Coal shortage to hit power capacity plans in India

Saturday, 25 Feb 2012

Business Line reported that the Indian power ministry, in its report to the Planning Commission, has informed that coal availability and capacity addition during the XII Plan paints a very very bleak scenario raising questions about achieving 9% growth during 2012-17.

With Coal India Limited production projected to be around 615 million tonnes against the XII Plan requirement of 842 million tonnes, the situation is likely to be very bad.

A note submitted to the Planning Commission states that “It may be noted that the availability of coal, as indicated by CIL, would support only about 19,000 MW of CIL linked new capacity during the XII Plan, as against 38,000 MW required. Accordingly, the XII Plan target of 76,000 MW would need to be scaled down to about 57,000 MW.”

To sustain capacity addition of 76,000 MW proposed in the XII Plan, fuel availability and related concerns need to be ensured. By the end of the XII Plan, the coal requirement would be around 842 million tonnes against the availability through linkage of around 450 million tonnes, coal blocks 100 million tonnes and imported coal 54 million tonnes. In addition to this, power utilities are likely to import 159 million tonnes to bridge the shortfall of 238 million tonnes.

The note states that credit exposure limit of banks and IFCs to the power sector is almost close to the breaching limit. It also points to mismatch in debt tenor (15 years) and cash flows (over 25 years). This issue is further complicated by the absence of uniform land acquisition policy that has held up a large number of projects coupled with delays in according environmental clearances to power projects/captive coal blocks. There is also the issue of poor financial health of distribution companies.

The total capacity addition during the XII Plan has been proposed at around 76,000 MW which will roughly comprise 62,695 MW based on coal fed projects, 2,800 MW of nuclear power, 9,200 MW of hydro power and 1,086 MW of gas based power.

(Sourced from BL)

Mozambique to start work on Nacala coal terminal - PM

Saturday, 25 Feb 2012

Mozambique expects construction of a coal terminal to start in the next few months at the northern port of Nacala, with the aim of having it operational in two to three years.

Mozambique prime minister Mr Aires Aly told Reuters that "We need to have it up and running in the next two to three years.”

He expects Nacala to have a total capacity of 25 million tonnes of coal, including the planned terminal exclusively for coal.

Vale has said it plans to spend USD 4.4 billion to build the terminal and a 912 kilometer railway line connecting its coal mine with the port. The railway line and port will initially have a capacity of 18 million tonnes to meet Vale's rising demand for exports.

Separately, Japan is conducting a feasibility study, financed by its overseas aid, on improving the capacity and operation of the port, including terminals for coal.

(Sourced from Thomson Reuters)

RBCT coal terminal expansion to 100 million tonne likely

Saturday, 25 Feb 2012

Major South African coal producers that own shares in the Richards Bay Coal Terminal may invest to expand the terminal to handle up to 100 million tonnes of coal a year.

Mr Mxolisi Mgojo head of Exxaro's coal unit said that coal miners had been surprised by the improved rate at which logistics group Transnet transported their coal via rail to the port in the second half of last year.

While Transnet's volumes are still below the terminal's annual capacity of 91 million tonnes, the transport group has been quickly catching up.

Mr Mgojo said that "The pressure is back on us as RBCT shareholders to say, beyond 91 million tonnes what can we do? We need to get to at least 100 million tonnes.” He said the expansion would depend on the timing of Transnet's upgrades on the coal export line.

For years miners had blamed Transnet for failing to improve much-needed infrastructure, but the group has put money into new wagons and locomotives and plans to build a line via Swaziland, which would ease congestion on the main coal export line and raise capacity to close to 100 million tonnes.

Exxaro, South Africa's second-largest coal producer and a big supplier to power utility Eskom, exported 4.9 million tonnes of coal last year and expects to ship 5 million in 2012.

Mr Mgojo said there was more focus than ever on developing the Waterberg coal fields, seen as the next major coal hub as reserves in the Witbank area near depletion.

This is after the government highlighted the project as one of its economic priorities along with the need to secure coal supplies for South African power plants, now supplying 85% of the electricity powering Africa's biggest economy.

Exxaro also said it planned to more than double its capital expansion this year to ZAR 10.93 billion (USD 1.4 billion) as it seeks to diversify into other commodities such as iron ore.

(Sourced from Reuters)

China Taiyuan Coal Trading Center starts operation

Saturday, 25 Feb 2012

China Taiyuan Coal Transaction Center, China’s first trading platform for coal commodities, started operation today with 722,800 tons traded, the official Xinhua News Agency said, citing center Director Qu Jiawu.

All coal companies in Shanxi province are asked to trade 95% of their output at the center, which is located in Taiyuan, the provincial capital, Xinhua said. Coal production in Shanxi accounts for almost a quarter of the country’s total.

(Sourced from Bloomberg)

Adani to spend heavily on Australian coal assets

Saturday, 25 Feb 2012

INDIA’S Adani Group plans to spend as much as USD 6 billion in Australia over the next three years to develop coal mines and related infrastructure and is interested in buying a majority stake in a gas company at home as the conglomerate gears up to expand operations.

