Debt-laden Greece gambles on privatisation

Fri Jul 8,2011
By Angeliki Koutantou & Victoria Howley

ATHENS/LONDON (Reuters) - A debt crisis, recession, plunging stock markets and a soccer scandal are not the best conditions in which to sell a stake in Europe's biggest betting company.

But that is what cash-strapped Greece faces as it prepares to sell OPAP, the most valuable asset on the government's privatisation list this year.

Greece must sell 50 billion euros ($73 billion) worth of assets by 2015, starting with 5 billion in 2011. This is a condition for a second European Union/International Monetary Fund bailout for the debt-laden country, after a 110 billion euro rescue last year.

Many bankers say the plan is far too ambitious and fear it will fail while a few say pressure from Greece's lenders and E.U. lawmakers w ill force the government to achieve its goal.

"I only wish the 50 billion euros was a legitimate target, but in this timeline, no way," said an investment banker involved in the plan, who declined to be named. "It is a pipe dream ... you can't make M&A happen just like that," he said.

OPAP will be the first big test of Greece's forced asset sales and the government is hoping investors will be tempted, despite the country's problems.

Unlike most of the assets earmarked for sale, OPAP is debt-free, profitable and has no strong labour unions.

The state's 34 percent stake in the company has a market value of about 1.17 billion euros.

Unlike most other Greek public firms, OPAP has a lean workforce and generates annual profit of about 600 million euros. "This makes it easier to sell than any other state company," said a local investment banker who advises Greece on asset sales.

PRICING UNDER SCRUTINY

But even OPAP poses problems that make many

observers doubt the privatisation plan is feasible, particularly as more complex sales are due to follow, like loss-making railway operator OSE and heavily unionised electricity utility PPC.

Greece may find it hard to sell assets at prices that the Socialist government and its privatisation-wary MPs can swallow.

The market value of companies, such as PPC or refiner Hellenic Petroleum, are already way below their pre-crisis levels.

Some fear that the tight timetable imposed on Greece by its lenders may lead to a fire-sale at knock-down prices. The nation would have to sell an asset every 10 days to meet its targets.

Greek lawmakers from both government and the opposition have warned they will oppose any fire sale. Despite passage of a framework austerity law last month which establishes an independent privatisation agency, the sale of big-ticket state companies will still require parliamentary approval.

"Given the haste element, I believe the OPAP stake will be most likely sold at a discount to the stock market value," another banker involved in the privatisations said .

Recession is already forcing Greece to settle for less. On June 30, the government sold spare carbon emission rights at a 20 percent discount to initial expectations.

And telecommunications firms have warned they will not fork out the 240 million euros the government expects them to spend in a frequency spectrum auction later this year.

BYZANTINE BUREAUCRACY

Bureaucracy is another hurdle. The country earlier this year appointed advisers for a host of privatisations, including a property development at the old Athens airport.

But it has not done much since then. According to at least two bankers involved, letters of engagement have still not been signed for many of the assets, which means the sales cannot start.

A senior government official told Reuters that an adviser will not have determined the sales terms for railway operator OSE before the end of this year. According to the EU/IMF timetable, OSE is supposed to have been sold by then.

Companies like OPAP and PPC also continue to be dogged by arcane regulations. A new law allowing OPAP to expand into online gambling has been delayed for months, thanks to MPs' reluctance "to turn Greece into a casino".

Some analysts fear Greece will not manage to clear up the regulatory tangle in time to sell companies like OPAP this year.

"Deadlines are too tight, I'm not sure they will manage the sale in time," said Paris Mantzavras, an analyst at HSBC.

A huge scandal that broke out last month has cast a cloud over Greece's soccer league, which is OPAP's showcase competition, and may also discourage investors, analysts said. The new soccer season may not even start in September.

AGGRESSIVE, BUT ACHIEVABLE

But some local investment bankers say that the 50 billion euro target could be reached. "There is great pressure on Greece ... the programme is aggressive but achievable," said one banker involved in some of the planned sales, including real estate, OPAP and Athens Airport.

Bankers away from the sales process are already thinking about potential buyers for OPAP. Private equity firm Apax Partners, Italian lottery operator Lottomatica, U.K. bookmaker William Hill and private equity firm KKR could be possible candidates, according to one.

Apax and William Hill declined to comment about the sale, while spokesmen for Lottomatica and William Hill did not immediately respond to a request for comment.

U.S. investment funds Capital Research & Management and Fidelity already own 15 percent and 5 percent of OPAP respectively. Capital Research also declined to comment on the planned sale.

German parliament set to okay clean coal bill

Saturday, 09 Jul 2011

Reuters reported that Germany lower house is expected to pass legislation that would open up EU funding for technology that traps greenhouse gases from burning coal, one week after parliament voted to phase out nuclear power in the next decade.

Utility group Vattenfall Europe has applied for EU aid for a controversial pilot plant in the economically underdeveloped region of Brandenburg, the only so called carbon capture and storage facility currently foreseen for Germany due to widespread opposition by local residents.

Mr Jens Koeppen conservative MP from Brandenburg said "The passage by the Bundestag is an important signal and the project has good chances of being funded by the EU."

Mr Martin Neumann the research policy expert for the junior coalition partner Free Democrats (FDP) who represents a constituency in Brandenburg said "The phase out of nuclear power means Germany has given itself a challenging task achieving both targets for climate protection and securing an environmentally friendly and efficient energy supply."

Coal accounts for just over 40% of the country energy needs, but it is also the dirtiest fuel when it comes to carbon dioxide emissions. This is particularly true for brown coal for which Germany is the largest global producer before even commodity-rich Australia.

Scientists say capturing carbon dioxide emissions and sequestering them underground could hold the key to an environmentally friendly way of burning the fossil fuel.

The current bill lays the foundation for testing and demonstration efforts only. Wider introduction would not take place without consulting local residents who often oppose sequestering carbon dioxide below the earth for fear the potentially lethal gas could escape in large amounts.

(sourced from Reuters)

Titan Iron Ore completes acquisition of option on Wyoming Iron Complex

Saturday, 09 Jul 2011

Titan Iron Ore Corp announce that effective June 30 2011 we closed the previously announced acquisition agreement dated June 13 2011 between the Company and J2 Mining Ventures Ltd a private Jersey Channel Islands company pursuant to which we have been assigned J2’s interest in an option agreement to purchase an iron ore exploration property in Albany County, Wyoming. The property consists of mineral leases and unpatented mining claims aggregating approximately 683 acres.

The Wyoming Iron Complex is wholly owned by Wyomex LLC a Wyoming limited liability company and as a result of the assignment and closing of the Acquisition Agreement, we have the exclusive right and option to acquire a 100% undivided legal and beneficial interest in the property by paying overtime a total purchase price of USD 7,000,000 to Wyomex. The purchase price consists of an initial payment of USD 85,000 and a 4.5% gross metal value royalty payable prior to production as a minimum advance of USD 62,500 every 6 months and upon commercial production from the property, a minimum of USD 150,000 per year. Once the full USD 7,000,000 has been paid to Wyomex the GMV royalty reduces to 1.5% on metals production.

A significant amount of work has been completed historically on the property including 117 drill holes totalling over 85,000 feet, metallurgical work a pilot plant test study a resource estimate and a pre-feasibility study all of which is not compliant with SEC Guide 7 or Canadian NI 43-101. The work done is historical and while informative, the Company intends to invest in exploration over the next year.

In connection with the Closing and as described in greater detail in the Company’s Current Report on Form 8-K filed today on EDGAR:
I). We completed a merger with our subsidiary, Titan Iron Ore Corp effective June 15 2011 to change our name from Digital Yearbook Inc to our current name
II). we completed a private placement unit offering on June 20 2011 for gross proceeds of USD 1,050,000;

III). We entered into an employment agreement with Mr Andrew Brodkey dated June 30 2011 and appointed Mr Brodkey as President and Chief Executive Officer of the Company

IV). We entered into consulting agreements dated June 30 2011 with Kriyah Consultants, LLC, Sage Associates Inc and J2 whereby among other things, Mr Frank Garcia was appointed as Chief Financial Officer, Dr David Hackman was appointed as the Company Vice President Exploration and Mr Jodi Henderson was appointed as the Company Corporate Secretary

V). Our affiliate shareholders transferred a total of 18,000,000 shares the Company to J2 and other persons as nominated by J2 pursuant to an affiliate stock purchase agreement dated June 30 2011

VI). We accepted the resignation of Mr Ed Mulhern as an officer effective June 30, 2011, and his resignation as a director to be effective 10 days after we have mailed a Schedule 14F to our shareholders and filed the Information Statement on EDGAR. We also appointed Mr Andrew Brodkey as a Director of the Company effective June 30 2011 and Dr Ronald J Richman as a Director of the Company, to be effective on the Effective Date
VII). We moved our administrative headquarters to Tucson, Arizona.

Mr Andrew Brodkey President of Titan stated that “The closing of the J2 Mining transaction is a historic milestone for our company. We believe that the Wyoming Iron Complex provides good potential for the Company and we intend to explore that potential soon.”

