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)

Continental Coal on track with development of third South African coal mine

Sat, 22 Oct 2011

First production from the underground mining operation is forecast to commence in the June quarter of 2012 with full production targeted to be achieved in the September quarter of 2012.

Development activities at Continental's third thermal coal mine are proceeding on schedule with the box-cut at the mine already excavated to a depth of 5.5 metres. The first blast in the box-cut was successfully completed on 15 October 2011.

Excavation of the pollution control dam is now 80% complete and the installation of the dam lining is scheduled to commence later this month. The ZAR 96 million decline development tender will be finalised in October 2011 and mobilisation to site is scheduled in early November 2011.

The construction of the terraces for the site buildings, the contractors lay down area, as well as the access roads and visual berms is now 65% complete. In addition, the underground mining equipment tenders for the Penumbra Coal Mine have been adjudicated by Continental and TWP Projects and meetings have been held with the preferred supplier for the ZAR 116 million equipping of the two production sections with the continuous miners and shuttle cars or battery haulers.

The Penumbra Coal Mine is on track to produce 500,000 tonnes per annum of a high quality export thermal coal product. Production of 750,000 tonnes of ROM coal from the Penumbra Coal Mine will be beneficiated through the existing Delta Processing Operations which comprises a 300tph coal processing plant and the 1.2Mtpa Anthra Rail Siding.

The export thermal coal product will be railed through to the Richards Bay Coal terminal under existing rail contracts and sold to EDF Trading and other export off-take agreements.

(sourced proactiveinvestors)

China faces tight power supply this winter

Fri, Oct21,2011

BEIJING-- A spokesman of the State Electricity Regulatory Commission said Thursday that power shortages would hit China during the winter and spring as concerns grow that rising coal prices will further increase supply pressures.

The southern and central regions, in particular, will be most heavily affected by power shortages due to lack of available coal and water to generate enough electricity to meet rising heating demands in cold seasons, spokesman Tan Rongyao said.

Tan said that the country faces great pressure in meeting demand this year. A total of 17 provinces have taken measures, including power cuts, to ease supply pressure since the start of the year.

He said that maximum power shortage could reach 26 million kilowatts this winter.

He said coal prices could rise further, which would only exacerbate the shortages.

(sourced Xinhua)

Labour strife hits Anglo’s South African thermal coal output

By Martin Creamer, Miningweekly
20th October 2011

Johannesburg (miningweekly.com) – Industrial action and geological constraints hit diversified Anglo American’s South African thermal coal production in the third quarter (Q3) of this year.

Anglo’s non-Eskom Q3 2011 production was down 11% at 5 198 000 t compared with 5 813 000 t in the corresponding period of last year, although export was up 7% to 4 605 000 t over Q3 2010, and up 43% quarter-on-quarter.

Supply to the State-owned Eskom power utility was down 16% at 8 752 000 t, compared with 10 431 000 t in Q3 2010.

Thermal output was up 18% in Colombia and up 17% in Australia.

South African thermal coal export prices were higher than in Q3 2010.

London analyst Liberum Capital notes that rival Xstrata received a better price than Anglo for its Australian thermal coal – $111/t by Xstrata compared with Anglo’s $98/t – and that Anglo got a better price than Xstrata in South Africa – $115/t compared with Xstrata’s $105/t.

Anglo American Thermal Coal’s Zibula project, which is expected to reach commercial production in early 2012, partly offset South Africa’s lower performance.

South Africa’s production of metallurgical coal was also down 32% to 76 000 t, while Anglo’s Australian opencast metallurgical coal operations were 24% up.

However, longwall moves at Australia’s underground metallurgical coal operations saw Australia’s total metallurgical coal output fall 4% to four-million tons.

COPPER DOWN

Anglo American’s copper production decreased by 9% to 139 900 t owing mainly to lower grades at Collahuasi, Los Bronces and Mantos Blancos, and weather interruptions at Collahuasi.

This was partially offset by higher production at El Soldado, which benefited from higher ore grades following recent mine development.

The Los Bronces expansion project remains on schedule for first production in Q4 2011.

At Collahuasi, commissioning of the first phase of the expansion project is under way to increase sulphide processing capacity to 150 000 t/d, an annual average production lift of 19 000 t/y of copper over the estimated life of the mine.

Chile’s State-owned copper-mining company Codelco has put a financing facility in place for its option to take up 49% of Anglo American Sur, which includes Los Bronces, El Soldado and the Chagres smelter in Chile.

Liberum says that the market is waiting for confirmation of how much Anglo will receive from Codelco and says that anything less than the $6.75-billion will be a bad outcome for Anglo.

It forecasts that Anglo’s earnings per share will fall 7.3% in 2012 and 8.6% in 2013 on Codelco’s exercising of the option.

Anglo’s copper equivalent growth to 2015 will also fall from 46% to 40%.

Liberum rates Anglo’s Q3 report as marginally the weakest of the majors that have reported so far, which include BHP Billiton and Xstrata.

IRON-ORE

Iron-ore production increased by 3% to 12.2-million tons, owing to increased performance from Kumba’s Sishen mine in South Africa’s Northern Cape province, where the commissioning of Kolomela remains on track to produce up to five-million tons a year in 2012, and nine-million tons a year in 2013.