Mr Ameet H Desai spokesman told a news conference that in Australia, Adani will invest at the Abbot Point coal terminal where it acquired operating rights last year, with funds also going to mining activities and building a railway line connecting the terminal with its coal mines in the Galilee basin.

Mr Desai said the group is arranging the funds through a mix of equity, debt and internal accruals.

The group plans to use coal sourced from Australia to run its own power stations and also for trading, primarily in India where a shortage of the dry fuel is hurting power generation.

Demand for coal is rising in India as many new power stations are coal based, but complicated environmental clearances and problems in land acquisition are delaying domestic mining projects.

The group started mine exploration work at the Galilee basin.

Its Adani Ports and Special Economic Zone unit spent USD 2 billion for a 99 year lease of the Abbot Point terminal in Queensland. The terminal can handle 21 million metric tonnes coal a year.

An executive said the company is refinancing most of the bridge loan taken to fund the Abbot Point deal through another loan of USD 1.8 billion. The loan will be from four Australian banks and the process should be completed in a few weeks.

Meanwhile, chairman Mr Gautam Adani said the group is interested in buying BG Group's 65% stake in India's Gujarat Gas Co. He didn't give details, but spokesman Mr Desai said the group is conducting due diligence before submitting a bid.

(sourced Theaustralian.com.au)

WB govt to seek re-allotment of 10 coal blocks

Friday, Feb 23, 2012

Kolkata: The West Bengal government will seek re-allotment of 10 coal blocks that were offered during the Left Front regime but were not taken up by the state. The blocks included the one earmarked for the West Bengal Power Development Corporation (WBPDCL).

"We are sending a letter to Union Coal Minister Sriprakash Jaiswal tomorrow seeking re-allotment of 10 coal blocks, including one earmarked for the WBPDCL, which were given to the state during the previous Left Front regime but not taken," Industry Minister Partha Chatterjee told reporters here.

The Centre had allotted 16 coal blocks in all but only six were taken by the previous government. He said that the state government would honour all the pre-conditions required for acquiring the blocks.

Chatterjee also said that Chief Minister Mamata Banerjee has written to Prime Minister Manmohan Singh recently for a national iron ore policy for equitable distribution of the mineral from bearing to non-bearing states for the development of the steel industry.

"Steel industry is affected for want of equitable distribution of iron ore from Jharkhand, Orissa, Chhattisgarh and partly Madhya Pradesh to the non-bearing states," the minister said.

(sourced BS)

Coal GoM to meet on March 1

Feb 23, 2012

New Delhi: Amid the country facing an acute coal shortage, a ministerial panel, headed by Finance Minister Pranab Mukherjee, will meet on March 1 to address the environmental issues that hurt the coal output.

"The Group of Ministers [GoM] meeting will take place on March 1. It will deliberate on the environment issues that is hampering production of coal," an official told PTI.

The development comes in the wake of widening demand-supply deficit of coal which is pegged at 137 million tonne this fiscal.

Coal Secretary Alok Perti has yesterday said that "fast-tracking clearances is the only answer," as 100 odd projects of Coal India (CIL) were pending at different stages for various clearances affecting production.

CIL, which accounts for 80% of the domestic production, has been pleading that it is not in a position to increase output for want of geen clearances. It has kept its output target for the current fiscal at 440 million tonne, just a marginal increase over 2010-11.

The official said that the issues will be deliberated in the proposed meeting of the 12-member panel which might meet once more sometime in early May.

The GoM was constituted by Prime Minister Manmohan Singh in February last year to iron out issues impeding dry fuel production. It had earlier decided to do away with contentious 'go' and 'no go' classification by the Environment Ministry.

Earlier this month, the Centre has asked all the states to send proposals without delay for clearances of coal blocks that were either rejected by the Environment Ministry due to their falling into no mining zone or have been pending for long.

Coal and Environment Ministries had locked horns over the issue after the latter had in 2009 classified 203 coal blocks under 'no go' area prohibiting mining there, impacting 660 million tonne coal production per annum.

(sourced Business-Standard.com)

Vale looks to Australia for iron ore

Friday, 24 Feb 2012

The Australian Financial Review reported that Brazil's Vale, the world's largest iron ore miner, is looking for investments in Australia to cut down on shipping costs to Asia.

The Brazilian ambassador to Australia, Mr Rubem Antonio Correa Barbosa told the newspaper that “Vale is trying to diminish this handicap by investing more in Australia and eventually being able to sell iron ore from Australia straight to China.”

But Vale's chief executive, Mr Murilo Ferreira, wouldn't specify where the company was looking. He said that “It is our duty to analyse all of the opportunities through junior companies.”

(sourced Businessspectator.com.au)

Steam coal prices stable despite modest gains in oil

Friday, 24 Feb 2012

Reuters reported that prompt physical coal prices were little changed on Thursday on muted trading activity and bid offer spreads for fixed price cargoes widened by around USD 1, too far apart for trades to seem likely.