Enel aims to switch oil plant to coal in June 2012

Saturday, 09 Jul 2011

Reuters reported that Italy biggest utility, Enel hopes to start its long term project to convert a major power plant to coal from fuel oil in June 2012, betting on new laws to bypass a top court decision blocking the project.

Italy top administrative court, the State Council in May cancelled government clearance for Enel EUR 2.5 billion Porto Tolle conversion project which was opposed by environmentalist groups.

An Enel spokesman said "Enel is committed with ministries and regional authorities to find a solution to start works. It is reasonable to think that it would be possible to start works in June 2012 depending on all necessary administrative procedures."

The group spokesman said Enel hopes Italy Environment and Industry Ministries would give their approval to the new regional law by March next year.

The spokesman said "Enel will is to go ahead with the EUR 2.5 billion investment into Porto Tolle."

Mr Fulvio Conti Enel Chief Executive said another boost to Enel plans could come from Italy's new austerity budget which includes a special measure permitting conversion of oil-fuelled power stations to a clean coal technology.

Enel had planned to start at the end of this year converting its 2,640 megawatt oil fuelled Porto Tolle plant on the River Po about 100 kilometres from Venice to use clean coal technology part of its drive to cut carbon emissions. (sourced from Reuters)

Newcastle steam coal price rises by 1pct

Saturday, 09 Jul 2011

Bloomberg reported that power station coal prices at Australia Newcastle port an Asian benchmark increased 1.3% in the week ended today.

According to the globalCOAL NEWC Index coal prices at the New South Wales port rose to USD 122.45 per tonne from USD 120.90 the previous week. (sourced from Bloomberg)

China sets 2nd batch of coke export quota

Saturday, 09 Jul 2011

China has issued the second batch of export quotas for coke, silver and some minor metals.

Chinese ministry of commerce MOFCOM has set the second batch of coke export quota at 3.82 million tonnes, bringing total quota for the full year to 8.42 million tonnes.

China is the world's largest coke producer, but it has begun to restrict coke exports as part of its efforts to reduce environment pollution. The government has slapped a punishing 40% export duty on coke exports, which has contributed to falling exports in recent years. (Reuters)

Imported iron ore stocks at Chinese ports at record high

Saturday, 09 Jul 2011

Reuters quoted industry consultancy Mysteel as saying that China imported iron ore inventories at major ports reached 93.65 million tonnes this week, 480,000 tonnes up on the week before.

Ore from Australia rose 210,000 tonnes to 35.51 million tonnes and that from Brazil rose 610,000 tonnes to 22.51 million tonnes. Indian ore inventories dropped 300,000 tonnes to 15.47 million tonnes.

(sourced from Reuters)

TATA Steel to use Riversdale funds to start projects

Saturday, 09 Jul 2011

Bloomberg reported that TATA Steel Ltd will use the USD 1.14 billion received from selling its stake in Riversdale Mining Ltd to start new projects and expand and upgrade existing ones.

Mr B Muthuraman vice chairman in an interview in Chennai said that the cash will help meet the investment required in its upcoming factory in the eastern state of Orissa.

As per report, part of the funds will be used to modernize TATA Steel’s European factories.

Mr Muthuraman said that TATA Steel doesn’t have plans to raise any more funds this fiscal year.

(Sourced from Bloomberg)

JSW Steel to halt expansion of Vijayanagar unit

Fri, July 8, 2011

Bangalore : JSW Steel will not go ahead with its proposed expansion plans at its Vijayanagar (Bellary) unit until it receives approval for captive iron ore mine in Karnataka.

It had earlier evinced interest to expand the capacity of the Vijayanagar facility to 16 million tonnes (mt) from 10 mt.

Vinod Nowal, chief executive officer and director of the company, said, “We will not expand the capacity to 16 mt until there is a captive iron ore source available to us.” He was speaking to reporters on the sidelines of a seminar organised by the Bangalore Chambers of Commerce and Industry here.

The Supreme Court yesterday refused to entertain a plea of the company to direct the Karnataka government to lease a captive mine for the plant. The court was not convinced by JSW’s submission that it made an investment of Rs 10,000 crore by setting a steel plant on the assurances of the state government that a captive mine would be allotted to it. It, however, allowed the company to appeal in the Karnataka High Court with its grievances.

“Our legal department is examining the case and we will appeal in the high court,” he said. Despite operating a 10-mt steel plant in Karnataka, the company doesn’t have any captive iron ore source in the state. It is procuring iron ore from Orissa, Chhattisgarh and Jharkhand to feed the plant. Nowal said the supply situation with respect to iron ore was tight and the company had stocks for 10 days only.

It reported a 29.8 per cent growth in net profit at Rs 793.6 crore for the fourth quarter of the last financial year. Net sales rose 32.5 per cent to Rs 7,209.3 crore from Rs 5,441.3 crore in the previous corresponding period.

(By Business Standard)

Sylvania Platinum to sell SA iron ore assets

Friday,July 8 2011

Sylvania Platinum, the platinum group metals producer with tailings retreatment operations and shallow mining exploration interests in SA, said on Friday that it planned to sell its South African iron ore assets.

The magnetite iron ore assets are held by the company's wholly owned subsidiary, SA Metals (formerly Pan Palladium), and are located on the northern limb of the bushveld complex in the North West Province.

A decision to dispose of the assets comes after an 18-month strategic review of the company's position and its next stage of production growth.

“The board of Sylvania Platinum has decided to divest its iron assets in order to realise value for them independently and to allow the company to concentrate purely on the production expansion from its platinum group metals tailings dumps and the development of the Northern Limb platinum group metals and base metal surface mining operations,” the company said in a statement to the London Stock Exchange.

Sylvania currently has five platinum group metals tailings dumps in operation.

Selling the assets would also allow the company to fully focus on reaching its 2012 financial year production targets including the optimisation of two existing plants, Lannex and Mooinooi, as well as the development of the company's sixth plant, Tweefontein.

Sylvania Platinum also expects to make significant progress at its Northern Limb near surface platinum group metals and base metal operations.

It intends to expand its low cost production portfolio by developing shallow, open pit mines on the Northern Limb and treat low grade material using existing technologies to create a platinum group metals product that can be sold to existing refineries with a base metals credit.

“Sylvania Platinum has had a number of quarters of record production growth from our platinum group metals operations. However, the next stage of our growth is of key importance as we significantly expand our platinum group metals dump operations and begin progress of our surface mining operation towards development,” said Sylvania Platinum's CEO Terry McConnachie. - I-Net Bridge

FOB Richards Bay coal price moves down as traders eye China

Friday,8Jul, 2011

London (Platts) : The Richards Bay physical thermal coal selloff continued Thursday, with two late-afternoon deals going through at about $116/mt FOB.

London Commodity Brokers executed an August FOB trade at $116.25/mt for 45,000 mt, with a northwest European utility trader said to have bought from a producer.

The GFI Group also brokered a deal at $115.75/mt for 75,000 mt, with exchange of futures for physical terms. A utility trader was said to have sold to a producer.

One source said lower prices were driven by lack of demand, "pure and simple," noting that Richards Bay was "not far off pricing into Europe again."

"Some utilities need South African coal, so they will top up. Two years ago, 70% of South African coal went to Europe, and [utilities] can divert or roll other tonnages," the source said.

He added there is demand for Richards Bay, not just in ARA, but in the Mediterranean and Turkey, with South African coal likely to come into Europe "at decent levels" if the arbitrage is there.

But with freight for capesize vessels between Richards Bay and Rotterdam currently reported at $10.50/mt, the markets would still need to diverge by around $3/mt for the arb to open.

A Switzerland-based trader said Richards Bay was being discounted for willing buyers, but noted that most people were putting cargoes straight into storage. A utility source said all the South African material bought in July had been intended for Asia, but he was "not sure [Chinese] buyers really want it." A third source, however, said the producer seen buying at $115.75/mt FOB was very likely to sell directly to China with the "right freight rate."

No deals were seen in the CIF ARA market, although an August bid-offer range of $123.50-124.25/mt placed the market at marginally lower levels on-day.

The FOB Newcastle market also weakened a touch, with an August bid-offer range reported at $120.50-122/mt

Platts assessed the daily 90-day CIF ARA price at $124/mt, down $0.50/mt, FOB barge (ARA) at $126.50/mt, down $0.50/mt, FOB Richards Bay at $115.90/mt, down $0.60/mt, and FOB Newcastle at $121.25/mt, down $0.50/mt.

--Mark Selby, Platts

Ramesh refers Mahan coal block clearance to GoM

Fri, Jul 08, 2011 | PTI

The Environment Ministry today withheld clearance to the Mahan coal block in Madhya Pradesh that is intended to fuel power plants of Essar and Hindalco and referred the matter to a Group of Ministers (GoM).

Environment Minister Jairam Ramesh has suggested the Sohagpur coalfield in Shahdol district as an alternative coal linkage for the power plants of the two leading corporates.

"I am not entirely clear why such a good quality forest area should be broken up for such a partial requirement," Ramesh said pointing out that Essar has itself said that the Mahan coal block would meet requirements for two 600 MW units for 14 years only.

