that the reparation of the bridge will not last long. If the renovation will take more time, we will be affected.”
Bayan is producing 14.5 million to 15.5 million tons of coal and it plans to sell 15 million to 16 million tons of coal this year. The company sells coal to Japan, India and Malaysia and has eight mining companies in East Kalimantan, according to its Web site.
Analysts in Jakarta, however, were not so sure that the disaster would have such a light impact on the companies.
“This accident should affect the coal loading and deliveries activities that may incur demurrage cost for coal producers,” Mandiri Sekuritas’ Herman said.
Erindra Krisnawan, an analyst with CIMB Niaga, agreed.
“As long as the evacuation schedule is not clear, we expect their stock to be pressured,” Erindra said.
Saturday’s collapse of the 10-year-old bridge, which spans the Mahakam river in central East Kalimantan province, has claimed the lives of at least 10 people, and 28 more are missing. The government is currently assessing the effects of the disaster.
The government has prevented any ship from crossing the area of the river where the bridge collapsed.
(sourced The JakartaGlobe)
Coal in Asia is unlikely to recover in 2012 from its first decline in three years as electricity-price controls prompt Chinese and Indian utilities to limit purchases of the fuel.
Power-station coal at the Australian port of Newcastle, a benchmark price for Asia, will average about $118 a metric ton next year, according to the median estimate of six analysts and traders surveyed by Bloomberg News. Prices have averaged $122 so far in 2011. Coal at Richards Bay in South Africa, which supplies Asia and Europe, will trade at about $111 a ton in 2012, down from $118 this year, the survey showed.
Power providers in China and India, Asia’s biggest energy users, are struggling to recoup their costs as governments restrict prices to curb inflation, reducing the incentive to boost electricity generation from thermal coal. China may slow imports of the fuel next year after increasing shipments by about 10 percent this year, according to the China Coal Transport and Distribution Association. Indian purchases may also fall, said Rahul Bhandare, chairman of Knowledge Infrastructure Systems, a coal trader.
“Where the two countries are alike is on the situation of their utilities, squeezed between high coal prices, both domestic and international, and regulated domestic power prices not allowing them to run at a profit,” said Emmanuel Fages, the Paris-based head of European energy research at Societe Generale. “Raising power prices is difficult for local authorities for economic and social reasons.”
Power-station coal at Newcastle with a heating value of 6,700 kilocalories per kilogram fell 10 percent this year to $113.60 a ton on Nov. 18, after climbing 46 percent in 2010 and 8.5 percent in 2009, according to data from IHS McCloskey, a Petersfield, England-based researcher.
The price for the fuel with a heating value of 6,000 kilocalories per kilogram at Richards Bay, Africa’s biggest coal terminal, fell 16 percent to $104.30 as of Nov. 23, according to McCloskey. It rose 69 percent in 2010 and slid 30 percent in 2009, the data show.
Power plants in China, the world’s biggest coal user, face the smallest profit margins in at least five years, according to Sanford C. Bernstein & Company. Coal costs more than 95 percent of the wholesale electricity price at benchmark plants it tracks, exceeding the level in 2008, when the nation suffered a wave of blackouts, data compiled by Michael Parker, a Hong Kong-based senior analyst at Bernstein, show.
Huaneng Power International, the nation’s biggest electricity provider, reported a 79 percent drop in net income in the third quarter from a year earlier.
The Chinese government has kept electricity prices unchanged for more than five months as it focuses on fighting inflation, which Premier Wen Jiabao said last month was his top economic priority. China’s inflation rate has dropped from a three-year high of 6.5 percent in July to 5.5 percent last month.
Power rates paid by non-residential users were raised in 15 provinces in June, the first increase in more than a year, and fees paid by some distributors were boosted. Residential prices were unchanged. More than 70 percent of Chinese generators are fueled by coal.
Electricity output was 364 billion kilowatt-hours in October, up 9.3 percent from a year earlier, according to the National Bureau of Statistics. That lagged behind the 13.2 percent increase in production by factories, which account for about 70 percent of Chinese power demand. Electricity consumption will rise 9.5 percent in 2012, Barclays said in a report.