An April South African cargo was bid at USD 105.75 and offered at USD 107.45, compared with bids and offers of USD 106 on Wednesday.

A May South African cargo was bid at USD 101.25 and offered at USD 102.50.

An April DES cargo was bid at USD 98.50 and offered at USD 100.50

One trader said “The market's moved sideways, if anything, just looking at the wider spreads.”

Oil at over USD 100 a barrel is providing structural support to coal prices, traders and analysts said, although there are spells when coal disconnects from oil and moves more on fundamentals.

(Sourced from Reuters)

JFE will not up hike stake in JSW Steel - Mr Seshagiri Rao

Thursday, 23 Feb 2012

CNBC-TV18 reported that Mr Seshagiri Rao the joint MD and group CFO of JSW Steel has told that there is no plan today that JFE will increase their stake in JSW beyond 15%.

During an interview with CNBC TV18, while answering to question “Debt levels still remain quite high and JFE Steel a couple of weeks back raised some stake in your company. Now that they have the headway to go all the way up to 25%, is that an option that you may consider in order to bring in higher participation from them and perhaps more cash as well to de-stress the balance sheet”, Mr Rao said “Today, the balance sheet of JSW is not stressed at all. If we look at the overall consolidated debt as on December 31, it was 1.08:1. This is taking into account the FCCBs which we raised as debt only. So balance sheet wise we are quite okay.”

He added “We have 11 million tonne installed and an operating capacity as part of JSW. We don't need any additional equity to come into the company. As per the current agreement with JFE, their overall equity holding is restricted to 15%. They have recently enhanced only to reach the 15% threshold. Otherwise, there is no plan today that JFE will increase their stake in JSW beyond 15%.”

(sourced moneycontrol.com)

Iron ore price to stay soft

Thursday, 23 February 2012

The record iron ore prices seen in 2011 are unlikely to be matched over the next six months, according to Pilbara exporters.Despite topping $US180 a tonne last year, the benchmark iron ore price has traded around $US140 a tonne in recent months, and BC Iron spokesman Morgan Ball said it was likely to stay there until midyear at least.''We are anticipating it will stay around that over the next six months,'' he said.

BC Iron is a junior exporter but is closely linked to Fortescue Metals Group through its 50-50 Nullagine joint venture, and Fortescue takes responsibility for selling BC Iron's product. Mr Ball's sentiments were matched by Sam Walsh, the boss of Australia's biggest iron ore exporter Rio Tinto.

Mr Walsh said there was still an ''element of softness'' in the iron price and the performance of the Chinese steel mills that buy most of Australia's ore. ''We believe we will go through a period of uncertainty probably in the first six months of this year, with volatility, but then we see some smoother sailing after that,'' he said. Mr Walsh said it was too early to know if the global iron ore price would be affected by a new tax imposed by the Chinese government on its domestic iron ore producers.

Reports on Friday suggested that China would raise its standard levy on Chinese iron ore producers from 60 per cent to 80 per cent in a bid to hamper marginal producers of the commodity. Mr Walsh said the move appeared to be aimed at reining in small Chinese producers of dubious environmental credentials and he did not believe it would dramatically affect the big Australian producers.
''I'm not expecting a huge impact, but time will tell,'' he said.

''It's an interesting development, a lot of people worry about whether China gets the message in relation to the environment, but they absolutely do.'' BC Iron has been exporting iron ore for almost a year and yesterday returned its first operating profit, of $5.5 million for the six months to December 31. BC Iron expects to export 3.5 million tonnes for the year to June 30, 2012.
(sourced Brisbane Times)

Iron Ore-Spot prices inch up but China demand still weak

Thursday, 23 Feb2012

Spot iron ore prices in China inched up on Wednesday but traders said the underlying poor health of the steel sector would continue to restrain demand. "The whole market is poor and prices still aren't ideal -- we won't be able to meet our sales target for this month," said the manager of an iron ore trading firm based in southern China.

Pilbara fines with 61.5 percent iron content were being quoted at $136-138 per tonne including cost and freight on Wednesday, inching up $1 from the previous day, according to consultancy Umetal. Iron ore with 62 percent iron content edged up 0.2 percent to $135.40 a tonne on Tuesday, according to reference price provider Steel Index.Slow steel demand in China, the world's biggest producer and consumer, has curbed the appetite for iron ore and sent the raw material's prices down more than 2 percent so far this year after falling nearly 19 percent in 2011.

"Demand ultimately depends on steel mills and they just can't accept our prices right now, and we can't go lower because our costs are too high," the trader said, adding that he didn't expect the market to recover until next month. China's move to cut banks' reserve requirement ratio for the first time this year helped Shanghai rebar futures end a seven-day slide on Monday and iron ore to snap a nine-day losing streak.
The price of Shanghai's most traded May rebar contract rose 23 yuan ($3.65) or 0.54 percent to end Wednesday at 4,251 yuan per tonne.Shanghai rebar futures and iron ore indexes at 0335 GMT
Source: Reuters

African Energy Resources uncovers 15000 tonne of coal for export trials

Thursday, 23 Feb 2012

Australian junior miner, African Energy Resources has mined and prepared 15,000 tonnes of coal at its Sese project near Francistown as a sample to test target export markets as the project nears commercial development.In a presentation made available, Mr Frazer Tabeart MD of AFR said the sample would also be used for bulk washing trials and to test key components such as the boiler.