He also pointed out that the Mahan coal was located in catchment area of the Rihand Reservoir and that there is a high degree of probability of excessive siltation due to denudation of the slopes and hills when they are mined for coal.

"The Forest Advisory Committee (FAC) sub-committee found that the quality of the forest and tree cover is much higher than that is being claimed by Essar/Hindalco and the state government," he said.

"In this backdrop, I am unable to agree to consider the Mahan coal-block for Stage-I clearance. However, keeping with the proposal I had made myself to the GoM on April 7, to resolve issues related to coal blocks in 'no-go' areas, the Mahan coal-block is therefore, being submitted to the GoM for its consideration with a recommendation that an alternative coal linkage be provided for the two power plants," Ramesh said in the order.

The block, located in Singrauli district, was jointly allocated to Essar and Hindalco for their thermal power plant. If the block is cleared, it will provide coal to Essar Power's 1,200 MW plant and Hindalco's 650 MW facility in Madhya Pradesh.

The coal block was allocated to Essar and Hindalco on April 12, 2006 for which environment clearance was given on December 23, 2008 but declared a no-go zone in January 2010. The Forest Advisory Committee has considered the proposal four times but it could not arrive at a final decision "given the complexity of the issues involved".

"Implicit in the recommendation of the FAC sub-committee to withhold permission for forest clearance is the need to carry out more detailed environmental impact assessment studies," Ramesh said.

He said he had proposed a compromise formula to Prime Minister Manmohan Singh on the no-go zone issue by which his Ministry would consider clearing a coal block even if it is a no-go zone area if it is meant for power project, which is over 60-70% complete.

"Substantial investment to the tune of about Rs 3,600 crore appear to have already been made in power plants linked with the Mahan coal-block," he said adding this leaves aside the question of why the plants were started in the first place when the forests clearances had not been obtained.

"Fait accompli has become far too common in environmental and forest clearances," he said adding he had earlier communicated to the Prime Minister why his Ministry could not give forest clearance for the mining. (By Money Control)

Zimbabwe: Zanu PF Minister Threatens Mass Mine Takeover

July08,2011 | SW Radio Africa (London)
By Alex Bell

ZANU PF's Indiginisation Minister, Saviour Kasukuwere, has threatened to take over foreign owned mining operations in Zimbabwe, saying their indigenisation plans "fall short" of government expectations.

Kasukuwere told the state owned ZBC that "what we are now doing as government is basically to invoke the law and ensure that we, as government, take over those assets."

Foreign owned mining firms recently had to submit their proposals of how they plan to indigenise their shareholding, under the new Indigenisation and Empowerment Act. The controversial law, spearheaded by Kasukuwere and ZANU PF, will see all foreign owned companies in Zimbabwe forced to cede 51% of their shares to local Zimbabweans or government approved groups.

About 173 mining firms have since submitted their empowerment plans, which appear to have been rejected. Kasukuwere has even said that the government won't discuss "so-called empowerment credits" with mining firms that have invested in social projects like schools and hospitals.

Analysts have said that the Indigenisation plans are a serious threat to Zimbabwe's economic future, because they hold no attraction for potential foreign investors. The country's economy is still trying to recover from years of mismanagement under ZANU PF rule, and foreign investment is critical for rebuilding the country.

But ZANU PF's plans will ensure that no foreigners can own businesses, making Zimbabwe even more unattractive as an investment haven.

Mozambique: Japan Offers Training in Mining Areas

Fri, July08, 2011

Maputo — The Japanese government on Wednesday offered to support Mozambique in the training of mining staff.

Speaking at an international conference on coal in Maputo, Japanese ambassador Susumo Segawa said "We in Japan don't have many resources, but we bank heavily on training. So we have many cadres in this area, and we can collaborate with Mozambique in staff training".

Segawa also asked the Minister of Mineral Resources, Esperanca Bias, about the impact of coal mining on Mozambique's overall socio-economic development, the involvement of small and medium companies in this area, and the existing level of training.

Bias replied that last year the government approved a strategic plan for the sector, which lays down the country's needs in terms of mining professionals. The plan estimates that, over the next ten years, Mozambique will need to train 4,500 mining specialists including geologists, engineers, metalworkers and others.

"We think it is easier to train people inside the country, rather than sending them abroad", she said. "This has advantages both in terms of quality and in covering a larger number of people. For this, we are relying on funding from the government, but we are open to other support".
(By AllAfrica)

Taboo eases on talk of Greek euro zone exit

Fri Jul8, 2011
By Philip Blenkinsop

BRUSSELS (Reuters) - Dismissed as foolish fantasy a year ago, the prospect of Greece leaving the euro zone has become a topic worthy of serious discussion among experts handling the crisis in recent weeks.

In public, the official line remains that no member will exit the single currency bloc, but policymakers are at least willing to exchange views on an intellectual level.

Is thinking the unthinkable a first step towards carrying it out? It would not be the first time euro zone officials have put the impossible into action.

In bailing out Greece, Ireland and Portugal, the bloc has already broken its rule that member states cannot assume the liabilities of others -- the supposed "no bailout" clause.

One of the senior euro zone officials involved in crafting the rescue packages, who is leaving Brussels after several years, was asked to write an assessment for their government of the crisis with a view on where the situation was headed in the coming years.

Wondering whether there would still be 17 members of the single currency by the end of the decade, the official opined in the report, the contents of which were related to Reuters:

"There may well still be 17 members, but whether it will be the same 17 members is an open question."

Among non euro-zone member states -- which include Britain, Sweden and Denmark -- senior Brussels-based officials express relief at not having joined the club and often privately discuss the once-unthinkable possibility of a state dropping out.

The euro project is at best faltering, but it is unclear whether the sovereign debt crisis will bring it to an end or whether it will emerge from a difficult teenage phase.

The 1992 Maastricht Treaty, which laid out the goal of establishing economic and monetary union, resolved to converge as well as strengthen the EU's economies. A levelling-out of wealth and prices across the region was a long-term aim.

Critics, and the evidence, suggest that has been a failure.

In 2010, prices for consumer goods and services were more than 20 percent above the EU average in Finland and some 30 percent below in fellow euro zone member Slovakia.

Income inequality has also increased, although not shot up, in the past decade, with the richest 20 percent in the euro zone now earning five times more than the poorest 20 percent.

While few actually expect a country to abandon the single currency, the chances of it happening have substantially increased since the crisis began in late 2009, with a growing consensus that Greece will prove unable to pay its bills.

It could default and stay within the euro zone, but it is unlikely to achieve the necessary improvement of its competitive position without devaluing, by exiting the single currency.

Emergency aid may take the form of loans not hand-outs, but many economists believe a Greek default is inevitable and that its bailout, set to be doubled, is only buying time.

Financial markets certainly seem to think so.

The prices of credit default swaps imply a 80 percent chance of Greece defaulting and a probability just short of 50 percent for Ireland and Portugal.

Jean Pisani-Ferry, director of the Brussels-based Bruegel thinktank, says that to return to markets, Greece would need to reduce its debt-to-GDP ratio considerably below a current level of some 150 percent. That would require creating a sustained primary surplus of more than 8 percent, he said.

However, no advanced economy other than oil-rich Norway has consistently been able to achieve a surplus above 6 percent.

"The situation is so exceptionally severe that it's hard to see how it can work," Pisani-Ferry said.

There is a risk that, as Greece struggles to push through austerity and is chastised on a regular basis by the EU, IMF and European Central Bank -- the troika of experts who oversee Athens' progress -- further market turmoil will be triggered.

Bank of America Merrill Lynch economists believe troika reviews at the end of November 2011 and of February 2012 will be particularly important in assessing Greece's progress.

Policymakers have consistently said a default would be catastrophic, but if it is indeed inevitable, all that can be controlled is when it should happen and how to contain it.

Senior EU officials repeatedly said there was no "Plan B" for Greece in the run-up to last month's Greek parliamentary votes in favour of austerity measures.

But the EU's top economic official, Olli Rehn, said there was "no Plan B to avoid default", implying that a contingency plan might have existed, albeit one which involved a Greek default taking place -- which would break another taboo.

If you believe a Greek default is inevitable, the question is how it should proceed.

Greece could skip interest payments or reduce the principal owed and still stay within the euro zone. Creditors, banks and taxpayers within and outside Greece would take a huge hit, but Greece would still be forced to carry out savage austerity just to cut its primary deficit to zero.

A devaluation via a Greek exit from the euro would be even more tumultuous, with a likely run on Greek banks as savers withdraw their euro-denominated assets.

Greece, with a modest export to GDP ratio of some 20-25 percent, would still struggle.

"Devaluation works best if you have a strong export sector. For Greece it is small and on average imports deducted from growth more than exports added," said Carsten Brzeski, an economist with ING in Brussels.

However, for an increasingly vocal number of commentators, devaluation is the only viable option.

"To have an economic future Greece has to be competitive," said Martin Jacomb, the chairman of Shire Plc and a former Bank of England director. "This involves, especially for sectors such as the tourist industry, lower real wages and that is almost impossible to achieve harmoniously without devaluation."

