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Saturday, February 18, 2012

Global steam coal prices may zoom if CIL pushes imports

Saturday, 18 Feb 2012

ET reported that International coal prices are likely to move up further as the world's largest producer CIL needs to go on global shopping for the dry fuel to meet the increased demand of the power sector.

A Committee of Secretaries, set up by Prime Minister Manmohan Singh to sort out issues relating to the power sector, has asked CIL to sign Fuel Supply Agreements with power plants that have already been commissioned or would go on stream on or before March 31st 2015 for 20 years.

The analysts said that "It will be a Herculean task for Coal India Ltd to meet the additional obligations since its entire production now gets exhausted to feed the power sector. In the current situation, CIL's only way out is to go for procuring the raw material in countries like Indonesia, Mozambique, Australia and South Africa.”

Analyst said that "The international prices of coal are likely to go up as India's state run miner Coal India looks for procuring in the global market. The demand for coal in India is likely to go up manifold as projects go on stream.”

The international price of coal is now hovering a little over USD 100 per tonne.

(Sourced from ET)

Steam coal prices rise a bit amid quiet trade

Saturday, 18 Feb 2012

Reuters reported that prompt European physical coal prices ticked higher again by 50 cents to USD 1.50 on Friday as less coal was offered.

A March South African cargo was bid at USD 107.50 with an offer of USD 110.00, up USD 1.50 on the bid.

An April South African cargo was bid at USD 105.00 and offered earlier at USD 105.50, up over USD 1.50 on the bid.

A March DES ARA Russian cargo was bid at USD 98.00, up 25 cents.

An April multi origin cargo was offered at USD 102.00, also slightly higher.

No fresh trades were reported and activity was quiet, utilities and traders said.

DES ARA prices dipped on Wednesday to their lowest level for over a year alongside coal swaps, but the move down was overdone and a correction upwards was expected.

(Sourced from Reuters)

Iron ore prices lowest since October on Chinese stockpiles

Saturday, 18 Feb 2012

Bloomberg reported that iron ore dropped for a seventh day, the longest losing run in more than three months, as the biggest consumer China may slow buying because of increased stockpiles.

Data from The Steel Index showed that ore with 62% iron content at the Chinese port of Tianjin fell 1.6% to USD 137.40 per metric tonne on February 17th 2012. Prices last had a losing run that long in the period ended Oct. 28.

Mr Daniel Hynes director of commodity research at Citigroup Inc in Sydney said that “They’re certainly not as aggressive as we’ve come to expect at this time of year.”

He said that a price rally late last year may have been down to re stocking.

According to data from, inventories at 30 Chinese ports totaled 100.21 million tonnes last week, about 32% more than a year earlier. Steel demand in China normally increases after the weeklong Lunar New Year holidays as construction resumes. The break ended on January 29 this year.

(Sourced from Bloomberg)

Tanzania to become leading iron ore producer in Africa

Saturday, 18 Feb 2012

It is reported that Tanzania is set to become one of the leading producers of iron ore on the African continent.

Experts told the Minister for Industry and Trade, Dr Cyril Chami that at least 50 million tonnes of iron ore is expected to be produced by the Maganga Matitu project in Ludewa District, Iringa Region within the next 100 years.

The project which is a joint venture of MMI Steel Mills Limited and the National Development Corporation is scheduled to start production of sponge iron in 2014.

It is also expected to produce between five and 10 MW of electricity to allow iron melting as well as power supply to residents of Ludewa District. Dr Chami said the project would benefit many people, especially Ludewa residents who have been involved in its development from the beginning.

According to Dr Chami, the sponge iron project was a biggest local investment ever and its implementation was so far highly impressive. He noted that "This project has made great strides since its implementation started and Tanzanians should expect a lot of benefits from it.”

The minister also urged all the investors to consider the environmental and social impact assessment before implementation of projects to avoid conflicts with residents in the respective areas. He was speaking during his visit at the MMI Steels Mills Limited and learn the challenges facing local industries.

Earlier, Mr Subhash Patel MD of MMI Steels Ltd said that about USD 12 million has so far been spent on the pre implementation stage of the project including exploration and infrastructural improvement at the area.

He listed some of the challenges as poor infrastructure, boundary conflicts as well as the poor social services, citing the example of existence of only one petrol station set up late last year. Mr Patel called for the government's support in implementing the project especially in infrastructure development and settlement of boundary conflicts.

He said that "The company has constructed 150 kilometres of roads and evaluation property is ready. Survey on the quality of the minerals by PB Company of UK is also ready.”

According to Mr Patel, 3,000 Tanzanians would get direct employment, while more than 8,000 others would be indirectly hired.


FMG expects iron price to stay at USD 140 per tonne

Saturday, 18 Feb 2012

Fortescue Metals Group expects iron ore prices will remain around USD 140 per tonne in the short-to-medium term as Chinese demand remains strong but little new supply comes onto the market.

Fortescue reported that it had achieved an average realised sales price of USD 139 per tonne during the six months to December 31, down from USD 149 per tonne in financial 2010/11.

Mr Nev Power CEO of FMG told reporters that "Our core market in China remains strong and the iron ore index price has remained around USD 140 per tonne.”

He said that "Long term, China's growth is forecast to be stable around the nine per cent mark and we don't see significant new supply to come into the market in the short term, and, therefore, expect the price to remain in that range."

Head of marketing Mr David Liu said China's steel market should stabilize after a recent lull.

(Sourced from AAP)

Friday, February 17, 2012

Japan top oil buyer to keep importing Iran crude

Friday, 17 Feb 2012

Japan's top buyer of Iranian crude, Showa Shell Sekiyu KK was buying about 100,000 barrels per day of crude oil from Iran steady with last year despite the mounting pressure from the United States to cut imports.

Mr Jun Arai president of Japan said that "We will carefully watch the ongoing bilateral discussions between Japan and the United States. Iran is an important source of crude for Japan as well as our company, and we will wait for the government's guidance on the matter."

The comment comes as US sanctions on Iran look set to make it difficult for refiners in Japan; Iran's number three crude buyer to pay Tehran for its oil. Japan is seeking an exemption from US sanctions which if enforced would penalize some Japanese banks for doing transactions with Iran's central bank.

Mr Arai said that Iranian crude accounted for 8.8% of Japan's total imports in 2011. Iran is the fourth-biggest crude supplier to Japan. The company has raised the operating rate of its group refineries with total capacity of 395,000 barrels per day to more than 99% of capacity in the Q4 of 2012 after the closure of its 120,000 barrels per day Ohgimachi facility in September. That figure is up from the 2011 average of 93.2% and 84.2% in 2010.

He said that the power venture with Tokyo Gas, the gas fired 814 MW Ohgishima Power Station in Yokohama, operated at near full capacity following the March 2011 earthquake that forced indefinite shutdowns of many nuclear reactors and some fossil fuel fired plants in quake-hit northern Japan.

(Source: Reuters)

Oracle announces USD 610 million investments in Thar Block VI

Friday, 17 Feb 2012

Oracle Coalfields Plc, the operators of Block VI of the Thar coal project have announced their plans to invest up to USD 610 million for a coal mine of 5 million tonnes per annum capacity.

Mr Shahrukh Khan CEO Oracle Coalfields said that “The institutional investors abroad have no reservations in investing in Pakistan and they are willing to expose in the resource sector particularly in a project that is expected to yield a return of 20.5%. Besides, the international lenders are also interested in the project.”

Mr Khan informed about the details of the feasibility of coal mining and power generation project at Block VI and continuing significant progress in the development of its 1.4 billion tonnes flagship coal resource project in Thar, Sindh.

He said that the results of the comprehensive technical feasibility study undertaken last year confirmed the technical and economic viability of the project. This represents a significant step towards providing the nation, Sindh and local communities in Thar with a new sustainable source of energy for decades to come by bringing into production its first large scale open pit coal mine.

Oracle has also signed MoU with Karachi Electricity Supply Company to develop initially 300 MW mine mouth power plant with the plan to develop up to 11 MW at the Block VI site. Initial coal production is expected in 2014 with mine development to be started by the end of the current year.

The feasibility study results concentrated on an initial mining area with Block VI of approximately 20 square kilometers and reported in accordance with the international recognized 2004 Australian JORC Code, a mineral resource of 529 million of wet tonnes.

