Saturday, 07 Jan 2012
ET reported that a consortium of Indian steel companies led by Steel Authority of India Limited will invest about INR 375 crore in initial exploration for iron ore at Hajigak in Afghanistan.
The exploration will give the Indian consortium, called Afghanistan Iron & Steel Consortium, an indication of the size and grade of reserves, which were last explored in the 60s.
The outlay, which will cover exploration over two years, will be a prelude to an investment of INR 55,000 crore to develop mines, build a steel plant and create infrastructure.
A working level team from AFISCO will visit Afghanistan shortly for talks with the government on the final agreement. The Indian team will also seek the Afghan government's active role in providing road and rail infrastructure outside the mining area, in securing licensing rights and housing for project workers.
Mr CS Verma chairman of SAIL said “We will seek the Afghan government's role in providing safety and security cover to Indian personnel. Since Afghanistan is on a negative list, the security factor will weigh critically before we make any investments. It will also help when the consortium seeks funding from multilateral financial institutions.”
Mr Verma said “While road and rail links within the project area will be our responsibility, we would want the Afghan government to provide infrastructure support outside the project area up to the nearest international port.”
The consortium, which has JSW Steel, JSW Ispat, JSPL, RINL, NMDC and Monnet Ispat as the other members, will hold a separate meeting to work out the issues.
(Sourced from ET)
Saturday, January 7, 2012
15 mines may likely to reopen in Karnataka
Saturday, 07 Jan 2012
The Indian steel industry may have something to cheer about this New Year as 15 to 20 miners from Karnataka’s mining belts are likely to get the nod to resume mining activities later this month.
The Central Empowered Committee will present a report and make recommendations on all representations made before them till late December 2011 by January 15th 2012 to the Supreme Court.
Sources indicate that the 15 to 20 mining lessees, who have been carrying out legitimate mining, are likely to be given the nod by the Apex Court to resume activities.
The future of the other miners and lessees remains uncertain.
The lessees were broadly divided into three categories for the sake of identifying and recommendations.
‘A’ category referred to legal lessees with no violations
‘B’ category with small deviations and violations, which could be set right by imposing suitable fines and corrective measures
‘C’ category referred to gross violations, whose operations are likely to be terminated
They were broadly divided on the basis of documents filed and surveys conducted for identification. The five member CEC, headed by Mr PV Jayakrishnan heard the last of the lessees on December 23rd 2011 and allowed time till December 30th 2011, to file any additional information or files, if requested.
(sourced Ibnlive.in.com)
The Indian steel industry may have something to cheer about this New Year as 15 to 20 miners from Karnataka’s mining belts are likely to get the nod to resume mining activities later this month.
The Central Empowered Committee will present a report and make recommendations on all representations made before them till late December 2011 by January 15th 2012 to the Supreme Court.
Sources indicate that the 15 to 20 mining lessees, who have been carrying out legitimate mining, are likely to be given the nod by the Apex Court to resume activities.
The future of the other miners and lessees remains uncertain.
The lessees were broadly divided into three categories for the sake of identifying and recommendations.
‘A’ category referred to legal lessees with no violations
‘B’ category with small deviations and violations, which could be set right by imposing suitable fines and corrective measures
‘C’ category referred to gross violations, whose operations are likely to be terminated
They were broadly divided on the basis of documents filed and surveys conducted for identification. The five member CEC, headed by Mr PV Jayakrishnan heard the last of the lessees on December 23rd 2011 and allowed time till December 30th 2011, to file any additional information or files, if requested.
(sourced Ibnlive.in.com)
South African steam coal prices rise as buying picks up
Saturday, 07 Jan 2012
Reuters reported that South African physical prompt coal bids rose by around USD 1 per tonne recently as buyers began to emerge after the end year holiday hiatus.
Traders and utilities said delays of two weeks to Colombian coal shipments by Drummond and Prodeco, two of the country's biggest exporters, were a minor price-supporting factor which could turn into a more significant influence if the rains persist.
Drummond and Prodeco mines in the north of the country where rainfall has been heaviest are neighboring but Colombia's biggest exporter, Cerrejon is seeing delays of only 2-3 days on average and met its 2011 export target of 32 million tonnes.
One European utility source said "Drummond is seeing the worst delays of around two weeks, Prodeco almost as bad but even though Prodeco's coal is high-grade and some is specialist pulverised coal for steelmaking, it is important and it does matter to the market."
In the European DES ARA market a few more players were seeking February and March delivery cargoes but there was more interest in January loading South African cargoes.
Some Indian buyers enquired about Q1 cargoes FOB Richards Bay, partly concerned by indications from Indonesia that an export takes on low energy content coal will be imposed this year ahead of a proposed ban on low energy coal exports in 2014.
But traders also bid for and bought January Richards Bay cargoes, some to cover short positions, others because the very prompt market looked strong, although this could fizzle out quickly.
A European trader said "There are some shorts in the market looking for Colombian cargoes, very prompt Richards Bay, mostly traders rather than consumers."
(Sourced from Reuters)
Reuters reported that South African physical prompt coal bids rose by around USD 1 per tonne recently as buyers began to emerge after the end year holiday hiatus.
Traders and utilities said delays of two weeks to Colombian coal shipments by Drummond and Prodeco, two of the country's biggest exporters, were a minor price-supporting factor which could turn into a more significant influence if the rains persist.
Drummond and Prodeco mines in the north of the country where rainfall has been heaviest are neighboring but Colombia's biggest exporter, Cerrejon is seeing delays of only 2-3 days on average and met its 2011 export target of 32 million tonnes.
One European utility source said "Drummond is seeing the worst delays of around two weeks, Prodeco almost as bad but even though Prodeco's coal is high-grade and some is specialist pulverised coal for steelmaking, it is important and it does matter to the market."
In the European DES ARA market a few more players were seeking February and March delivery cargoes but there was more interest in January loading South African cargoes.
Some Indian buyers enquired about Q1 cargoes FOB Richards Bay, partly concerned by indications from Indonesia that an export takes on low energy content coal will be imposed this year ahead of a proposed ban on low energy coal exports in 2014.
But traders also bid for and bought January Richards Bay cargoes, some to cover short positions, others because the very prompt market looked strong, although this could fizzle out quickly.
A European trader said "There are some shorts in the market looking for Colombian cargoes, very prompt Richards Bay, mostly traders rather than consumers."
(Sourced from Reuters)
Wesfarmers coking coal price falls to USD 230 per tonne
Saturday, 07 Jan 2012
Price negotiations for the January 2012 to March 2012 quarter for metallurgical coal exports from Wesfarmers Resources' Curragh mine in Queensland's Bowen Basin have now been concluded with the majority of customers.
For the January 2012 to March 2012 quarter, the weighted average USD FOB for new contract prices of Curragh metallurgical coal will decrease by approximately 19% as compared to the October 2011 to December 2011 quarter prices.
All of Curragh contracted tonnage for this quarter is under the quarterly pricing mechanism.
Mr Stewart Butel Managing Director of Wesfarmers Resources said the company was satisfied with the result of its negotiations for Curragh hard coking coal with price settlements for the January 2012 to March 2012 quarter at approximately USD 230 per tonne FOB Queensland. Approximately 95% of the January 2012 to March 2012 quarter sales tonnage is forecast to be at the new contract prices with the balance at carry over prices from the previous quarter.
Commissioning of the new coal preparation plant at Curragh has commenced, with practical completion estimated to occur at the end of first quarter calendar year 2012.
Price negotiations for the January 2012 to March 2012 quarter for metallurgical coal exports from Wesfarmers Resources' Curragh mine in Queensland's Bowen Basin have now been concluded with the majority of customers.
For the January 2012 to March 2012 quarter, the weighted average USD FOB for new contract prices of Curragh metallurgical coal will decrease by approximately 19% as compared to the October 2011 to December 2011 quarter prices.
All of Curragh contracted tonnage for this quarter is under the quarterly pricing mechanism.
Mr Stewart Butel Managing Director of Wesfarmers Resources said the company was satisfied with the result of its negotiations for Curragh hard coking coal with price settlements for the January 2012 to March 2012 quarter at approximately USD 230 per tonne FOB Queensland. Approximately 95% of the January 2012 to March 2012 quarter sales tonnage is forecast to be at the new contract prices with the balance at carry over prices from the previous quarter.
Commissioning of the new coal preparation plant at Curragh has commenced, with practical completion estimated to occur at the end of first quarter calendar year 2012.
Wesfarmers coking coal price falls to USD 230 per tonne
Saturday, 07 Jan 2012
Price negotiations for the January 2012 to March 2012 quarter for metallurgical coal exports from Wesfarmers Resources' Curragh mine in Queensland's Bowen Basin have now been concluded with the majority of customers.
For the January 2012 to March 2012 quarter, the weighted average USD FOB for new contract prices of Curragh metallurgical coal will decrease by approximately 19% as compared to the October 2011 to December 2011 quarter prices.
All of Curragh contracted tonnage for this quarter is under the quarterly pricing mechanism.
Mr Stewart Butel Managing Director of Wesfarmers Resources said the company was satisfied with the result of its negotiations for Curragh hard coking coal with price settlements for the January 2012 to March 2012 quarter at approximately USD 230 per tonne FOB Queensland. Approximately 95% of the January 2012 to March 2012 quarter sales tonnage is forecast to be at the new contract prices with the balance at carry over prices from the previous quarter.
Commissioning of the new coal preparation plant at Curragh has commenced, with practical completion estimated to occur at the end of first quarter calendar year 2012.
Price negotiations for the January 2012 to March 2012 quarter for metallurgical coal exports from Wesfarmers Resources' Curragh mine in Queensland's Bowen Basin have now been concluded with the majority of customers.
For the January 2012 to March 2012 quarter, the weighted average USD FOB for new contract prices of Curragh metallurgical coal will decrease by approximately 19% as compared to the October 2011 to December 2011 quarter prices.
All of Curragh contracted tonnage for this quarter is under the quarterly pricing mechanism.
Mr Stewart Butel Managing Director of Wesfarmers Resources said the company was satisfied with the result of its negotiations for Curragh hard coking coal with price settlements for the January 2012 to March 2012 quarter at approximately USD 230 per tonne FOB Queensland. Approximately 95% of the January 2012 to March 2012 quarter sales tonnage is forecast to be at the new contract prices with the balance at carry over prices from the previous quarter.
Commissioning of the new coal preparation plant at Curragh has commenced, with practical completion estimated to occur at the end of first quarter calendar year 2012.
China builds first 200 million tonne coal base
Saturday, 07 Jan 2012
It is reported that Shenhua Shendong Coal Group Corporation produced 202 million tonnes of commercial coal in 2011 becoming the first 200 million tonne commercial coal production base in China.
The company said it had set several new records in coal output and sales in 2011. Its annual output of raw and commercial coal both exceeded 200 million tonnes. To be more specific, its raw coal output reached 219 million tonnes in 2011, up nearly 11.2 million tonnes from the previous year. Meanwhile, its commercial coal output reached 202 million tonnes up nearly 9.3 million tonnes from the previous year.
The company Shendong coalfield covers a total area of 31,200 square kilometers and is partly located in northern Yulin in Shaanxi province and partly in southern Ordos in Inner Mongolia.
The coalfield has 223.6 billion tonnes of proven coal reserves, the largest in China. Shenhua Shendong Coal Group Corporation has built the world only 10 million tonbe coal mine complex in the coalfield.
(sourced Peopledaily.com.cn)
It is reported that Shenhua Shendong Coal Group Corporation produced 202 million tonnes of commercial coal in 2011 becoming the first 200 million tonne commercial coal production base in China.
The company said it had set several new records in coal output and sales in 2011. Its annual output of raw and commercial coal both exceeded 200 million tonnes. To be more specific, its raw coal output reached 219 million tonnes in 2011, up nearly 11.2 million tonnes from the previous year. Meanwhile, its commercial coal output reached 202 million tonnes up nearly 9.3 million tonnes from the previous year.
The company Shendong coalfield covers a total area of 31,200 square kilometers and is partly located in northern Yulin in Shaanxi province and partly in southern Ordos in Inner Mongolia.
The coalfield has 223.6 billion tonnes of proven coal reserves, the largest in China. Shenhua Shendong Coal Group Corporation has built the world only 10 million tonbe coal mine complex in the coalfield.
(sourced Peopledaily.com.cn)
Beacon Hill Resources sets up coal mining partnership in Mozambique
Saturday, 07 Jan 2012
It is reported that British mining company Beacon Hill Resources had set up a partnership with Midwest Africa Limited to explore and develop a coal deposit covering an area of 184 square kilometres in Mozambique Tete province.
In a statement, Beacon Hill said that MAL has a license for that deposit which is located in the Changara district to the south of the Zambezi River and the working coal mines located in the Moatize district.
Beacon Hill Resources is the owner of the Moatize mines and recently started exporting coal. The statement added that the partnership was yet another step in the company’s expansion strategy for the Tete coal region.
The chairman of Beacon Hill, Justin Lewis, noted that the company had started exporting thermal coal and announced that production or coking coal would begin soon and the partnership is very important for our strategy given that the new license covers an area that is 70 times the size of the Moatize Mines.
The partnership is called Nongo Limitada is 99% owned by Beacon Hill Resources and 1% by MAL. In the deal MAL received 60,000 shares in Beacon Hill.
MAL will transfer the license to Nongo Limitada after which it will control another 19% of this company and will have a 20% stake in total.
(sourced www.macauhub.com.mo)
It is reported that British mining company Beacon Hill Resources had set up a partnership with Midwest Africa Limited to explore and develop a coal deposit covering an area of 184 square kilometres in Mozambique Tete province.
In a statement, Beacon Hill said that MAL has a license for that deposit which is located in the Changara district to the south of the Zambezi River and the working coal mines located in the Moatize district.
Beacon Hill Resources is the owner of the Moatize mines and recently started exporting coal. The statement added that the partnership was yet another step in the company’s expansion strategy for the Tete coal region.
The chairman of Beacon Hill, Justin Lewis, noted that the company had started exporting thermal coal and announced that production or coking coal would begin soon and the partnership is very important for our strategy given that the new license covers an area that is 70 times the size of the Moatize Mines.
The partnership is called Nongo Limitada is 99% owned by Beacon Hill Resources and 1% by MAL. In the deal MAL received 60,000 shares in Beacon Hill.
MAL will transfer the license to Nongo Limitada after which it will control another 19% of this company and will have a 20% stake in total.
(sourced www.macauhub.com.mo)
Friday, January 6, 2012
CFRE suggests 30 million tonne cap for Karnataka
Friday, 06 Jan 2012
Business Standard reported that the macro level Environment Impact Assessment Study conducted by the Indian Council of Forestry Research and Education in the mining areas of Chitradurga and Tumkur in view of the illegal iron ore mining, has recommended extraction of iron ore to 5 million tonnes per annum while in its earlier report on Bellary it had recommended for extraction of 25 million tonnes from Bellary district.
The ICFRE has said the ceiling of 5 million tonnes should be permitted provided all environmental and other safeguards are in place and due diligence is exercised by all the agencies concerned.
Taking into account the prevailing situation and demand of iron ore in India, it concluded that only 30 million tonne of iron ore should be extracted in Karnataka.
ICFRE also said that “There is a need to have an independent assessment of the ore reserves in individual mines and a stringent review of the environmental safeguards installed by the mine before raising the limits of annual extraction of ore. IBM has to keep in mind the ‘inter-generation equity’ while giving its consent for mining as iron ores are finite resources.”
The study also suggested that IBM must fix an annual cap on ore extraction from the area, keeping in view not only the ore availability but also the ecological sustainability of the area.
It said that the extraction of each mine within the area must be fine tuned to remain within the overall limit fixed for the zone. Over extraction should be severely penalized. The lessee must extract almost a uniform quantity of ore over the lease period which is generally 20 years.
The ICFRE submitted its report on Chitradurga and Tumkur to the Supreme Court in December 2011. The apex court is likely to resume hearing on illegal mining case on January 20th 2012.
(Sourced from BS)
Business Standard reported that the macro level Environment Impact Assessment Study conducted by the Indian Council of Forestry Research and Education in the mining areas of Chitradurga and Tumkur in view of the illegal iron ore mining, has recommended extraction of iron ore to 5 million tonnes per annum while in its earlier report on Bellary it had recommended for extraction of 25 million tonnes from Bellary district.
The ICFRE has said the ceiling of 5 million tonnes should be permitted provided all environmental and other safeguards are in place and due diligence is exercised by all the agencies concerned.
Taking into account the prevailing situation and demand of iron ore in India, it concluded that only 30 million tonne of iron ore should be extracted in Karnataka.
ICFRE also said that “There is a need to have an independent assessment of the ore reserves in individual mines and a stringent review of the environmental safeguards installed by the mine before raising the limits of annual extraction of ore. IBM has to keep in mind the ‘inter-generation equity’ while giving its consent for mining as iron ores are finite resources.”
The study also suggested that IBM must fix an annual cap on ore extraction from the area, keeping in view not only the ore availability but also the ecological sustainability of the area.
It said that the extraction of each mine within the area must be fine tuned to remain within the overall limit fixed for the zone. Over extraction should be severely penalized. The lessee must extract almost a uniform quantity of ore over the lease period which is generally 20 years.
The ICFRE submitted its report on Chitradurga and Tumkur to the Supreme Court in December 2011. The apex court is likely to resume hearing on illegal mining case on January 20th 2012.
(Sourced from BS)
NMDC to continue iron ore exports - Report
Friday, 06 Jan 2012
The steel ministry, in a departure from its stand on iron ore exports, has agreed to begin talks with Japan and South Korea on resuming exports from NMDC’s mines.
The steel ministry was under pressure from the commerce ministry to depute a delegation to the two countries and commence talks.
Even as the Union Cabinet had decided to allow NMDC to export ore to Japan and South Korea until 2014, the steel ministry had expressed a view that the exports should not be allowed as the Comptroller and Auditor General and the Income Tax Department had raised objections.
The CAG had questioned the rationale behind exporting iron ore when local demand for it is on the rise. The IT department criticised NMDC for selling at long term prices instead of spot prices and losing substantial revenues.
The steel ministry recently sought a Cabinet review on the export directive and impressed upon the commerce ministry to examine its position on exports in a scenario where steel producers were seeking more raw material security.
The view taken by the commerce ministry prevailed when Commerce Ministry Anand Sharma met Cabinet Secretary Ajit Seth in the last week of November where it was decided to continue exporting iron ore to Japan and South Korea.
The commerce ministry feared that stopping exports would dent the revenues of MMTC, the canalising agency under its administrative control.
(sourced Indianexpress.com)
The steel ministry, in a departure from its stand on iron ore exports, has agreed to begin talks with Japan and South Korea on resuming exports from NMDC’s mines.
The steel ministry was under pressure from the commerce ministry to depute a delegation to the two countries and commence talks.
Even as the Union Cabinet had decided to allow NMDC to export ore to Japan and South Korea until 2014, the steel ministry had expressed a view that the exports should not be allowed as the Comptroller and Auditor General and the Income Tax Department had raised objections.
The CAG had questioned the rationale behind exporting iron ore when local demand for it is on the rise. The IT department criticised NMDC for selling at long term prices instead of spot prices and losing substantial revenues.
The steel ministry recently sought a Cabinet review on the export directive and impressed upon the commerce ministry to examine its position on exports in a scenario where steel producers were seeking more raw material security.
The view taken by the commerce ministry prevailed when Commerce Ministry Anand Sharma met Cabinet Secretary Ajit Seth in the last week of November where it was decided to continue exporting iron ore to Japan and South Korea.
The commerce ministry feared that stopping exports would dent the revenues of MMTC, the canalising agency under its administrative control.