He points to Argentina, Latin America's third-largest economy which defaulted on $100 billion of debt in 2002 and dropped the peso's link to the U.S. dollar, and also to the post-split successor states of Czechoslovakia and Yugoslavia, which proved able to adopt different currencies.

Argentina rapidly returned to economic growth of around 9 percent, but the reputation it earned and its failure since to return to global capital markets in the face of U.S. litigation mean euro zone policymakers do not see it as a model to follow.

"This was less messy because they still had the peso, albeit devalued, but we have seen countries split and each part develop their own currencies successfully," Jacomb said.

(Additional reporting by Luke Baker; editing by Philippa Fletcher)

Indonesia's Bayan signs 100 mln tonne coal deal with Indian firm

Fri Jul8, 2011

JAKARTA, July 8 (Reuters) - Indonesian coal miner Bayan Resources Tbk has signed a deal with India's Universal Crescent Power Private Ltd to supply 100 million tonnes of coal over 15 years from 2015, the firm's chief financial officer said on Friday.

"It's an index linked contract based on the Newcastle index (and) is fully compliant with the minimum pricing regulation," Alastair McLeod told Reuters. "It's not a fixed price contract, and so it will vary every month on delivery of the contract."

In late May, Bayan, Indonesia's eighth-largest coal producer, said it was aiming to more than double its annual output to as much as 25 million tonnes by 2013 to meet rising demand from consumers such as India.

The company produced 11.9 million tonnes of coal last year and expects output to rise to between 14.5 million and 15.5 million tonnes in 2011.

"It is a further expansion that will be required," McLeod said of the India agreement.

"We have already got some debt facilities in place although they're pretty much fully utilized," adding that the company is looking to raise additional debt in the latter part of this year or beginning of the next year to fund the expansion.

Bayan is 20 percent-owned by Korea Electric Power Corp and has open-pit mines located in East Kalimantan.

The firm exports most of its coal to countries and regions that include Europe, Taiwan, Malaysia, Japan and South Korea.

India, Asia's third-largest economy, is the biggest market for Bayan by volume, accounting for about 30 percent of all exports.

By 0353 GMT, shares of Bayan were little changed near a record high of 23,950 rupiah.

Petrovietnam units sign $1.2 bln coal-power plant deals

Fri Jul 8, 2011

HANOI, July 8 (Reuters) - State-run Petrovietnam has awarded two contracts worth a combined $1.2 billion to two subsidiaries to build a 1,200-megawatt, coal-fired power plant, which will boost its thermal coal imports from Indonesia and Australia, the government said.

Vietnam has also licensed Malaysia's Jaks Resources Berhad to invest $2.25 billion to build a coal-fired power plant in northern Vietnam, using domestic coal, a state-run newspaper reported on Friday.

The moves come as coal is expected to take over from hydropower as the leading fuel for new electricity generation in Vietnam in the next five years, a period when annual power consumption is set to rise by 15 percent, after supply had lagged demand by 3 percent in the past five years.

The contract signing for the first project in central Vietnam follows the country's first import of nearly 10,000 tonnes of Indonesian thermal coal this year, as it also continues to buy electricity from southern China to avoid outages.

These also come as Vietnam takes the initial steps towards opening up its power sector, by launching a pilot competitive generation market last Friday to encourage private power generators to boost supply.

The contracts for the Quang Trach 1 plant were signed with Petrovietnam Construction Corp (PVC) and Petrovietnam Investment Consultancy and Engineering Corp (PVE). Construction will start on July 19, the government said in a statement issued late on Thursday.

PVE said the contract awarded to the firm was valued at $17.6 million, the largest in Vietnam so far for a designing deal.

The plant would use coal imported from Indonesia and Australia, the statement said, adding that its use of pulverised coal-fired technology would be environmentally friendly.

HIGHER COAL IMPORTS

Vietnam, a net coal exporter, is expected to import 6.5 million tonnes of the power-generating fuel annually by 2015, from around half a million tonnes a year in recent years, as domestic supply is declining, a minister was quoted on Thursday as saying.

The government said PVE would take the designing role and PVC will buy, install and test-run equipment, including two generators, at the plant in Quang Binh province's Quang Trach district, 410 km (255 miles) south of Hanoi.

The first generator is slated to start operation in June 2015 and the second in December 2015, with a combined annual output expected at around 8.4 billion kilowatt hours, the government's statement said.

Petrovietnam has been tasked to ensure it would supply 9,000 megawatt of designed power generating capacity between 2011 and 2015 in order to meet a quarter of Vietnam's electricity output.

It was not immediately clear how Petrovietnam is going to fund the Quang Trach 1 plant's project.

Last December, Petrovietnam said it would use its funds to meet 30 percent of the investment need to build the $1.2-billion Long Phu 1 power plant in the country's south, also using Indonesian and Australian coal, while taking export credit assistance funds for the remaining 70 percent.

Long Phu 1 and Quang Trach 1 would sell electricity to state utility Vietnam Electricity group (EVN).

Vietnam also plans to start building the country's first nuclear power plant in 2014 using Russian technology.

The country's electricity consumption would nearly double to 175 gigawatt-hours in 2015 from 98 gigawatt-hours this year while supply will increase to 196 gigawatt-hours from the current 110.8 gigawatt-hours, EVN has said.

Cockatoo Coal sells 49pc of Woori to Japan's Mitsui

Fri,July 08, 2011
By Ross Kelly,Dow Jones Newswires

COCKATOO Coal will sell 49 per cent of its Woori project in Queensland to Japan's Mitsui for $37.25 million.

Mitsui now owns 49 per cent stakes in the Woori, Collingwood and Taroom projects, all in Queensland's Surat Basin, and Cockatoo Coal said these will now be consolidated into one joint venture managed by Cockatoo.

The joint venture will work on completion of a feasibility study by December 2013, Cockatoo Coal said. The deal with Mitsui remains subject to relevant regulatory approvals.

GMDC seeks alternative coal block in Chhattisgarh

Friday, 08 Jul 2011

Gujarat Mineral Development Corporation Ltd has requested the central government for a coal block in Chhattisgarh for a proposed thermal power plant in the eastern State.

The request comes as the environment ministry is refusing to give the green signal for coal mining in the Morga II block due to environment issues. Due to this delay, GMDC's thermal power generation plans are likely to go haywire.

Mr VS Gadhvi MD of GMDC told Business Line that “We are still hopeful of an early decision in this regard.”

He said the ministry of coal appeared convinced of GMDC's request but no reply has been received for an alternative coal block.

Nearly five years ago, the listed company, essentially a mining major, was allotted coal blocks in Chhattisgarh (Morga II) and Orissa (Naini). In 2008, it had planned to set up three power plants in a joint venture to generate 4,500 megawatt using indigenous coal based thermal power technology in the two coal rich States. The total investment planned was nearly INR 20,000 crore.

It was a unique business model in which GMDC would provide assured coal supplies to private parties who would, in turn, ensure supply of a mandated 2,750 MW to Gujarat as its share by 2012.

The Naini coal block had been jointly allotted to GMDC and the Puducherry Industrial Investment Promotion Corporation.

Mr Gadhvi further said that “We have got possession of land there and the Government of India is now carrying out exploration. After its completion, we will apply for environmental clearance for mining coal in this block as well.”

Morga-II and Naini have mineable coal reserves of 350 million tonnes and 250 million tonnes respectively, spread over 21 square kilometer and 10 square kilometer areas.(sourced from BL)

Government extends MMTC LTA for high grade iron ore export

Friday, 08 Jul 2011

The Indian government has approved the proposal to renew the long term agreements and has authorized MMTC to supply iron ore, both lumps and fines, of grade +64% Fe content to Japanese steel mills and POSCO of South Korea for another 3 years ie 2011-2014) under long term agreements entered into by MMTC earlier.

The long term agreements entered into by MMTC during the year 2006-11 expired on March 31st 2011.

JSW Steel withdrew iron ore petition as SC refused to entertain plea

Friday, 08 Jul 2011

The Hindu reported that JSW Steel on Wednesday withdrew its petition seeking direction to the Karnataka government for allotting captive iron ore mines for its steel plant in the state after the Supreme Court refused to entertain its plea.

A bench comprising Justices Mr VS Sirpurkar and Mr TS Thakur declined to entertain the plea of JSW Steel to direct the Karnataka government to lease a captive mine for steel plant at Vijaynagar in the State.

The bench said that “We cannot enlarge the scope of the petition and direct some one to surrender its lease or give lease to some one.”

The apex court was also not convinced by the submission of the company that it made an investment of INR 10,000 crore by setting a steel plant on the assurances of the state government that a captive mine would be allotted to it.

The bench said that “JSW are not an unknown villager, who would invest such a large sum on promises only.”

However, it gave liberty to the company to approach the Karnataka High Court if it feels that the state government has not fulfilled obligation under the MoU signed by it in 1994.

Senior advocate Mr Mukul Rohatgi appearing for JSW Steel submitted that while signing MoU with the State in 1994, it was assured that it would be allotted a captive mine in the state after National Mineral Development Corporation surrender some of the mines in the State.