Mr Khan said that within this overall mining area, a Phase 1 zone was determined with coal reserves of 113 MWT. With further potential increase in reserves in Phase 2 of the mining area, the life of mine could be extended by a further 30 years or more.

Mr Younas Dhaga Sindh Coal and Energy Secretary said that infrastructure development is underway on a fast pace and the provincial government had approved various schemes and allocated funds.

Mr Dhaga also informed about the Engro’s project and said that they have completed their bankable feasibility and are waiting some infrastructure updating. The Sindh government has decided to award Block IV of the Thar coal project to Chinese state owned Three Gorges.


BHPB BMA miners strike could hit coking coal production in Australia

Fri, 17 Feb 2012

ABS reported that more than 3000 BHP Billiton Mitsubishi Alliance workers began a 7 day strike in Queensland, in the biggest industrial action in Australia in more than a decade, potentially cutting output by approximately 1 million tonnes.

Workers are threatening week long stoppage at seven Bowen Basin mines, which produce one fifth of the world's coking coal.

There are warnings from analysts, that the stoppages will cause big problems for Asian customers.

BHP says the action won't affect pay negotiations, or decisions on issues the company says are vital to competitiveness.

Analyst Mr Tim Morris says the action could affect coal prices. He said “It's a reflection of workers wanting a larger slice of what's been a growing profit pie in the coal industry. You've already got significant flooding affecting coal output and Australia's one of the world's largest suppliers of coal to Asia. So it could have an impact on short-term pricing and if the tension continues, you could see some medium-term issues as well.”

Workers at BHP’s Goonyella Riverside, Broadmeadow, Peak Downs, Saraji, Norwich Park, Gregory Crinum, and Blackwater mines will be involved in the strikes.

(Sourced from

CIL plunges on penalties for failing to supply coal to power plants

Friday, 17 Feb 2012

Bloomberg reported that Coal India Ltd, facing a decline in production, fell the most in seven months after the government ordered it to increase sales to power utilities and said it will face penalties for failing to meet the obligations.

CIL declined by 5.8% to INR 320.05 at BSE, the biggest loss since July 8.

The stock has climbed 6.5% this year, compared with a 17% increase in the benchmark Sensitive Index.

The government ordered Coal India yesterday to sign agreements to supply projects due to be completed by March 2015, and import the fuel to overcome local production bottlenecks.

Coal India will pay a fine if supplies fall short of commitments.

(Sourced from Bloomberg)

Indian government orders CIL to ink FSA to end power shortages

Friday, 17 Feb 2012

Finally, Indian government has acted to alleviate chronic power shortages that hinder its economic growth, ordering its monopoly coal miner Coal India Limited to guarantee long term supplies or face penalties.

It asked CIL to sign 20 year Fuel Supply Agreements with power projects that are due to be commissioned by 2015 and have an agreement with distribution utilities to sell power. This would help power plants with an estimated capacity of more than 50,000 MW.

Until now, Coal India's long term contracts were for a five year period and the last one it signed was in 2009.

A government statement said that the government decision followed intensive lobbying by top executives from India's power companies, who had sought the help of prime minister Dr Manmohan Singh to boost supplies of coal.

Domestic coal supply has fallen short of targets, largely due to regulatory hurdles faced by miners, while poor infrastructure hinders the transport of imported coal, leaving many power plants running below capacity.

(Sourced from Reuters and CNBC TV 18)

Bohai Thermal Coal prices fall for 14th consecutive week

Friday, 17 Feb 2012

The benchmark Bohai Rim Steam Coal Price Index which tracks power station coal prices at 6 ports fell for the 14 consecutive week due to the lingering sluggish market demand along with recent significant falls in coal prices and lower freight rates.

Data showed that the average price of thermal coal with calorific value of 5500 Kcal per kilogram clocked in at CNY 777 per tonne in the week ended February 15th 2012 down 0.26% or CNY 2 per tonne from a week earlier and indicating an aggregated decline of CNY 76 per tonne.

At Qinhuangdao port, the price of 5500 Kcal per kilogram thermal coal dropped CNY 5 per tonne to reach in the range of CNY 765 per tonne to CNY 775 per tonne. The median price level of CNY 770 per tonne was CNY 30 per tonne lower than the ceiling price imposed by the National Development and Reform Commission.

Despite depressing track records over the past weeks, thermal coal prices at the ports are expected to move up in the not too far future driven by slow recovery in coal market coupled with slight rebound in freight rates for carrying coal from the ports.

Korea Western Power seeks 170000 tonne coal for March to April

Friday, 17 Feb 2012

Korea Western Power Co Ltd is seeking 170,000 tonnes of bituminous coal for arrival between March and April via a spot tender, the utility said on its website (

The tender for NCV minimum 5,600 kcal/kg bituminous coal supplied to Taean Power Plant would close at 2 PM on February 21.

(Sourced from Reuters)

Vale sells 80 pct of Q4 iron ore at spot prices - Report

Friday, 17 Feb 2012

An executive of Vale said that Vale, the world's largest iron ore producer, made 80% of sales of the mineral in the fourth quarter at spot prices.

(Sourced from Reuters)

Japan and Mozambique to cooperate on development of coal, oil and natural gas

Friday, 17 Feb 2012

Japan and Mozambique will cooperate on the development of coal, oil and natural gas in the southern African country as global competition to secure natural resources intensifies.

A memorandum of cooperation was signed today in Tokyo with Mozambique’s mineral resources ministry, the Ministry of Economy, Trade and Industry of Japan said in a statement. The agreement also covers the participation of Japanese companies in development projects.

Nippon Steel Corp and POSCO the largest steelmakers in Japan and South Korea, are investing in the $600 million Revuboe coking coal project in Mozambique. Coking coal and iron ore are the key raw materials used to make steel.

(Sourced from Bloomberg)

South Korea January coal imports up 3pct

Friday, 17 Feb 2012

South Korea's imports of coal in January rose 3.8 percent to 10.71 million tonnes from 10.32 million tonnes a year earlier, customs data showed on Wednesday.

Details of January imports are as follows

 Jan '12PriceJan '11Price
S. Africa1,054,408128.12137,47689.82

Price in USD

(Sourced from Reuters)

Thursday, February 16, 2012

Karnataka rakes in INR 270 crore royalty from E auctions

Thursday, 16 Feb 2012

Despite a halt on iron ore mining in Karnataka since July last year, the Karnataka state government has earned a royalty revenue of INR 270 crore, about 62% of the total royalty earnings in the last financial year. With two more months in the current financial year, royalty revenues are likely to go up further.

Mining activity came to a halt in July, when the Supreme Court ordered the closure of mining and transportation of iron ore in Bellary district. Subsequently, on August 26 the apex court also ordered closure of mining in Chitradurga and Tumkur districts.

However, through its orders dated September 2 and 23, the court had permitted sale of about 25 million tonnes of iron ore from the stockpile at various leases in Bellary, Chitradurga and Tumkur districts to ensure supply of ore to domestic steel mills, sponge iron and pig iron units, in and around Karnataka. A monitoring committee comprising forest officials of Karnataka and the director of mines and geology was constituted to supervise the sale of ore through electronic auctions.

Till January 6, the monitoring committee had conducted 18 e auctions, through which close to 11 million tonne of iron ore was sold for INR 2,694 crore. On this sale, the state department of mines and geology has collected royalty of INR 269.4 crore at 10% and INR 323.3 crore towards forest development tax at the rate of 12%

According to the final report on the status of mining leases surveyed by the joint team of the Central Empowered Committee the average sale price of iron ore works out to INR 2,455 a tonne.

Sources close to the process told Business Standard that with this, the royalty receivable by the government for the sale of 25 million tonne of iron ore through E auction may exceed the total royalty received by it for ore during 2010-11.

In addition, about 700,000 tonnes of iron ore dump belonging to the state-owned Mysore Minerals Limited and lying outside its sanctioned lease boundary has also been sold for INR 79.8 crore (and the royalty, FDT payable on the sale), at INR 1,140 a tonne. Earlier, MML used to sell the over burden/waste dump at substantially lower rates.

According to information provided by the DMG to CEC, during 2010-11, the state government received INR 435 crore as royalty for 33.75 million tonnes of iron ore produced and sold in the state. The average rate works out to INR 129 a tonne.