(sourced Indianexpress.com)
Goa miner want exclusion from export tax
Friday, 06 Jan 2012
Times of India reported that miner as well as the Goa Chamber of Commerce and Industry have taken strong objection to the iron ore export duty hike to 30% from 20% effective from December 30.
As per report, both Goa Mineral Ore Exporter's Association Goa Chamber of Commerce and Industry have written to the finance ministry Mr Pranab Mukherjee to roll back the hike for low grade ore from Goa.
Mr Manguirish Pai Raikar president wrote that "Though the ministry has not given any rationale behind the hike, we believe it is prompted by the major domestic steel producers and is intended to make export of iron ore less competitive so that ore can be made available for encouraging domestic production of steel. A hike on ore with Fe content over 58% may be justified as such ore is used by the domestic steel and sponge iron industries.”
Mr Raikar in the letter, forwarded as a press note, elaborated that domestic steel manufacturers use iron ore lumps, while Goa produces low grade ore consisting mostly of fines. The latter ore, including fines, cannot be pelletised and hence are not suitable for steel making.
Mr Raikar added that "At the moment, only China has the technology to enable use of these materials which are unwanted in India; and until such time as the technology comes to India, this export should really be incentivized and not taxed.”
He held that if Goan ore is not exported and thus converted to foreign exchange after undergoing the process of generating employment and tax revenues, and is not consumed in India, it ceases to become a strategic natural resource and loses all economic relevance. Mr Raikar stated that "The low grade ore generated in the course of mining will then have to be treated as waste, raising environmental concerns in a tourist paradise.”
He further held that the low grade ore which competes for the Chinese market against ores from Australia, Madagscar, etc and is sold in the spot market may see clients opt for other players as Goa's pricing may be higher. This is especially since this is the second major export duty hike in this fiscal. Mr Raikar further stated that "This will make it difficult for us to negotiate long term sale arrangements so that mining investments, which are all long term in nature, cannot be planned properly.”
Mr Raikar concluded by pointing out that in the absence of any alternative use for low grade Goan ore, ore from Goa and Redi (southern Maharashtra) were treated separately in the export policy during earlier years and Goa should continue to be treated so.
Mr Glean Kalavampara secretary of GMOEA pointed out that no low grade ore is used by the domestic steel industry and even existing pig iron plants in Goa draw iron ore from Karnataka and elsewhere. He told TOI that "Logistically speaking, it is not practical or cost effective to transport ore from Goa to Orissa and other states where steel plants exist as there already exists surplus ore in those states.”
GMOEA too fears that Goa will lose out to Australia and Brazil who could easily increase their ore outputs and wipe Goa out.
(Sourced from TOI)
Times of India reported that miner as well as the Goa Chamber of Commerce and Industry have taken strong objection to the iron ore export duty hike to 30% from 20% effective from December 30.
As per report, both Goa Mineral Ore Exporter's Association Goa Chamber of Commerce and Industry have written to the finance ministry Mr Pranab Mukherjee to roll back the hike for low grade ore from Goa.
Mr Manguirish Pai Raikar president wrote that "Though the ministry has not given any rationale behind the hike, we believe it is prompted by the major domestic steel producers and is intended to make export of iron ore less competitive so that ore can be made available for encouraging domestic production of steel. A hike on ore with Fe content over 58% may be justified as such ore is used by the domestic steel and sponge iron industries.”
Mr Raikar in the letter, forwarded as a press note, elaborated that domestic steel manufacturers use iron ore lumps, while Goa produces low grade ore consisting mostly of fines. The latter ore, including fines, cannot be pelletised and hence are not suitable for steel making.
Mr Raikar added that "At the moment, only China has the technology to enable use of these materials which are unwanted in India; and until such time as the technology comes to India, this export should really be incentivized and not taxed.”
He held that if Goan ore is not exported and thus converted to foreign exchange after undergoing the process of generating employment and tax revenues, and is not consumed in India, it ceases to become a strategic natural resource and loses all economic relevance. Mr Raikar stated that "The low grade ore generated in the course of mining will then have to be treated as waste, raising environmental concerns in a tourist paradise.”
He further held that the low grade ore which competes for the Chinese market against ores from Australia, Madagscar, etc and is sold in the spot market may see clients opt for other players as Goa's pricing may be higher. This is especially since this is the second major export duty hike in this fiscal. Mr Raikar further stated that "This will make it difficult for us to negotiate long term sale arrangements so that mining investments, which are all long term in nature, cannot be planned properly.”
Mr Raikar concluded by pointing out that in the absence of any alternative use for low grade Goan ore, ore from Goa and Redi (southern Maharashtra) were treated separately in the export policy during earlier years and Goa should continue to be treated so.
Mr Glean Kalavampara secretary of GMOEA pointed out that no low grade ore is used by the domestic steel industry and even existing pig iron plants in Goa draw iron ore from Karnataka and elsewhere. He told TOI that "Logistically speaking, it is not practical or cost effective to transport ore from Goa to Orissa and other states where steel plants exist as there already exists surplus ore in those states.”
GMOEA too fears that Goa will lose out to Australia and Brazil who could easily increase their ore outputs and wipe Goa out.
(Sourced from TOI)
Iron ore price fall raises doubts on Australia mine tax plan
Friday, 06 Jan 2012
Reuters reported that Australia politically charged mining profits tax could raise less of the initial AUD 11 billion Prime Minister Ms Julia Gillard is promising if iron ore prices return to November levels accountants BDO warned in a senate submission.
BDO said If iron ore experiences a double dip drop prices could fall to a point where no one will pay MRRT. It SAID between USD 120 and USD 125 a tonne for ore, it was difficult to envisage established mining companies paying any tax, given large deductions afforded to them under the plan.
BDO said "We respectfully request treasury advice what MRRT tax will be collected if iron ore prices remain at USD 120 for an extended period of time."
Mega miners Xstrata, BHP Billiton and Rio Tinto last year agreed with Ms Gillard to pay the Minerals Resource Rent Tax only if the tax was cut to 30% from 40% and limited to profits from iron ore and coal mining.
(Sourced from Reuters)
Reuters reported that Australia politically charged mining profits tax could raise less of the initial AUD 11 billion Prime Minister Ms Julia Gillard is promising if iron ore prices return to November levels accountants BDO warned in a senate submission.
BDO said If iron ore experiences a double dip drop prices could fall to a point where no one will pay MRRT. It SAID between USD 120 and USD 125 a tonne for ore, it was difficult to envisage established mining companies paying any tax, given large deductions afforded to them under the plan.
BDO said "We respectfully request treasury advice what MRRT tax will be collected if iron ore prices remain at USD 120 for an extended period of time."
Mega miners Xstrata, BHP Billiton and Rio Tinto last year agreed with Ms Gillard to pay the Minerals Resource Rent Tax only if the tax was cut to 30% from 40% and limited to profits from iron ore and coal mining.
(Sourced from Reuters)
Chinese coal output in November rises to 321 million tonnes
Friday, 06 Jan 2012
Reuters reported that China raw coal production in November rose 4.4%YoY to reach 321 million tonnes while total output in the first 11 months of the year rose 11.6% to 3.46 billion tonnes.
Industry portal SXCOAL.com said citing data from the China Coal Industry Association that of the total year to date output, that from main state-owned coal mines reached 1.77 billion tonnes up by 12.1% from the same period last year.
Following a two year consolidation of the coal sector in Shanxi province, China coal heartland and output has increased strongly as better technology boosts production efficiency. Consolidation efforts have also spread to neighboring coal producing regions such as Shaanxi and Inner Mongolia.
Under the government five year development plan, Beijing intends to consolidate its coal mining companies from around 11,000 to 4,000 firms with eight to 10 major producers expected to account for nearly two thirds of all output by 2015.
The National Bureau of Statistics does not publish monthly raw coal output figures along with other commodities.
(Sourced from Reuters)
Reuters reported that China raw coal production in November rose 4.4%YoY to reach 321 million tonnes while total output in the first 11 months of the year rose 11.6% to 3.46 billion tonnes.
Industry portal SXCOAL.com said citing data from the China Coal Industry Association that of the total year to date output, that from main state-owned coal mines reached 1.77 billion tonnes up by 12.1% from the same period last year.
Following a two year consolidation of the coal sector in Shanxi province, China coal heartland and output has increased strongly as better technology boosts production efficiency. Consolidation efforts have also spread to neighboring coal producing regions such as Shaanxi and Inner Mongolia.
Under the government five year development plan, Beijing intends to consolidate its coal mining companies from around 11,000 to 4,000 firms with eight to 10 major producers expected to account for nearly two thirds of all output by 2015.
The National Bureau of Statistics does not publish monthly raw coal output figures along with other commodities.
(Sourced from Reuters)
Thursday, January 5, 2012
NMDC May Pay $300 Million for Mozambique, Russian Coal Mines
Thu, January 05, 2012
NMDC Ltd., India’s largest iron ore producer, plans to acquire two coking coal mines in Mozambique and Russia for about $300 million to feed its planned steel plants in India.
Talks are on to acquire a mine with 360 million metric tons of deposits in Mozambique’s Tete province and an 80 million-ton mine in Russia’s Kemorovo region, Chairman Narendra Kumar Nanda said today in a phone interview. The company is also considering buying an iron ore and manganese mine in Brazil’s Amapa province, he said, without elaborating.
Lack of access to local mines and rising global prices of coking coal are eroding profits at Indian steelmakers, spurring them to look for acquisitions overseas. NMDC, which has 210 billion rupees ($4 billion) of cash in hand, is building a 3 million ton steel plant in central India and a similar-sized plant jointly with Russia’s OAO Severstal in southern India.
“Considering its cash reserves, such acquisitions are like baby steps for NMDC,” said Rahul Jain, a Mumbai-based analyst with RBS Equities India Ltd. “The global slowdown has lowered asset prices and this is a time when the company should approach bigger targets.”
The shares fell as much as 1.5 percent to 169 rupees and traded at 170.05 rupees as of 12:34 p.m. in Mumbai. The stock has declined 39 percent in the past year, compared with a 21 percent drop in the benchmark Sensitive Index.
“We want to be prepared when our steel mills start operating,” said Nanda, who took charge on Jan. 1. “We can bring some coal from these mines to our plants and sell the rest for hedging purposes.”
NMDC expects to appoint advisers by the end of this month to carry out the due diligence for the assets, he said. The company recently ended acquisition talks for Greystone Mineracao do Brasil’s iron ore mine in Brazil and a coal mine in Russia, Nanda said.
NMDC said in October it signed an accord to acquire a 50 percent stake in Australia’s Legacy Iron Ore Ltd. for A$18.9 million ($19.5 million), its first acquisition overseas.
(sourced Business Week)
NMDC Ltd., India’s largest iron ore producer, plans to acquire two coking coal mines in Mozambique and Russia for about $300 million to feed its planned steel plants in India.
Talks are on to acquire a mine with 360 million metric tons of deposits in Mozambique’s Tete province and an 80 million-ton mine in Russia’s Kemorovo region, Chairman Narendra Kumar Nanda said today in a phone interview. The company is also considering buying an iron ore and manganese mine in Brazil’s Amapa province, he said, without elaborating.
Lack of access to local mines and rising global prices of coking coal are eroding profits at Indian steelmakers, spurring them to look for acquisitions overseas. NMDC, which has 210 billion rupees ($4 billion) of cash in hand, is building a 3 million ton steel plant in central India and a similar-sized plant jointly with Russia’s OAO Severstal in southern India.
“Considering its cash reserves, such acquisitions are like baby steps for NMDC,” said Rahul Jain, a Mumbai-based analyst with RBS Equities India Ltd. “The global slowdown has lowered asset prices and this is a time when the company should approach bigger targets.”
The shares fell as much as 1.5 percent to 169 rupees and traded at 170.05 rupees as of 12:34 p.m. in Mumbai. The stock has declined 39 percent in the past year, compared with a 21 percent drop in the benchmark Sensitive Index.
“We want to be prepared when our steel mills start operating,” said Nanda, who took charge on Jan. 1. “We can bring some coal from these mines to our plants and sell the rest for hedging purposes.”
NMDC expects to appoint advisers by the end of this month to carry out the due diligence for the assets, he said. The company recently ended acquisition talks for Greystone Mineracao do Brasil’s iron ore mine in Brazil and a coal mine in Russia, Nanda said.
NMDC said in October it signed an accord to acquire a 50 percent stake in Australia’s Legacy Iron Ore Ltd. for A$18.9 million ($19.5 million), its first acquisition overseas.
(sourced Business Week)
Vale, CSN, MMX Iron-Ore Mines May Be Disrupted by Heavy Rain
Thu,January 05, 2012
Vale SA, Cia. Siderurgica Nacional SA and MMX Mineracao e Metalicos SA operations in southeastern Brazil may suffer output disruptions and transportation delays for a third year because of heavy rains.
The state of Minas Gerais will receive 300 millimeters (11.8 inches) of showers in the seven days through Jan. 10, said Marco Antonio dos Santos, a meteorologist at Sao Paulo-based Somar Meteorologia.
That equals the average for the entire month of January in the past 30 years, Santos said yesterday in an interview from Valinhos, Brazil.Minas Gerais declared a state of emergency in 71 cities yesterday after a cold weather front caused storms and floods that have killed at least eight people. The state’s capital, Belo Horizonte, last month received the heaviest rainfall for December in a century, according to Somar. Downpours in the January-March rainy season reduced output at Vale, CSN and MMX mines and disrupted ports and railways in the past two years.
Rain can be “a serious problem for mining in Brazil,” Pedro Galdi, an equity strategist at brokerage SLW Corretora, said in a phone interview from Sao Paulo yesterday. “It’s hard to operate with storms and water.” Vale declined 1.2 percent to 40.30 reais at 12:02 p.m. in Sao Paulo trading, while MMX dropped 1.6 percent to 6.87 reais and CSN fell 0.8 percent to 15.88 reais.Vale, the world’s largest iron-ore producer, said last year that the heaviest rain in 44 years in the beginning of 2011 reduced output by 600,000 metric tons.
MMX, the mining company controlled by Brazilian billionaire Eike Batista, also said iron-ore production fell between January and April because of downpours and power outages.Steelmaker CSN’s 5.6 million tons of iron-ore output in the first quarter of 2010 missed the company’s estimates by 2 million tons after downpours disrupted railways and port shipments.
(sourced Bloomberg)
Vale SA, Cia. Siderurgica Nacional SA and MMX Mineracao e Metalicos SA operations in southeastern Brazil may suffer output disruptions and transportation delays for a third year because of heavy rains.
The state of Minas Gerais will receive 300 millimeters (11.8 inches) of showers in the seven days through Jan. 10, said Marco Antonio dos Santos, a meteorologist at Sao Paulo-based Somar Meteorologia.
That equals the average for the entire month of January in the past 30 years, Santos said yesterday in an interview from Valinhos, Brazil.Minas Gerais declared a state of emergency in 71 cities yesterday after a cold weather front caused storms and floods that have killed at least eight people. The state’s capital, Belo Horizonte, last month received the heaviest rainfall for December in a century, according to Somar. Downpours in the January-March rainy season reduced output at Vale, CSN and MMX mines and disrupted ports and railways in the past two years.
Rain can be “a serious problem for mining in Brazil,” Pedro Galdi, an equity strategist at brokerage SLW Corretora, said in a phone interview from Sao Paulo yesterday. “It’s hard to operate with storms and water.” Vale declined 1.2 percent to 40.30 reais at 12:02 p.m. in Sao Paulo trading, while MMX dropped 1.6 percent to 6.87 reais and CSN fell 0.8 percent to 15.88 reais.Vale, the world’s largest iron-ore producer, said last year that the heaviest rain in 44 years in the beginning of 2011 reduced output by 600,000 metric tons.
MMX, the mining company controlled by Brazilian billionaire Eike Batista, also said iron-ore production fell between January and April because of downpours and power outages.Steelmaker CSN’s 5.6 million tons of iron-ore output in the first quarter of 2010 missed the company’s estimates by 2 million tons after downpours disrupted railways and port shipments.
(sourced Bloomberg)
Essar Steel ramps up Hazira steel unit capacity to 10 mtpa
Thu, Jan05, 2012
HAZIRA (GUJARAT): In an era where low-cost is the buzzword, Essar Steel has more than doubled the capacity of its Hazira steel plant from 4.6 million tonnes per annum to 10 mtpa at an investment of USD 7.5 billion, less than half the industry standard for setting up a facility of this size.
"It took USD 7.5 billion to create a 10-mtpa fully-integrated steel-making facility at Hazira. The investment includes raw material beneficiation, steel-making and distribution. The industry standard is more than twice for putting up a 10-mtpa capacity alone," Essar Group Chief Executive Prashant Ruia told reporters here today.
The plant will have the capability to manufacture steel at a low cost through a series of cost-cutting measures.
Essar Steel began its journey at Hazira in 1989 with a 0.9-mtpa sponge iron-making plant and in the passage of 22 years, gradual expansion of capacity has made the facility one of the top four flat steel producers in the world at a single location.
"We would like to dedicate this plant to the nation. When I first ventured into Hazira, it was my desire to put India on the global steel map and today that dream has come true. Our world-class steel complex is a testament to the hard work put in by the Essar family and our small contribution to the steel industry and India's growth story," Essar Group Chairman Shashi Ruia said in a statement.
The company is already among the lowest cost steel producers in the world through raw material and energy securitisation, Prashant Ruia said, adding that operational efficiencies, throughput enhancement and asset optimisation would move it further down the cost curve.
The Hazira facility combines a DRI, blast furnace and corex technology for making iron, which is later used in the steel-making process through electric arc furnaces. The advantage of having such a combination is that there is no wastage of gas generated through the corex iron-making technology.
As a result, the company generates almost 45 per cent of its captive requirement in the gas-based DRI. Essar Steel has a long-term contract with ONGC for the rest of the gas requirement.
"The cost of labour for per tonne steel-making is just USD 8.2 per tonne. This is only second to USD 5.71 for Baosteel. Even Posco's labour cost for per tonne steel production is higher than us at USD 9.22," Ruia said.
Ruia said the plant is expected to run at 80-85 per cent capacity in the next fiscal and 70-75 per cent of the output would be value-added products, the demand for which is on the rise on account of the fast-growing automobile and FMCG sectors.
(sourced ET)
HAZIRA (GUJARAT): In an era where low-cost is the buzzword, Essar Steel has more than doubled the capacity of its Hazira steel plant from 4.6 million tonnes per annum to 10 mtpa at an investment of USD 7.5 billion, less than half the industry standard for setting up a facility of this size.
"It took USD 7.5 billion to create a 10-mtpa fully-integrated steel-making facility at Hazira. The investment includes raw material beneficiation, steel-making and distribution. The industry standard is more than twice for putting up a 10-mtpa capacity alone," Essar Group Chief Executive Prashant Ruia told reporters here today.
The plant will have the capability to manufacture steel at a low cost through a series of cost-cutting measures.
Essar Steel began its journey at Hazira in 1989 with a 0.9-mtpa sponge iron-making plant and in the passage of 22 years, gradual expansion of capacity has made the facility one of the top four flat steel producers in the world at a single location.
"We would like to dedicate this plant to the nation. When I first ventured into Hazira, it was my desire to put India on the global steel map and today that dream has come true. Our world-class steel complex is a testament to the hard work put in by the Essar family and our small contribution to the steel industry and India's growth story," Essar Group Chairman Shashi Ruia said in a statement.
The company is already among the lowest cost steel producers in the world through raw material and energy securitisation, Prashant Ruia said, adding that operational efficiencies, throughput enhancement and asset optimisation would move it further down the cost curve.
The Hazira facility combines a DRI, blast furnace and corex technology for making iron, which is later used in the steel-making process through electric arc furnaces. The advantage of having such a combination is that there is no wastage of gas generated through the corex iron-making technology.