He said that “From 1994 to 2011, 17 years has gone by, but we have not been given any mines. Even the small producers in the state have been allotted captive mines adding that JSW Steel is forced to buy iron ore from others and transport miles and it is hampering its growth.”

(sourced from TheHindu)

Coking coal imports decline strongly at Indian port of Paradip in June

Friday,08 July 2011

With high prices leading to low demand, coking coal imports via the port of Paradip in the eastern Indian state of Orissa declined in June this year to 482,593 mt, as reported by leading Indian business newspaper Business Standard. This volume was down significantly from 632,795 mt in May, indicating a decrease of 24 percent. The coking coal import volume via Paradip in April had totaled 656,295 mt. (By steelorbis)

South Korea's POSCO buys Thainox stake for $287 mln

* To expand its presence in SE Asia's stainless steel market
* Thainox stocks hit 6-1/2-year high

BANGKOK/SEOUL, July 7 (Reuters) - POSCO Pcl , the world's third-biggest steelmaker, said on Thursday it was buying a stake in Thainox Stainless Pcl , Southeast Asia's largest stainless steel producer, in a deal worth 305.9 billion won ($287 million).

In a bid to gain a strong foothold in fast-growing Southeast Asia, South Korea's POSCO, which already owns 15.39 percent of the Thai company, will buy the stake from major shareholder the Mahagitsiri family at 2.20 baht per share.

The news sent Thainox shares up more than 10 percent when they resumed trade in the afternoon after being suspended on Thursday morning pending the announcement.

They ended at 2.08 baht, up 9.5 percent. The offer price was 15.7 percent higher than Wednesday's close of 1.90 baht.

POSCO ended down 0.3 percent at 464,500 won.

"The deal aims to tap into the Southeast Asian market and enhance its global competitiveness in the stainless business," POSCO told the South Korean stock exchange.

POSCO said it planned to buy all the remaining shares it did not own in a tender offer at the same price between September and October.

That would value the company at around $440 million, according to a Reuters calculation.

Thailand, where global home appliance makers and Japanese car makers have production bases, is the biggest cold-rolled stainless steel market in Southeast Asia, POSCO said.

Stainless steel demand in Southeast Asia rises 8 percent a year on average and supply falls short of demand, it said.

Analysts were positive on the takeover plan.

"The deal will help POSCO secure a foothold in the Southeast Asian market and compete better with Japanese and other competitors," said Aum Jin-seok, an analyst at Kyobo Securities.

POSCO could cancel the tender if it was unable to get at least 51 percent of Thainox, the Thai firm told the exchange.

POSCO has long been interested in taking over Thainox but talks had stalled due to political instability in Thailand.

There was a general election in Thailand at the weekend and the outcome -- a landslide win for what was the opposition -- may ensure more stability in the near term, analysts say.

In 2009, POSCO bought a 90 percent stake in a Vietnamese stainless steel company, Asian Stainless Corp.

POSCO's Chinese stainless joint venture, Zhangjiagang POSCO Stainless Steel, recently completed the construction of additional facilities that raised its annual capacity to 1 million tonnes from 800,000 tonnes.

That capacity addition will bring POSCO's total stainless steel capacity in South Korea and overseas to 3 million tonnes, making it the market's second-biggest player along with Taiyuan Iron & Steel and just behind Acerinox SA , POSCO said. ($1 = 30.48 Baht) ($1 = 1065.95 Korean Won)

BHP resumes Port Hedland operations after port accident

Fri 08 Jul, 2011

SYDNEY (Reuters) - Global miner BHP Billiton (BLT.L) will resume its Port Hedland iron ore shipping operations in Australia on Friday, a day after suspending rail and port movement when a worker was killed in a crane accident, a company spokeswoman said.

"We expect to be back to normal by around midday on Friday, local time," the spokeswoman said.

The incident, which brought one of the world's biggest iron ore export terminals to a near-halt, was under investigation by safety authorities and the Western Australia state police, according to the spokeswoman. Commodities traders expect any loss of production to BHP Billiton arising from the incident to be negligible, given the short duration of the suspension.

The port remained open for business to other users, which include Fortescue Metals Group and Atlas Iron .

BHP Billiton stopped all its rail and port activities pending clearance from authorities to resume operations.

BHP Billiton, the world's No.3 iron ore miner, ships all its ore via Port Hedland and each month accounts for the majority of the roughly 18 million tonnes shipped from the port.

Rio Tinto, the world's No.2 iron ore miner behind Vale of Brazil, uses its own rail line and doesn't ship ore to Port Hedland.

Vale has no iron ore mining business in Australia.

(Reporting by James Regan; Editing by Ed Davies)

Iron Ore-Spot prices rise, Shanghai rebar at 3-week top

Fri Jul 8, 2011

* Shanghai rebar eyeing best week since early April
* China seen unlikely to sustain record steel output
* BHP resumes operations at Port Hedland

By Manolo Serapio Jr

SINGAPORE, July 8 (Reuters) - Spot iron ore prices rose on Friday as a brighter outlook for China's steel demand prompted mills to restock the raw material, with Shanghai steel futures edging up to three-week highs.

China's daily crude steel output hit a record high above 2 million tonnes towards the end of June, buoyed by increased construction of social housing units in the country. But some analysts expect the production pace to slow down.

"It's very difficult to see Chinese steel mills cutting production because local demand for long steel products is driven by local government investment and real estate remains strong," said Henry Liu, regional head of commodity research at Mirae Asset Securities in Hong Kong.

The key October rebar contract on the Shanghai Futures Exchange hit a session-peak of 4,828 yuan per tonne, its highest since June 13. It stood at 4,818 yuan by the midday break, up 0.2 percent.

Shanghai rebar is up 2 percent for the week, its best weekly gain since early April.

Higher steel prices usually prod traders and steel mills to buy more iron ore, the key steelmaking material.

Offers for iron ore in the spot market rose $2 on Friday from Thursday, with Australian 62-grade Newman fines quoted at $176-$178 a tonne, with freight, Chinese consultancy Umetal said.

Ore with 63.6/63 iron content from India was quoted at $179-$181 a tonne.

"I think most of the buyers in the market are traders who are taking positions on expectations that prices will continue rising," said a shipping manager for an iron ore trading firm in Shanghai.

"But many of the steel mills still prefer to buy port stocks which are $3-$4 per tonne cheaper than spot prices."

The price of iron ore with 62 percent iron content rose 1.2 percent to $170.70 a tonne on Thursday, the highest since June 23, according to The Steel Index .IO62-CNI=SI.

A similar index by Platts IODBZ00-PLT was flat at $174 and that of Metal Bulletin's .IO62-CNO=MB was little changed at $169.76.

Traders said a brief suspension by BHP Billiton of shipments from Australia's Port Hedland also supported prices.

BHP, the world's No. 3 iron ore miner, said it will resume operations on Friday, a day after suspending rail and port movements when a worker was killed in a crane accident.

SHORT-LIVED

Liu at Mirae Assets said despite China's record steel production pace, demand could gradually ease during the normal summer lull when product inventories are likely to rise.

At the same time, he doubts whether there will be a big push on steel prices from China's social housing projects, estimating that the government's target of building 10 million houses this year should only require 20 million tonnes of steel, equivalent to just 10 days of domestic steel output.

"I don't expect the social housing project to boost demand as huge as some analysts believe and this round of iron ore restocking is likely to be short-lived," a Shanghai-based iron ore trader said.

"Since we are not expecting a big hike in steel demand in the summer, we are selling our materials at a loss as we just don't want to build up too much inventory," he said.

Reflecting expectations spot iron ore prices may not be able to build on recent gains, nearby forward swaps <0#SGXIOS:> slipped on Thursday.

The Singapore Exchange-cleared July and August contracts both dropped by more than a dollar to $169.75 and $167.83 a tonne, respectively. The September contract slipped 87 cents to $167.25. (By Thomson Reuters)

Govt panel okays bill calling for mining profit share

Thu Jul 7, 2011

NEW DELHI (Reuters) - A panel of ministers on Thursday approved a new bill calling for coal miners to share a maximum 26 percent of their profits with local communities, a government source said.

The source at the mining ministry added the draft law, which now goes to cabinet for approval, calls for other miners to give to local communities an amount equivalent to royalties.

The bill requires parliamentary approval after passing by cabinet to become a law. It will be applicable to new projects.

The draft law proposes the profit sharing formula in a bid to smooth land acquisition, a touchy issue in the countryside, where many oppose natural resources being carted away by outsiders. The bill had initially suggested all miners give 26 percent of profits to local communities.

A part of government moves to expand social programmes for the poor, the bill seeks to simultaneously please its core support base, block flows of new recruits to the Maoists and balance modern lifestyles against traditional ways.

While industry bodies are reconciled to sharing some profits, they have baulked at 26 percent, saying that will raise business costs too much and deter investors.

The mining ministry says that profit-sharing should make it easier for mining projects to win local approval and accelerate the pace of developments.

Years of protests, sometimes violent, have delayed many industrial projects, including South Korean steel maker POSCO's plant in Orissa, the biggest foreign direct investment in India at $12 billion.