(Sourced from BS)

Russia cuts 2011 coking coal exports by 21pct as China demand drops

Thursday, 16 Feb 2012

Bloomberg reported that Russian exports of steelmaking coal declined 21% last year to 14.2 million tonnes because of lower demand from China and periodic halts at some Siberian mines.

The Economy Ministry in Moscow said China decreased purchases of Russian coking coal 41% from the previous year to 1.5 million tonnes. Ukraine accounted for 40% of exports while Switzerland where Russian producers have trading divisions represented 15%.

The ministry said export prices advanced 46% from a year earlier to USD 174 a ton. Production of steelmaking coal in Russia fell 3% last year to 64.7 million tonnes while domestic demand added 5% to 52 million tons. The industrial safety regulator temporarily halted mines run by OAO Raspadskaya and OAO Mechel during the past year damping output.

The data showed Russia imported almost 1.5 million tons of coal from the US more than double the previous year.

(Sourced from Bloomberg)

Talks on mega-carrier access open in Brazil

Thursday, 16 February 2012

China and Brazil are negotiating access to Chinese ports for the fleet of giant vessels owned by the miner Vale SA. The talks come as a result of China's tightened regulations on large carriers and signal that the issue has intensified at the political level. During a meeting in the Brazilian capital, Brasilia, the country's Vice-President Michel Temer discussed the issue of access for Vale's Valemax vessels - the world's biggest dry-bulk carriers - with China's Vice-Premier Wang Qishan, according to Marco Aurelio Garcia, foreign policy adviser to Brazilian President Dilma Rousseff.

"It will be dealt with at a political level," Garcia was quoted as saying, according to a report by Bloomberg.
On Jan 31, the Chinese Ministry of Transport tightened port regulations, a move that has effectively prevented Vale's mega-vessels from docking at ports in the country.The ministry said its decision to bar giant ships was taken because of "maritime safety issues". Vale's Valemax vessels are designed to carry 400,000 metric tons of iron ore and are "too large for Chinese ports to accommodate", said Sun Guangqin, director of the Port and Shipping Institute at Dalian Maritime University.

"To tighten the regulations on giant vessels is necessary for the safe operation of ports and shipping routes," Sun said in a recent interview. Analysts said the trade in iron ore between the two emerging economies is also a factor. In 2009, China replaced the United States as Brazil's largest trading partner. The total trade volume between the two countries jumped 16 percent to $77.1 billion last year. Iron ore, one of the South American country's main export commodities, plays an important role in Sino-Brazilian trade.

China, the largest consumer of iron ore, imported 686 million tons of the material in 2011, an increase of 10.9 percent from the previous year, according to data from Chinese General Administration of Customs.
Miners such as Vale might attain monopolies on the transportation of iron ore by setting up their own fleets, Zhang Shouguo, executive vice-president of the China Shipowners' Association, said.

"It (the monopoly) will hurt China's shipping industry as well as the steel industry," said Zhang.
Vale has invested $2.3 billion in 19 of the 400,000-ton giant bulk carriers and will control another 16 under long-term contracts, according to the company.Scheduled for delivery by the end of 2013, the vessels will reduce freight costs from Brazil to China by between 20 and 25 percent and will significantly reduce carbon emissions compared with other vessels, Vale said.

The miner currently operates five Valemax vessels, but none has reached a Chinese port since being put into service in May.In the meantime, Vale managed to unload its 388,000-ton Berge Everest at Dalian port on Dec 28, prompting protests from domestic shipping companies and the China Shipowners' Association.
Source: China Daily

Bulk carrier docks in Fukushima to discharge coal

Thursday, 16 Feb 2012

It is reported that the 87,000 DWT NYK-operated bulk carrier, Shirakumo arrived at the port of Soma wharf No 5 in Fukushima prefecture on February 9.

Shirakumo is the first coal carrier to berth at the wharf since the Great East Japan Earthquake.

The ship was carrying 63,000 tons of coal from Newcastle, Australia, destined for the Shinchi thermal power station of Soma Kyodo Power Co Ltd. Through the efforts of related parties, operations at the wharf could be resumed and more coal will be expected to make its way into the region resulting in a dramatic recovery of coal shipments into the area.

A poster containing encouraging messages from many citizens of Newcastle, including coal-exporting related parties was also delivered to Soma Kyodo Power Co Ltd by the vessel. NYK hopes the wharf is actively utilized for reconstruction of the affected areas.

NYK will continue its efforts to aid reconstruction of the affected area and help maintain a stable supply of energy resources.

1. Vessel Particulars
2. Length Overall: 229.00 meters
3. Deadweight tonnage: 87,144 tons
4. Flag: Singapore
5. Built year: 2006
6. Loaded cargo: 63,000 tons of coal

(Sourced from

Wednesday, February 15, 2012

Orissa asks SAIL to stop iron ore mining at Bolani

Tuesday, 14 Feb 2012

BS reported that state Steel and Mines Department has asked the Steel Authority of India Ltd to stop mining activities immediately at Bolani mines following the expiry of forest clearance on February 11. The steel maker has closed mining at the area and said it will resume mining within three to four days.

A top SAIL official was quoted as saying that “We could not get the forest clearance for Bolani iron ore mines in time, but we hope to get the clearance in next three or four days.”

The official said that “The MOEF could not give its consent in time to renew the clearance as the state government delayed in sending its recommendation. But we will try our best to get the clearance as soon as possible otherwise it will affect our production.”

SAIL is excavating the Bolani mine under deemed extension provision mentioned in the Mineral and Mineral (Development and Regulation) Act, 1957. However, the company had received forest clearance from the Ministry of Environment and Forest (MOEF), Government of India for about 706 ha forest land that was valid till February 11.

Bolani mines, spread over 1,597 ha in Keonjhar district under Joda mines circle, possess best quality iron ores that are primarily used for the Durgapur plant of SAIL. The mine has an estimated iron ore reserve of about 150 million tonne.

In 2008, SAIL had announced to invest INR 120 crore to develop Bolani mine that included deploying highly efficient earth moving equipment and other effective mining method. Following the expansion, Bolani mine alone will supply about 10 million tonne iron ore every year to the national steel producer.

(Sourced from BS)

JSW Energy to set up power plant in South Africa

Wednesday, 15 Feb 2012

ET reported that Integrated power generator JSW Energy, looking for suitable acquisitions inside India is planning to set up a 450-600-MW coal-fired plant in South Africa where the power sector is opening up for investment.

Mr Navraj Singh senior vice president, business development, JSW Energy said "We are interested in acquiring power projects in India. The sector will now see only serious long-term players. Many of the new players have put on hold their projects or are going slow,"

He said the decision on target companies would depend on the total package, whether land acquisition has been done and the like.

Mr Singh said "South Africa's power sector is now opening up. We have a mine there and are looking at setting up a power plant with a capacity ranging between 450 MW and 600 MW. We are also looking at additional mines in South Africa."

He said the company was also setting up a 240-MW hydel power project at Kuther in Himachal Pradesh for which land acquisition is under progress and bids for civil works are being evaluated.

He added that the company new projects in India are progressing at a good pace.

Mr Singh said "Land acquisition process is on for our Chattisgarh power project (2x660 MW). We will need about 300 acres. The project has got environmental clearance and water allocation.”

He also said "In West Bengal, we are putting up a 300-MW captive power plant for our steel mill. In the second phase we will put up a 1,320-MW (2x660 MW) project which will be an independent power producer (IPP) project."

Sector analysts said many of the domestic power projects have hit the roadblock and only long term players can continue in this space.

An analyst not wanting to be named told IANS that "There are small power projects in the south facing issues of fuel linkage/supplies. For JSW Energy, the path for faster growth is through acquisitions. The kind of projects that would entice the company would be those having land on hand but not fuel linkage, or strong balance sheet to look for other options like imports or going in for own coal mine."

Meanwhile, JSW Energy, with a domestic generation capacity of 2,600 MW is planning to put up a pit head power plant in South Africa where it has a 0.5 million tonne coal mine.

(Sourced from ET)

NTPC told to begin production from 5 de allocated coal blocks

Wednesday, 15 Feb 2012

Mr P Uma Shankar Power Secretary at an Operation & Maintenance conference said public sector power major NTPC has been asked to begin production from five mines re-allocated to it by the Coal Ministry. The blocks had earlier been taken away after the company failed to develop them.