However, it is the export trials that have sparked investor interest, being potentially the first time coal from Botswana will leave the continent and be tested in world markets, a development eagerly awaited by government and other coal sector investors.Perhaps more importantly, the export trial could potentially illuminate an export route for other coal sector players for whom the absence of a route from mine to port has paralyzed project development.

While AFR has not specifically said the coal sample will reach export markets via rail and port, the company's development plans include one million tonnes per annum through Zimbabwe and Mozambique to markets in India.According to its development plan, AFR plans to export up to one million tonnes per annum next year while producing another 600,000 tonnes for the domestic market from its thermal coal resources estimated at over 2.5 billion tonnes.

By 2014, the Australian miner expects Sese to be producing 4 million tonnes per annum, with up to 2 million tonnes targeted for export while the balance will be for a local power project and the local market. According to the plans, by 2017, with new rail infrastructure in place, Sese targets the production of 12.4 million tonne per annum with exports of 9.3 million tonnes, a figure that is expected to rise to 14 million tonne per annum by 2020.

Mr Tabeart at a conference last July said that "The challenge is infrastructure and we are taking a keen interest in this. We do not expect that a major railway line will be in place by 2017 and that’s something we have planned into our approach. We are starting with 1 million tonnes per annum and perhaps by 2014/15 we could partner with a local independent power producer and ramp up to five million tonne per annum. A much larger export operation is possible of even up to 30 million tonne per annum if the infrastructure for exports is put in place."

(sourced www.mmegi.bw)

China coal imports fall 8pc

SHANGHAI: China January coal imports fell 8 percent from the previous month to 19.65 million tonnes, a second straight month of decline as lower domestic prices and cooling demand hit orders, an industry website said on Tuesday, citing customs data.

With the steel industry plagued by slumping orders, imports of coking coal, a key steel making ingredient, tumbled 30 percent in January from a month ago to just 3.45 million tonnes the lowest since August when shipments were at 3.28 million, according to trade portal China Energy Net (www.china5e.com).

On an annual basis, January's coal imports were still up 3.9 percent, the report said.

After soaring to a record high of 22.14 million tonnes in November, China's coal imports have steadily fallen as a government imposed price ceiling of 800 yuan ($130) a tonne for spot coal prices in late November caused domestic prices to fall precipitously.

Coupled with weaker demand on the back of a cooling economy, domestic spot coal prices have fallen for 13 consecutive weeks and shed 70 yuan since November to 777 yuan a tonne.

With Chinese utilities and traders having piled up on stocks in the fourth quarter, the swift drop in local prices have made imports unattractive.

Traders said business has been slow and are looking for signs of a rebound in the second quarter, when utilities are expected to restock after winter sucks up inventories and industrial activity picks up.

"A lot of the shipments were deals done in early November. The market is very quiet now and bids that are streaming in for March and April are really low," said a Shanghai-based trader.

Bids for Australian coal with a heating value of 5,500 kcal/kg NAR were currently hovering at around $104 a tonne (CFR), down from around $110 a week ago.

"Offers have been falling by around $3-$5 on a weekly basis and will probably stay that way until the Chinese return and who knows when that will be," said a Singapore-based trader.

China Energy Net said total bituminous coal imports in January were 6.49 million tonnes, down 20 percent from a month ago, while volumes for anthracite and lignite were at 2.51 million and 3.28 million, respectively.

The customs agency will publish the final trade data later on Tuesday at 1430 local time (0630 GMT).

(sourced: Reuters & Brecorder.com)

Taiwan's China Steel to invest in Australia coal mine

Feb22, 2012

TAIPEI (Reuters) - China Steel, Taiwan's top steel maker, said on Tuesday it will pay T$3.06 billion ($104 million) to invest in a coal mine in Australia and take rights to 10 percent of the future output, in a move to counter the impact of higher coal prices.

About half the amount will be used to buy the share of output rights at the MDL 162 site in the northern state of Queensland, while the rest will go on building facilities and on future development, China Steel said in a statement.

The investment will secure annual output of 600,000 tons of metallurgical coal for China Steel once completed in 2016, raising its owned coal supply to 7 percent from 3 percent of total supply, a spokesman said separately.

Falling demand for steel amid a global slowdown but higher prices of raw materials like coal have prompted China Steel and global rivals to try and seek their own supplies.

In December China Steel agreed to a 23 percent cut in iron ore prices and had earlier said it was seeking to delay some raw material deliveries.

Shares of China Steel ended flat before the announcement, versus a 0.42 percent slide of the broader market.