As a result, the company generates almost 45 per cent of its captive requirement in the gas-based DRI. Essar Steel has a long-term contract with ONGC for the rest of the gas requirement.
"The cost of labour for per tonne steel-making is just USD 8.2 per tonne. This is only second to USD 5.71 for Baosteel. Even Posco's labour cost for per tonne steel production is higher than us at USD 9.22," Ruia said.
Ruia said the plant is expected to run at 80-85 per cent capacity in the next fiscal and 70-75 per cent of the output would be value-added products, the demand for which is on the rise on account of the fast-growing automobile and FMCG sectors.
(sourced ET)
Essar's ore reserves in Minnesota estimated at 1.77 bn tonnes
Thu, Jan05, 2012
NEW DELHI: Essar Group today said it has emerged as a leading iron ore reserves owner in North America with confirmation that its Minnesota Project contains 1.77 billion tonnes of reserves.
"ESML... has reserves of 1.77 billion metric tonnes, with a grading of 31.78 per cent total iron, along with inferred mineral reserves and resources estimated at 201 million metric tonnes, making it a leading iron ore resource party in the North American Basin," the company said in a statement.
Essar Steel Minnesota LLC (ESML), a private resources company engaged in the development and mining of iron ore, is a part of the Ruias-led USD 17 billion Essar Group.
The company said the reserves were "confirmed by the National Instrument 43-101 Mineral Resources and Mineral Reserves Report by Met-Chem Canada, an internationally renowned consulting engineering firm providing all phases of geology, mining, mineral processing and engineering services."
ESML President and CEO Madhu Vuppuluri said the findings of about two billion tonnes of resources at the project exceeded company's expectations, adding that 95 per cent of the total measured and indicated resources are made up of mineral reserves.
"We believe that our project contains sufficient reserves and resources not only to increase the planned production of iron ore pellets from 4.1 million tonnes to 7 million tonnes (MT) annually, but also will enable us to evaluate options to further utilise our increased mineral resources," he said.
ESML's project is a taconite iron ore project located at Nashwauk, Minnesota, in the western part of the Mesabi Range, covering an area of approximately 19,200 acres.
"All permits for the construction and production of 4.1 MT of iron ore pellets annually have been received. Applications have been filed for a second phase expansion to add additional 2.9 MT of iron ore pellets production annually, bringing the annual capacity to 7 MT," the statement said.
Phase I construction of the iron ore mine, crushing facilities, concentrator and pellet plant commenced in October, 2010.
(sourced ET)
NEW DELHI: Essar Group today said it has emerged as a leading iron ore reserves owner in North America with confirmation that its Minnesota Project contains 1.77 billion tonnes of reserves.
"ESML... has reserves of 1.77 billion metric tonnes, with a grading of 31.78 per cent total iron, along with inferred mineral reserves and resources estimated at 201 million metric tonnes, making it a leading iron ore resource party in the North American Basin," the company said in a statement.
Essar Steel Minnesota LLC (ESML), a private resources company engaged in the development and mining of iron ore, is a part of the Ruias-led USD 17 billion Essar Group.
The company said the reserves were "confirmed by the National Instrument 43-101 Mineral Resources and Mineral Reserves Report by Met-Chem Canada, an internationally renowned consulting engineering firm providing all phases of geology, mining, mineral processing and engineering services."
ESML President and CEO Madhu Vuppuluri said the findings of about two billion tonnes of resources at the project exceeded company's expectations, adding that 95 per cent of the total measured and indicated resources are made up of mineral reserves.
"We believe that our project contains sufficient reserves and resources not only to increase the planned production of iron ore pellets from 4.1 million tonnes to 7 million tonnes (MT) annually, but also will enable us to evaluate options to further utilise our increased mineral resources," he said.
ESML's project is a taconite iron ore project located at Nashwauk, Minnesota, in the western part of the Mesabi Range, covering an area of approximately 19,200 acres.
"All permits for the construction and production of 4.1 MT of iron ore pellets annually have been received. Applications have been filed for a second phase expansion to add additional 2.9 MT of iron ore pellets production annually, bringing the annual capacity to 7 MT," the statement said.
Phase I construction of the iron ore mine, crushing facilities, concentrator and pellet plant commenced in October, 2010.
(sourced ET)
Europe bond auctions crucial test for euro crisis
Jan05, 2012,
Lackluster sale of German government debt offers little relief
By William L. Watts, MarketWatch
FRANKFURT (MarketWatch) — A less-than-thrilling uptake of German government debt on Wednesday put a drag on the euro, kicking off a major theme for the shared currency and other financial markets as Europe’s debt crisis drags into 2012.
Germany sold 4.1 billion euros ($5.3 billion) of 10-year government bonds. The auction, which had aimed to sell up to €5 billion euros of supply, attracted bids totaling €5.3 billion. The Bundesbank, as is standard practice, retained around €900 million of bonds on behalf of Germany’s public debt agency.
“Although today’s auction was an improvement ... it nevertheless highlighted the sense of caution that permeates the European sovereign debt markets as the region faces a massive wave of refinancing over the next few months amid continuing turmoil in its peripheral economies,” said Boris Schlossberg, director of currency research at GFT.
Bids exceeded supply 1.3 times. The yield declined from an already low 1.98% in a November auction to 1.93%.
Technically, November’s auction had been under-subscribed — an outcome that further rattled already panicked European markets as investors feared the debt crisis was beginning to take a toll on the currency’s sturdiest country.
The sale opens a heavy round of funding by European sovereigns in the first quarter, including sales by Spain, the euro-zone’s fourth-largest economy, and Italy, its third largest.
Analysts at RBC Capital Markets last month estimated a total of €220 billion to €230 billion of European government bond supply to be issued in the first quarter alone.
France, which faces worries over the standing of its triple-A rating, is set to issue government bonds on Thursday, while Spain and Italy will tap the market for the first time in 2012 next week.
Read complete article at MarketWatch
Lackluster sale of German government debt offers little relief
By William L. Watts, MarketWatch
FRANKFURT (MarketWatch) — A less-than-thrilling uptake of German government debt on Wednesday put a drag on the euro, kicking off a major theme for the shared currency and other financial markets as Europe’s debt crisis drags into 2012.
Germany sold 4.1 billion euros ($5.3 billion) of 10-year government bonds. The auction, which had aimed to sell up to €5 billion euros of supply, attracted bids totaling €5.3 billion. The Bundesbank, as is standard practice, retained around €900 million of bonds on behalf of Germany’s public debt agency.
“Although today’s auction was an improvement ... it nevertheless highlighted the sense of caution that permeates the European sovereign debt markets as the region faces a massive wave of refinancing over the next few months amid continuing turmoil in its peripheral economies,” said Boris Schlossberg, director of currency research at GFT.
Bids exceeded supply 1.3 times. The yield declined from an already low 1.98% in a November auction to 1.93%.
Technically, November’s auction had been under-subscribed — an outcome that further rattled already panicked European markets as investors feared the debt crisis was beginning to take a toll on the currency’s sturdiest country.
The sale opens a heavy round of funding by European sovereigns in the first quarter, including sales by Spain, the euro-zone’s fourth-largest economy, and Italy, its third largest.
Analysts at RBC Capital Markets last month estimated a total of €220 billion to €230 billion of European government bond supply to be issued in the first quarter alone.
France, which faces worries over the standing of its triple-A rating, is set to issue government bonds on Thursday, while Spain and Italy will tap the market for the first time in 2012 next week.
Read complete article at MarketWatch
China 2011 steel output likely 683 million tons
Thu, Jan. 5, 2012
-- China's crude steel production likely reached 683 million tons in 2011
-- Country's 2012 crude steel demand may rise 4% to reach 700 million tons
-- Severe challenges ahead for China's steel exports, association says
BEIJING (MarketWatch) -- China's total crude steel output likely rose 9.2% in 2011 to 683 million metric tons, the China Iron and Steel Association said in a statement Thursday.
Steel exports likely rose 16% to 49 million tons. China's 2012 crude steel demand may rise around 4% to 700 million tons, it said.
However, many steelmakers in China are facing serious financing and capital difficulties, and some will have to halt or delay projects due to capital stress, CISA said.
The National Bureau of Statistics is expected to release steel output data later this month.
China faces "severe challenges" this year on the export front, and international trade frictions may arise, CISA said.
The association projected downside for iron ore prices due to sluggish global demand. "Chinese steelmakers are facing meager profit margins or losses this year," it said.
Import prices for iron ore averaged $166.2/ton in the first 11 months, up 31.5%.
In the first 11 months, CISA's member-mills gained a combined profit of CNY85.3 billion, up 8.1% but their profit margin was only 2.55% during the period, the association said.
(sourced MarketWatch)
-- China's crude steel production likely reached 683 million tons in 2011
-- Country's 2012 crude steel demand may rise 4% to reach 700 million tons
-- Severe challenges ahead for China's steel exports, association says
BEIJING (MarketWatch) -- China's total crude steel output likely rose 9.2% in 2011 to 683 million metric tons, the China Iron and Steel Association said in a statement Thursday.
Steel exports likely rose 16% to 49 million tons. China's 2012 crude steel demand may rise around 4% to 700 million tons, it said.
However, many steelmakers in China are facing serious financing and capital difficulties, and some will have to halt or delay projects due to capital stress, CISA said.
The National Bureau of Statistics is expected to release steel output data later this month.
China faces "severe challenges" this year on the export front, and international trade frictions may arise, CISA said.
The association projected downside for iron ore prices due to sluggish global demand. "Chinese steelmakers are facing meager profit margins or losses this year," it said.
Import prices for iron ore averaged $166.2/ton in the first 11 months, up 31.5%.
In the first 11 months, CISA's member-mills gained a combined profit of CNY85.3 billion, up 8.1% but their profit margin was only 2.55% during the period, the association said.
(sourced MarketWatch)
Essar to use low-grade iron ore fines at Hazira
Thu, Jan05, 2012
Hazira: The $15 billion Essar group will become one of the first steel mills in India to use low-grade iron ore fines to make steel at the Essar Steel Hazira plant whose capacity has now been expanded to 10 million tonnes per annum from seven million tonnes per annum.
Prashant Ruia, group CEO at Essar group said, “Most of our raw material will be low-grade fines which is much cheaper. A bulk of our iron ore needs have been secured through off-take agreements with key players such as NMDC and captive mines in Jharkhand and Chhatisgarh. In addition, the iron ore benefication plants have been set up by the company to facilitate usage of low-grade iron ore fines abundantly available in the country.”
So far, iron ore fines have either been exported or dumped along with overburden, as Indian steelmakers have locked the technology to process this inferior grade raw material into iron.
Essar Steel has licensed the technology for iron ore benification from Sweden-based Metso and for pellets it has sourced technology from Germany-based Lurgi. The company refused to comment on the price it has paid for acquiring the technology. As per the current market prices using iron ore fines will help the company to reduce cost by 60 per cent, a senior company official said Ruia.
For its energy requirements, Essar has long-term power purchase agreements with Essar Power and will soon have access to cheaper coal based power from its captive plants too.
Essar is also producing ore pellets through benefication of iron ore. Every million tonnes of steel requires 1.4 million tonne pellet for manufacturing. Essar Steel will have 20 million tonne pellet making capacity operational once its Orissa benefication plant goes on stream in two equal phases starting from March 2012. The final six million tonnes at Orissa will be operational in a year’s time.
(sourced MyDigaltalFC)
Hazira: The $15 billion Essar group will become one of the first steel mills in India to use low-grade iron ore fines to make steel at the Essar Steel Hazira plant whose capacity has now been expanded to 10 million tonnes per annum from seven million tonnes per annum.
Prashant Ruia, group CEO at Essar group said, “Most of our raw material will be low-grade fines which is much cheaper. A bulk of our iron ore needs have been secured through off-take agreements with key players such as NMDC and captive mines in Jharkhand and Chhatisgarh. In addition, the iron ore benefication plants have been set up by the company to facilitate usage of low-grade iron ore fines abundantly available in the country.”
So far, iron ore fines have either been exported or dumped along with overburden, as Indian steelmakers have locked the technology to process this inferior grade raw material into iron.
Essar Steel has licensed the technology for iron ore benification from Sweden-based Metso and for pellets it has sourced technology from Germany-based Lurgi. The company refused to comment on the price it has paid for acquiring the technology. As per the current market prices using iron ore fines will help the company to reduce cost by 60 per cent, a senior company official said Ruia.
For its energy requirements, Essar has long-term power purchase agreements with Essar Power and will soon have access to cheaper coal based power from its captive plants too.
Essar is also producing ore pellets through benefication of iron ore. Every million tonnes of steel requires 1.4 million tonne pellet for manufacturing. Essar Steel will have 20 million tonne pellet making capacity operational once its Orissa benefication plant goes on stream in two equal phases starting from March 2012. The final six million tonnes at Orissa will be operational in a year’s time.
(sourced MyDigaltalFC)
South African Coal Exports to India Slump 24% in 11 Months, Mjunction Says
Thursday, 05 January 2012
India’s imports of coal (CCAIIQTL) from South Africa fell in the first 11 months of 2011, while China almost doubled purchases, according to Mjunction Services Ltd.India bought 14.39 million metric tons of the fuel from South Africa, down 24 percent from 18.96 million in the same period a year earlier, India Coal Market Watch, a unit of Mjunction, said in an e-mail dated yesterday. Purchases in November fell 21 percent from the previous year to 1.29 million tons.
South Africa’s shipments to China, the world’s biggest coal consumer, rose 88 percent to 12.26 million tons in the first 11 months of 2011, India Coal said in the note. November sales increased more than threefold to 2.84 million. India’s imports accounted for 25 percent of the 57.4 million tons from South Africa through November last year, according to Bloomberg calculations based on data from Mjunction and the Richards Bay Coal Terminal website. China accounted for 21 percent of the shipments.
Prices (CLSPSARB) at Richards Bay fell to $105.74 a ton as of Dec. 30 from $105.95 a ton a week earlier, according to data from Petersfield, U.K.-based researcher IHS McCloskey.
Kolkata, India-based Mjunction is a joint venture between Tata Steel Ltd. and Steel Authority of India Ltd.
Source: Bloomberg
India’s imports of coal (CCAIIQTL) from South Africa fell in the first 11 months of 2011, while China almost doubled purchases, according to Mjunction Services Ltd.India bought 14.39 million metric tons of the fuel from South Africa, down 24 percent from 18.96 million in the same period a year earlier, India Coal Market Watch, a unit of Mjunction, said in an e-mail dated yesterday. Purchases in November fell 21 percent from the previous year to 1.29 million tons.
South Africa’s shipments to China, the world’s biggest coal consumer, rose 88 percent to 12.26 million tons in the first 11 months of 2011, India Coal said in the note. November sales increased more than threefold to 2.84 million. India’s imports accounted for 25 percent of the 57.4 million tons from South Africa through November last year, according to Bloomberg calculations based on data from Mjunction and the Richards Bay Coal Terminal website. China accounted for 21 percent of the shipments.
Prices (CLSPSARB) at Richards Bay fell to $105.74 a ton as of Dec. 30 from $105.95 a ton a week earlier, according to data from Petersfield, U.K.-based researcher IHS McCloskey.
Kolkata, India-based Mjunction is a joint venture between Tata Steel Ltd. and Steel Authority of India Ltd.
Source: Bloomberg
JSW Steel shifts UK service centre to Karnataka
Thursday, 05 Jan 2012
Business Standard reported that JSW Steel has shut down its 500,000 tonnes per year capacity in the United Kingdom and shifted the entire machinery to its Vijayanagar steel plant in southern India.
The plant has an annual hot rolled and cold rolled slitter and cut to length facility of 500,000 tonne at the Vijayanagar facility in Bellary district.
Mr Seshagiri Rao joint MD and group CFO of the company told BS that the service centre has now been shifted and commissioned at its upstate Karnataka plant.
The UK company was named JSW Steel Service Centre (UK) Ltd and had three slitting lines and one multi strand blanking line. JSW’s 100% Indian subsidiary, JSW Steel Processing Centres Ltd, bought these assets from the UK company for an undisclosed sum. In the last fiscal, the company processed 490,000 tonne of steel from this service centre. In FY09, the company processed only 304,000 tonne of steel due to the weak UK steel market.
As on date, the JSW Steel has completely exited the UK market, as the service centre was its sole operation in that European country. At present the company owns only the land where it had its service centre.
(Sourced from BS)
Business Standard reported that JSW Steel has shut down its 500,000 tonnes per year capacity in the United Kingdom and shifted the entire machinery to its Vijayanagar steel plant in southern India.
The plant has an annual hot rolled and cold rolled slitter and cut to length facility of 500,000 tonne at the Vijayanagar facility in Bellary district.
Mr Seshagiri Rao joint MD and group CFO of the company told BS that the service centre has now been shifted and commissioned at its upstate Karnataka plant.
The UK company was named JSW Steel Service Centre (UK) Ltd and had three slitting lines and one multi strand blanking line. JSW’s 100% Indian subsidiary, JSW Steel Processing Centres Ltd, bought these assets from the UK company for an undisclosed sum. In the last fiscal, the company processed 490,000 tonne of steel from this service centre. In FY09, the company processed only 304,000 tonne of steel due to the weak UK steel market.
As on date, the JSW Steel has completely exited the UK market, as the service centre was its sole operation in that European country. At present the company owns only the land where it had its service centre.
(Sourced from BS)
Iron Ore-China market still slow as traders stay away
Thursday, 05 January 2012
Spot iron ore prices in China were mostly unchanged on the first trading day of 2012, with buyers and sellers unable to find a reason to rush back from a two-day new year break.
The offer price of 61.5 percent Pilbara fines, including cost and freight, stood in the $136-139 per tonne range on Wednesday, unchanged from the last trading day of 2011, industry consultancy Umetal said. Analysts said there was little to entice buyers back into the market, with steel demand low and ore inventories generally sufficient to keep mills running.
"What concerns me a little bit is that Chinese mills seem to have restocked over the last three to four weeks without really pushing the price up at all," said Graeme Train, commodity analyst with Macquarie Securities in Shanghai.
Activity normally slows ahead of China's lunar new year, and many traders have expressed hope that the market will improve when the week-long holiday ends on Jan. 30, but the lull could last longer than that, said Train. "It seems everyone is waiting for some signal that things are going to get meaningfully better but the government has been very slow to send a very positive signal," he said.
"There is really no catalyst, and we are probably looking at two very quiet months at least."
Analysts played down the impact of India's decision to raise export tariffs in order to guarantee supplies to domestic users, saying the influence of the world's third-biggest iron ore producer had already been on the wane.
India announced this week that it would increase iron ore export tariffs from 20 percent to 30 percent in an effort to guarantee supplies for domestic users.
"I can't see demand strong enough in 2012 to make global supply and demand tight enough to bring Indian marginal producers back into the market, so I can't see it supporting higher prices," said Sebastian Lewis, head of data and analytics with Steel Business Briefing in Shanghai.
"More likely it will accelerate the trend in declining Indian exports and Australia and other miners will be the beneficiaries," he said. Umetal said Indian 63.5/63 percent iron ore was being offered at $143-146 per tonne on Wednesday, also unchanged.
It added in a research note that the decline in Indian iron ore export volumes had already been offset by growing shipments from South Africa, Iran, Canada and Russia.
While India remains China's third-biggest supplier after Australia and Brazil, its market share has been in decline. In the first 11 months of 2011, India's total shipments of 63.3 million tonnes represented 11 percent of the total, down from 15.6 percent in 2010.
Deliveries from South Africa, Iran, Canada and Russia reached nearly 73 million tonnes over the 11 months, up 33 percent compared with the same period of the previous year.
The most traded steel rebar contract on the Shanghai Futures Exchange ended Wednesday at 4,159 yuan ($660) per tonne, down 51 yuan per tonne or 1.21 percent from the previous session.