He said that “Some of NTPC coal mines were de-allocated now they have been re-allocated they should do something to increase production from those blocks.”

Last year, the Coal Ministry had cancelled allocation of five blocks Chatti Bariatu, Chatti Bariatu, Kerandari, Brahmani and Chichiro Patsimal to NTPC as it could not develop the mines within the stipulated timeframe.

In his address to the conference, the Union Minister of State for Power Mr KC Venugopal said the country should seriously focus on improving availability of domestic coal by developing more mines and had to find ways to improve fuel security.

He asked NTPC to work hard for early start of production of coal from its captive mines to help bridge the gap between requirement and availability as also lower the cost of power generation.
Pricing of coal

Mr Venugopal said availability and pricing of coal were two crucial issues confronting the power sector. He said initiatives had already been taken for execution of fuel supply agreements for plants commissioned beyond March 2009.

Meanwhile, sources said NTPC may soon begin work on its proposed 1,980 megawatt thermal power plant at North Karanpura in Jharkhand.

Mr Arup Roy Choudhury NTPC Chairman and Managing Ditrector said that “We are told that the report on the North Karanpura project is with the Finance Minister and we are also told that the project will come up. We are ready for the project.”

Mr Choudhury said he was hopeful of starting work on the project as soon as the panel gave its go-ahead. He said that “Our land acquisition is over. The moment we get the clearance, we would start work.”

The proposed plant has been in the news over its relocation, as it is planned in an area holding six billion tonnes of coal reserves. While the Coal Ministry was arguing in favour of relocating the proposed plant, the Power Ministry was opposed to the move, following which the matter was referred to a Ministerial panel last year.


Japanese stainless steel products imports up by 13pct YoY in 2011

Wednesday, 15 February 2012

The Japan Iron and Steel Federation compiled the import statistics released by the Ministry of Finance into the table attached hereto with regard to the imports of stainless steel products during 2011.
Total imports in 2011 were 189,263 tonnes, up by 13.6% YoY from 167,499 tons in 2010. Fairly high level of monthly imports of more or less 15,000 tonnes except in April 2011, June 2011 and August 2011 helped the total annual imports to increase.
Total value of the imports was USD 787.972 million with an averaged unit price of USD 4,163 per tonne, up by 14.3% from 2010. Monthly averages of the unit prices for 10 months of 2011 between February 2011 and November 2011 were all more than USD 4,000 per tonne.
All major originating countries, especially Korea, increased exports to Japan compared to 2010. Besides, imports from those countries traditionally of smaller exports to Japan also increased volumes by 8%.
The imports in December 2011 were 16,909 tonnes, up by 13.6% MoM from November 2011, a small rebound from the past several months of decline. Total value of the imports in December 2011 was USD 64.318 million with an averaged unit price of USD 3,803.77 per tonne, down again from the preceding month by 8.5%, mainly because of the prices of most of the imported products, except the ones from China, dropped from November 2011.
By comparison, total imported quantity of special steel products, including stainless steel products, in December 2011 was 49,079 tonnes, up by 58.9% MoM from November 2011, mainly because the imports of other special steel products notably increased to 32,170 tonnes, up by 100% MoM from November 2011.
Source: TEX Report Limited

Steam coal prices remain stable despite many cargo offers

Wednesday, 15 Feb 2012

Reuters reported that heavy selling of prompt DES ARA cargoes continued on Tuesday by utilities and traders but there were more buyers in evidence than at the start of the week and prices were barely changed.


A February delivery DES ARA cargo traded at USD 96.00 a tonne, barely changed.

A March delivery DES ARA cargo traded at USD 97.00, little changed from Monday.

A March loading South African cargo traded at USD 104.75, down 25 cents.

An April loading South African cargo traded at USD 103.20, unchanged.

A rise in temperatures after a spell of freezing weather has trimmed gas and power demand and prices but had little effect on coal, principally because coal prices showed a minimal reaction to the freeze.

The current oversupply as cargoes bought previously or under term contracts arrive in Europe will last only as long as China remains out of the spot market, utilities, traders and producers said. In the interim, prices will come under further pressure.

(Sourced from Reuters)

Tuesday, February 14, 2012

Italy, Spain, Portugal Among Six Cut by Moody's

Tue, Feb. 14, 2012

(Bloomberg) -- Moody's Investors Service cut the debt ratings of six European countries including Italy, Spain, Portugal, Slovakia, Slovenia and Malta, and said it may strip France and the U.K. of their top Aaa ratings, citing Europe's debt crisis. Caroline Hyde and Mark Barton report on Bloomberg Television's "First Look." (source: Bloomberg)

Coal India Q3 net rises 54% at Rs 4,038 crore

Tue, 14 Feb, 2012

NEW DELHI: State-run Coal India Ltd registered a 54% rise in net profit for the third quarter at Rs 4,038 crore on high coal prices. The company reported Rs 2,626 crore net profit during same period last fiscal. Coal India's total income increased 21% to Rs 15,349 crore for the quarter from Rs 12,686 crore for the same period a year ago, a company statement said on Monday.

The company had raised coal prices in February last year. It produced 114.62 million tonnes of coal in the third quarter as against 113.77 million tonnes in the same period last year. Coal India said it made an additional provision in third-quarter results for new wage agreement that it signed with on January 31. It plans to make the rest of the provision in the March quarter, the statement said.

The company signed an agreement with its five recognised trade unions to increase wages by 25%. The agreement until June 2016 is expected to add about Rs 4,000 crore the company's annual wage bill ofRs 20,000 crore. Coal India employee benefit expenses in December quarter rose 20% toRs 5,622 crore.

The company's stand-alone net profit grew over 10-fold for the third quarter at Rs 1,219.33 crore. It reported a stand-alone profit of Rs 115.37 crore during corresponding year last fiscal. Coal India's total income increased nearly four times toRs 1,566.23 crore for the quarter from Rs 400.56 crore for the quarter-ended December 31, 2010.

(sourced ET)

India will burn more coal than China in 20 years

Tuesday, 14 Feb 2012

BL reported that India is set to overtake China in global coal demand over the next two decades partially offsetting the sluggish offtake by its neighbor. However, both nations are poised to be among the top three economies by 2030 driving global fossil fuel consumption primarily driven by power sector demand.

According to BP's Energy Outlook for 2030 released recently, China's energy demand growth is projected to decelerate to three per cent annually over the forecast period against 6.6 per cent annually during the 1990-2010 period. This is due to a slowing GDP growth and rapid improvement in energy intensity. India, on the other hand, does not follow China's path and there is no surge in energy demand as further industrialization takes place.

The report said demand growth will slow to 4.5% annually for the forecast period against 5.5%. This dip in demand is attributed to improved energy efficiency, partly offsetting the needs of industrialization and infrastructure expansion.

The report said that India remains on a lower path of energy intensity and by 2030 it will consume only about half the energy that China consumes today, at a similar income per capita level as in China.

Currently, India accounts for a third of growth in global coal demand and is projected to increase its share of consumption to 14% from the present 8% by 2030. China, which accounts for two third of the growth in global coal demand will see a relatively slower increase to 53% from the present 48% due to a slowing GDP growth and rapid improvement in its energy intensity.

The report further said that Both China and India face challenges in growing domestic production fast enough to keep up with demand. Their growing import requirements drive further expansion and integration of global coal trade. Coal remains the main commercial fuel for the world's top two most populated nations. However, coal's share in the total fuel mix for India is projected to drop to 50% from 53% mainly due to domestic resource constraints.

(Sourced from BL)

Mitsubishi clear to take control of Australia iron ore project

Tuesday, 14 Feb 2012

Reuters reported that Japan Mitsubishi Corp cleared the last hurdle on Monday to take control of iron ore, port and rail projects in Western Australia which are slated to cost USD 10 billion and which it hopes to fund with Chinese partners.

A spokesman said shareholders in Murchison Metals approved the sale of the company 50% stakes in the Jack Hills iron ore mine and its affiliated Oakajee port and rail project to its partner, Mitsubishi for AUD 325 million.

The deal is due to close on February 20. The long delayed port project is key to opening up a new iron ore province in Western Australia outside the control of dominant iron ore producers, Rio Tinto and BHP Billiton.

The AUD 5.9 billion Oakajee port and rail project and the USD 3.7 billion Jack Hills iron ore expansion project have been held back due to cost blowouts which Murchison could not afford and the failure to line up companies to use the infrastructure.