(sourced Reuters)

Coal India in a spot over supply to power plants

Wed, Feb22, 2012

Kolkata: Later this month, when Mr Sriprakash Jaiswal will be meeting top officials from the Ministry as well as Coal India to work out the coal supply modalities for next fiscal, following the recent directive of the Prime Minister's Office (PMO), he may find himself in an unenviable situation.

First, he has to ask CIL to make additional supplies of approximately 50 million tonnes of coal in 2012-13 and, reach them to power stations ignoring concerns on the logistics front.
Jigsaw Puzzle

CIL is currently agreement-bound to supply 90 per cent (trigger level) of the 306 million tonnes requirement to 75 power stations in the country which were commissioned before April 2009.

If the company is now forced to sign fuel supply agreements (FSA) with the projects commissioned during the last two years, the total supply commitment will reach approximately 350 mt during the next fiscal.

Assuming that CIL will achieve a modest 5-6 per cent production growth next fiscal, there will still be a shortfall of 25-30 million tonnes.

Theoretically, the shortfall can be managed by restricting supplies to the existing customers to 90 per cent of requirement. Available estimates suggest many in this category are now enjoying 100 per cent or more supplies.
Pithead stock

Shortfall in production can be mitigated by diluting the pit-head stock. CIL ended last fiscal with an inventory of 70 mt and an insider suggests that irrespective of the recent rise in off-take, there may not be any significant dilution in stock by the end of this fiscal.

However, evacuation of this stock, dispersed across mines in five states is not easy, courtesy poor evacuation logistics on the part of Railways. Moreover, there are seasonal impediments - such as restricted working hours in summer and poor road conditions in rainy season – in moving coal from mine to railway sidings.

Poor logistics may also prove to be a huge bottleneck in evacuating the augmented production. Sources suggest, criticised from all corners, CIL has launched a hunt to locate assets which can be brought on stream with immediate effect. However, many such assets (as in Rajmahal) do not enjoy adequate evacuation logistics.

The theoretical possibility of meeting shortfall through imports is also difficult to achieve. Even if power producers now agree to pay CIL for imported coal (which they opposed in the past), CIL is not in a position to solve logistics tangle involved in moving the coal from ports to power plants.

Passing the buck

With logistics set to emerge as spoilsport in moving coal to customers, inviting penalties on CIL; the coal major may plead for keeping safety options open with regard to future FSAs. One logical step in this direction could be making power sector partly or fully responsible for lifting the available coal especially from areas which do not have adequate rail logistics.

(sourced BusinessLine.com)
Keywords: coal supply, Sriprakash Jaiswal, fuel supply agreements, power projects

Coal terminal strike called off

Wed,February 22, 2012

The Construction, Forestry, Mining and Energy Union (CFMEU) has called off a 24-hour strike today at the Port Kembla Coal Terminal, on the New South Wales south coast, after negotiations moved closer to a resolution.

About 100 workers have been striking over job security.

Pacific National Coal says as a result of the strike being called off, drivers in the Illawarra and Lithgow will no longer be stood down.

It announced yesterday it would have to stand down the workers from today due to a lack of work resulting from the strike, even though Pacific National employees were not striking.

The CFMEU says it is buoyed by progress made during talks yesterday.

The union's district vice-president, Bob Timbs, says it was not the union's intention to cause issues for workers indirectly affected by protected industrial action.

(sourced ABC.net.au)

South African steam coal prices rise

Tuesday, 21 Feb 2012

Reuters reported that prompt South African physical coal prices rose by around 50 cents on Monday as market participants tried to cover short positions taken at the end of last year amid tight supply for March in particular.

A March South African cargo was bid at USD 108.00 and offered at USD 110.00, up 50 cents on the bid.

An April South African cargo was bid at USD 105.35 and offered earlier at USD 105.90, up 40 cents.

A March DES ARA multi-origin cargo was bid at USD 96.00 and offered at USD 99.00, unchanged.

An April multi-origin cargo was bid at USD 99.00 and offered at USD 100.05, down USD 1.00 on the offer but unchanged on the bid.

Front month South African coal prices FOB Richards Bay have held a premium over subsequent months since January for the same reason and despite weak demand in Europe and Asia.

Players among banks, traders and utilities late last year sold coal swaps and physical in anticipation of being able to buy back at cheaper prices.

Although coal values have been dropping while China has remained out of the spot market, there is still some short-covering, which needs to be done and sellers are reluctant to offer while there's a chance Richards Bay prices will keep ticking higher.

(Sourced from Reuters)

NTPC and DVC to maximize coal production to help power plants

Tuesday, 21 Feb 2012

ET reported that the Indian government will prod state run firms such as NTPC and Damodar Valley to maximize production from their mines so that up to 150 million tonnes of additional coal could be produced annually.

The ministry official said interested PSUs with coal blocks may be asked to submit their revised mine plan documents for excess production of coal that can be sold to Coal India. Coal India may also be asked to assist other state run companies in appointing mine developers and operators for expediting coal block development.