Source: Reuters
Spot iron ore prices in China were mostly unchanged on the first trading day of 2012, with buyers and sellers unable to find a reason to rush back from a two-day new year break.
The offer price of 61.5 percent Pilbara fines, including cost and freight, stood in the $136-139 per tonne range on Wednesday, unchanged from the last trading day of 2011, industry consultancy Umetal said. Analysts said there was little to entice buyers back into the market, with steel demand low and ore inventories generally sufficient to keep mills running.
"What concerns me a little bit is that Chinese mills seem to have restocked over the last three to four weeks without really pushing the price up at all," said Graeme Train, commodity analyst with Macquarie Securities in Shanghai.
Activity normally slows ahead of China's lunar new year, and many traders have expressed hope that the market will improve when the week-long holiday ends on Jan. 30, but the lull could last longer than that, said Train. "It seems everyone is waiting for some signal that things are going to get meaningfully better but the government has been very slow to send a very positive signal," he said.
"There is really no catalyst, and we are probably looking at two very quiet months at least."
Analysts played down the impact of India's decision to raise export tariffs in order to guarantee supplies to domestic users, saying the influence of the world's third-biggest iron ore producer had already been on the wane.
India announced this week that it would increase iron ore export tariffs from 20 percent to 30 percent in an effort to guarantee supplies for domestic users.
"I can't see demand strong enough in 2012 to make global supply and demand tight enough to bring Indian marginal producers back into the market, so I can't see it supporting higher prices," said Sebastian Lewis, head of data and analytics with Steel Business Briefing in Shanghai.
"More likely it will accelerate the trend in declining Indian exports and Australia and other miners will be the beneficiaries," he said. Umetal said Indian 63.5/63 percent iron ore was being offered at $143-146 per tonne on Wednesday, also unchanged.
It added in a research note that the decline in Indian iron ore export volumes had already been offset by growing shipments from South Africa, Iran, Canada and Russia.
While India remains China's third-biggest supplier after Australia and Brazil, its market share has been in decline. In the first 11 months of 2011, India's total shipments of 63.3 million tonnes represented 11 percent of the total, down from 15.6 percent in 2010.
Deliveries from South Africa, Iran, Canada and Russia reached nearly 73 million tonnes over the 11 months, up 33 percent compared with the same period of the previous year.
The most traded steel rebar contract on the Shanghai Futures Exchange ended Wednesday at 4,159 yuan ($660) per tonne, down 51 yuan per tonne or 1.21 percent from the previous session.
Source: Reuters
Mining ban may hit Sesa Goa profit margins
Thursday, 05 Jan 2012
It is reported that the Finance Ministry decision to hike the export duty on iron ore from 20% to 30% within the space of a year spells bad news for iron ore miner Sesa Goa whose profit margins could take a further knock.
Sesa Goa exports medium-grade iron ore from its Goa mines to China. The company hawks low grade ore compared with international players and as such does not command pricing power. Its ability to pass through the higher levy therefore remains doubtful. The 30% export duty would translate to further margin pressures for the company.
The iron ore producer paid INR 660 crore in export duties on INR 8,586 crore of iron ore exports in FY11. During this period, export duties on iron ore fines averaged five per cent. Paying out 30% export duty could cripple Sesa Goa domestic operations which are struggling to raise output. Over the past year, the company has faced setbacks in the form of a ban on exports from its Karnataka mines and closure of Odisha mines.
Both the closures have hit volumes which slipped by nearly 14% to 5.8 million tonnes during the first half of FY12. The new mining Bill may require Sesa Goa to pay a charge equivalent to royalty which currently stands at 10% of the final price.
(sourced TheHinduBusinessline.com)
It is reported that the Finance Ministry decision to hike the export duty on iron ore from 20% to 30% within the space of a year spells bad news for iron ore miner Sesa Goa whose profit margins could take a further knock.
Sesa Goa exports medium-grade iron ore from its Goa mines to China. The company hawks low grade ore compared with international players and as such does not command pricing power. Its ability to pass through the higher levy therefore remains doubtful. The 30% export duty would translate to further margin pressures for the company.
The iron ore producer paid INR 660 crore in export duties on INR 8,586 crore of iron ore exports in FY11. During this period, export duties on iron ore fines averaged five per cent. Paying out 30% export duty could cripple Sesa Goa domestic operations which are struggling to raise output. Over the past year, the company has faced setbacks in the form of a ban on exports from its Karnataka mines and closure of Odisha mines.
Both the closures have hit volumes which slipped by nearly 14% to 5.8 million tonnes during the first half of FY12. The new mining Bill may require Sesa Goa to pay a charge equivalent to royalty which currently stands at 10% of the final price.
(sourced TheHinduBusinessline.com)
Indonesia coal exports in November rise by 6pct YoY
Thursday, 05 Jan 2012
Bloomberg quoted according to data released by the Ministry of Trade that Indonesia, the world biggest exporter of thermal coal increased exports in November.
Data released showed Indonesia shipped 29.6 million tonnes of coal for the month up by 6.1%MoM. It shipped 23.2 million tonnes in November 2010.
The trade ministry reported that Indonesia coal exports for power stations in the first 11 months of 2011 rose 13% to 283.7 million tonnes.
It didn’t offer an explanation for the increase in exports nor identify buyers. The figures which come from surveyors’ reports before shipment are subject to change.
(Sourced from Bloomberg)
Bloomberg quoted according to data released by the Ministry of Trade that Indonesia, the world biggest exporter of thermal coal increased exports in November.
Data released showed Indonesia shipped 29.6 million tonnes of coal for the month up by 6.1%MoM. It shipped 23.2 million tonnes in November 2010.
The trade ministry reported that Indonesia coal exports for power stations in the first 11 months of 2011 rose 13% to 283.7 million tonnes.
It didn’t offer an explanation for the increase in exports nor identify buyers. The figures which come from surveyors’ reports before shipment are subject to change.
(Sourced from Bloomberg)
Jharkhand gets back four coal blocks
Thursday, 05 Jan 2012
The Telegraph reported that Mr Sriprakash Jaiswal India’s coal minister has kept his promise to friend and Jharkhand chief minister Mr Arjun Munda with his ministry taking an in principle decision to re allocate four out of five coal blocks taken away in May.
The blocks three of which were with National Thermal Power Corporation in Karanpura one with Jharkhand State Electricity Board in Banhardih and another that was jointly allocated to Damodar Valley Corporation and Jharkhand government undertaking Tenughat Vidyut Nigam Limited in Gondulpara were taken away after the companies overshot their deadlines to develop them.
The blocks which were allocated between 2006 and 2007, translate into a combined reserve of 1,836 million tonnes. The companies had blamed the delay in developing them on Naxalites slow land acquisition and forest clearances.
Senior official in Mr Jaiswal office told The Telegraph that “Except the JSEB block in Banhardih all other blocks have been cleared for in principle re-allocation under strict conditions. They will have to deposit a stipulated bank guarantee and undertake that they will develop the mine within 24 months. This can be extended by another 12 months if their reasons are satisfactory. If there is still delay, they will not only lose the block, but also the guarantee.”
He added that the Banhardih block also might be re-allocated to JSEB soon as a policy decision was taken on this in a meeting chaired by additional secretary Mr Zohra Chatterji more than a month back.
Mr Munda along with his deputy Mr Hemant Soren had met Mr Jaiswal in July to protest against the coal blocks being taken away. They pitched for a review on grounds that Banhardih was awarded through the state dispensation route and all the blocks were critical to ensure power to a new state trying to attract industry. Then, Mr Jaiswal had promised on camera to help his dost Mr Mundaji.
(Sourced from telegraphindia.com)
The Telegraph reported that Mr Sriprakash Jaiswal India’s coal minister has kept his promise to friend and Jharkhand chief minister Mr Arjun Munda with his ministry taking an in principle decision to re allocate four out of five coal blocks taken away in May.
The blocks three of which were with National Thermal Power Corporation in Karanpura one with Jharkhand State Electricity Board in Banhardih and another that was jointly allocated to Damodar Valley Corporation and Jharkhand government undertaking Tenughat Vidyut Nigam Limited in Gondulpara were taken away after the companies overshot their deadlines to develop them.
The blocks which were allocated between 2006 and 2007, translate into a combined reserve of 1,836 million tonnes. The companies had blamed the delay in developing them on Naxalites slow land acquisition and forest clearances.
Senior official in Mr Jaiswal office told The Telegraph that “Except the JSEB block in Banhardih all other blocks have been cleared for in principle re-allocation under strict conditions. They will have to deposit a stipulated bank guarantee and undertake that they will develop the mine within 24 months. This can be extended by another 12 months if their reasons are satisfactory. If there is still delay, they will not only lose the block, but also the guarantee.”
He added that the Banhardih block also might be re-allocated to JSEB soon as a policy decision was taken on this in a meeting chaired by additional secretary Mr Zohra Chatterji more than a month back.
Mr Munda along with his deputy Mr Hemant Soren had met Mr Jaiswal in July to protest against the coal blocks being taken away. They pitched for a review on grounds that Banhardih was awarded through the state dispensation route and all the blocks were critical to ensure power to a new state trying to attract industry. Then, Mr Jaiswal had promised on camera to help his dost Mr Mundaji.
(Sourced from telegraphindia.com)
Steam coal prices move up with oil on Iranian tension
Thursday, 05 Jan 2012
Reuters reported that physical prompt coal prices moved slightly higher on Wednesday, in line with gains in oil due to growing tension between Iran and the United States and European Union.
A few index inked DES ARA trades took place but no fixed price trades.
A January loading South African cargo was bid at USD 108.50 and offered at USD 112.50, up 25 cents.
A February cargo was bid at USD 104.50, while a March cargo was bid at USD 105.00, unchanged.
A January DES ARA cargo was bid at USD 108, up USD 1.00
A February DES ARA cargo was bid at USD 110.00 and offered at USD 115.00, up USD 1.50
Unless there are fresh supply disruptions, prices look set to continue to drift lower, traders and utilities said.
Coal would not be immune to a spike in oil prices if the United States and EU decide to place an embargo on Iranian oil imports and this escalates.
The US and EU on Wednesday agreed in principle to ban Iranian oil imports but have yet to decide when an embargo would come into effect.
Iran has threatened to close the Strait of Hormuz to oil shipping in response to sanctions.
(Sourced from Reuters)
Reuters reported that physical prompt coal prices moved slightly higher on Wednesday, in line with gains in oil due to growing tension between Iran and the United States and European Union.
A few index inked DES ARA trades took place but no fixed price trades.
A January loading South African cargo was bid at USD 108.50 and offered at USD 112.50, up 25 cents.
A February cargo was bid at USD 104.50, while a March cargo was bid at USD 105.00, unchanged.
A January DES ARA cargo was bid at USD 108, up USD 1.00
A February DES ARA cargo was bid at USD 110.00 and offered at USD 115.00, up USD 1.50
Unless there are fresh supply disruptions, prices look set to continue to drift lower, traders and utilities said.
Coal would not be immune to a spike in oil prices if the United States and EU decide to place an embargo on Iranian oil imports and this escalates.
The US and EU on Wednesday agreed in principle to ban Iranian oil imports but have yet to decide when an embargo would come into effect.
Iran has threatened to close the Strait of Hormuz to oil shipping in response to sanctions.
(Sourced from Reuters)
Wednesday, January 4, 2012
Iron ore fall raises doubts on Australia mine tax plan
Wed Jan 4, 2012
SYDNEY, (Reuters) - Australia's politically charged mining profits tax could raise less of the initial A$11 billion Prime Minister Julia Gillard is promising if iron ore prices return to November levels, accountants BDO warned in a senate submission.
Mega-miners Xstrata, BHP Billiton and Rio Tinto , last year agreed with Gillard to pay the Minerals Resource Rent Tax only if the tax was cut to 30 percent from 40 percent and limited to profits from iron ore and coal mining.An earlier version was deemed unworkable within the ruling Labor Party and led to the removal of Australia's first Labor leader in 11 years, Kevin Rudd.
Analysts are divided on the direction of iron ore prices, which this year dropped as low as $116 a tonne and ranged from $119 to $147 a tonne over November.On Wednesday, the price stood at $138.30 a tonne.
Steel industries in most countries requiring ore are suffering, leaving China and other robust Asian economies with healthier balance sheets the key buyers.If iron ore experiences a "double dip drop" prices could fall to a point "where no one will pay MRRT", BDO said.
Between $120 and $125 a tonne for ore, it was "difficult to envisage" established mining companies paying any tax, given large deductions afforded to them under the plan, BDO said."We respectfully request treasury advise what MRRT tax will be collected if iron ore prices remain at $120 for an extended period of time," BDO said in its submission.
TAX BEING CLOSELY WATCHED
Gillard wants to use the tax to boost payments into worker pension funds and to spread the benefits of Australia's resources boom to other parts of the economy.The tax is being closely watched by other resource nations.Huge expansion plans underway by big mining houses promise to deliver hundreds of millions more tonnes of iron ore to the global supply pool.
At the same time, there are some signs China's steel production is waning after years of near-uninterrupted growth.China's daily crude steel output fell to 1.666 million tonnes in the second 10 days of December, down 0.44 percent from the preceding 10 days, data from the China Iron & Steel Association showed.
JULY 1 START
For the first half of 2012 -- the tax starts on July 1, 2012 -- seasonally weaker seaborne iron ore supply and some recovery in steel production should keep iron ore prices in a $130-$150 range according to CLSA analysts. By 2014, the price could be as low as $100 a tonne, CLSA forecasts.
Supporters of the tax have accused detractors of waging a scare campaign by saying Australia, whose economy relies heavily on mining, would see less investment in mining if the tax was introduced.
Mining is the lifeblood of the Australian economy and iron ore and coal generate the lion's share of national overseas earnings.But to date, even detractors concede that there's been little sign Australia was losing its appeal as a mining centre.
Rio Tinto is accelerating a plan to lift output by 50 percent to 333 million tonnes a year by 2015. BHP is aiming for a 37 percent rise in production to 220 million tonnes by around the same time.Gillard's supporters estimate Xstrata, BHP and Rio Tinto would shoulder 80 percent of the $11.1 billion in added tax revenue collected in the first three years.
(sourced Reuters)
SYDNEY, (Reuters) - Australia's politically charged mining profits tax could raise less of the initial A$11 billion Prime Minister Julia Gillard is promising if iron ore prices return to November levels, accountants BDO warned in a senate submission.
Mega-miners Xstrata, BHP Billiton and Rio Tinto , last year agreed with Gillard to pay the Minerals Resource Rent Tax only if the tax was cut to 30 percent from 40 percent and limited to profits from iron ore and coal mining.An earlier version was deemed unworkable within the ruling Labor Party and led to the removal of Australia's first Labor leader in 11 years, Kevin Rudd.
Analysts are divided on the direction of iron ore prices, which this year dropped as low as $116 a tonne and ranged from $119 to $147 a tonne over November.On Wednesday, the price stood at $138.30 a tonne.
Steel industries in most countries requiring ore are suffering, leaving China and other robust Asian economies with healthier balance sheets the key buyers.If iron ore experiences a "double dip drop" prices could fall to a point "where no one will pay MRRT", BDO said.
Between $120 and $125 a tonne for ore, it was "difficult to envisage" established mining companies paying any tax, given large deductions afforded to them under the plan, BDO said."We respectfully request treasury advise what MRRT tax will be collected if iron ore prices remain at $120 for an extended period of time," BDO said in its submission.
TAX BEING CLOSELY WATCHED
Gillard wants to use the tax to boost payments into worker pension funds and to spread the benefits of Australia's resources boom to other parts of the economy.The tax is being closely watched by other resource nations.Huge expansion plans underway by big mining houses promise to deliver hundreds of millions more tonnes of iron ore to the global supply pool.
At the same time, there are some signs China's steel production is waning after years of near-uninterrupted growth.China's daily crude steel output fell to 1.666 million tonnes in the second 10 days of December, down 0.44 percent from the preceding 10 days, data from the China Iron & Steel Association showed.
JULY 1 START
For the first half of 2012 -- the tax starts on July 1, 2012 -- seasonally weaker seaborne iron ore supply and some recovery in steel production should keep iron ore prices in a $130-$150 range according to CLSA analysts. By 2014, the price could be as low as $100 a tonne, CLSA forecasts.
Supporters of the tax have accused detractors of waging a scare campaign by saying Australia, whose economy relies heavily on mining, would see less investment in mining if the tax was introduced.
Mining is the lifeblood of the Australian economy and iron ore and coal generate the lion's share of national overseas earnings.But to date, even detractors concede that there's been little sign Australia was losing its appeal as a mining centre.
Rio Tinto is accelerating a plan to lift output by 50 percent to 333 million tonnes a year by 2015. BHP is aiming for a 37 percent rise in production to 220 million tonnes by around the same time.Gillard's supporters estimate Xstrata, BHP and Rio Tinto would shoulder 80 percent of the $11.1 billion in added tax revenue collected in the first three years.
(sourced Reuters)
Iron Ore-China market still slow as traders stay away
Wed Jan 4, 2012
* Prices largely unchanged in first trading day of 2012
* No positive signals to entice buyers back to market
* Impact of Indian export tariff increase seen limited (Updates rebar price)
BEIJING, Jan 4 (Reuters) - Spot iron ore prices in China were mostly unchanged on the first trading day of 2012, with buyers and sellers unable to find a reason to rush back from a two-day new year break.
The offer price of 61.5 percent Pilbara fines, including cost and freight, stood in the $136-139 per tonne range on Wednesday, unchanged from the last trading day of 2011, industry consultancy Umetal said.
Analysts said there was little to entice buyers back into the market, with steel demand low and ore inventories generally sufficient to keep mills running.
"What concerns me a little bit is that Chinese mills seem to have restocked over the last three to four weeks without really pushing the price up at all," said Graeme Train, commodity analyst with Macquarie Securities in Shanghai.
Activity normally slows ahead of China's lunar new year, and many traders have expressed hope that the market will improve when the week-long holiday ends on Jan. 30, but the lull could last longer than that, said Train.
"It seems everyone is waiting for some signal that things are going to get meaningfully better but the government has been very slow to send a very positive signal," he said.
"There is really no catalyst, and we are probably looking at two very quiet months at least."
Analysts played down the impact of India's decision to raise export tariffs in order to guarantee supplies to domestic users, saying the influence of the world's third-biggest iron ore producer had already been on the wane.
India announced this week that it would increase iron ore export tariffs from 20 percent to 30 percent in an effort to guarantee supplies for domestic users.
"I can't see demand strong enough in 2012 to make global supply and demand tight enough to bring Indian marginal producers back into the market, so I can't see it supporting higher prices," said Sebastian Lewis, head of data and analytics with Steel Business Briefing in Shanghai.
"More likely it will accelerate the trend in declining Indian exports and Australia and other miners will be the beneficiaries," he said.
Umetal said Indian 63.5/63 percent iron ore was being offered at $143-146 per tonne on Wednesday, also unchanged.
It added in a research note that the decline in Indian iron ore export volumes had already been offset by growing shipments from South Africa, Iran, Canada and Russia.
While India remains China's third-biggest supplier after Australia and Brazil, its market share has been in decline. In the first 11 months of 2011, India's total shipments of 63.3 million tonnes represented 11 percent of the total, down from 15.6 percent in 2010.
Deliveries from South Africa, Iran, Canada and Russia reached nearly 73 million tonnes over the 11 months, up 33 percent compared with the same period of the previous year.
The most traded steel rebar contract on the Shanghai Futures Exchange ended Wednesday at 4,159 yuan ($660) per tonne, down 51 yuan per tonne or 1.21 percent from the previous session. ($1 = 6.294 yuan)
(sourced Reuters)
* Prices largely unchanged in first trading day of 2012
* No positive signals to entice buyers back to market
* Impact of Indian export tariff increase seen limited (Updates rebar price)
BEIJING, Jan 4 (Reuters) - Spot iron ore prices in China were mostly unchanged on the first trading day of 2012, with buyers and sellers unable to find a reason to rush back from a two-day new year break.