Murchison biggest shareholder, South Korean steel maker POSCO last year said it was considering buying stakes in Jack Hills and the Oakajee project.

Other potential partners in the infrastructure are Sinosteel which is developing the Midwest iron ore project and Angang Steel Co which is backing Gindalbie Metals' Karara iron ore project.

Last week, Western Australian Premier Mr Colin Barnett said Mitsubishi was due to meet with potential Chinese partners in Beijing later this month to discuss participating in the two projects.

Mr Barnett said "There is a major meeting in Beijing, in the next few weeks, involving Australian companies, the Chinese state owned enterprises, Mitsubishi, some financial institutions from China and that will be the critical meeting and hopefully bringing China formally into the project and moving forward."

(Sourced from Reuters)

PT Resource Alam takes over four coal miners in East Kalimantan

Tuesday, 14 Feb 2012

Coal miner PT Resource Alam Indonesia said that it has spent USD 7.9 million to acquire controlling stakes in four coal mining companies in East Kalimantan.

The company in a statement said that Resource Alam purchased a 75% stake in each of the firms: PT Kaltim Mineral, PT Jaya Mineral, PTTambang Mulia and PT Chaido Mega Mineral.

The statement said that “Future development of the newly acquired concessions, in addition to the company’s organic growth, is in alignment with Resource Alam’s long term objective to become one of Indonesia’s major coal producers.”

Resource Alam previously commissioned mining consultant PT Britindo to conduct geological studies of the coal mining concessions, which span 28,521 hectares, and their prospective open-cut potential.

Indonesia, the world’s largest coal exporter, is expected to produce 340 million tons this year, including 6 million tons expected to be produced by Resource Alam.

Mr Eric Tirtana Resource Alam’s investor relations chief told The Jakarta Post that “The newly acquired fields are still green fields, they’re not yet producing. The potentials are still being analyzed. We’re still counting on organic growth for the year.”

Chaido is the closest to starting operations next year, on 5,000 hectares near Resource Alam’s northern block. Resource Alam spent USD 1.67 million to acquire the company’s 75% stake.

Meanwhile, Kaltim Mineral, Jaya Mineral and Tambang Mulia will start production in 2015 on a combined adjoining area of 23,521 hectares. A 75% stake in each of the three firms was valued at USD 6.25 million.


Steam coal prices dip further on Monday

Tuesday, 14 Feb 2012

Reuters reported that a surge of offers of almost every variety of coal in every cargo size for delivery into Europe pushed physical prices down by around USD 1.00 on Monday to USD 97.00.


A March loading South African cargo traded at USD 105.00 a tonne on Friday but a 50,000 tonne March cargo also traded at USD 103.50, down around USD 1.00.

An April loading South African cargo traded at USD 103.10.


A March DES ARA multi-origin including US coal cargo and a US cargo were offered at USD 96.90 and USD 96.96 with no bid.

A Russian March DES ARA cargo was offered at USD 98.60.

An April multi origin cargo was bid at USD 96.50 while a multi origin plus US cargo was offered at USD 97.95.

A March loading South African cargo was bid at USD 104.60 and offered at USD 105.00, down 50 cents on the bid.

Prices are set to remain below USD 100 with further falls possible until China resumes buying and a new global price floor is set by whatever price the Chinese are willing to pay. Fall in European power and gas prices also dragged coal lower, as temperatures rose by 15 degrees from last week's freezing conditions.

(Sourced from Reuters)

Monday, February 13, 2012

India: Iron ore exports to hit a new low in FY13

Monday, 13 February 2012

India’s iron ore exports are likely to hit a new low during the 2012-13 financial year and settle at about 40 million tonnes (mt), a drop of close to 35 per cent over the current year’s estimates. Exports are estimated to decline to about 60 mt in 2011-12 from 100 mt in 2010-11, a fall of 40 per cent.

“The decline in exports is mainly due to rise in export duty to 30 per cent and railway freight, which is highly discriminatory for exports compared to domestic freight rates. Before 2003, nobody bought low-grade ore from India. In the future, too, apart from China, nobody will buy low-grade ore,” said Basant Poddar, chairman, Federation of Indian Mineral Industries, South.

For example, the railways charge Rs 600 a tonne as freight for movement of ore for domestic consumption and Rs 2,800 a tonne for ore meant for exports. This has discouraged miners from exporting, he said. Another major factor for low exports is the ban in Karnataka. In addition, the stoppage of mining in Karna-taka, following the Supreme Court order in July, added to a decline in exports during the current financial year.

Orissa’s exports have come down mainly due to differential railway freight rates. Goa’s exports have also declined substantially this year and may settle at about 34 mt, down from 55 mt last year, he said. Karnataka’s share in national exports was about 35 mt till 2009-10. Since August 2010, there have been no exports from the state. Next year, India’s exports will touch the lowest level in the past decade.

“Demand from China is steady, but they are also getting ore from Australia and Brazil also. Australia and Brazil are together adding about 500 mt of exportable capacity in the next five years. Whereas, in India, we are closing our mines and losing our status as the third-largest exporter of ore in the world. We may drop to sixth or seventh position,” Poddar said.

During the current year, India’s share of exports in the world market is set to decline to about 10 per cent. In the next year, it is likely to further drop to about five per cent, at 35-40 mt. Prices of 63 Fe grade iron ore, presently at $130-135 a tonne on a FoB basis in the international market, are likely to go up 8-10 per cent during the current quarter, as the demand from China is picking up after the beginning of the new year. At the same time, Indian miners are losing their position due to various reasons, said Praveen Kumar, chairman, Maya Iron Ores, a derivative commodity brokerage firm.

“If the Supreme Court accepts the Central Empow-ered Committee’s (CEC) recommendation and puts a cap on the production of iron ore at 30 mt in Karnataka, investments in the steel sector will not only be affected, but it would also lead to loss of market share for India in the export market,” he said.
The loss means future investments to the tune of about $5-10 billion in the ports and railway sectors taken up on a public-private partnership basis will be in jeopardy, Poddar noted.

“The Indian steel industry uses high grade ore and there is no market for low-grade ore, due to poor technology with steel mills. So, why stop low-grade ore exports , which has huge demand from China? If we can’t export it, there will be a problem in managing low-grade fines and it would cause environmental damage,” he added. (sourced Business-Standard)

Iran’s cutting steel imports, depressing global steel market

Monday, 13 February 2012

Steel exports to Iran, one of the world's top importers of billet used in construction, are grinding to a halt, traders said. "Iran is the only market in the world that can move billet prices and now trading has basically come to a halt," a steel trader based in Britain said.

"Now you can really feel the effects of the sanctions imposed by the U.S. and Europe...It is very difficult to do any business with Iran at the moment," a steel trader at a Swiss metals trading house said. Thanks to large-scale building programs in the last few years, Iran has become one of the top importers of steel billet, a semi-finished long steel product mainly used for construction.

The country imported over 3 million tons of semi-finished steel products in 2010 and almost 2 million of hot-rolled coil, a steel product used in transport, construction, shipbuilding and energy pipelines, according to data from the International Steel Statistics Bureau. Boris Krasnojenov, an analyst with Moscow-based Renaissance Capital, said monthly Iran imports from Russia were over 300,000 tons for most of last year.

"As far as I know, the situation is much worse. Some say CIS mills cut sales 10 times," he said.
The collapse in Iranian imports is depressing international steel billet prices, which fell by about $50 a ton in a month to $560 a ton fob Russia and Ukraine this week. "All volumes from the Caspian Sea will be redirected to the Black Sea," Krasnojenov said. "That is a major problem for Russian steel plants." Russia sends about 15 percent of its total exports to Iran, making it the largest source of foreign steel, but the sanctions are pushing it out of the market.

"Steel demand is pretty strong, the problem is the banking system," said Dmitry Smolin, metals and mining analyst at URALSIB Capital. "Russian banks do not have trading lines with Iranian banks to facilitate rouble transactions." Iran's envoy to Moscow said late last month that Iran and Russia had started using their domestic rial and rouble currencies in bilateral trade instead of the U.S. dollar. However, market players say the dollar shortage is crippling the steel trade.