India's mining sector has only opened up fully to private investors in recent years and state-run companies have lacked the funds and expertise to probe deeper than the top 50 metres or so where its iron ore and coal reserves are found. ( By Reuters)

Iron Ore-Spot offers steady, BHP suspends Port Hedland ops

Thu Jul 7, 2011 | Reuters

* BHP shipment suspension seen supporting prices
* China daily steel output hits record above 2 mln T
* China hikes rates for third time this year (Adds comment, Shanghai rebar)

By Manolo Serapio Jr

SINGAPORE, July 7 (Reuters) - Offers to sell iron ore in the spot market were steady on Thursday, with prices likely to get short-term support from news that miner BHP Billiton has suspended shipments from a major port after a fatal incident.

BHP , the world's No. 3 iron ore producer, said it had suspended port and rail operations at the Port Hedland iron ore terminal in Western Australia following the incident. It said operations would be halted until further notice.

BHP ships more than 150 million tonnes of iron ore annually from Port Hedland and is the biggest customer of the public facility.

"I expect it to be supportive of prices at least for the short term. They're not going to shut down their operations because of this," said a Singapore-based trader.

"I think it will be a temporary thing, probably 48 hours," said Troy Flannery, senior resource analyst at DJ Carmichael in Perth.

Offers for Australia's Newman 62-percent grade iron ore fines, which BHP sells to the spot market, were steady at $174-$176 a tonne, including freight, on Thursday, said Chinese consultancy Umetal.

Indian 63.5/63-grade ore was also unchanged at $177-$179 a tonne.

Iron ore indexes, which track spot transactions and which global miners use in setting supply contract prices, rose on Wednesday.

The Steel Index's 62 percent benchmark .IO62-CNI=SI gained 20 cents to $168.70 a tonne and a similar index by Metal Bulletin .IO62-CNO=MB rose 29 cents to $169.72. Both indexes rose for a fourth straight day.

Platts 62 percent index IODBZ00-PLT edged up a dollar to $174, for a second consecutive day of gains.

CHINA STEEL OUTPUT AT RECORD

Higher Chinese steel prices are aiding gains in iron ore prices.

"But steel prices are not rising as fast as iron ore so we could see iron ore lose steam soon," said the Singapore trader. "We'll probably be rangebound for the next two weeks."

The most active October rebar contract on the Shanghai Futures Exchange ended down 4 yuan at 4,808 yuan per tonne, after hitting a three-week high of 4,823 yuan.

China's daily crude steel output hit a record 2.018 million tonnes in the last 10 days of June, data from the China Iron and Steel Association showed.

China has been producing at a record pace this year on strong demand from the construction sector as the country races to meet its social housing targets. Some analysts expect output to slow during the usual summer lull in July and August.

The data comes a day after China raised interest rates for a third time this year, which most analysts read as suggesting that Beijing may be nearing the end of its monetary policy tightening campaign.

"Probably the next move after a few months time is going to be loosening so that should support iron ore prices," said Flannery.

"And there's a lot of talk out there that China is running behind schedule on its public housing targets which they need to meet by the end of the year."

But tighter credit continues to make it difficult for Chinese traders and steel mills to buy iron ore, with some of them using their stocks to secure loans, traders said.

"I estimate that around 10 million tonnes of iron ore inventories at major ports could not be traded right now as traders use them for bank financing," said an iron ore trader in Beijing.

India renews iron ore deal with Japan mills, POSCO

NEW DELHI | Thu Jul 7, 2011

NEW DELHI (Reuters) - India has renewed a deal to supply iron ore to Japanese steel mills and South Korea's POSCO for three years starting 2011, a government statement said on Thursday, a contract that will not affect global prices .

It did not specify the amount of the steel-making commodity to be exported but said the consignments would consist of both lumps and fines of grade +64 Fe content. The iron ore is to be supplied through state-run trading firm MMTC.

The earlier agreement was signed for five years in 2006 . Private exports from India, the world's third biggest supplier of iron ore, have been hit because of higher export taxes, a ban on shipments from a key producing state and the onset of monsoon.

"This will have zero impact on the market as these are regular contracts," said R.K. Sharma, secretary general of the Federation of Indian Minerals Industries (FIMI), which has over 100 iron ore exporters as members , referring to Thursday's government statement.

The iron ore will be sourced from mines of state-run NMDC, which does not export on its own account. MMTC exports about 7-8 million tonnes of iron ore a year.

India exported 85.4 million tonnes of iron ore from April to February, according to FIMI, mostly to China. (sourced Reuters)

Opponents to protest Bellingham coal terminal

Environmentalists are set to meet in Mount Vernon to protest the proposed Bellingham coal terminal and the affect it could have as about 20 trains a day transport the coal through Western Washington.

MOUNT VERNON, Wash. — Environmentalists are set to meet in Mount Vernon to protest the proposed Bellingham coal terminal and the affect it could have as about 20 trains a day transport the coal through Western Washington.

The Skagit Valley Herald says the meeting at 7 p.m. Thursday at the Lincoln Theater in Mount Vernon is being hosted by nine environmental groups from Skagit and Whatcom counties.

The $600 million cargo terminal at Cherry Point in Bellingham is expected to create 1,700 jobs for construction and 250 permanent jobs as well as generate $54 million in annual tax revenues.
---
sourced: The Associated Press Skagit Valley Herald

German parliament set to okay clean coal bill

Thu Jul7,2011 |By Christiaan Hetzner

BERLIN (Reuters) - Germany's lower house is expected to pass legislation that would open up EU funding for technology that traps greenhouse gases from burning coal, one week after parliament voted to phase out nuclear power in the next decade.

Utility group Vattenfall Europe has applied for EU aid for a controversial pilot plant in the economically underdeveloped region of Brandenburg, the only so-called carbon capture and storage (CCS) facility currently foreseen for Germany due to widespread opposition by local residents.

"The passage by the Bundestag is an important signal, and the project has good chances of being funded by the EU," said a conservative MP from Brandenburg, Jens Koeppen, on Thursday ahead of the vote later in the day.

Germany, Europe's largest economy and a global manufacturing powerhouse, has committed to reducing its carbon footprint by 40 percent in 2020 compared with 1990, with further cuts to come over the following three decades.

Pointing to the low level of planet-warming gases emitted by nuclear reactors, critics have warned Berlin that its anti-nuclear policies will make climate targets even more difficult to achieve.

"The phase-out of nuclear power means Germany has given itself a challenging task achieving both targets for climate protection and securing an environmentally friendly and efficient energy supply," said Martin Neumann, the research policy expert for the junior coalition partner Free Democrats (FDP) who represents a constituency in Brandenburg.

LIMITED IMPACT

Coal accounts for just over 40 percent of the country's energy needs, but it is also the dirtiest fuel when it comes to carbon dioxide (CO2) emissions. This is particularly true for brown coal, for which Germany is the largest global producer before even commodity-rich Australia.

Scientists say capturing carbon dioxide emissions and sequestering them underground could hold the key to an environmentally friendly way of burning the fossil fuel.

The current bill lays the foundation for testing and demonstration efforts only. Wider introduction would not take place without consulting local residents, who often oppose sequestering carbon dioxide below the earth for fear the potentially lethal gas could escape in large amounts.

A clause that would allow regional states to veto plans for CCS plants for fear of widespread opposition means the legislation's impact would probably be limited.

Even Brandenburg's own regional government has said its citizens may scarcely accept bunkering CO2 produced in local power plants and steel mills in sites around the state.

"Many issues remain unclear and can only be solved through sufficient research. That's the only way one can answer the many questions and conjecture over the effects, sometimes even horror scenarios, posed by opponents of this new technology," the FDP's Neumann said. (By Reuters)

Australia’s coal miners plot against Gillard’s carbon trade plan

Coal producers in Australia yesterday said they would start a public campaign against Prime Minister Julia Gillard’s bid to initiate carbon trading to cut emissions.

Thu,07 July,2011

COAL producers in Australia yesterday said they would start a public campaign against Prime Minister Julia Gillard’s bid to initiate carbon trading to cut emissions.

General Electric and Fujitsu have backed Ms Gillard’s bid to initiate carbon trading to cut emissions in the country that is the developed world’s biggest polluter per capita.

The companies are two of 55 that signed a letter sent to Ms Gillard on Tuesday night from the Carbon Markets & Investor Association supporting her plan for an emissions trading system to start next year.

But the country’s coal producers yesterday said they would fight the policies they say would cost the industry A$22bn ($23,5bn).

"Australia is one of the top 20 countries in the world in terms of emissions and has the highest per capita emissions of almost any country in the world," said Anthony Hobley, board member of the investor association . "If Australia does not do this it allows others to do nothing."

Ms Gillard, the least popular prime minister in 13 years, on Tuesday told parliament she would be "wearing out my shoe leather" to reverse record low public support for climate measures in the world’s biggest coal exporter. On Sunday, she is due to announce a start price for carbon, the deadline for open trading and compensation for companies and households.

Shares of steel makers rose yesterday . BlueScope Steel , Australia’s biggest steel maker, rose 6,1% in Sydney trading to A$1,39 and Onesteel rose 6,2% to A$2,05.