The offer price of 61.5 percent Pilbara fines, including cost and freight, stood in the $136-139 per tonne range on Wednesday, unchanged from the last trading day of 2011, industry consultancy Umetal said.
Analysts said there was little to entice buyers back into the market, with steel demand low and ore inventories generally sufficient to keep mills running.
"What concerns me a little bit is that Chinese mills seem to have restocked over the last three to four weeks without really pushing the price up at all," said Graeme Train, commodity analyst with Macquarie Securities in Shanghai.
Activity normally slows ahead of China's lunar new year, and many traders have expressed hope that the market will improve when the week-long holiday ends on Jan. 30, but the lull could last longer than that, said Train.
"It seems everyone is waiting for some signal that things are going to get meaningfully better but the government has been very slow to send a very positive signal," he said.
"There is really no catalyst, and we are probably looking at two very quiet months at least."
Analysts played down the impact of India's decision to raise export tariffs in order to guarantee supplies to domestic users, saying the influence of the world's third-biggest iron ore producer had already been on the wane.
India announced this week that it would increase iron ore export tariffs from 20 percent to 30 percent in an effort to guarantee supplies for domestic users.
"I can't see demand strong enough in 2012 to make global supply and demand tight enough to bring Indian marginal producers back into the market, so I can't see it supporting higher prices," said Sebastian Lewis, head of data and analytics with Steel Business Briefing in Shanghai.
"More likely it will accelerate the trend in declining Indian exports and Australia and other miners will be the beneficiaries," he said.
Umetal said Indian 63.5/63 percent iron ore was being offered at $143-146 per tonne on Wednesday, also unchanged.
It added in a research note that the decline in Indian iron ore export volumes had already been offset by growing shipments from South Africa, Iran, Canada and Russia.
While India remains China's third-biggest supplier after Australia and Brazil, its market share has been in decline. In the first 11 months of 2011, India's total shipments of 63.3 million tonnes represented 11 percent of the total, down from 15.6 percent in 2010.
Deliveries from South Africa, Iran, Canada and Russia reached nearly 73 million tonnes over the 11 months, up 33 percent compared with the same period of the previous year.
The most traded steel rebar contract on the Shanghai Futures Exchange ended Wednesday at 4,159 yuan ($660) per tonne, down 51 yuan per tonne or 1.21 percent from the previous session. ($1 = 6.294 yuan)
(sourced Reuters)
Coking coal to remain worry for Indian steel firms
Wednesday, 04 Jan 2012
Business Standard reported that as India is targeting steel capacity of 200 million tonnes by 2020, a major concern staring in the face of steelmakers is how to secure sustainable supply of coking coal.
As per report, Indian reserves of coking coal are less than 34 billion tonnes of which the share of prime grade is only 5.31 billion tonnes.
According to a study by ANZ Bank, India's import requirements of metallurgical coal will climb to 90 million tonne by 2015 from around 30 million tonne now. The import projection is based on the perception of the country’s steel production growing at an annual clip of 10%. As India's imports treble in the next four years, it will move ahead of Japan and China, now leading the group of importing countries. China is likely to import 70 million tonne in 2015.
As per report, all Indian steel majors are attempting to reduce coke consumption by adopting multi pronged strategies.
TATA Steel and SAIL are blending medium grade coking coal with the prime grade.
Some local steelmakers are stepping up coal dust injection in their BFs to bring down coke rate. The thumb rule is one kg of coal dust will replace an identical amount of coke, the making of which requires 1.4 kg of coal, in BF.
(Sourced from BS)
Business Standard reported that as India is targeting steel capacity of 200 million tonnes by 2020, a major concern staring in the face of steelmakers is how to secure sustainable supply of coking coal.
As per report, Indian reserves of coking coal are less than 34 billion tonnes of which the share of prime grade is only 5.31 billion tonnes.
According to a study by ANZ Bank, India's import requirements of metallurgical coal will climb to 90 million tonne by 2015 from around 30 million tonne now. The import projection is based on the perception of the country’s steel production growing at an annual clip of 10%. As India's imports treble in the next four years, it will move ahead of Japan and China, now leading the group of importing countries. China is likely to import 70 million tonne in 2015.
As per report, all Indian steel majors are attempting to reduce coke consumption by adopting multi pronged strategies.
TATA Steel and SAIL are blending medium grade coking coal with the prime grade.
Some local steelmakers are stepping up coal dust injection in their BFs to bring down coke rate. The thumb rule is one kg of coal dust will replace an identical amount of coke, the making of which requires 1.4 kg of coal, in BF.
(Sourced from BS)
Coal stocks at power plants down by 35pct YoY
Wednesday, 04 Jan 2012
Business Standard reported that delays in commissioning of new mines and a historic dip in production from operational mines have thrown coal availability position and the associated power capacity into emergency mode.
Fresh data from the Central Electricity Authority, the apex power sector planning body, reveals the current fuel stock at India’s 89 thermal power stations is down by 35% from a year earlier.
The power stations are running on an 8.3 million tonne coal stock, against 12.7 million tonne in the same period last year. In addition, 26 power stations have supercritical stocks, or stocks that can support operations for four days, up from 14 stations. Also, half of the 89 stations have stocks sufficient to sustain operations for seven days.
A senior coal ministry official said that “The main reasons for the decreased availability of coal recently are logistical problems of railway rakes and the hit to production from strike at Coal India Ltd and heavy rains.”
He said the ministry had taken several steps, including cancellation of captive blocks and taking up the rake availability issue with the Railways.
The ministry has awarded 193 captive coal blocks, largely to private sector companies, over the past 18 years. However, only 28 have started operations, throwing production targets off the track. These blocks were expected to produce 104 million tonne coal a year by the end of this Plan period. But last year, production stood at a dismal 34 million tonne. The ministry, therefore, has cancelled allocations of a dozen blocks, including five blocks of state-run NTPC Ltd.
The power ministry is also worried over the widening gap between the power capacity linked to CIL supply and actual receipts from the coal producer. CIL’s production remained flat at 431 million tonne last year. During this year, too, it has been reporting declines in production for the first time in recent history. The power ministry has urged CIL to meet its supply commitments in the absence of which over 24,000 MW new power capacity is likely to be stranded.
The ministry stated in a recent note that “Inadequate availability of domestic coal and reluctance of coal companies to sign fuel supply agreements have serious repercussions on the confidence of utilities, developers and investors.”
(Sourced from BS)
Business Standard reported that delays in commissioning of new mines and a historic dip in production from operational mines have thrown coal availability position and the associated power capacity into emergency mode.
Fresh data from the Central Electricity Authority, the apex power sector planning body, reveals the current fuel stock at India’s 89 thermal power stations is down by 35% from a year earlier.
The power stations are running on an 8.3 million tonne coal stock, against 12.7 million tonne in the same period last year. In addition, 26 power stations have supercritical stocks, or stocks that can support operations for four days, up from 14 stations. Also, half of the 89 stations have stocks sufficient to sustain operations for seven days.
A senior coal ministry official said that “The main reasons for the decreased availability of coal recently are logistical problems of railway rakes and the hit to production from strike at Coal India Ltd and heavy rains.”
He said the ministry had taken several steps, including cancellation of captive blocks and taking up the rake availability issue with the Railways.
The ministry has awarded 193 captive coal blocks, largely to private sector companies, over the past 18 years. However, only 28 have started operations, throwing production targets off the track. These blocks were expected to produce 104 million tonne coal a year by the end of this Plan period. But last year, production stood at a dismal 34 million tonne. The ministry, therefore, has cancelled allocations of a dozen blocks, including five blocks of state-run NTPC Ltd.
The power ministry is also worried over the widening gap between the power capacity linked to CIL supply and actual receipts from the coal producer. CIL’s production remained flat at 431 million tonne last year. During this year, too, it has been reporting declines in production for the first time in recent history. The power ministry has urged CIL to meet its supply commitments in the absence of which over 24,000 MW new power capacity is likely to be stranded.
The ministry stated in a recent note that “Inadequate availability of domestic coal and reluctance of coal companies to sign fuel supply agreements have serious repercussions on the confidence of utilities, developers and investors.”
(Sourced from BS)
MahaGenCo to import low moisture Coal
Wednesday, 04 January 12
Maharashtra State Power Generation Co. Ltd. is the state power generation utility owned by Government of Maharashtra, intends to procure coal of foreign origin during rainy season for its Chandrapur, Nasik, Bhusawal and Khaparkheda TPS .The coal should have low Total Moisture & Fines to avoid unloading problems, according to the notice released by Mahagenco in its website.
The interested parties may submit Expression Of Interest suggesting suitable technical specifications of coal of foreign origin for rainy season, availability of such coal, monthly quantity that can be delivered, precautionary measures to avoid ingress of excessive moisture due to rain, delivery conditions or suggestions if any.
EOI must be delivered to TPS’s of Mahagenco within 15 days from the date of publication (on or before 17 January 2012) to Chief Engineer (FMC), MAHAGENCO, 3rd Floor Prakashgad, Prof. Anant Kanhekar Marg, Bandra (E), Mumbai – 400 051, Tel No: +91 22 26474211/26472131 Fax No: +91 22 26581466, Email-cefmc@mahagenco.in
After scrutinizing the EOI Quantities shall be finalized in accordance with TPS requirement and cost benefit assessment shall be done and RFQ/Tender may be floated whichever is suitable for Mahagenco, the notice further said.
(sourced coalspot.com)
Maharashtra State Power Generation Co. Ltd. is the state power generation utility owned by Government of Maharashtra, intends to procure coal of foreign origin during rainy season for its Chandrapur, Nasik, Bhusawal and Khaparkheda TPS .The coal should have low Total Moisture & Fines to avoid unloading problems, according to the notice released by Mahagenco in its website.
The interested parties may submit Expression Of Interest suggesting suitable technical specifications of coal of foreign origin for rainy season, availability of such coal, monthly quantity that can be delivered, precautionary measures to avoid ingress of excessive moisture due to rain, delivery conditions or suggestions if any.
EOI must be delivered to TPS’s of Mahagenco within 15 days from the date of publication (on or before 17 January 2012) to Chief Engineer (FMC), MAHAGENCO, 3rd Floor Prakashgad, Prof. Anant Kanhekar Marg, Bandra (E), Mumbai – 400 051, Tel No: +91 22 26474211/26472131 Fax No: +91 22 26581466, Email-cefmc@mahagenco.in
After scrutinizing the EOI Quantities shall be finalized in accordance with TPS requirement and cost benefit assessment shall be done and RFQ/Tender may be floated whichever is suitable for Mahagenco, the notice further said.
(sourced coalspot.com)
Iron ore prices may average 11pct lower in 2012 - IG Markets
Wednesday, 04 Jan 2012
Bloomberg quoted according to Mr Chris Weston IG Markets institutional dealer that Iron ore prices may decline by as much as 11% on average this year because of concern that global economic growth may falter.
Mr Weston said the steelmaking raw material may average between USD 150 and USD 160 per tonne in 2012. Iron ore with 62% content delivered to the port of Tianjin, China averaged USD 167.60 a ton in 2011 and traded at USD 138.50 on December 30.
He said that “I see flat trade, I don’t see any explosive price action to the upside. There are obviously some real risks to global growth and Chinese growth as well.”
Mr Weston said “I do see some positivity in terms of the supply side. There is potential for substantial delays in the Brazilian projects, so that will keep prices relatively elevated and supported.”
Commodities from wheat and palm oil to copper declined in 2011 as the European debt crisis and declining global growth stoked concern that demand for raw materials will shrink. Economic growth in China will slow to 8.5% this year after growing 10.4% in 2010, the Organization for Economic Cooperation and Development projected on November 28.
Ore delivered to China from Australia, the biggest exporter, will average USD 150 per tonne in 2012 up from a forecast USD 140 a ton.
(Sourced from Bloomberg)
Bloomberg quoted according to Mr Chris Weston IG Markets institutional dealer that Iron ore prices may decline by as much as 11% on average this year because of concern that global economic growth may falter.
Mr Weston said the steelmaking raw material may average between USD 150 and USD 160 per tonne in 2012. Iron ore with 62% content delivered to the port of Tianjin, China averaged USD 167.60 a ton in 2011 and traded at USD 138.50 on December 30.
He said that “I see flat trade, I don’t see any explosive price action to the upside. There are obviously some real risks to global growth and Chinese growth as well.”
Mr Weston said “I do see some positivity in terms of the supply side. There is potential for substantial delays in the Brazilian projects, so that will keep prices relatively elevated and supported.”
Commodities from wheat and palm oil to copper declined in 2011 as the European debt crisis and declining global growth stoked concern that demand for raw materials will shrink. Economic growth in China will slow to 8.5% this year after growing 10.4% in 2010, the Organization for Economic Cooperation and Development projected on November 28.
Ore delivered to China from Australia, the biggest exporter, will average USD 150 per tonne in 2012 up from a forecast USD 140 a ton.
(Sourced from Bloomberg)
Indonesia cuts January coal price to the lowest in 13 months
Wednesday, 04 Jan 2012
Bloomberg quoted according to data released by the energy ministry that Indonesia, the world largest exporter of power-station coal, cut the benchmark price for sales in January by 3% to the lowest in 13 months.
The Directorate General of Coal and Minerals at the ministry said in its website today in Jakarta that the cost of coal with a gross energy value of 6,322 kilo calories per kilogram was set at USD 109.29 a ton on free-on-board basis at vessel compared with USD 112.67 a ton in December.
Below is a list of price references and markers used to calculate prices for coal of similar quality from eight leading grades in Indonesia, Southeast Asia biggest economy as compiled by the energy ministry. Grades are in kilo-calories a kilogram while prices are in US dollars a ton.
(Sourced from Bloomberg)
Bloomberg quoted according to data released by the energy ministry that Indonesia, the world largest exporter of power-station coal, cut the benchmark price for sales in January by 3% to the lowest in 13 months.
The Directorate General of Coal and Minerals at the ministry said in its website today in Jakarta that the cost of coal with a gross energy value of 6,322 kilo calories per kilogram was set at USD 109.29 a ton on free-on-board basis at vessel compared with USD 112.67 a ton in December.
Below is a list of price references and markers used to calculate prices for coal of similar quality from eight leading grades in Indonesia, Southeast Asia biggest economy as compiled by the energy ministry. Grades are in kilo-calories a kilogram while prices are in US dollars a ton.
(Sourced from Bloomberg)
Indian iron ore export tax hike reactions from miners
Wednesday, 04 Jan 2012
It is reported that the country miners have said the upward revision in iron ore export duty to 30% will make India produce uncompetitive in the global market and total shipments are unlikely to exceed 50 million tonnes in the current fiscal.
Mr RK Sharma Federation of Indian Mineral Industries' Secretary General said "The government has further hiked export duty on iron ore to 30 per cent on December 30. This will make Indian iron ore totally uncompetitive in the world market."
He said that "Iron ore exports are already down by around 30 per cent during the April-November period of the current fiscal over the same period last fiscal. It will be far more challenging next year."
Mr Sharma said in the remaining period of the current fiscal, only some quantity of exports would be feasible from Goa, besides stocks lying at other ports. He said that "However taking all, it is not going to be 45 million tonnes to 50 million tonnes in the current fiscal."
Mr Glen Kalavampara secretary of the Goa Mineral Ore Exporters' Association said "We are shocked at the decision to hike export tax on iron ore as such volatility in policy does not promote India's image as a reliable supplier."
He said that "Absence of supplies from India will help Australian and Brazilian suppliers to consolidate their domination of the global market."
India, the world third largest iron ore exporter, had shipped 117.3 million tonnes of iron ore in 2009-10 and 70% to 80% of this was in the form of fines which do not have many takers among domestic steel makers. In 2010-11, iron ore exports from the country came down to 97.64 million tonnes and in the first eight months of the current fiscal, exports dipped by a little over 28% to 40 million tonnes vis-a-vis the corresponding period last fiscal.
(sourced Reuters & ET)
It is reported that the country miners have said the upward revision in iron ore export duty to 30% will make India produce uncompetitive in the global market and total shipments are unlikely to exceed 50 million tonnes in the current fiscal.
Mr RK Sharma Federation of Indian Mineral Industries' Secretary General said "The government has further hiked export duty on iron ore to 30 per cent on December 30. This will make Indian iron ore totally uncompetitive in the world market."
He said that "Iron ore exports are already down by around 30 per cent during the April-November period of the current fiscal over the same period last fiscal. It will be far more challenging next year."
Mr Sharma said in the remaining period of the current fiscal, only some quantity of exports would be feasible from Goa, besides stocks lying at other ports. He said that "However taking all, it is not going to be 45 million tonnes to 50 million tonnes in the current fiscal."
Mr Glen Kalavampara secretary of the Goa Mineral Ore Exporters' Association said "We are shocked at the decision to hike export tax on iron ore as such volatility in policy does not promote India's image as a reliable supplier."
He said that "Absence of supplies from India will help Australian and Brazilian suppliers to consolidate their domination of the global market."
India, the world third largest iron ore exporter, had shipped 117.3 million tonnes of iron ore in 2009-10 and 70% to 80% of this was in the form of fines which do not have many takers among domestic steel makers. In 2010-11, iron ore exports from the country came down to 97.64 million tonnes and in the first eight months of the current fiscal, exports dipped by a little over 28% to 40 million tonnes vis-a-vis the corresponding period last fiscal.
(sourced Reuters & ET)
Tuesday, January 3, 2012
India iron ore exports seen plunging after tax rise
Tue Jan 3, 2012
* Exports seen at 5 mln T for Jan-March quarter
* 2011/2012 exports seen at 50 mln T vs 97 mln T pvs year
* Concerns policy volatility may hurt India's supplier image
NEW DELHI, Jan 3 (Reuters) - India's iron ore exports are likely to be 75 percent lower than previously expected in the quarter ending in March as a rise in export duties kicks in as part of the government's push to conserve supplies for domestic steelmakers.
Asia's third-largest economy announced a 50 percent jump in export duties on Monday to 30 percent, prompting traders to slash their forecasts for exports for the year to March 2012 to around 50 million tonnes from 65 million. That was already down from 97 million tonnes last year.
Given that India had exported about 45 million tonnes in the nine months to December, it is likely to ship only another 5 million tonnes in the three months to March 31, top industry body, Federation of Indian Mineral Industries, said on Tuesday.
India is one of the world's biggest exporters of iron ore, with much of it bought by China, which has the world's largest steel industry. The shortage is expected to push up global prices by 7 to 10 percent over the current $140 a tonne, traders said.
"We are shocked at the decision to hike export tax on iron ore as such volatility in policy does not promote India's image as a reliable supplier," said Glen Kalavampara, secretary of the Goa Mineral Ore Exporters' Association. Goa is India's biggest exporter of iron ore.
"Absence of supplies from India will help Australian and Brazilian suppliers to consolidate their domination of the global market."
Indian exports were already down around a third from last year primarily due to legal wrangling over stalled shipments from a key producing state and efforts to conserve supplies.
Shares in Indian exporters Sesa Goa and NMDC slid on Monday after the announcement of the tax hike but closed up on Tuesday on fund buying at lower levels.
Deutsche Bank sharply reduced its earnings estimates for Sesa Goa -- by 29 percent this fiscal year and by 24 percent for 2012/13 -- on Tuesday, factoring in the increase in iron ore export tax among other reasons.
Steel companies continued Monday's gains. Tata Steel Ltd rose 6.1 percent to 361.85 rupees. Credit Suisse upgraded the world's No. 7 steelmaker to 'neutral' from 'underperform', citing valuation comfort at current levels.