(sourced Reuters)

India increases Iran oil imports

Monday, 13 February 2012

Iran's crude oil exports to India have increased 37.5% in January. India has increased oil imports from Iran to become the Islamic Republic's largest customer last month, ignoring recent sanctions imposed by US and EU on importing Iran’s oil. According to The Wall Street Journal Iranian crude exports to India rose to 550,000 barrels a day in January, up 37.5 percent from December 2011.

The development, the report said, has partly offset a 50 percent cut in crude exports to China as a result of pricing dispute. China now imports around 250,000 barrels a day from Iran. The news comes despite the West’s rising pressure on Iran to halt its peaceful nuclear program.On the New Year’s Eve, the United States imposed new sanctions against Iran aimed at preventing other countries from importing Iran’s oil and doing transactions with its central bank.

European Union foreign ministers also approved sanctions against Iran’s oil and financial sectors on January 23, including a ban on Iranian oil imports, a freeze on the assets of the country’s Central Bank within EU states, and a ban on selling diamonds, gold, and other precious metals to Tehran.Although financial sanctions have caused problems with regard to payment for Iran’s oil by other countries, they have apparently not been able to deter India.

Iran's Ambassador to India Seyyed Mehdi Nabizadeh said last Tuesday that India had agreed to pay for some purchases of Iranian oil in Indian rupees, a route that would avoid the risk of an interruption in banking transfers. Meanwhile, despite a pledge to find alternative supply sources for Iran’s oil, South Africa has also increased its Iranian oil imports to 100,000 barrels a day, The Wall Street Journal quoted an unnamed informed source as saying.

The US, Israel and their European allies accuse Iran of diversion in its peaceful nuclear program and have used this as an excuse to pass four rounds of international sanctions against the country at the UN Security Council. Refuting the claims, Tehran insists that as a member to the International Atomic Energy Agency and the Nuclear Non-Proliferation Treaty (NPT), it is fully entitled to peaceful applications of the nuclear energy.
Source: Press TV

Mozambique's Maputo hot spot for South African coal

Monday, 13 February 2012

Mozambique capital Maputo is hotting up as a magnet for companies aspiring to be significant South African coal exporters, following a Vitol joint venture deal, industry sources said this week.
The port has been used on a small scale for coal exports which shippers were unable to move from the main export hub, Richards Bay Coal Terminal (RBCT), but is now the centre of major expansion plans for South African coal.

Two exporters have in the last few months started using the main Maputo harbour, which has no loading equipment, for the first time and gleaming new fencing has been set up around stockpiles there, a recent visitor to the port said. A handful of mining majors own RBCT, by far the cheapest, most efficient port, but new entrants have mostly failed to gain a foothold there.

"If you want to be producing South African coal for export, don't ever think you are going to get into Richards Bay - Maputo is really the only option," an executive involved in South African projects said.
Would-be entrants already see Glencore well established. At Maputo it accounts for a third of the 3 million tonnes a year of exports and is also using the main harbour which has no loading equipment.
This deadlock has been frustrating for rival, large trading firms wanting to catch up with Glencore's roughly 20 year head start in building an integrated global coal business including investments in mines and ports and myriad offtake agreements.

"Glencore were in Matola (Maputo's inland coal terminal) from the start, to see how significant or useful an export point it was, with the ability to back out at any time," said an industry source recently returned from Maputo."Vitol seems to want to move into the Glencore space (by investing in ports and production)," a veteran South African industry source said.

"This is a great deal for Vitol, it gives them an export outlet for thermal, coking and sized coal and from the Waterberg too, eventually," another industry source said.If Glencore completes its purchase of Optimum Coal Holdings with its empowerment partner, entrepreneur Cyril Ramaphosa, it will be the country's fourth-largest exporter after Anglo American, and own a big chunk of highly-desirable Richards Bay export capacity.Although currently high, Maputo's costs will fall when the port is expanded substantially and rail investment allows more coal to be railed rather than trucked.

"RBCT offers huge savings - $2-3 a tonne to shareholders, $5 for Quattro junior miners but that's a fraction of the $15-20 charged by Richards Bay Dry Bulk Terminal or $9-10 at Maputo," said the recently returned official. Vitol has a coal offtake agreement with producer Coal Of Africa and is expected to make export space for COA as it ramps up production.

But there will be no shortage of takers for Maputo's capacity, even after the planned expansion, because the 50,000 tonne ships loaded at Matola are ideal for the growing Indian market, an industry source said.
"There are two users of the main harbour, Glencore for sized coal and Jupiter Trading, while Glencore is using the inland Matola terminal for thermal coal," he said.Coal from the main harbour stockpiles is loaded into builders' skips which are tipped into waiting vessels, he said.

This method is costly and slow but the high price of sized coal used for domestic fuel gives a fat profit margin, he said."With their (Glencore's) optimum capacity they can use RBCT primarily for thermal exports and the smaller, higher cost ports for high value products, they don't need Maputo," he added.

More such strategic investment opportunities are likely to emerge in the next year or so primarily because South Africa's state-owned Transnet Freight Rail has gone from zero to hero in six months to consistently move more coal than miners ever thought possible.
After years of complaining about TFR's poor performance, miners are having to start considering boosting output.

Until June last year, TFR's poor past performance had for several years capped exports at around 65 million tonnes a year despite a capacity of over 80 million and plans to rise to over 90 million tonnes.
"Now the shoe's on the other foot and they're (TFR) getting it right. If they can sustain it, producers will eventually bring on more mining capacity," a producer source said.

"It's a 2-3 year process to make a decision and another 4-5 years to put it into place but it's just so difficult to decide to invest when there are so many uncertainties," he added.RBCT shareholders' export entitlement equates to the stakes they own in the terminal - a 20 percent stake would give 20 percent of whatever total tonnage can be exported and that in turn depends on what TFR can move. While TFR was struggling, RBCT shareholders' ability to export was constrained and they held tightly to their export capacity rather than be tempted to sell or lease it.

But if TFR keeps up its current pace and before miners invest in new mines, RBCT shareholders with more export capacity than production may revisit leasing."It's quite possible that it reverts to the situation several years ago when some RBCT shareholders leased what they couldn't fill with their own output or buy from smaller miners Free On Rail but there's hardly anything available like that now," a transport and logistics source said.
Source: Reuters

Nagaland has mined 3 million tonnes of coal

Monday, 13 Feb 2012

Morung Express reported that since April 2011, Nagaland state has accessed at least 3 million tones of coal, a colossal increase of 295.5% from November 2008 when the state accessed a comparatively miniscule 0.11%.

The figures presented by project assessment and update new agency, Project Monitor, is surprising for the reason that coal exploration and extraction in Nagaland is still primarily an unorganized and often debated sector.

According to Project Monitor, in a News Bureau report filed on February 06, 2012, the total coal reserves “assessed” by 14 states, including Nagaland, is at 286 billion tonnes.

About 272,000 meters of exploratory drilling was carried out during 2008-09, which converted 2.74 billion tonnes of coal reserves into ‘proved category’. The subsequent two years 2009-10 and 2010-11 witnessed 4.70 and 4.92 lakh meters of detailed exploratory drilling that resulted in 2.70 billion tonnes and 2.17 billion tonnes of resources, respectively, of the proven category. During the 12th Plan 4.955 million meters drilling is envisaged to convert about 74.85 billion tonnes of resources into ‘proved category’ by the Central Mine Planning & Design Institute and its agencies.

As per the estimate and inventory prepared by Geological Survey of India, the total assessed coal resources were placed at 285.9 billion tones as on April 1st 2011. Of this, Jharkhand accounted for 28%, Odisha 24%, Chhattisgarh 17% and Madhya Pradesh and Andhra Pradesh around 8% each. Thus, around 85% of the country’s coal resources, which form the base for thermal power and several other manufacturing industries like cement and steel, are in these five states only. Coal has in recent years proved a powerful pull for all big-ticket projects in mining, power and metal sectors.


NTPC will release INR 34000 crore order by March end - BGR Energy

Monday, 13 Feb 2012 Source - CNBC-TV18

Mr BG Raghupathy CMD of BGR Energy told CNBC-TV18 that because of land possession issues, NTPC had to defer the order but he is confident of it being released from NTPC before the end of March.

The 34,000 crore NTPC order for supercritical boilers has been deferred. BGR Energy was L1 for INR 3,600 crore turbine order from NTPC. The order was expected to be released from NTPC before March. The company bid for INR 22,000 crore of projects.