India has been reluctant to raise power prices as the economy slows and the central bank tries to curb inflation that exceeded 9.7 percent in October. The Reserve Bank of India has lifted its benchmark repurchase rate 375 basis points since the start of 2010 and last month forecast the economy will grow 7.6 percent in the year ending March 31, lower than the 8 percent it estimated previously. The government faces at least five regional elections next year.
“Power tariffs are politically sensitive and are not often revised,” Devendra Pant, an analyst at Fitch Ratings in New Delhi, said in a Nov. 14 note. “State power utilities have large accumulated losses.”
Coal accounted for 66 percent of India’s electricity generation in the 2011 fiscal year, Pant said. The variable cost of producing power using imported fuel is about 3 rupees (6 cents) a kilowatt-hour compared with an average tariff of 3.50 rupees, according to New Delhi-based Knowledge Infrastructure, which imports about 4 million tons a year of coal.
Indian utilities bought 23 million tons from overseas in the first half of the year ending March 2012, compared with 55 million expected for the full year, Sabine Schels, a London-based analyst for Bank of America, said. The nation faces a shortage of 142 million tons of coal for power stations and steelmakers in the year, the coal ministry estimated in February.
NTPC, India’s largest power producer, said income from electricity generation, before interest and tax, fell 1.3 percent in the second quarter after fuel costs climbed 24 percent to 106.5 billion rupees. Total expenditure rose 7 percent, according to an Oct. 25 statement. Adani Power’s profit missed analyst estimates after fuel costs more than tripled in the quarter, the company said.
Electricity generation and coal demand may still be spurred by another increase in Chinese power prices. Shares in the nation’s utilities, including Datang International Power Generation and Huaneng Power surged in Hong Kong on Nov. 8 after Deutsche Bank upgraded its recommendation on the industry to “overweight,” saying the government may raise rates charged to distributors within months.
Mr Ambar Timblo MD of Fomento Resources tells Sudheer Pal Singh about the mix of complex issues haunting the state’s mining sector.
Q - What is the major cause of suspicion of illegal mining in Goa?
A - One of the principal causes of suspicion is small-sized mines of less than 100 hectares. It is characteristic of Goa, and is one reason why dumps are placed outside the lease area, thus causing suspicion of illegalities. A miner needs area to do conservative and efficient mining. There are provisions in the law which allow a miner to place rejection stacks outside the lease. But it has to be done as part of the mining plan.
Q - If this is a part of the approved mining plan, why is it being called an irregularity?
A - There is a belief that in the name of moving these dumps, the miners are excavating more ore than allowed under environment clearance. So what we need is more of a policing system to keep this under check. One needs to put more checks and balances to monitor movement.
(Source - Business-Standard)
Mr KC Venugopal minister of state for power informed the Lok Sabha that in order to bridge the gap between requirement of coal and its availability from the domestic sources in respect of thermal power stations designed on indigenous coal, power utilities have been assigned an import target of 35 million tonne for the year 2011-12.
Utility wise Target for Import of Coal for the year 2011-12 in respect of Power Stations designed on Domestic Coal is given below:
|Haryana Power Generation Corporation Ltd.||1.45|
|Rajasthan Rajya Vidyut Utpadan Nigam Ltd.||1.45|
|Uttar Pradesh Rajya Vidyut Utpadan Nigam Ltd||1.08|
|Madhya Pradesh Power Generating Company Ltd||0.80|
|Gujarat State Electricity Corporation Ltd||1.48|
|Maharashtra State Power Generation Co Ltd||3.35|
|Andhra Pradesh Power Generation Corporation||1.60|
|Tamil Nadu Generation & Distribution Corporation||1.80|
|Karnataka Power Corporation Ltd||0.90|
|Damodar Valley Corporation||1.73|
|Calcutta Elect Supply Company||0.50|
|West Bengal Power Development Corporation Ltd||1.00|
|Aravali Power Company Private Limited||0.30|
|NTPC SAIL Power Company||0.30|
|TATA (Maithon RB)||0.21|
|Chhattisgarh State Power Generation Company||0.20|
In million tonne
In addition, the power stations have also been envisaged to operate on imported coal. The coal import requirement for such power stations for the year 2011-12 was assessed as 20 million tonne.