The government has shown an inclination to conserve resources, though it does not support a blanket ban on exports, largely because the domestic steel industry does not have the technology to use ore fines. India mostly ships fines to China.
New Delhi also hopes that sustained Chinese demand means buyers would be willing to pay a slightly higher price.
"We think global demand will be able to absorb a slight adjustment in prices on the upside, which leaves a bit of room for us to adjust duties," an Indian ministry official said.
GLOBAL PRICES
Chinese steel mills had been expected to replenish stockpiles before their New Year holidays, which start on Jan. 22. Chinese markets are closed on Jan. 2.
China's iron ore imports are expected to rise 6 percent to a record 720 million tonnes in 2012, according to a Reuters poll conducted in December.
India's government is trying to cut down on illegal iron ore mining and shipments but favours better tracking and monitoring along with higher taxes rather than blanket bans on exports. It last raised the export duty in February 2011.
In April, the Supreme Court overturned an export ban imposed by Karnataka's state government in July 2010, but shipments have yet to pick up because of administrative delays.
The court has itself banned mining in some parts of the state due to environmental worries and allegations of illegal mining, allowing only state-run NMDC to mine in the areas.
Such regulatory uncertainty deflates industry confidence of India being a stable supplier.
Indian exports could slump below 10 million tonnes within three years as more ore is earmarked for domestic consumption, according to David Flanagan, managing director of Australian iron ore miner Atlas Iron.
Indian ore exporters say the government policy makes little sense as domestic steelmakers can hardly use fines.
Moreover, India's steel demand is likely to grow by only 6 percent in the current fiscal year, nearly half the earlier forecast, as higher interest rates squeeze demand from the automobile and construction sectors.
"Low-grade iron ore should have been free for exports," Kalavampara said.
(sourced Reuters)
* Exports seen at 5 mln T for Jan-March quarter
* 2011/2012 exports seen at 50 mln T vs 97 mln T pvs year
* Concerns policy volatility may hurt India's supplier image
NEW DELHI, Jan 3 (Reuters) - India's iron ore exports are likely to be 75 percent lower than previously expected in the quarter ending in March as a rise in export duties kicks in as part of the government's push to conserve supplies for domestic steelmakers.
Asia's third-largest economy announced a 50 percent jump in export duties on Monday to 30 percent, prompting traders to slash their forecasts for exports for the year to March 2012 to around 50 million tonnes from 65 million. That was already down from 97 million tonnes last year.
Given that India had exported about 45 million tonnes in the nine months to December, it is likely to ship only another 5 million tonnes in the three months to March 31, top industry body, Federation of Indian Mineral Industries, said on Tuesday.
India is one of the world's biggest exporters of iron ore, with much of it bought by China, which has the world's largest steel industry. The shortage is expected to push up global prices by 7 to 10 percent over the current $140 a tonne, traders said.
"We are shocked at the decision to hike export tax on iron ore as such volatility in policy does not promote India's image as a reliable supplier," said Glen Kalavampara, secretary of the Goa Mineral Ore Exporters' Association. Goa is India's biggest exporter of iron ore.
"Absence of supplies from India will help Australian and Brazilian suppliers to consolidate their domination of the global market."
Indian exports were already down around a third from last year primarily due to legal wrangling over stalled shipments from a key producing state and efforts to conserve supplies.
Shares in Indian exporters Sesa Goa and NMDC slid on Monday after the announcement of the tax hike but closed up on Tuesday on fund buying at lower levels.
Deutsche Bank sharply reduced its earnings estimates for Sesa Goa -- by 29 percent this fiscal year and by 24 percent for 2012/13 -- on Tuesday, factoring in the increase in iron ore export tax among other reasons.
Steel companies continued Monday's gains. Tata Steel Ltd rose 6.1 percent to 361.85 rupees. Credit Suisse upgraded the world's No. 7 steelmaker to 'neutral' from 'underperform', citing valuation comfort at current levels.
The government has shown an inclination to conserve resources, though it does not support a blanket ban on exports, largely because the domestic steel industry does not have the technology to use ore fines. India mostly ships fines to China.
New Delhi also hopes that sustained Chinese demand means buyers would be willing to pay a slightly higher price.
"We think global demand will be able to absorb a slight adjustment in prices on the upside, which leaves a bit of room for us to adjust duties," an Indian ministry official said.
GLOBAL PRICES
Chinese steel mills had been expected to replenish stockpiles before their New Year holidays, which start on Jan. 22. Chinese markets are closed on Jan. 2.
China's iron ore imports are expected to rise 6 percent to a record 720 million tonnes in 2012, according to a Reuters poll conducted in December.
India's government is trying to cut down on illegal iron ore mining and shipments but favours better tracking and monitoring along with higher taxes rather than blanket bans on exports. It last raised the export duty in February 2011.
In April, the Supreme Court overturned an export ban imposed by Karnataka's state government in July 2010, but shipments have yet to pick up because of administrative delays.
The court has itself banned mining in some parts of the state due to environmental worries and allegations of illegal mining, allowing only state-run NMDC to mine in the areas.
Such regulatory uncertainty deflates industry confidence of India being a stable supplier.
Indian exports could slump below 10 million tonnes within three years as more ore is earmarked for domestic consumption, according to David Flanagan, managing director of Australian iron ore miner Atlas Iron.
Indian ore exporters say the government policy makes little sense as domestic steelmakers can hardly use fines.
Moreover, India's steel demand is likely to grow by only 6 percent in the current fiscal year, nearly half the earlier forecast, as higher interest rates squeeze demand from the automobile and construction sectors.
"Low-grade iron ore should have been free for exports," Kalavampara said.
(sourced Reuters)
PT Bumi is bullish on Indian steam coal demand
Tuesday, 03 Jan 2012
PT Bumi Resources, Indonesia’s largest coal miner by output, is targeting a 14% increase in coal production and sales volume this year on strong demand from India.
Mr Dileep Srivastava investor relations director at Bumi Resources said that the company aimed to have 75 million tonnes of coal production and sales this year, up from an estimated 66 million tonnes in 2011.
Mr Dileep said Bumi Resources expected the coal market to continue strengthening with increasing demand from India and Indonesia, followed by China and other markets.
He said “There will be growth in China still, but it is just nominal growth. The bulk of the growth will come from India because they have a lot of the start up power plants.”
He estimated that 15% of the company’s sales this year would come from India.
Mr Dileep did not elaborate on sales data from India for last year or 2010 but described the potential for the New Year as “significant.”
PT Bumi Resources has a long term contract to supply 10.8 million tonnes of coal annually to TATA Power for two power plants in India, and it is likely to start shipping this year.
(sourced TheJakartaglobe.com)
PT Bumi Resources, Indonesia’s largest coal miner by output, is targeting a 14% increase in coal production and sales volume this year on strong demand from India.
Mr Dileep Srivastava investor relations director at Bumi Resources said that the company aimed to have 75 million tonnes of coal production and sales this year, up from an estimated 66 million tonnes in 2011.
Mr Dileep said Bumi Resources expected the coal market to continue strengthening with increasing demand from India and Indonesia, followed by China and other markets.
He said “There will be growth in China still, but it is just nominal growth. The bulk of the growth will come from India because they have a lot of the start up power plants.”
He estimated that 15% of the company’s sales this year would come from India.
Mr Dileep did not elaborate on sales data from India for last year or 2010 but described the potential for the New Year as “significant.”
PT Bumi Resources has a long term contract to supply 10.8 million tonnes of coal annually to TATA Power for two power plants in India, and it is likely to start shipping this year.
(sourced TheJakartaglobe.com)
Polish treasury min calls for review of mining tax
Tuesday, Jan 3, 2012
WARSAW (Reuters) - Poland's new mining tax, which is to mainly fall on Europe's No.2 copper producer KGHM , is out of sync with global standards and should be reviewed to reflect production costs, the treasury ministry said.
Last month, the finance minstry published its proposed mining tax bill, to be discussed by government this month. The levy is to raise 1.8 billion zlotys ($524.2 million) this year and subsequently rise to 2.2 billion. ($1 = 3.4340 Polish zlotys)
(sourced Reuters)
WARSAW (Reuters) - Poland's new mining tax, which is to mainly fall on Europe's No.2 copper producer KGHM , is out of sync with global standards and should be reviewed to reflect production costs, the treasury ministry said.
Last month, the finance minstry published its proposed mining tax bill, to be discussed by government this month. The levy is to raise 1.8 billion zlotys ($524.2 million) this year and subsequently rise to 2.2 billion. ($1 = 3.4340 Polish zlotys)
(sourced Reuters)
Coal price hike will hit power utilities hard in India
Tuesday, 03 Jan 2012
It is reported that the hike in coal prices from January 1 will hit the power utilities hard. The worst affected will be power units in the east as Coal India Ltd will levy 6% extra on coal from Eastern Coalfields Ltd as it is a sick subsidiary and listed with the Board for Industrial & Financial Restructuring. ECL supplies coal to both CESC and WBPDCL.
The restructuring followed an approval to the long-pending proposal by the board of directors at CIL recently. Though CIL chairman Mr NC Johan said the new mechanism would have a minimum impact on consumers, he said it would have a positive impact on company revenue.
Mr Johan said "We've ensured that no coal-producing company will lose in revenue due to the restructuring. However, if some company manages to increase the quality of coal produced, it will command a higher price for coal, adding that the new system does away with the anomalies in pricing of same grade coal produced by different collieries and subsidiaries.”
Mr Johan claimed that even after the revision, coal price would be 77% lower than the international prices for power, fertilizer and defence and 25% for others.
Power department officials expressed dismay over the decision
(sourced Timesofindia.indiatimes.com)
It is reported that the hike in coal prices from January 1 will hit the power utilities hard. The worst affected will be power units in the east as Coal India Ltd will levy 6% extra on coal from Eastern Coalfields Ltd as it is a sick subsidiary and listed with the Board for Industrial & Financial Restructuring. ECL supplies coal to both CESC and WBPDCL.
The restructuring followed an approval to the long-pending proposal by the board of directors at CIL recently. Though CIL chairman Mr NC Johan said the new mechanism would have a minimum impact on consumers, he said it would have a positive impact on company revenue.
Mr Johan said "We've ensured that no coal-producing company will lose in revenue due to the restructuring. However, if some company manages to increase the quality of coal produced, it will command a higher price for coal, adding that the new system does away with the anomalies in pricing of same grade coal produced by different collieries and subsidiaries.”
Mr Johan claimed that even after the revision, coal price would be 77% lower than the international prices for power, fertilizer and defence and 25% for others.
Power department officials expressed dismay over the decision
(sourced Timesofindia.indiatimes.com)
Windfall coming for CIL from new pricing method
Tuesday, 03 Jan 2012
Having an unenviable record of zero production growth in 2010-11 and now facing an uphill task in posting production growth this fiscal, the price rationalization move seems to have offered Coal India Ltd a clear opportunity to post a substantial profit growth in the January-March quarter.
Company officials, however maintain that the new system should keep pressure on the respective mining subsidiaries to maintain quality or risk witnessing a revenue slippage. However, considering that the company has yet to have adequate calorie metres and coal would be sold in the next three months merely by converting existing products from UHV to GCV by using available calculators, there is little doubt that CIL would witness an approximately INR 1,500 crore positive impact on the bottomline in the next quarter on account of the new mechanism
Since the company had last enhanced prices with effect from March 2011 the price benefit will be even higher for January to February.
1. End result
Even though CIL is facing an uphill task posting production growth this fiscal compared to 2010-11 and profits for the fourth quarter of this fiscal may spiral. What is more interesting worker unions are demanding a minimum wage hike of 30% under the ongoing negotiation for a five year wage pact with effect from July 1.
Rough estimates suggest that such a payout should cost CIL INR 6,000 to INR 6,500 crore annually over and above the existing employee cost. This is nearly double the company current provisioning of an estimated INR 3,000 crore annually.
Assuming that Coal India will yield to pressure from the trade unions, the new pricing exercise therefore will offer the company sufficient room to strike the wage deal without negatively impacting the bottom line.
2. Price hike?
However, if the entire price benefit is passed on to employees and it will be mandatory for the company to either enhance the production and productivity or escalate prices further to ensure profit growth in 2012-13.
Needless to mention, the company official sources are tight lipped about the emerging possibilities.
(sourced TheHinduBusinessline.com)
Having an unenviable record of zero production growth in 2010-11 and now facing an uphill task in posting production growth this fiscal, the price rationalization move seems to have offered Coal India Ltd a clear opportunity to post a substantial profit growth in the January-March quarter.
Company officials, however maintain that the new system should keep pressure on the respective mining subsidiaries to maintain quality or risk witnessing a revenue slippage. However, considering that the company has yet to have adequate calorie metres and coal would be sold in the next three months merely by converting existing products from UHV to GCV by using available calculators, there is little doubt that CIL would witness an approximately INR 1,500 crore positive impact on the bottomline in the next quarter on account of the new mechanism
Since the company had last enhanced prices with effect from March 2011 the price benefit will be even higher for January to February.
1. End result
Even though CIL is facing an uphill task posting production growth this fiscal compared to 2010-11 and profits for the fourth quarter of this fiscal may spiral. What is more interesting worker unions are demanding a minimum wage hike of 30% under the ongoing negotiation for a five year wage pact with effect from July 1.
Rough estimates suggest that such a payout should cost CIL INR 6,000 to INR 6,500 crore annually over and above the existing employee cost. This is nearly double the company current provisioning of an estimated INR 3,000 crore annually.
Assuming that Coal India will yield to pressure from the trade unions, the new pricing exercise therefore will offer the company sufficient room to strike the wage deal without negatively impacting the bottom line.
2. Price hike?
However, if the entire price benefit is passed on to employees and it will be mandatory for the company to either enhance the production and productivity or escalate prices further to ensure profit growth in 2012-13.
Needless to mention, the company official sources are tight lipped about the emerging possibilities.
(sourced TheHinduBusinessline.com)
Giant Vale ship completes maiden journey to China
Tue Jan 3, 2012
SINGAPORE Jan 3 (Reuters) - The first of Vale's giant dry bulk vessels to arrive in China has completed delivery of its iron ore cargo, shipping data showed on Tuesday, a key step forward in the Brazilian miner's plan to cut shipping costs to its biggest market.
Reuters Freightviews and independent shipping data confirmed the 388,000-tonne vessel, Berge Everest, had departed China's Port of Dalian over the weekend for Singapore, where it will likely refuel for its journey back to Brazil.
Draught measurements indicated the ship had unloaded all or nearly all of its iron ore cargo in Dalian.
Vale has ordered 35 of the world's largest dry bulk carriers, of which six are already on the water, at an estimated cost of $4.2 billion from Chinese and Korean shipyards.
The world's second largest miner had been trying since June 2011 to get Chinese authorities to allow the megaships to enter the country's ports.
Chinese port officials have declined to comment on the arrival of Berge Everest, leaving it unclear as to whether other giant Vale ships will be allowed to dock in the country's ports.
Five other giant ships operated by Vale, the world's top iron ore producer, were not expected to follow Berge Everest into China at least in the near term.
Shipping data showed two heading back to Brazil, two in Europe and one -- the Vale Beijing -- anchored off Brazil's Ponta da Madeira Port.
The Vale Beijing, the newest member of the "Valemax" fleet, developed cracks in its hull on its maiden voyage, sparking concerns from Chinese shipowners about the safety of these ships.
Chinese shipowners and steelmakers are strongly opposed to Vale's vessels, fearing the ships are a "Trojan Horse" that the miner will use to monopolize both the shipping and iron ore markets at China's expense.
Vale, which sells about 40 percent of its ore to China, is counting on Valemaxes to slash shipping costs and better compete with Australian rivals BHP Billiton and Rio Tinto . While Vale's ore is generally of higher quality, that advantage is cancelled by Australia's proximity to China, the world's top steelmaker and biggest ore importer.
(sourced Reuters)
SINGAPORE Jan 3 (Reuters) - The first of Vale's giant dry bulk vessels to arrive in China has completed delivery of its iron ore cargo, shipping data showed on Tuesday, a key step forward in the Brazilian miner's plan to cut shipping costs to its biggest market.
Reuters Freightviews and independent shipping data confirmed the 388,000-tonne vessel, Berge Everest, had departed China's Port of Dalian over the weekend for Singapore, where it will likely refuel for its journey back to Brazil.
Draught measurements indicated the ship had unloaded all or nearly all of its iron ore cargo in Dalian.
Vale has ordered 35 of the world's largest dry bulk carriers, of which six are already on the water, at an estimated cost of $4.2 billion from Chinese and Korean shipyards.
The world's second largest miner had been trying since June 2011 to get Chinese authorities to allow the megaships to enter the country's ports.
Chinese port officials have declined to comment on the arrival of Berge Everest, leaving it unclear as to whether other giant Vale ships will be allowed to dock in the country's ports.
Five other giant ships operated by Vale, the world's top iron ore producer, were not expected to follow Berge Everest into China at least in the near term.
Shipping data showed two heading back to Brazil, two in Europe and one -- the Vale Beijing -- anchored off Brazil's Ponta da Madeira Port.
The Vale Beijing, the newest member of the "Valemax" fleet, developed cracks in its hull on its maiden voyage, sparking concerns from Chinese shipowners about the safety of these ships.
Chinese shipowners and steelmakers are strongly opposed to Vale's vessels, fearing the ships are a "Trojan Horse" that the miner will use to monopolize both the shipping and iron ore markets at China's expense.
Vale, which sells about 40 percent of its ore to China, is counting on Valemaxes to slash shipping costs and better compete with Australian rivals BHP Billiton and Rio Tinto . While Vale's ore is generally of higher quality, that advantage is cancelled by Australia's proximity to China, the world's top steelmaker and biggest ore importer.
(sourced Reuters)
IMX Resources to sell iron ore shipment on spot market
Tuesday, 03 Jan 2012
IMX Resources has taken steps to sell its 19th shipment of magnetite ore from the Cairn Hill Phase 1 project in South Australia to an existing spot shipment customer.
The company had anticipated the resumption of magnetite ore deliveries to joint venture partner Taifeng Yuanchuang International Development Company, starting with the 19th shipment, following the modification of its processing plant at Bayuquan in China and reduction of its inventory of stockpiled ore.
However, Taifeng advised the joint venture operating entity, Termite Resources NL, that it is unwilling to pay the Phase 1 Life of Mine sales contract pricing for the shipment and has requested renegotiation of the terms of the contract.
Taifeng has also advised the joint venture that as a result of continuing bottlenecks at its processing plant it cannot take all of the ore it has contracted to purchase under the contract.
Mr Neil Meadows MD of IMX Resources said that the company is working with Taifeng to resolve the issues in an equitable and timely manner.
He said “We have had strong interest from other parties in our product and we are confident that we will have long term offtake agreements to support the operation in place by the end of the third quarter of the 2012 financial year.”
The joint venture has begun negotiations of long term contracts with alternative parties for the part of the ore production from Cairn Hill that Taifeng has indicated it will not take.
IMX’s interest in the Cairn Hill JV is held through a direct 51% interest in the joint venture company Outback Iron, which holds the Cairn Hill mining lease through subsidiary Termite. Taifeng has the remaining 49% interest in Outback.
(Sourced from proactiveinvestors.com.au)
IMX Resources has taken steps to sell its 19th shipment of magnetite ore from the Cairn Hill Phase 1 project in South Australia to an existing spot shipment customer.
The company had anticipated the resumption of magnetite ore deliveries to joint venture partner Taifeng Yuanchuang International Development Company, starting with the 19th shipment, following the modification of its processing plant at Bayuquan in China and reduction of its inventory of stockpiled ore.
However, Taifeng advised the joint venture operating entity, Termite Resources NL, that it is unwilling to pay the Phase 1 Life of Mine sales contract pricing for the shipment and has requested renegotiation of the terms of the contract.