Below is an edited transcript. Watch the accompanying video for more.

Q - Can you confirm to us whether this huge order has indeed been delayed?

A - NTPC has to be in possession of the land and they have to have the expert appraisal committee meeting at the Ministry of Finance. For one project Lara Super Thermal Power Project at Raigarh has been already completed and the land is also almost in possession so we are expecting the order to be released before the end of March.

In Darlipali we expect the order in the month of April. A small bit of land is to be acquired. Once that is over we expect NTPC to release it. So it is not going to be deferred, NTPC is going ahead with the placement of orders.

Q - NTPC is going ahead with the entire INR 34,000 crore orders that they have and you will be hearing from them by the end of March?

A - Yes.

Q - There has been a slippage in order book. In fact even in this quarter's performance there has been a big dip on the net profit and for orders as well. Are there any more delays that you are seeing from the clients on the ground with the kind of orders that you have got?

A - The entire country's power sector has been slipping orders for the last 12 months, nobody got any big order. We got INR 1,700 crore EPC job of 2x300 MW. Various projects are in the finalisation stage; one is in Rajasthan of 6,000 crore.

They have held discussion with BHEL and we expect to be called next and the 660 MW NTPC bulk tender NTPC is awaiting for the court decision and we have bid for nearly INR 22,000 crore of projects for BTG and EPC projects which is taking a little time which is usual but we expect these orders to come in within the next six months. As of today our order book is about INR 8,500 crore and with the two orders that we expecting in the month of March and April we will be adding INR 9,400 crore we will be adding to our order book.

Role of captive coal producers in India

Monday, 13 Feb 2012

Business standard reported that with Indian prime minister Dr Manmohan Singh’s office working on urgent measures to address the ‘coal crisis’, the private power industry’s hue and cry over the issue seems to have subsided for now.

Experts, however, said that private developers have no right to complain, as they have failed to develop their own captive coal reserves over the past two decades.

As per report, the private sector accounts for a bulk of the dip in production. Of the 208 captive coal blocks allotted since 1993, with a whopping 49 billion tonnes of reserves and a production potential of 657 million tonne per year (a notch less than India’s annual coal demand), the estimated production is a dismal 37 million tonnes per year from only 27 captive blocks the private sector has been able to commission so far.

Mr Amrit Pandurangi senior director at accounting and consultancy firm Deloitte Touche Tohmatsu Ltd said that “While there is no denying CIL’s production has come down, the private sector has also failed to increase production to expected levels. This might be related to delayed clearances in some cases. But the private sector’s tendency to grab blocks and continue to sit over them for long is also to be blamed.”

The private sector does not agree that delays in developing captive blocks have played a major role in augmenting the shortages, and attributes the slump to unavailability of linkage coal. Mr Ashok Khurana director general of the Association of Power Producers said that “Captive blocks have been delayed because of land and environment clearance issues. The nation lost over two years because of the ‘no-go’ policy. CIL’s production has stagnated.”

The power sector’s requirement of coal in the current financial year is estimated at 470 million tonne. The sector is likely to suffer an overall shortage of 70 million tonne.

(Sourced from BS)

BHPB mulls iron ore production cuts as prices fluctuate

Monday, 13 Feb 2012

AFP reported that BHP Billiton warned that it could scale back production at unprofitable operations as commodity prices softened due to economic uncertainty.

Mr Marius Kloppers CEO of global mining giant BHP Billiton at a press conference in Sydney said that its flagship iron ore business was in good health despite weakening Chinese demand and insisted it would take a fairly big event to knock expansion plans worth AUD 27 billion.

He told ABC television “I think a more immediate problem is that given some of those price movements that you've seen, not all of our operations are making profit to the same extent at the moment.”

He said “That's probably more the avenue that you're going to see us act in, where an existing operation doesn't make profit, we're probably likely to say 'look this is not making profit, let's curtail production.”

BHP posted a 5.5% fall in first half profits last week to USD 9.4 billion, largely due to volatility in commodity prices and Mr Kloppers said iron ore had clearly moderated a little bit as China cooled.

However, Mr Kloppers said freight costs from Australia's resource rich west coast to China were as low as they've ever been and iron ore shipments would be very profitable "even if that price comes back a little bit more.

(Sourced from AFP)

Europe coal loses to South Africa on renewables - Energy Markets

Monday, 13 Feb 2012

Germany's biggest program of solar and wind power production has driven European coal prices below South Africa's for the first time in 10 months.

According to IHS McCloskey data, coal in northwest Europe cost USD 3.55 a metric tonne less than supplies from South Africa's Richards Bay yesterday, the widest discount for next-month prices since May 5, 2010. According to Barclays Plc, the difference is likely to keep increasing as European demand weakens and Asia boosts imports from South Africa.

Mr Bevan Jones a general manager at London Commodity Brokers Ltd said that “Producers are asking themselves if this is a seismic shift, and I think this move probably is sustainable.” He said that “Europe remains well supplied by the US, Colombia and Russia, while demand is on its weak side. Meanwhile, demand is consistent in Asia.”

Coal prices in Europe have fallen 7.5% this year as nations increase the amount of energy they get from alternative sources. Germany, the continent's biggest power market, installed a record 3,000 megawatts of new solar panels in December, the Bonn-based Bundesnetzagentur, the network regulator. Coal stockpiles at the biggest storage site in the Netherlands are 6.7% above year ago levels, according to Europees Massagoed-Overslagbedrijf BV, which operates the terminal.

(Sourced from Bloomberg)

Iron ore cargos increase on the US Great Lakes while coal continues to slip

Monday, 13 Feb 2012

The Lake Carriers' Association announced that drybulk cargo shipments totaled 3.9 million tons in January, an increase of 14% compared to January 2011 and 41% ahead of the month's five year average.

Iron ore cargos for the steel industry increased 21% compared to a year ago and outperformed their five year average by 58%. Shipments of iron ore on the Great Lakes totaled 3,587,016 net tons in January, an increase of 24% over January 2011 and 57% ahead of the month's five year average.

However, coal loadings slipped by 53% compared to January 2011, and slightly less 45% compared to the trade's five year average. Shipments of coal on the Great Lakes totaled 382,312 net tons in January, a decrease of 49% compared to January 2011 and decreased by 62% on the month's five year average.

Limestone cargos, on the other hand only had one cargo moved during the month of January due to low temperatures which make rinsing the limestone difficult.

(sourced from

Prosperity Minerals buys stake in Malaysian iron ore mines

Monday, 13 Feb 2012

Chinese miner, Prosperity Minerals announced a USD 25 million investment in Malaysian iron ore mines.

After the completion of the transaction, the company will hold an effective 3.5% interest in a iron ore operation.

All Wealthy owns a 70% interest in exclusive mining rights in the two Malaysian iron ore mines. It also owns a processing plant in Malaysia adjacent to the mines, which are currently under trial production with a future target production capacity of three million tonnes per annum.

Upon completion of the acquisition, Prosperity will secure the right, but not the obligation, to buy 9.5 million tonnes of iron ore over a 10 year period at a discount to the prevailing market price.

Prosperity Minerals is an iron ore operator serving the People’s Republic of China, as well as having real estate interests and investments in two cement plants.

(Sourced from

South Korea utility coal demand seen at 73 million tonne this year - KEPCO

Monday, 13 Feb 2012

An official at state-run Korea Electric Power Corp said that South Korea's five state run power utilities will need 73 million tonnes of steaming coal this year, of which 52% has already been secured. KEPCO did not provide figures for last year's consumption.

A utility source said demand last year had reached at a similar level, adding that earlier projections had put demand this year at up to 80 million tonnes, but a shift to high calorific coal after a nationwide power shortage late last year had reduced the volume of demand.

KEPCO and other utility officials said procurements this year had been made at an average of about USD 115 per tonne on a cost-and-freight basis, adding that most were made through long-term contracts rather than spot purchases.

KEPCO fully owns five utilities Korea East West Power Co, Korea Southern Power Co, Korea South East Power Co, Korea Western Power Co and Korea Midland Power Co.

(Sourced from Reuters)

Sunday, February 12, 2012

The curious case of coal crisis

Experts say captive coal reserves' output minimal private players call no-go policy biggest dampener

Sun,Feb 12, 2012
New Delhi : With Prime Minister Manmohan Singh’s office working on urgent measures to address the ‘coal crisis’, the private power industry’s hue and cry over the issue seems to have subsided for now. Experts, however, say private developers have no right to complain, as they have failed to develop their own captive coal reserves over the past two decades.