The official said that “The PSUs have already been communicated about the proposal during recent review meetings. No formal or individual communications have, however, been sent so far. A few policy hurdles may obstruct the plan but the ministry feels it is better than depending on coal imports.”

The rise in production would facilitate setting up of power plants of 60,000 MW in the next three years.

(Sourced from ET)

Sical gets approval to convert iron ore terminal into a coal facility

Tuesday, 21 Feb 2012

The Mint reported that the board of government controlled Ennore Port Ltd has approved a request from Sical Iron Ore Terminals Ltd to handle coal at its INR 500 crore iron ore loading facility after a ban on export of the ore from Karnataka has rendered the terminal idle since it was opened in January last year.

This is the first instance of such a cargo change being allowed after a port contract has been tendered and awarded.

Mr Rakesh Srivastava a joint secretary looking after ports in the Union shipping ministry said that “At a meeting on 10 February, the board of Ennore Port gave its in-principle approval to convert the iron ore terminal into a coal terminal. Sical Iron Ore Terminals will be allowed to handle only the coal sourced by Tamil Nadu Electricity Board to fire its power stations.”

Mr Srivastava said that “The board’s in principle clearance is subject to requisite final approval from the government.”

TNEB is expected to ship about 10 million tonnes of coal a year through Ennore. This condition will ensure that the exclusive rights granted to Chettinad International Coal Terminal Pvt. Ltd to handle coal for customers other than TNEB at Ennore port is maintained.

Demand for shipping coal through Ennore has surged after the Madras high court directed Chennai port, located 20km from Ennore, to stop handling dusty cargo such as coal and iron ore from 1 October, to check pollution in north Chennai. The permission to change cargo will help the project lenders avert the asset from turning sticky.

Sical Iron Ore Terminals is a joint venture firm formed by Sical Logistics Ltd and state run commodity trader MMTC Ltd to develop and operate the new iron ore terminal at Ennore port in Tamil Nadu, India’s biggest iron ore loading facility, for 30 years. Sical Logistics has a 74% stake in the project while the rest is held by MMTC.

(Sourced from livemint.com)

CIL to reduce steam coal E auction to 7pct - Report

Tuesday, 21 Feb 2012

ET, citing government officials, reported that Coal India Limited will gradually reduce spot market sales, called E auction, to 7% of its output by 2015 from the current 10% to make more coal available at cheaper rates to the power sector.

(Sourced from ET)

Karnataka urges SC to allow 117 mining firms to restart

Monday, 20 Feb 2012

The Karnataka government has urged the Supreme Court to allow 117 mining companies to resume iron mining in the state.

The Central Empowered Committee appointed by the apex court to probe illegal mining in the state, had recently recommended for permitting these mines to restart mining.

Mr SV Ranganath chief secretary government of Karnataka in an affidavit filed before the Supreme Court said that “It is learnt that a few mines have been cleared by CEC, wherein no significant illegality or irregularity has been noticed. These mines, classified as A category”, may kindly be allowed to operate without hindrance.”

Similarly, there are some other mines, which have been enumerated as “B category”, for reasons of some or the other kind of illegality or irregularity noticed by the CEC. He said that “Such mines may also be kindly allowed to operate and the state government would undertake to ensure all material safeguards in place and due diligence is exercised by all agencies as per the orders of the Supreme Court.”

The chief secretary has further added the government will take whatever action as directed by the Supreme Court in respect of those mines classified under “C category.”

The CEC in its report submitted to the apex court on February 3, had recommended for cancellation of 49 mining leases in the ‘C Category’ and reauctioning of those leases as per the current market prices.

Some of the mines classified under ‘A category’ include NMDC, Mineral Enterprises Ltd, and two leases of Mysore Minerals Ltd, among others. ‘Category B’ includes Sesa Goa, MSPL, Sandur Manganese and Iron Ores Ltd and Mysore Minerals Ltd, among others.

The CEC has recommended for cancellation of ‘Category C’ leases after paying the penalty. They include Canara Minerals, Associated Mining, Trident Minerals, Deccan Mining Syndicate (P) Ltd and V S Lad & Sons, among others.

(Sourced from BS)

NMDC cuts iron ore fines prices by 20pct - Report

Monday, 20 Feb 2012

BS reported that NMDC has cut prices of fines and lumps by 20% and 3 per cent respectively in the light of fall in international prices of ore.

NMDC sources told Business Standard that the price of iron ore fines and lumps now would be around INR 2,600 and INR 5,000 a tonne.

Previously, NMDC was selling fines at INR 3,380 a tonne and lumps at INR 5,100.

(Sourced from Reuters)

Lanco Infratech to invest INR 22000 crore on three thermal projects

Monday, 20 Feb 2012

Lanco Infratech plans to install nearly 4,000 MW additional thermal power generation capacity, entailing investments of about INR 22,000 crore by March 2015.

The diversified group currently has an installed power generation capacity of 4,400 MW.

Mr K Rajagopal CEO (thermal) Lanco Infratech told PTI that "We are planning to have additional thermal power capacity of about 4,000 MW by March 2015. The total investment would be around INR 22,000 crore.”