Taifeng has also advised the joint venture that as a result of continuing bottlenecks at its processing plant it cannot take all of the ore it has contracted to purchase under the contract.
Mr Neil Meadows MD of IMX Resources said that the company is working with Taifeng to resolve the issues in an equitable and timely manner.
He said “We have had strong interest from other parties in our product and we are confident that we will have long term offtake agreements to support the operation in place by the end of the third quarter of the 2012 financial year.”
The joint venture has begun negotiations of long term contracts with alternative parties for the part of the ore production from Cairn Hill that Taifeng has indicated it will not take.
IMX’s interest in the Cairn Hill JV is held through a direct 51% interest in the joint venture company Outback Iron, which holds the Cairn Hill mining lease through subsidiary Termite. Taifeng has the remaining 49% interest in Outback.
(Sourced from proactiveinvestors.com.au)
Monday, January 2, 2012
Rajasthan to grant mining rights to RINL and SAIL
Monday, Jan02, 2012
JAIPUR: The Rajasthan government has decided to grant iron ore mining rights to two public sector units - Rashtriya Ispat Nigam Limited (RINL) and Steel Authority of India Limited (SAIL) - in Bhilwara. Rajasthan industries and mines minister Rajendra Pareek told ET that the state government is sending proposal to central government for the allotment of mines to these two PSUs. "We have earmarked 864.6 ha for SAIL and 1043 ha mining area for RINL. We will allot them mines once we get the nod from central government," he said.
The two PSUs are likely to invest Rs 4000 crore in Bhilwara for creating 5 million tonnes mechanized iron ore mining capacity at Bhilwara. "Once the mining rights are granted, the state will get 2 million tonne per annum greenfield steel plant, 1.8 million tonne per annum pelletisation plant and one miilion tonne per annum sponge iron plant. These projects are likely to create 2000 direct jobs and over 20,000 indirect employment opportunities," he said.
Apart from these two companies, steel pipemaker Jindal SAW is also setting up a beneficiation plant in the same geography to produce approximately 6,000 tonnes of concentrate per day. It has executed a mining lease agreement for 30 years with Rajasthan for iron ore mines having approximately 180 mn tonnes of reserves of various categories of iron ores.
The iron ore mines of Bhilwara were discovered way back in 1967. But the ore in the area is of magnetite grade, yielding only about 30-35% recovery which is lower than that mined in Karnataka and other states. It had kept steel companies away from these mines for long. Now companies are taking interest after the Rajasthan government has assured linkages to limestone from Jaisalmer and dolomite from Jodhpur.
(sourced ET)
JAIPUR: The Rajasthan government has decided to grant iron ore mining rights to two public sector units - Rashtriya Ispat Nigam Limited (RINL) and Steel Authority of India Limited (SAIL) - in Bhilwara. Rajasthan industries and mines minister Rajendra Pareek told ET that the state government is sending proposal to central government for the allotment of mines to these two PSUs. "We have earmarked 864.6 ha for SAIL and 1043 ha mining area for RINL. We will allot them mines once we get the nod from central government," he said.
The two PSUs are likely to invest Rs 4000 crore in Bhilwara for creating 5 million tonnes mechanized iron ore mining capacity at Bhilwara. "Once the mining rights are granted, the state will get 2 million tonne per annum greenfield steel plant, 1.8 million tonne per annum pelletisation plant and one miilion tonne per annum sponge iron plant. These projects are likely to create 2000 direct jobs and over 20,000 indirect employment opportunities," he said.
Apart from these two companies, steel pipemaker Jindal SAW is also setting up a beneficiation plant in the same geography to produce approximately 6,000 tonnes of concentrate per day. It has executed a mining lease agreement for 30 years with Rajasthan for iron ore mines having approximately 180 mn tonnes of reserves of various categories of iron ores.
The iron ore mines of Bhilwara were discovered way back in 1967. But the ore in the area is of magnetite grade, yielding only about 30-35% recovery which is lower than that mined in Karnataka and other states. It had kept steel companies away from these mines for long. Now companies are taking interest after the Rajasthan government has assured linkages to limestone from Jaisalmer and dolomite from Jodhpur.
(sourced ET)
CIL may form arm to buy S Africa coal assets
Monday,January 2, 2012
New Delhi : State-run Coal India (CIL) is likely to set up a subsidiary for buying coal assets in South Africa, as part of efforts to boost its output.
The government of Limpopo, the northernmost province of South Africa, approached CIL a couple of months back, requesting the PSU to form a joint venture (JV) with one of its public sector firms for acquiring coal mines there, a top official in CIL said.
(sourced BS)
New Delhi : State-run Coal India (CIL) is likely to set up a subsidiary for buying coal assets in South Africa, as part of efforts to boost its output.
The government of Limpopo, the northernmost province of South Africa, approached CIL a couple of months back, requesting the PSU to form a joint venture (JV) with one of its public sector firms for acquiring coal mines there, a top official in CIL said.
(sourced BS)
Coal India says higher revenue to offset wage hike
Monday, Jan02, 2012
(Reuters) - Coal India, the world's largest coal miner, hopes a revision in its pricing method will boost revenue and help offset the impact of a likely wage increase in the near term, its chairman said on Monday.
The state-run company last week decided to benchmark the pricing for non-coking coal to gross calorific value from the current useful heat value based gradation, a move that could push up costs for cement and steel makers.
"I am not looking for any price hike," N.C. Jha told Reuters. "I expect some additional revenues might come which could offset the additional wage cost that is likely to come."
The company prices coal about two-thirds lower than global prices, in part because of comparatively low quality coal.
Despite the change in pricing method, it will continue to offer between 25 to 77 percent discount to power sector customers, and 25 to 66 percent discount to others, Jha said.
Coal India will study the new mechanism for three months before adopting it, he said.
"Under a best case, Coal India's Q4FY12 (March quarter)earnings could see 8 to 10 percent upside," brokerage Religare estimated in a note to clients, adding the power sector would feel "neglible" impact, while cement and steel customers could face some cost increases.
The miner, based in the eastern city of Kolkata, accounts for nearly 80 percent of the coal output in Asia's third-largest economy, but it has been unable to meet growing demand from customers due to delays in environmental clearances at some mines.
It raised prices last February for some customers, resulting in additional revenue of about $1.4 billion annually.
WAGE NEGOTIATIONS
Coal India has been in negotiations with five recognised unions, which represent most of its 300,000 workers, for a new wage agreement. A new round of talks is set to start on January 10.
Anticipating a higher wage bill, the company made a provision of 7.5 billion rupees in the September quarter, and will make an equal provision in the December quarter, Jha said.
"If the unions agree, we could see some movement (on wage increase) this month," he said.
The government, which raised $3.4 billion from the company in 2010 in the country's largest IPO ever, owns 90 percent of the miner.
The company is interested in acquiring assets in Australia, Indonesia, South Africa and the United States and is talks with unlisted companies, Jha said, without identifying them.
Shares in Coal India, the country's fourth-most valuable company at about $36 billion, were trading 3.2 percent higher in a flat Mumbai market.
(Reuters) - Coal India, the world's largest coal miner, hopes a revision in its pricing method will boost revenue and help offset the impact of a likely wage increase in the near term, its chairman said on Monday.
The state-run company last week decided to benchmark the pricing for non-coking coal to gross calorific value from the current useful heat value based gradation, a move that could push up costs for cement and steel makers.
"I am not looking for any price hike," N.C. Jha told Reuters. "I expect some additional revenues might come which could offset the additional wage cost that is likely to come."
The company prices coal about two-thirds lower than global prices, in part because of comparatively low quality coal.
Despite the change in pricing method, it will continue to offer between 25 to 77 percent discount to power sector customers, and 25 to 66 percent discount to others, Jha said.
Coal India will study the new mechanism for three months before adopting it, he said.
"Under a best case, Coal India's Q4FY12 (March quarter)earnings could see 8 to 10 percent upside," brokerage Religare estimated in a note to clients, adding the power sector would feel "neglible" impact, while cement and steel customers could face some cost increases.
The miner, based in the eastern city of Kolkata, accounts for nearly 80 percent of the coal output in Asia's third-largest economy, but it has been unable to meet growing demand from customers due to delays in environmental clearances at some mines.
It raised prices last February for some customers, resulting in additional revenue of about $1.4 billion annually.
WAGE NEGOTIATIONS
Coal India has been in negotiations with five recognised unions, which represent most of its 300,000 workers, for a new wage agreement. A new round of talks is set to start on January 10.
Anticipating a higher wage bill, the company made a provision of 7.5 billion rupees in the September quarter, and will make an equal provision in the December quarter, Jha said.
"If the unions agree, we could see some movement (on wage increase) this month," he said.
The government, which raised $3.4 billion from the company in 2010 in the country's largest IPO ever, owns 90 percent of the miner.
The company is interested in acquiring assets in Australia, Indonesia, South Africa and the United States and is talks with unlisted companies, Jha said, without identifying them.
Shares in Coal India, the country's fourth-most valuable company at about $36 billion, were trading 3.2 percent higher in a flat Mumbai market.
South Africa misses coal boom
Monday, 02 January 2012
South Africa's coal exports are surging into 2012 just when top spot buyers China and India are out of the market and supply bottlenecks elsewhere have eased, so it will have to fight for market share, eroding prices in a fundamentally weak landscape.
South Africa has the port capacity to export 81 million tonnes a year of coal from Richards Bay Coal Terminal, but in recent years the tonnage shipped has been far lower at about 64 million tonnes due to rail bottlenecks.
Exports in 2012 are forecast at around 70 million tonnes due to operator Transnet Freight Rail's (TFR's) improved railing rate, exporters and analysts said.
Even if TFR cannot sustain its target 1.6 million tonnes of coal a week moved to Richards Bay, after years of doubt and stinging criticism exporters expect rail rates to rise enough for an extra 7-10 million tonnes of exports.
"I think there's a lot of room for prices to come down - I wouldn't be surprised to see $85.00 a tonne FOB Richards Bay then rebounding back to $105 next year,” said Jaime Correal, analyst at Wood Mackenzie in Annapolis.
Exporters who have enjoyed fat margins on sales at over $100 against cash costs of about $60 are weighing up their likely profits on a higher volume sales at lower prices.
South Africa will export 21 million tonnes of coal in Q4, only slightly less than the 27 million shipped in the first half of the year, following a dramatic performance improvement by rail operator TFR.
Benchmark South African prices FOB Richards Bay have fallen from January’s highs of over $130.00 a tonne to about $100.00, on weakening fundamentals which will bite harder and push prices down in the coming year.
"Isn't it ironic that South Africa gets its act together on railings just as China withdraws from the market?," one major European trader said.
"It's the coal without any visible means of support because it isn't yet pricing in to any market in the world," he said.
This year began with a price spike and supply disruption due to floods in Australia's Queensland state and the Japanese tsunami. Indonesia and Colombia's output was hampered by severe rains and South Africa's exports seemed set for a shockingly low total of under 57 million tonnes.
"Last year almost every exporter had problems - but this year it's the reverse, nobody has a major problem exporting and South Africa is shipping at a totally unexpected rate," one major South African exporter said.
"It's bearish next year and the South African exporters are not in the best position to be trying to increase sales now," said Emmanuel Fages, an analyst with Societe Generale.
But some are unconvinced that TFR can keep up the pace.
"The performance of TFR has really improved lately but it's not clear if it will be sustainable or whether they'll start to have problems again," said Jaime Correal, coal analyst with Wood Mackenzie. "For this reason and because of strong domestic demand, we expect a slow growth in South African exports to 68 million tonnes maximum next year and slowly beyond that."
Retired drivers save the day
Among numerous TFR initiatives this year, the re-hiring of locomotive drivers had a dramatic impact on productivity, exporter, rail and transport sources said. "TFR re-employed 26 retired or semi-retired train drivers; their knowledge is very important, they know how to handle a train and can do their own minor repairs," one source said. These experienced drivers are able to drive new longer trains with many more jumbo wagons over some challenging parts of the line prone to derailments, and can save hours by avoiding the need to send out repair teams.
The move to a scheduled rail service, infra-red inspections of rail track (two potential derailments were averted that way) and raised security to prevent cable theft all played a part.
Rising quantities of American coal bought 1-2 years ago at discount prices are being shipped to Europe, increasing the pressure on South African sellers to shift sales to Asia.
India has been the biggest single buyer of South African coal since 2007, much of it now sold under term contracts but from next year India's biggest trade importers say they will buy spot only and will seek cheaper alternatives where possible.
"There's no doubt that some of the Indian buyers with index-linked term contracts have really suffered and will be more short-term buyers," another major exporter said.
India has been out of the spot market for several months and in the meantime, China absorbed the unwanted tonnes.
China is now the second-largest buyer of South African coal and absorbed about 9.5 million tonnes in January-October, roughly a fifth of the country's exports and a huge increase.
South Korea, which has reverted to buying standard grade coal, is also expected to buy more from South Africa.
"China and India, especially China, are such a huge price influence and the Chinese buyers like South African coal so as long as freight rates remain fairly low, it will still be competitive into China," the second exporter said.
Source: Reuters
South Africa's coal exports are surging into 2012 just when top spot buyers China and India are out of the market and supply bottlenecks elsewhere have eased, so it will have to fight for market share, eroding prices in a fundamentally weak landscape.
South Africa has the port capacity to export 81 million tonnes a year of coal from Richards Bay Coal Terminal, but in recent years the tonnage shipped has been far lower at about 64 million tonnes due to rail bottlenecks.
Exports in 2012 are forecast at around 70 million tonnes due to operator Transnet Freight Rail's (TFR's) improved railing rate, exporters and analysts said.
Even if TFR cannot sustain its target 1.6 million tonnes of coal a week moved to Richards Bay, after years of doubt and stinging criticism exporters expect rail rates to rise enough for an extra 7-10 million tonnes of exports.
"I think there's a lot of room for prices to come down - I wouldn't be surprised to see $85.00 a tonne FOB Richards Bay then rebounding back to $105 next year,” said Jaime Correal, analyst at Wood Mackenzie in Annapolis.
Exporters who have enjoyed fat margins on sales at over $100 against cash costs of about $60 are weighing up their likely profits on a higher volume sales at lower prices.
South Africa will export 21 million tonnes of coal in Q4, only slightly less than the 27 million shipped in the first half of the year, following a dramatic performance improvement by rail operator TFR.
Benchmark South African prices FOB Richards Bay have fallen from January’s highs of over $130.00 a tonne to about $100.00, on weakening fundamentals which will bite harder and push prices down in the coming year.
"Isn't it ironic that South Africa gets its act together on railings just as China withdraws from the market?," one major European trader said.
"It's the coal without any visible means of support because it isn't yet pricing in to any market in the world," he said.
This year began with a price spike and supply disruption due to floods in Australia's Queensland state and the Japanese tsunami. Indonesia and Colombia's output was hampered by severe rains and South Africa's exports seemed set for a shockingly low total of under 57 million tonnes.
"Last year almost every exporter had problems - but this year it's the reverse, nobody has a major problem exporting and South Africa is shipping at a totally unexpected rate," one major South African exporter said.
"It's bearish next year and the South African exporters are not in the best position to be trying to increase sales now," said Emmanuel Fages, an analyst with Societe Generale.
But some are unconvinced that TFR can keep up the pace.
"The performance of TFR has really improved lately but it's not clear if it will be sustainable or whether they'll start to have problems again," said Jaime Correal, coal analyst with Wood Mackenzie. "For this reason and because of strong domestic demand, we expect a slow growth in South African exports to 68 million tonnes maximum next year and slowly beyond that."
Retired drivers save the day
Among numerous TFR initiatives this year, the re-hiring of locomotive drivers had a dramatic impact on productivity, exporter, rail and transport sources said. "TFR re-employed 26 retired or semi-retired train drivers; their knowledge is very important, they know how to handle a train and can do their own minor repairs," one source said. These experienced drivers are able to drive new longer trains with many more jumbo wagons over some challenging parts of the line prone to derailments, and can save hours by avoiding the need to send out repair teams.
The move to a scheduled rail service, infra-red inspections of rail track (two potential derailments were averted that way) and raised security to prevent cable theft all played a part.
Rising quantities of American coal bought 1-2 years ago at discount prices are being shipped to Europe, increasing the pressure on South African sellers to shift sales to Asia.
India has been the biggest single buyer of South African coal since 2007, much of it now sold under term contracts but from next year India's biggest trade importers say they will buy spot only and will seek cheaper alternatives where possible.
"There's no doubt that some of the Indian buyers with index-linked term contracts have really suffered and will be more short-term buyers," another major exporter said.
India has been out of the spot market for several months and in the meantime, China absorbed the unwanted tonnes.
China is now the second-largest buyer of South African coal and absorbed about 9.5 million tonnes in January-October, roughly a fifth of the country's exports and a huge increase.
South Korea, which has reverted to buying standard grade coal, is also expected to buy more from South Africa.
"China and India, especially China, are such a huge price influence and the Chinese buyers like South African coal so as long as freight rates remain fairly low, it will still be competitive into China," the second exporter said.
Source: Reuters
India to be 2nd largest crude steel producer?
Monday, 02 January 2012
India is expected to become the 2nd largest producer of crude steel in the world by 2015, said the Ministry of Steel in its Year End Review.
Steel sector trends
• India became the 4th largest producer of crude steel in the world in 2010 as against the 8th position in 2003 and is expected to become the 2nd largest producer of crude steel in the world by 2015.
• India also maintained its lead position as the world’s largest producer of direct reduced iron (DRI) or sponge iron.
• Ministry’s National Steel Policy (NSP) 2005 projection of 110 million tonnes of finished steel production per annum by 2019-20 is likely to be exceeded by 2012. The country is likely to achieve a crude steel production capacity of 112 million tonnes by the year 2011-12.
• Going by estimate of Rs.4,000 crore investment per million tonne of additional capacity, intended steel capacity build up in the country is likely to result in an investment of Rs.8,70,640 crore by 2020.
• 222 MoUs have been signed with various states for planned capacity of around 276 million tonnes by 2019-20.
• Major investment plans are in the states of Orissa, Jharkhand, Karnataka, Chhattisgarh and West Bengal.
• The steel sector contributes to nearly 2pc of the GDP and employs over 5 lakh people.
• The per capita steel consumption during the last six years has risen from 38 kg in 2005-06 to 55 kg in 2010-11.
Production, consumption and demand of Steel
• In the next five years, demand of steel is likely to grow at a higher annual average growth of over 11-12pc as compared to the average annual growth of 8pc achieved between 1991-92 and 2010-11.
• Capacity for crude steel production expanded from 51.17 million tonnes per annum (mtpa) in 2005-06 to 78 mtpa in 2010-11.
• Crude steel production grew at 8pc annually (CAGR) from 46.46 million tonnes in 2005-06 to 69.57 million tonnes in 2010-11.
• Production for sale of finished steel stood at 66.01 million tonnes during 2010-11 as against 46.57 million tonnes in 2005-06, an average annual (CAGR) growth of 7pc .
• Consumption of finished steel has grown at a CAGR of 9.6 pc during the last six years.
• Export of finished steel during 2010-11 stood at 3.36 million tonnes while imports during 2010-11 stood at 6.54 million tonnes.
Major initiatives and achievements
(i) Steel Authority of India Ltd. (SAIL) became a Maharatna company and Rashtriya Ispat Nigam Ltd. (RINL) became a Navratna company during 2010.
(ii) Mega Expansion Plans of SAIL, RINL and NMDC Ltd.
The Steel PSUs are in the midst of ambitious expansion plans. The major thrust of the modernization and expansion plans is to adopt the best modern technology, which in addition to being cost effective should also be energy efficient and environment friendly.