Climate Change Minister Greg Combet declined to comment when Bloomberg contacted his office.

The Australian Coal Association yesterday reiterated the plan would cause the closure of 18 coal mines, costing 4700 jobs. "We will be telling the story to all Australians," Australian Coal Association executive director Ralph Hillman told the National Press Club in Canberra yesterday. Mr Hillman said any plan to address climate change should occur in phases and shield exporting polluters, and Australia should act in concert with trading partners.

Independents Tony Windsor, Rob Oakeshott, Andrew Wilkie and the Greens party, which has one member in the lower house, said they would support the plan if it met their conditions. Ms Gillard needs the four votes from non- Labour Party members to get legislation through parliament’s lower house. Ms Gillard’s popularity rating fell to 28% last month, matching the low for then-prime minister John Howard after he proposed tax hikes in 1998. (By Bloomberg)

S.Africa's June coal exports rise to 4.78 mln T

Thu Jul 7, 2011

*Transnet hopes to move 70 mln tonnes in 2011/12

JOHANNESBURG, July 7 (Reuters) - South Africa's coal exports from the Richards Bay Coal Terminal (RBCT) rose to 4.78 million tonnes in June from 3.57 million the previous month, RBCT data showed on Thursday.

South Africa -- a major exporter of coal to power stations in Europe and Asia -- had 2.99 million tonnes of stock at the terminal at the end of June, RBCT said.

South African freight logistics group Transnet [TRAN.UL] has said it expects to move 70 million tonnes of export coal to port by rail in its 2011-12 financial year, though problems on the line have put its target in doubt.

Coal producers in South Africa, including Anglo American (AAL.L: Quote), BHP Billiton (BHP.AX: Quote)(BLT.L: Quote), Exxaro (EXXJ.J: Quote), Optimum Coal (OPTJ.J: Quote) and Xstrata (XTA.L: Quote), have been eager to export more coal to meet fast-rising demand from India and China, but have been limited by infrastructure bottlenecks.

South Africa's coal exports via the Richards Bay terminal have been way below the expanded capacity at the terminal of 91 million tonnes.

Anglo, Xstrata in Wage Dispute With South African Miners

Thu,Jul 7,2011
By Carli Lourens & Mkhululi Mancotywa

Anglo American Plc (AAL), Xstrata Plc (XTA) and other coal producers are in a dispute over wages with South African workers who have threatened to strike at mines that supply coal to Europe, India and China.

There is a “formal” dispute after negotiations failed today, “paving the way for a massive strike action,” Lesiba Seshoka, spokesman for the National Union of Mineworkers, South Africa’s largest labor union, said in a phone message today.

NUM is one of three unions disputing the Johannesburg-based Chamber of Mines’ proposal to raise coal miners’ wages by 5 percent to 6 percent, depending on skills, the chamber said in a separate e-mailed statement. The body negotiates on behalf of Anglo’s thermal coal unit, Xstrata, Exxaro Resources Ltd. (EXX), Optimum Coal Holdings (OPT) and Kangra Coal, spokesman Jabu Maphalala said by phone from Johannesburg today.

The union is demanding a 14 percent wage increase. That’s three times the consumer inflation rate of 4.6 percent for May.

The union will ask the Commission for Conciliation, Mediation and Arbitration today for a certificate of non- resolution, a procedural step necessary before unions are allowed to strike in South Africa, the world’s largest platinum producer and a coal supplier to power plants in Europe.

CCMA will host a meeting between labor representatives and the companies on July 20, the chamber said.

Following separate negotiations with Anglo’s platinum unit today, NUM said it will ask members for a mandate to call a strike after it rejected Anglo American Platinum Ltd.’s offer to raise pay by 4.6 percent. The company, which mines almost all of its platinum in South Africa, is the world’s largest producer. (By bloomberg)

Iran: Processed Iron Ore Output Up

Thursday, 07 July 2011

Production of iron ore concentrate reached 7 million tons in the first quarter of the current Iranian year (started March 21). This amount pertained to domestic companies which had an output of 6.991 million tons, indicating a 4.4-percent growth compared to the figure for the same period last year, IRIB reported.

Iron ore concentrate production in the first quarter of last year reached 6.694 million.
During the said period, the top producer was Chadormalu Mining & Industrial Co. whose production reached 2.428 million tons.
Gol Gohar Iron Ore Company and Central Iron Ore Company produced 2.047 and 1.626 tons respectively ranking second and third in terms of iron ore concentrate production.
The first quarter report of iron ore producing companies shows that the Mishdovan mine recorded the highest production growth rate with 92 percent while Jalalabad mine and Chadromalu registered 6.9 percent and 6.3 percent growth. (source Iran Daily)

Paradip Port may start work on coal and iron berth in September

Thursday, 07 Jul 2011

BL reported that the work on coal and iron ore berths at the Paradip port, already delayed by two years, is expected to start shortly.

Mr GJ Rao chairman of Paradip Port Trust told Business Line that “The forest clearance from the Orissa Government will be available by the end of this month and final clearance from the Union Ministry of Environment and Forests by August 31, and hopefully the work will start in September. We now see light at the end of the tunnel.”

Mr Rao observed that “It will be at least another six months or so before various statutory clearances become available.”

The two berths, each with the capacity of 10 million tonnes, are estimated to cost about INR 900 crore.

The implementation will be through the PPP route and accordingly, two concessional agreements were signed one in July 2009 with Blue Water Iron Ore Terminal Pvt Ltd, a special purpose vehicle of the Nobel Group, for the iron ore berth; and the other in November 2009 with Essar Paradip Terminals, the SPV floated by the Essar Group, for the coal berth.

Meanwhile, the public hearing for environmental clearance for multipurpose berth and oil jetty was held recently.

(sourced from Business Line)

Euro Coal-Futures rise, fail to break $130/mt

Thu Jul 7, 2011

* Gas, power outperform coal
* German dark spread rises to 16-month high

LONDON, July 7 (Reuters) - European coal futures made slight gains on Thursday but underperformed relative to power and gas.

The API2 2012 coal contract opened at $129 a tonne and rose 40 cents to around $129.40 a tonne at 1420 GMT.

Unlike its equivalent benchmarks in the power and gas sector - which saw German 2012 baseload (24 hours delivery) power rise above 58 euros per megawatt-hour (MWh) and the UK's NBP Winter 2011 gas contract break through 72 pence per thermn - API2 2012 coal failed to reach or break through the $130 marker.

The coal market's underperformance relative to power and gas meant that it became more profitable for European utilities to generate electricity from coal.

The German 2012 baseload clean dark spread rose to 9 euros a MWh on Thursday, its highest level since Q1 2010.

The rise also meant that coal's premium over gas power generation rose to more than 11 euros per MWh, its highest since the switching of 2008 on 2009.

On the supply side, South Africa's Chamber of Mines said on Thursday that three unions representing employees in the coal mining sector have declared a dispute over wages.

"The decision to declare a dispute followed the Chamber's request that unions consider withdrawing some of the demands which had significant cost implications so that the coal mining companies could devote available resources to wages," it said in a brief statement.

The Chamber of Mines is negotiating on behalf of several coal miners, including Anglo Thermal Coal SA , Exxaro , Optimum Coal and Xstrata Coal (By Reuters)

FMG to use remote technology at Solomon iron ore mine

Thursday, 07 Jul 2011

Fortescue Metals Group has signed an agreement with earthmoving equipment giant Caterpillar for remotely operated mining technology at its planned Solomon iron ore mine.

One of Caterpillar dealers, Seven Group owned WesTrac is also party to the deal.

The proposed Solomon mine in Western Australia Pilbara region is expected to have about 45 autonomous trucks in use by 2015. An initial fleet of a dozen autonomous trucks will be rolled out in the second half of 2012.

Driverless trucks began operating in the mining sector in the 1990s and, more recently, Rio Tinto started running some of its Pilbara operations including rail services remotely from Perth.

Caterpillar said in a statement the new technology and trucks provided to Fortescue are expected to deliver productivity and performance gains.

Mr Steve Wunning Caterpillar Group president said the equipment would also provide a significant improvement in mine safety and reduce Solomon's environmental footprint.

(sourced from Heraldsun)

Euro Coal-Futures drop back under $130/mt

* API2 2012 hits technical resistance
* Falls in line with gas and power

LONDON, July6 (Reuters) - European coal futures dropped in value on Wednesday after encountering technical resistance in the morning and then reacting to bearish sentiment in the oil and euro markets.

After rising above $130 a tonne on Tuesday, the API2 2012 coal futures contract on Wednesday opened just below that level and traded down to $128.75 a tonne at 1435 GMT.

The move mirrored similar developments in European benchmark gas and power contracts.

German 2012 baseload (24 hours delivery) power failed to rise to and sustain itself above 58 euros per megawatt-hour, and UK NBP Winter 2011/2012 gas prices had the same trouble with 72 pence per therm.

"Coal, gas and power prices are tightly correlated at the moment, and when oil and the euro fell in the late morning that gave traders another incentive to not bet on rising prices today," one energy trader said.