Currently, India requires 690 million tonnes (mt) of coal a year to fire plants, largely in the infrastructure sectors of power and steel. Domestic production was originally expected to touch 680 mt by the end of the current Plan period in March. This was scaled down to 630 mt in the mid-term appraisal and again to 554 mt at present, creating a 136 mt gap between demand and supply.

Interestingly, apart from the slowdown in production from state-owned Coal India (CIL), the private sector accounts for a bulk of the dip in production. Of the 208 captive coal blocks allotted since 1993, with a whopping 49 billion tonnes (bt) of reserves and a production potential of 657 mt per year (a notch less than India’s annual coal demand), the estimated production is a dismal 37 mt per year from only 27 captive blocks the private sector has been able to commission so far.

“While there is no denying CIL’s production has come down, the private sector has also failed to increase production to expected levels. This might be related to delayed clearances in some cases. But the private sector’s tendency to grab blocks and continue to sit over them for long is also to be blamed,” said Amrit Pandurangi, senior director at accounting and consultancy firm Deloitte Touche Tohmatsu Ltd.

The lack of captive output has led to the government's coal production plan going completely awry, as projected production from captive blocks had to be brought down from the initial 104 mt to 81 mt in the mid-term assessment, and again to 56 mt, in line with the overall shortage. CIL’s expected production, too, had to be brought down from the 486 mt projected in the mid-term assessment to 447 mt now.

“In a number of cases, captive block holders have been slow in exploiting the block. Their problems have been primarily that of environment, forest clearances and land acquisition,” the Planning Commission said in its recent review of the coal sector’s performance during the current Plan period.

Taking note of the dismal progress in the development of captive blocks, the coal ministry had conducted a review last year. Threatening cancellation of their captive coal blocks, the ministry had issued showcause notices to 84 companies, including Tata Steel, Reliance Energy, Vedanta Subsidiary Sterlite Energy, GMR Energy, Lanco Group, Jindal Steel and Power and the world’s largest steel maker, ArcelorMittal. Blocks held by several firms, including NTPC and Damodar Valley Corporation, were cancelled.

Last month, an 18-member delegation of power company chiefs, including Tata Power chairman Ratan Tata, Lanco Infratech chairman L Madhusudan Rao, Reliance Power chairman Anil Ambani and Naveen Jindal, a Congress member of Parliament and chairman of Jindal Power Ltd, approached the prime minister and other key ministers, alleging their investments were hit. This followed the severe coal crunch for power stations in November.

The private sector does not agree that delays in developing captive blocks have played a major role in augmenting the shortages, and attributes the slump to unavailability of linkage coal. “Captive blocks have been delayed because of land and environment clearance issues. The nation lost over two years because of the ‘no-go’ policy. CIL’s production has stagnated,” said Ashok Khurana, director general of the Association of Power Producers.

The power sector’s requirement of coal in the current financial year is estimated at 470 mt. The sector is likely to suffer an overall shortage of 70 mt.

, with CIL supplying 343 mt, Singareni Collieries 33 mt and an additional 22 mt from captive mines. However, according to the Planning Commission, the shortfall can be easily met with 50 mt of imports, which is equivalent to 70 mt of domestic coal.

“Even otherwise, the 70 mt of pithead coal stocks with Coal India can be liquidated to meet the entire shortfall. So, where is the crisis?” asked a senior CIL official. The company has seen a 1.6 per cent decline in production between April and January 2011-12. The company’s output remained flat at 431 mt in the financial year ended March 2011.

(sourced BS)

FIMI favors underground iron ore mining in Western Ghats

Sunday, 12 Feb 2012

The Federation of Indian Mineral Industries has suggested to the government to take up feasibility study of underground mining in Karnataka's Western Ghats.

In addition to 2.16 billion tonnes of haematite ore deposits in Karnataka, there is magnetite ore to the tune of 7.8 billion tonnes.

Mr Basant Poddar chairman of FIMI South said that “FIMI is ready to support feasibility study between northern boundary of Bababudan Giri hills in Kudremukh up to Goa.”

He added that “Underground mining is successfully working beneath Johannesburg in South Africa and Stockholm in Sweden. This is an option the Government has to consider seriously, to tap magnetite iron ore of 7.8 billion tones.”

FIMI office bearers said mining in Goa and Maharashtra is on the Western Ghats. Why is that they have permission to mine and not in Karnataka, they questioned.

(Sourced from BL)

China iron ore imports in Jan down by 14pct

Sunday, 12 Feb 2012

China Knowledge reported that China, the world's largest iron ore importer and steel maker, saw its iron ore import fell 13.9% YoY to 59.32 million tonnes in January last year.

According to latest statistics released by the General Administration of Customs, the iron ore import last month reflected a 7.4% decline from the previous month. The average import price of iron ore dropped 10.9% YoY to USD 136.5 per tonne in January.

(Sourced from China Knowledge)

West Africa offers good returns for right iron ore projects - Fairfax

Sunday, 12 Feb 2012

Broker Fairfax said that West Africa will become an important source of iron ore over the next ten tears, with attractive returns on projects once capital is secured.

The broker has assessed some of the companies planning iron ore mines in the region and picked the ones it sees as having most potential.

Investor interest in the region sparked into life recently after African Iron received a takeover bid from South African giant Exarro.

More corporate activity will underpin the value of iron projects in West Africa going forward, said Fairfax, though not all projects have the right pre-requisites to come to commercial production.

It said that be wary of large scale magnetite projects which are not close to transport infrastructure and do not have access to power.

It added that “The commercialisation of these projects will require significant capital and require the backing of partners with deep pockets.”

African Iron is typical of a company that will do well said Fairfax and it was no surprise to the broker that it attracted the attention of a buyer. It said that “The project had all the criteria to achieve commercialization good quality deposit with DSO (direct shipping ore) which could be readily mined and transported.”

The company has a 120 million tonnes high grade hematite resource 44 million tonnes of DSO with 77 million tonnes of upgradeable DSO.

African Iron’s target was a 5 million tonnes per annum operation for a 10 year mine life based on 50 million tonne DSO hematite resource and requiring a capex spend of USD 300 million.

West African Minerals is another early stage developer that Fairfax believes has potential through a very targeted strategy of finding tenements where there is DSO (haematite) potential.

It said that the management team have already identified six permits in the Cameroon DSO with potential from aeromagnetic geophysical surveys.

Two of the key licences are located near the Cameroon coast and discovery here could enable relatively easy transportation. The company also hold five exploration licences in Sierra Leone.


Japanese minister seeks licence for Nippon Steel in Mozambique

Sunday, 12 Feb 2012

The Japanese Deputy Minister of Economy, Trade and Industry, Mr Tadahiro Matsushita has asked the Mozambican government to speed up the granting of a coal mining concession in the western province of Tete to the Nippon Steel Corporation.

Mr Matsushita made this request on Wednesday, during an audience granted by Mozambican President Armando Guebuza.

Nippon Steel has been exploring for coal in Revobue, near the mining concessions granted to Vale of Brazil and Riversdale of Australia (which has now been taken over by Rio Tinto). Now it needs to replace the exploration licence with a licence for a mining concession. Nippon Steel hopes to begin effective mining by 2014.

Mr Matsushita told reporters after the audience that "In the meeting with President Guebuza we spoke of coal exploration in Tete, because there is a Japanese company working on prospection which wants a licence for a mining concession. I asked the President to grant the licence as quickly as possible.”

He added that "We don't just want to extract coal, but we also want to rehabilitate infrastructures, train Mozambican staff, and help generate employment, thus contributing to Mozambique's development.”

The list of infrastructures that Japan wants to rehabilitate includes the northern port of Nacala and the road links from Tete to Nacala.

As for natural gas, Mr Matsushita said Japan sees that Mozambique has great potential in this area, and we are going to negotiate so that in future we can implement projects. There are many Japanese companies that have shown an interest in natural gas.

In order to step up cooperation between the two countries in mineral resources, two high level Mozambican delegations will visit Japan later this month. The first, led by the Minister of Mineral Resources, Esperanca Bias, will travel to Japan next week.

(Sourced from