• The expansion plans would increase the capacity of SAIL from 12.84 million tonnes (in 2006-07) per annum crude steel production to 21.40 million tonnes in the first phase to be completed by 2012-13, at an estimated cost of around Rs. 70,000 crore, which includes Rs. 10,000 crore for mine development.
• Rashtriya Ispat Nigam Limited (RINL) is at an advanced stage of commissioning it crude steel capacity expansion project from 2.9 million tonnes to 6.3 million tonnes per annum. The project is likely to be completed by 2010-11 at an estimated cost of Rs. 15,525 crore.
• NMDC plans to increase the production of iron ore from the present level of around 24 million tonnes to 40 million tonnes by 2014-15.
• NMDC is setting up a 3 million tonne per annum (mtpa) capacity Integrated Steel Plant at Nagarnar, Chhattisgarh with an estimated cost of Rs. 15,525 crore.
• NMDC is also setting up a 1.2 million tonne per annum (mtpa) capacity pellet plant at Donimalai, Karanataka.
(iii) Merger/acquisitions/revival/restructuring/Joint ventures of the Steel PSUs
• Maharashtra Elektrosmelt Ltd (MEL), the 99.12pc subsidiary of Steel Authority of India Limited (SAIL), has been merged with SAIL with effect from 01.04.2010.
• ‘SAIL Refractory Company Limited’ – a subsidiary company of SAIL for transfer of the Refractory unit of BSCL incorporated in August, 2011
• SAIL- SCL Limited - Joint ventures (JV) with Govt. of Kerala to revive existing facilities at Steel Complex, Calicut has been effective from 30.12.2010. SAIL has formally taken over the management of the JV Company. Govt. of Kerala has been requested to expedite approval of rolling mill by JV Board.
• JV with Kobe Steel for ITmk3 Technology envisages installation of a 0.5 MTPA Iron Nugget plant at ASP, Durgapur. This unit will produce premium grade Iron Nuggets from iron ore fines and non-coking coal. Proposal for formation of a JV Company with M/s Kobe Steel (50:50 equity participation) has been put up for consideration of SAIL Board on 29.11. 2011.
• Hajigak Iron Ore Deposits, Afghanistan
SAIL led Consortium which submitted bid in September’2011 has been alloted mining blocks B, C and D of the Hajigak Iron ore deposits (reserve of 1770 MT). The total investment estimated at US USD 10. 8 Billion in phases (includes development of mine, installation of 6.12 MTPA Steel plant in two phases, 800 MW Power plant, Rail and Road infrastructure and CSR activities).
(iv) Special Purpose Vehicle
• A Joint Venture Company(JVC) called “ International Coal Ventures Ltd” comprising of SAIL, RINL, CIL, NTPC and NMDC has been set up for acquisition of coal mines in overseas territories, with an equity base of Rs.3000 crore to be leveraged with around Rs. 7000 crore of debt.
The ICVL will function like a Navratna company with powers to clear proposals involving investment of upto Rs.1500 crore. The company has already initiated efforts to acquire coal properties abroad with specific countries like Australia, Mozambique, Canada, Indonesia and USA.
(v) Enhancing steel distribution network
• Public sector steel units are expanding their dealer and distributor networks to reach district centers and remote areas of the country. Presently SAIL has a total marketing network of 2700 dealers in 626 districts, 66 warehouses, 37 branch sales offices and 27 customer contact offices in the country. RINL has over 150 dealers. Private sector steel companies have also been asked to expand their distribution network to cover almost all the major districts of the country.
• Ministry of Steel has evolved a scheme for routing the allocation of iron and steel materials from main producers like SAIL, RINL and Tata Steel to SSI units and other Government Departments through the Small Scale Industries Corporations (SSICs) and the National Small Scale Corporation (NSIC) and provides handling charges of approximately Rs.500-550 per tonne to the Corporations so that the Corporations supply the steel materials at the doorsteps of the SSI units.
(vi) Corporate Social Responsibility (CSR)
• CSR has been identified as an important parameter in the MoUs drawn up by all the PSUs with the Ministry. CSR activities focusing on environmental care, education, health care, cultural efflorescence and peripheral development, family welfare, social initiatives and other measures are underway in the PSUs.
• All profitable Steel PSUs have earmarked certain amount based on the net profit of last year in terms of DPE Guidelines.
(vii) Promoting R and D in Steel Sector
In order to encourage R and D activities in iron and steel sector, Ministry of Steel is providing financial assistance under the following two schemes:
(A) Financial assistance from Steel Development Fund (SDF) under the mechanism of Empowered Committee (EC)
• 68 R and D projects have been approved costing Rs. 544.34 crore with SDF assistance of Rs. 263.48 crore. So far Ministry of Steel has released Rs. 145.63 crore from Steel Development Fund (SDF). Out of 68 R and D projects, 35 projects have been completed yielding benefits to the industries, 9 projects have been stopped after midterm review and 24 projects are in progress.
(B) Financial assistance from Government Budgetary Support (GBS) under the mechanism of Project Approval and Monitoring Committee (PAMC)
• Under this scheme R and D project proposals in three broad areas namely (i) development of innovative /path breaking technologies (ii) improvement of quality of steel and (iii) beneficiation of raw materials in the Iron and Steel Sector are being proposed. So far 8 R and D projects have been approved costing Rs. 143.87 crore with Government Budgetary Support of Rs. 111.11 crore. So far Rs. 31.18 crore has been released up to 2010-11. The projects are at their initial stage.
(viii) Assessment of steel demand
• The Ministry has initiated a study to assess the steel demand in the rural areas of the country and to examine the potential of increasing the level of steel consumption. The study would cover 300 districts, 1500 villages, 4500 manufactures and 8000 retailers spread over all the 35 states and union territories of the country.
(ix) Disinvestment of Steel PSUs
• Disinvestment of 10pc Government of India’s shareholdings in MOIL has been completed. The Government earned Rs. 618.76 crore by disinvestment of MOIL.
• In accordance with the Cabinet Decision, 51pc shareholding (i.e. 7, 36,638 shares) of Government of India in Eastern Investments Company Limited (EIL) under Bird Group of Companies was transferred to Rashtriya Ispat Nigam Limited (RINL). Thus RINL has become the holding company of Eastern Investments Company Limited (EIL) and its subsidiaries Orissa Minerals Development Corporation (OMDC) and Bisra Stone Lime Company Ltd. (BSLC) are now subsidiaries of RINL w.e.f. 05.01.2011.
(Source: NewKerala)
India is expected to become the 2nd largest producer of crude steel in the world by 2015, said the Ministry of Steel in its Year End Review.
Steel sector trends
• India became the 4th largest producer of crude steel in the world in 2010 as against the 8th position in 2003 and is expected to become the 2nd largest producer of crude steel in the world by 2015.
• India also maintained its lead position as the world’s largest producer of direct reduced iron (DRI) or sponge iron.
• Ministry’s National Steel Policy (NSP) 2005 projection of 110 million tonnes of finished steel production per annum by 2019-20 is likely to be exceeded by 2012. The country is likely to achieve a crude steel production capacity of 112 million tonnes by the year 2011-12.
• Going by estimate of Rs.4,000 crore investment per million tonne of additional capacity, intended steel capacity build up in the country is likely to result in an investment of Rs.8,70,640 crore by 2020.
• 222 MoUs have been signed with various states for planned capacity of around 276 million tonnes by 2019-20.
• Major investment plans are in the states of Orissa, Jharkhand, Karnataka, Chhattisgarh and West Bengal.
• The steel sector contributes to nearly 2pc of the GDP and employs over 5 lakh people.
• The per capita steel consumption during the last six years has risen from 38 kg in 2005-06 to 55 kg in 2010-11.
Production, consumption and demand of Steel
• In the next five years, demand of steel is likely to grow at a higher annual average growth of over 11-12pc as compared to the average annual growth of 8pc achieved between 1991-92 and 2010-11.
• Capacity for crude steel production expanded from 51.17 million tonnes per annum (mtpa) in 2005-06 to 78 mtpa in 2010-11.
• Crude steel production grew at 8pc annually (CAGR) from 46.46 million tonnes in 2005-06 to 69.57 million tonnes in 2010-11.
• Production for sale of finished steel stood at 66.01 million tonnes during 2010-11 as against 46.57 million tonnes in 2005-06, an average annual (CAGR) growth of 7pc .
• Consumption of finished steel has grown at a CAGR of 9.6 pc during the last six years.
• Export of finished steel during 2010-11 stood at 3.36 million tonnes while imports during 2010-11 stood at 6.54 million tonnes.
Major initiatives and achievements
(i) Steel Authority of India Ltd. (SAIL) became a Maharatna company and Rashtriya Ispat Nigam Ltd. (RINL) became a Navratna company during 2010.
(ii) Mega Expansion Plans of SAIL, RINL and NMDC Ltd.
The Steel PSUs are in the midst of ambitious expansion plans. The major thrust of the modernization and expansion plans is to adopt the best modern technology, which in addition to being cost effective should also be energy efficient and environment friendly.
• The expansion plans would increase the capacity of SAIL from 12.84 million tonnes (in 2006-07) per annum crude steel production to 21.40 million tonnes in the first phase to be completed by 2012-13, at an estimated cost of around Rs. 70,000 crore, which includes Rs. 10,000 crore for mine development.
• Rashtriya Ispat Nigam Limited (RINL) is at an advanced stage of commissioning it crude steel capacity expansion project from 2.9 million tonnes to 6.3 million tonnes per annum. The project is likely to be completed by 2010-11 at an estimated cost of Rs. 15,525 crore.
• NMDC plans to increase the production of iron ore from the present level of around 24 million tonnes to 40 million tonnes by 2014-15.
• NMDC is setting up a 3 million tonne per annum (mtpa) capacity Integrated Steel Plant at Nagarnar, Chhattisgarh with an estimated cost of Rs. 15,525 crore.
• NMDC is also setting up a 1.2 million tonne per annum (mtpa) capacity pellet plant at Donimalai, Karanataka.
(iii) Merger/acquisitions/revival/restructuring/Joint ventures of the Steel PSUs
• Maharashtra Elektrosmelt Ltd (MEL), the 99.12pc subsidiary of Steel Authority of India Limited (SAIL), has been merged with SAIL with effect from 01.04.2010.
• ‘SAIL Refractory Company Limited’ – a subsidiary company of SAIL for transfer of the Refractory unit of BSCL incorporated in August, 2011
• SAIL- SCL Limited - Joint ventures (JV) with Govt. of Kerala to revive existing facilities at Steel Complex, Calicut has been effective from 30.12.2010. SAIL has formally taken over the management of the JV Company. Govt. of Kerala has been requested to expedite approval of rolling mill by JV Board.
• JV with Kobe Steel for ITmk3 Technology envisages installation of a 0.5 MTPA Iron Nugget plant at ASP, Durgapur. This unit will produce premium grade Iron Nuggets from iron ore fines and non-coking coal. Proposal for formation of a JV Company with M/s Kobe Steel (50:50 equity participation) has been put up for consideration of SAIL Board on 29.11. 2011.
• Hajigak Iron Ore Deposits, Afghanistan
SAIL led Consortium which submitted bid in September’2011 has been alloted mining blocks B, C and D of the Hajigak Iron ore deposits (reserve of 1770 MT). The total investment estimated at US USD 10. 8 Billion in phases (includes development of mine, installation of 6.12 MTPA Steel plant in two phases, 800 MW Power plant, Rail and Road infrastructure and CSR activities).
(iv) Special Purpose Vehicle
• A Joint Venture Company(JVC) called “ International Coal Ventures Ltd” comprising of SAIL, RINL, CIL, NTPC and NMDC has been set up for acquisition of coal mines in overseas territories, with an equity base of Rs.3000 crore to be leveraged with around Rs. 7000 crore of debt.
The ICVL will function like a Navratna company with powers to clear proposals involving investment of upto Rs.1500 crore. The company has already initiated efforts to acquire coal properties abroad with specific countries like Australia, Mozambique, Canada, Indonesia and USA.
(v) Enhancing steel distribution network
• Public sector steel units are expanding their dealer and distributor networks to reach district centers and remote areas of the country. Presently SAIL has a total marketing network of 2700 dealers in 626 districts, 66 warehouses, 37 branch sales offices and 27 customer contact offices in the country. RINL has over 150 dealers. Private sector steel companies have also been asked to expand their distribution network to cover almost all the major districts of the country.
• Ministry of Steel has evolved a scheme for routing the allocation of iron and steel materials from main producers like SAIL, RINL and Tata Steel to SSI units and other Government Departments through the Small Scale Industries Corporations (SSICs) and the National Small Scale Corporation (NSIC) and provides handling charges of approximately Rs.500-550 per tonne to the Corporations so that the Corporations supply the steel materials at the doorsteps of the SSI units.
(vi) Corporate Social Responsibility (CSR)
• CSR has been identified as an important parameter in the MoUs drawn up by all the PSUs with the Ministry. CSR activities focusing on environmental care, education, health care, cultural efflorescence and peripheral development, family welfare, social initiatives and other measures are underway in the PSUs.
• All profitable Steel PSUs have earmarked certain amount based on the net profit of last year in terms of DPE Guidelines.
(vii) Promoting R and D in Steel Sector
In order to encourage R and D activities in iron and steel sector, Ministry of Steel is providing financial assistance under the following two schemes:
(A) Financial assistance from Steel Development Fund (SDF) under the mechanism of Empowered Committee (EC)
• 68 R and D projects have been approved costing Rs. 544.34 crore with SDF assistance of Rs. 263.48 crore. So far Ministry of Steel has released Rs. 145.63 crore from Steel Development Fund (SDF). Out of 68 R and D projects, 35 projects have been completed yielding benefits to the industries, 9 projects have been stopped after midterm review and 24 projects are in progress.
(B) Financial assistance from Government Budgetary Support (GBS) under the mechanism of Project Approval and Monitoring Committee (PAMC)
• Under this scheme R and D project proposals in three broad areas namely (i) development of innovative /path breaking technologies (ii) improvement of quality of steel and (iii) beneficiation of raw materials in the Iron and Steel Sector are being proposed. So far 8 R and D projects have been approved costing Rs. 143.87 crore with Government Budgetary Support of Rs. 111.11 crore. So far Rs. 31.18 crore has been released up to 2010-11. The projects are at their initial stage.
(viii) Assessment of steel demand
• The Ministry has initiated a study to assess the steel demand in the rural areas of the country and to examine the potential of increasing the level of steel consumption. The study would cover 300 districts, 1500 villages, 4500 manufactures and 8000 retailers spread over all the 35 states and union territories of the country.
(ix) Disinvestment of Steel PSUs
• Disinvestment of 10pc Government of India’s shareholdings in MOIL has been completed. The Government earned Rs. 618.76 crore by disinvestment of MOIL.
• In accordance with the Cabinet Decision, 51pc shareholding (i.e. 7, 36,638 shares) of Government of India in Eastern Investments Company Limited (EIL) under Bird Group of Companies was transferred to Rashtriya Ispat Nigam Limited (RINL). Thus RINL has become the holding company of Eastern Investments Company Limited (EIL) and its subsidiaries Orissa Minerals Development Corporation (OMDC) and Bisra Stone Lime Company Ltd. (BSLC) are now subsidiaries of RINL w.e.f. 05.01.2011.
(Source: NewKerala)
Is India following Indonesia to standardize Coal Prices to get maximum benefits?
Monday, 02 January, 2012
Coal India limited, an Indian state owned and world 3rd largest coal producer has introduced gross calorific value (GCV) based pricing mechanism by January 1, 2012.
The BoD of Coal India Ltd on Friday approved a proposal to adopt the internationally accepted, gross calorific value (GCV) based pricing mechanism beginning 2012. The GCV based pricing mechanism will replace existing useful heat value (UHV) pricing mechanism.
According to media reports, new coal prices, dearer by 12-15 percent, is expected to push up power generation cost by at least US$ 0.00753 per unit. Indian UMPP’s, already affected due to Indonesian regulation that requires all the coal suppliers to follow government bench-mark pricing mechanism for coal transaction. UMMP’s have appealed to the government for a power tariff rise. If Coal India’s new coal-price structure pushes the prices of indigenous coal upward, then power producers may push the government for a tariff increase to secure bottom-line of company to keep the industry alive.
Times of India reported that, January 1, coal will be sold in 17 price brands starting from the variety that produces 2,200 kcal/kg to one that produces 7,000 kcal/kg. In between, there are 15 price bands, each at an incremental rise of 300 kcal/kg. Times of India has not reported anything about price adjustment for ash content.
Imported coal
As Coal India moving from UHV pricing mechanism to GCV based mechanism, Indian utilities in the opinion that, the imported coal prices may be competitive in the future for utilities who are currently using only indigenous coal due to price as well as the quality. Indian coal used to be higher ash content compared to imported coal.
"Even if we want to use more coal of higher calorific value, CIL cannot supply it. So we will be using the same coal but paying more," said a utility official, as quoted by times of India. If Coal India fails to fulfill customers' requirements for higher GCV coal when they willing to pay high, then there is possibility utilities looking for imported coal.
However, it is not clear that, whether Coal India will also introduce a coal price index, or it will go with a fixed pricing mechanism for a specific period. Incase coal India follows Indonesian coal pricing structure and tries to introduce index based pricing mechanism for its coal, then indigenous coal prices will also vary based on monthly international indices.
According to media reports, coal India has released price structure to its customers, which has not published for public.
Media reports further said, while those using coal of B, G and F grades will not be affected as new prices will be either same or lower, but those using other coal grades will be extremely affected.
If you believe an article violates your rights or the rights of others, please contact us.
(sourced CoalSpot.com)
Coal India limited, an Indian state owned and world 3rd largest coal producer has introduced gross calorific value (GCV) based pricing mechanism by January 1, 2012.
The BoD of Coal India Ltd on Friday approved a proposal to adopt the internationally accepted, gross calorific value (GCV) based pricing mechanism beginning 2012. The GCV based pricing mechanism will replace existing useful heat value (UHV) pricing mechanism.
According to media reports, new coal prices, dearer by 12-15 percent, is expected to push up power generation cost by at least US$ 0.00753 per unit. Indian UMPP’s, already affected due to Indonesian regulation that requires all the coal suppliers to follow government bench-mark pricing mechanism for coal transaction. UMMP’s have appealed to the government for a power tariff rise. If Coal India’s new coal-price structure pushes the prices of indigenous coal upward, then power producers may push the government for a tariff increase to secure bottom-line of company to keep the industry alive.
Times of India reported that, January 1, coal will be sold in 17 price brands starting from the variety that produces 2,200 kcal/kg to one that produces 7,000 kcal/kg. In between, there are 15 price bands, each at an incremental rise of 300 kcal/kg. Times of India has not reported anything about price adjustment for ash content.
Imported coal
As Coal India moving from UHV pricing mechanism to GCV based mechanism, Indian utilities in the opinion that, the imported coal prices may be competitive in the future for utilities who are currently using only indigenous coal due to price as well as the quality. Indian coal used to be higher ash content compared to imported coal.
"Even if we want to use more coal of higher calorific value, CIL cannot supply it. So we will be using the same coal but paying more," said a utility official, as quoted by times of India. If Coal India fails to fulfill customers' requirements for higher GCV coal when they willing to pay high, then there is possibility utilities looking for imported coal.
However, it is not clear that, whether Coal India will also introduce a coal price index, or it will go with a fixed pricing mechanism for a specific period. Incase coal India follows Indonesian coal pricing structure and tries to introduce index based pricing mechanism for its coal, then indigenous coal prices will also vary based on monthly international indices.
According to media reports, coal India has released price structure to its customers, which has not published for public.
Media reports further said, while those using coal of B, G and F grades will not be affected as new prices will be either same or lower, but those using other coal grades will be extremely affected.
If you believe an article violates your rights or the rights of others, please contact us.
(sourced CoalSpot.com)
Subscribe to:
Posts (Atom)
Posts