Despite the drops, technical indicators in the coal futures market remained strong as the API2 2012 price remained above its 50 exponential daily moving average (DMA) value of $128.40 a tonne, and the moving average convergence-divergence (MACD) signals also looked bullish.

"The MACDs only just turned bullish, and I think there is some appetite in the market to push prices higher, so today's drop may well have been a mere blip in a bigger move up," another trader said.

On the physical side, mining giant Xstrata has agreed to sell Australian thermal coal to major buyer Tokyo Electric Power at $127.50 a tonne freight on board from October, sources familiar with the talks said on Tuesday.

The TEPCO deal was a 24 percent hike from prices agreed in 2010 and around $2.50 less than the record April price agreement signed earlier this year.

GVK Power to raise debt for Hancock coal assets

Thursday, 07 Jul 2011

India's GVK Power a unit of infrastructure major GVK Group which had inked a deal to purchase two of Hancock Prospecting's thermal coal mines in Australia for around USD 2.4 billion, is set to raise USD 1.2 billion as debt to part fund its acquisition.

The Hyderabad based GVK Power has roped in ICICI Bank to syndicating the USD 1.2 billion loan. Sanjay Reddy, vice chairman of GVK, signed an agreement with Gina Rinehart, chairman of Hancock, earlier in June.

For some months now, Indian billionaire GV Krishna Reddy controlled GVK Power and Infrastructure was inching closer to its buyout of Hancock's two mines in the Galilee basin in Australia.

Analysts tracking the stock said the valuations were very stretched. Mr Ganesh RS corporate analyst with a broking firm said that “Though these are good quality flagship coal mines owned by Hancock, GVK may over leverage itself with this buyout.”

Officials, however, said the acquisition is critical to GVK group's plans to expand its power generation capacity of 901 megawatts to 10,000 megawatts by 2013.

(sourced from Mineweb.com)

CIL workers unions threaten for 3 days strike

Thursday, 07 Jul 2011

Coal India employees affiliated to five central trade unions have threatened to go on a three day strike from August 8 to protest delay in wage revision.

The trade union bodies INTUC, BMS, HMS, AITUC and CITU in a joint statement also demanded that there should be no further disinvestment in Coal India, which mines country's 81% production.

The statement said that “After prolonged discussions, a joint notice of strike dated July 4th 2011, has been served upon chairman CIL, Kolkata and CMD SCCL, Hyderabad for three day strike in entire coal industry of India from August 8 to 10th 2011.”

Consequent upon a meeting with coal minister Mr Sriprakash Jaiswal a decision on wage revision, under the National Coal Wage Agreement IX, was to be completed before June 30.

However, the committee, which was to start negotiations on the issue, is yet to be formed. The trade unions also demanded the coverage of the scheme might be extended to all coal workers of the country including employees of captive coal mines.

The statement said that "Irrational allocation of coal blocks for captive use be stopped. Unused coal blocks be received back and allotted to respective coal companies to augment own production.”

The unions also demanded that the ban on recruitment on non-technical posts, including supervisory, para-medical, general workers, be lifted. It said that "Coal Mines Pension Fund rate of interest should be at par with Employees' Provident Fund and pension be enhanced from 25% to 40%.”

The unions also threatened to organize demonstration before the companies head quarters on July 18. (sourced from PTI)

Port Hedland iron ore shipments rise 2pct in June

Thursday, 07 Jul 2011

Reuters reported that iron ore shipments from Australia Port Hedland, one of the world largest export terminals rose 2% to 18.55 million tonnes in June from 18.21 million tonnes in May.

Shipments to China, the ports biggest destination rose to 13.88 million tonnes in June from 12.53 million tonnes a month earlier.

BHP Billiton is the port biggest user followed by Fortescue Metals Group Ltd.

(Sourced from Reuters)

ThyssenKrupp sells $2.45 bln shares to help pay debt

* ThyssenKrupp sells treasury shares to boost equity
* Decision made after Blohm + Voss deal scrapped
* Shares close down 0.46 pct at 34.75 eur

FRANKFURT, July 6 (Reuters) - Germany's biggest steelmaker ThyssenKrupp (TKAG.DE: Quote) has decided to sell some 1.7 billion euros ($2.45 billion) of treasury shares to institutional investors to partly pay off debts.

The decision, made on Wednesday, came after a deal for ThyssenKrupp to sell Blohm + Voss to Abu Dhabi MAR fell apart last week, leaving its plans to withdraw from civilian shipbuilding in disarray.

ThyssenKrupp -- which also makes submarines, mega-yachts, elevators and industrial plants -- said in a statement that all the remaining 49.48 million shares it has collected from the 2006 buyback programme will be sold via an accelerated bookbuilding process.

Based on Wednesday's closing price of 34.75 euros, the placement would generate gross proceeds of 1.7 billion euros.

ThyssenKrupp in May unveiled plans for a major revamp that would hive off its stainless steel unit, Europe's largest producer, as part of a 10 billion euro divestment plan that will help pay debts and build up its engineering business.

Analysts had expected the shake-up since the company's new Chief Executive Heinrich Hiesinger took over early this year.

ThyssenKrupp had amassed huge debts while in the middle of building mammoth plants in Brazil and the United States as part of its ambitious plan to expand in North America.

ThyssenKrupp's financial debt as of March 31, 2011 was 7.715 billion euros compared with 6.157 billion as of the end of its business year on Sept. 30, 2010.

"An important element of the group's strategic development is the reduction of net financial debt," ThyssenKrupp said on Wednesday.

The placement of treasury stock, which represent some 9.6 percent of capital, will also strengthen the group's equity, it added.

The sale will be managed by Commerzbank, Deutsche Bank and HSBC Trinkaus and Burkhardt.

Separately, German daily Handelsblatt said, citing sources, that Uwe Sehlbach, a board member of ThyssenKrupp's Material Services division, had to resign as a consequence of a cartel investigation into price-fixing by an operating unit and nine other steel and rail companies.

The report said Sehlbach was not involved in the alleged cartel run by the 10 companies, including ThyssenKrupp unit GfT Gleistechnik GmbH.

A spokesman for ThyssenKrupp told Reuters Sehlbach left company on June 30, declining to give any further comment.($1=.6930 Euro) (sourced Thomson Reuters)

China Bohai steam coal price falls first time since March

Thursday, 07 Jul 2011

Bloomberg reported that China Bohai coal prices along six northern ports fell for the first time since March after stockpiles and imports of the fuel increased.

According to the Qinhuangdao Seaborne Coal Market website Bohai Rim Steam Coal Price Index or BSPI fell 0.12% to CNY 842 per tonne compared with a week earlier.

The weekly gauge tracks power station coal prices at six major Chinese ports.

According to China Coal Transport and Distribution Association Coal stockpiles at the nation major power plants rose to more than 64.6 million tons in mid June or close to 18 days of use after utilities built inventories for summer. Prices at Qinhuangdao, another benchmark power-station coal at the nation largest port for the fuel remained unchanged on July 4 after reaching the highest in more than two years in June.

Beijing based coal association said in a statement that Bohai coal prices may fail to increase in summer because of rising imports and high inventories. Chinese coastal coal prices may decline.

According to Chinese customs data imports of the fuel from countries including Indonesia and Australia climbed to a four-month high of 13.6 million tons in May after higher domestic prices made overseas supplies more attractive. (sourced from Bloomberg)

Kaunisvaara iron ore logistics JV announced

Thursday, 07 Jul 2011

Northland Resources has announced an agreement to form 50:50 joint ventures with civil engineering firm Peab to manage the transportation of iron from the magnetite mine which Northland is developing at Kaunisvaara, 100 kilometres north of the Arctic Circle in Sweden.

Production is expected to be underway at the end of 2012, with an annual capacity of 5 million tonnes of iron ore concentrate.

Mr Karl Axel Waplan, Northland President & CEO said on June 29th that the joint venture will manage the entire transport chain include lorry transport to the Svappavaara railhead, movement by rail to the Norwegian port of Narvik and loading onto ships.

One or two further partners are to be invited to join the venture. No decision has been taken has been taken as to whether the joint venture will operate trains itself or subcontract haulage.

Kiruna Wagon has been commissioned to develop an ore concentrate wagon for the project with an order for up to 220 envisaged. Peab has a SKr800m contract for civil works at the mine.

Gunvor and Volga Resources buy Russian coal mines

Thursday, 07 Jul 2011

Reuters reported that Energy trader Gunvor and Volga Resources had agreed to buy a 51% stake in Russian coking coal mines in Yakutia with 363 million tonnes of reserves.

The Kolmar mines originally held by billionaire Mr Mikhail Prokhorov Onexim group allow Gunvor to expand its growing coal business.

Mr Torbjorn Tornqvist Gunvor chairman said in a statement that "This deal marks our first entry into Russian coal mining."

The trader, co owned by businessman Mr Gennady Timchenko is diversifying its traditional crude oil and petroleum commodities trading business into other areas.

Under the terms of the deal, the Lonestate Assets investment vehicle will acquire 51% of Kolmar from existing shareholders.

Lonestate will fund the purchase through a loan from Montlink a joint venture of Gunvor and Volga Resources.

(Sourced from Reuters)