The company is developing three projects, each have a capacity of 1,320 MW.

According to Mr Rajagopal, these plants along with some hydro projects would take the company's total power generation capacity to more than 9,000 MW.

The thermal initiatives under development are unit III and IV Amarkantak in Chattisgarh, Vidarbha in Maharashtra and Babandh in Orissa.

State run Coal India's recent decision to ink fuel supply pacts for power projects would benefit Lanco's three projects under development. Meanwhile, Lanco is planning to raise up to USD 750 million in the next six months for its power business.

Lanco, which has presence in various sectors, including EPC, power and and infrastructure, saw its consolidated net profit slide 63% to INR 60.92 crore in the three months ended December 2011.

(Sourced from PTI)

Afghanistan stands by bidding process for Hajigak mine

Monday, 20 Feb 2012

Afghanistan's Ministry of Mines on Saturday rejected allegations of problems in the bidding for one of the country's largest mines, calling it a fair and transparent process.

In a letter to McClatchy, the ministry's director-general for policy and promotion, Mr A Jalil Jumriany said that the selection of bids for four blocks of the Hajigak iron ore mine in central Afghanistan was overseen by a team of Afghan government experts, and that a panel of international advisers found that the process was "conducted according to international standards."

However, Jumriany's letter did not challenge the main points in a McClatchy report published Friday, which raised allegations of flaws in the bidding process and that the winning bidders a state led Indian consortium and a Canadian firm hadn't demonstrated that they could meet production targets.

Among the charges raised by Acatco an Afghan-American firm that was short-listed for the contracts but failed to win mining rights was that the winning firms hadn't shown that they'd secured adequate funding for extracting iron ore from Hajigak, often described as the jewel of Afghanistan's mining sector.

Acatco also charged that its bid was rejected despite offering clearer dates for starting production and higher royalty payments to the Afghan government. A complaints commission of the Afghan parliament has taken up the matter and summoned Afghanistan's minister of mines, Wahidullah Shahrani, who failed to appear at a hearing Saturday because he was traveling, according to a spokesman.

(Sourced from www.adn.com)

Adani group plans Queensland biggest coal mine

Monday, 20 Feb 2012

An Indian conglomerate is planning to build Queensland's biggest coal mine, west of Rockhampton in the state's central region, including a new town, runway, railway and port facilities.

The Adani Group has proposed a new open cut and underground mine, mostly on the Moray Downs cattle station, about 100 kilometres north of Emerald.

The cost of construction is expected to be at least AUD 6 billion and the mine would produce about 60 million tonnes per year, with a mine life of more than a century.

If the project goes ahead, Adani said it would be the largest investment by an Indian company in Australia.

The company is also planning to establish a new town to deal with the Carmichael mine's remote location.

It said it would also build an airstrip for fly in fly out workers, along with new railway and port facilities at either Abbot Point or Hay Point.

Adani said that exports would predominantly service the Indian domestic power market.

Queensland Mining Minister Stirling Hinchliffe said that he would prefer the company to use locally sourced labour. He said that "I have given a very clear message to the companies involved, including Mr Adani directly, that we have a very high expectation about the role that Queenslanders will play in these projects.”

Mr Hinchliffe also says there is not sufficient infrastructure in central Queensland's Galilee Basin to cope with the major new mining project.

(Sourced from www.abc.net.au)

Global coking coal market comes face to face with oversupply - Mr McCloskey

Sunday, 19 Feb 2012

The global coking coal market is currently oversupplied and prices are poised for further declines. Despite this, a variety of new projects and expansions will continue to swell global supply for the foreseeable future, although the largest new tonnages will not make their appearance until the next decade. Australia and China remain the keys to supply and demand respectively.

Mr Gerard McCloskey of McCloskey Group said that “There is an oversupply. If Australia comes back to the sort of levels it was doing in the first half of 2010, another 30 million tonnes will come onto a very balanced market.”

He said that prices will fall, but will remain at pretty decent levels that are likely to be well above producer costs.

Mr McCloskey said that “Whatever happens to prices in next quarter, you’ll have seen the longest period with coking coal above USD 200 eight quarters.”

He added “During that time, price volatility has been extraordinary, with prices hitting as much as USD 330 in the second quarter of 2011, before falling back to USD 235 in the current quarter.”

Mr McCloskey predicted that “There will be a correction of prices down towards USD 200. It’s a great price. Until two years ago we had not had prices above USD 200 except for one brief period in 2008.”

Mr McCloskey said that additional supply meanwhile is coming from Australia, which is just getting back to normality following last year’s extensive flooding in Queensland, the country’s major coal producing region. Australian producers are in the process of adding another 30 million tonnes to a hard coking coal market that is probably only about 140 million tones.

(sourced Futuresmag.com)

15 miners in final stage of contract renegotiations with Indonesian government

Sunday, 19 Feb 2012

The Indonesian ministry’s mineral and coal director general Mr Thamrin Sihite said that The Energy and Mineral Resources Ministry and 15 mining firms are finalizing renegotiations over mining contracts as part of the companies’ adjustments to the new mining law.

Mr Thamrin said that the ministry and the 15 companies, comprising of 11 coal and four mineral miners, have finished working on the details of renegotiated clauses and were waiting to sign the new contracts.

Mr Thamrin said that “We’re completing the administration process to finalize the renegotiations with the 15 companies. But we have to report to the coordinating economic minister and the President first.”

However, Mr Thamrin would not reveal the names of the 15 companies. He said that “We’ll announce the renegotiation progress within two weeks.”

Currently, the ministry has 42 companies registered as having mineral mining contracts with the government (locally known as Kontrak Karya) and 76 companies have coal contracts of work.

In addition to the 15 companies, 65% of the 118 contract holders have also principally agreed to renegotiate. However, the details of such agreements are difficult to finalize.

Contract renegotiations have long been a major problem in the mineral and coal mining sector.

The 2009 law on minerals and coal mandates that all contracts signed before its implementation have to be adjusted to meet the terms of the law.

Throughout the renegotiation process, the government and miners have been discussing six main issues: the size of mining areas, contract extensions, the amount of royalties to be give, obligations to process raw materials in Indonesia, divestment and the utilization of local goods and services.

A mining expert from the ReforMiner Institute, Pri Agung Rakhmanto, warned that the progress of the renegotiations should not be judged solely on the amount of companies that have agreed to sign new contracts. He told The Jakarta Post said that “We should also take into account the scale of the companies and the commodities they produce. If only small companies agree to renegotiate, the result won’t be too significant.”

The renegotiated elements should also be monitored because if the amount of royalties remained untouched, there would be no additional revenue for the government.

He added that “In renegotiating with mining companies, the government has to be more firm and have a concrete strategy. A direct approach with the companies will also result in better outcomes.”

The government has set up a team to handle the renegotiations, led by Coordinating Economic Minister Hatta Rajasa. The working period of the team will end in 2013.

Meanwhile, Energy and Mineral Resources Minister Jero Wacik claimed on Thursday that PT Freeport Indonesia, operator of the Grasberg gold and copper mine in Timika, Papua, had agreed to renegotiate a contract.

Earlier, PT Newmont Nusa Tenggara, operator of the Batu Hijau gold and copper mine in West Nusa Tenggara, also claimed that it had no problem with the renegotiation plan.

(sourced Thejakartapost.com)

Billion tonne steam coal market looms as India increases sea cargoes

Sunday, 19 Feb 2012

Bloomberg reported that steam coal may become the third commodity to surpass annual shipments by sea of 1 billion tonnes, joining crude oil and iron ore, as India raises imports of the solid fuel to feed new power plants.

According to data from Clarkson Research Services Ltd, a unit of the world’s largest shipbroker, seaborne coal trade will expand 4% to 956 million tonnes this year as Indian purchases gain 12% and imports into China climb 8%.

According to Mr Calum Kennedy, a senior analyst with Clarkson in London, deliveries may exceed 1 billion tonnes if Chinese power plants buy extra, cheaper foreign thermal coal.

Mr Ole Henry Senne COO of Singapore based SIVA Bulk Ltd whose vessels transport Indonesian coal to India said that “Before, the iron ore market was driving shipping markets. Now it’s India and China with their coal needs. If you took away the coal from India and the coal imported to China, there probably wouldn’t be a market.”

According to Clarkson, Indian imports of coal burned for power will have this year’s second strongest growth among all the 3.7 billion tonnes of global dry bulk commodities shipped by sea. The shipbroker projects a 17% increase to 104.2 million tonnes as Indian buying of coal used to make steel falls 3.4%. The fastest-growing trade is US iron ore imports, predicted to jump 33% to 1.6 million tonnes.

(Sourced from Bloomberg)

Thai PTT aims for 2020 coal output of 70 million tonnes

Sunday, 19 Feb 2012

Thailand's top energy firm PTT Pcl reported a 26% drop in quarterly net profit on Friday, in line with market expectations, as domestic fuel demand was hit by floods and petrochemical and oil margins fell.

Analysts said that earnings at PTT, Asia Pacific's third biggest listed oil and gas firm by market value, are expected to recover in the first quarter and further in 2012 due to improved gas demand and higher contributions from its petrochemical affiliates and upstream unit.

Mr Youssef Abboud senior analyst at Thanachart Securities said that " Beyond Q4, we should see an improvement quarter-on-quarter in gas volume as demand from electricity producers will pick up as the impact of the floods recedes.

State controlled PTT, Thailand's most valuable company, posted an October-December net profit of THB 16.6 billion (USD 540 million), down from a revised 22.49 billion a year earlier and below the 17 billion baht forecast in a poll by Thomson Reuters I/B/E/S.

For 2011, the company posted a record net profit of THB 105.3 billion, up by 25.4% from 83.09 billion in 2010. This compared with a forecast of THB 106 billion.

(Sourced from Reuters)