Export sales volumes from Sishen rose 11% to 9.2-million tons and South African domestic sales volumes decreased 29% to 1.5-million tons owing to reduced offtake from ArcelorMittal South Africa.

In Brazil, record monthly production of 419 000 t was achieved at Amapá in September and civil works at the beneficiation plant and pipeline at the Minas-Rio iron-ore project are progressing, with the first ore shipment due in the second half of 2013.

Chinese coal imports in 2011 seen 150 million tonnes to 160 million tonnes

Wed,19 Oct 2011

Reuters citing Mr Phil Ren of China Tader Coal SCM Company and Vice President of Northeast Asia Coal Exchange Center as saying that China 2011 thermal coal imports are likely to be around 150 million tonnes to 160 million tonnes having recovered in the second half of the year after a slow start.

Mr Ren said speaking at the Coaltrans annual conference in Madrid that China thermal coal imports could rise to account for 10% of the country total consumption 400 million tonnes in five years' time.

He said that China coal import levels are hard to predict because China imports more when domestic prices are higher than international prices, but the country in any case needs imported coal for the southeast regions.

He added that "For economic and transport reasons China has to import coal to meet its southeast consumption. He also said that imports could be 5% to10% of China total consumption which is forecast at 4 billion tonnes so therefore 10% of that is 400 million tonnes that's a lot of coal."

(Sourced from Reuters)

Euro Coal-Prices dip, trade remains thin

Wed Oct 12, 2011

* Nov S.African trades at $112.50/T
* Oil rises but coal fails to follow

LONDON Oct 12 (Reuters) - Prompt physical coal prices fell slightly by around 25 U.S. cents a tonne on Wednesday after a day of quiet trade.

Few bids, offers or trades were reported in Europe, although South Korea and China have continued to quietly buy prompt cargoes, traders said.

"It's hard to see the market's direction clearly," said Emmanuel Fages, analyst with Societe Generale in Paris.

Coal has largely been immune to the sharp movements seen in other markets although prices have drifted lower by around $15 a tonne during the past two months.

Brent crude oil rose on Wednesday, lifted by news Slovakian lawmakers will approve a plan to expand powers in the euro zone rescue fund.

European demand has been minimal aside from the regular spot buying by one major utility which is always short physical coal but the pace of buying has picked up in Asia.

TRADES

A November loading South African cargo traded at $112.50 a tonne, up around 25 cents.

A December delivery DES ARA cargo traded at $119.50.

(sourced Reuters)

974 power firms line up for coal supply in India

Sep06,2011

The coal ministry has received applications for long term coal linkage from central and state utilities, independent power producers and captive power producers for 974 power projects with a generation capacity of over 596,000 MW as on July 31.

Of the 974 applications, 107 are from central and state utilities for capacity addition of 122,405 MW, 434 applications from CPPs for 37,345.79 MW and 433 from IPPs for a record 425,836.5 MW capacity addition. The installed capacity of these power projects vary from 10 MW to 5,280 MW.

A coal ministry official said that "Some of the applications had already been considered in the past by the standing linkage committee (long term) but deferred the decision due to various reasons. These applications will be taken up in due course to provide long-term coal linkage for the upcoming power projects."

The official said the standing linkage committee (long term) would take up the proposals wherein the applicant had changed the category from CPP to IPP or enhanced or reduced the generation capacity or modified configuration.

According to the official, adequate reserves coal reserves upto 1,200 metres deep have been estimated at 277 billion tonnes as on April 1st 2010 and lignite reserves have been estimated at 39.07 billion tonnes as on March 31st 2009. Of the 277 billion tonne, 110 billion tonnes of coal reserves have already been identified, 130.65 billion tonnes are indicated and 35.6 billion tonnes inferred.

The power ministry official said it had been pursuing with the coal ministry for an early clearances for both short and long term coal linkages.

(sourced BS)

3 factors contribute to coal monopoly and prices hike in China

Tuesday, 16 Aug 2011

It is reported that the high hovered thermal coal prices has been down for its sixth week and experts say the intensive monopoly of coal industry may pull up prices later August and lead to a new round of coal shortage next year.

1. Price Hike around the Corner

By August 11, BSPI is reported to continue declining for another week. 5,500 kilocalories per kilogram thermal coal price at Bohai Rim close at CNY 829 per tonne off CNY 2 per tonne from that in the previous week down for the sixth week in a row and the cumulative decline touches CNY 14 per tonne.

An expert from China Guodian Corporation notes that a few yuan fall will do no good to the cost of power plants. Once the coal price picks up, it will undergo a drastic rise of tens of hundreds yuan and will not retreat back. So the so called decrease is almost meaningless towards power plants.

More analysts reckon that despite the current retreat, coal prices this month is expected to stabilize and soar. By the end of summer peak, power plant all over the country, holding a strong bullish forecast for coal price, will stock as much as possible, which will further push up the price.

Mr Huang Teng from China Coal Group predicts that coal prices will rise on about 20th of this month following up by a dramatic increase.

2. Coal Monopoly Bolsters Prices

Mr Huang analyzes that one supporter of coal prices comes from the government administrative monopoly. Since the Central Government endows local governments with the managing right of large coal mines the latter controls the mining rights and becomes beneficiary of China coal.

And the conglomerates, represented by large coal enterprises after integration in Shanxi, Inner Mongolia also drag up prices by controlling the output, launching commercial monopoly. He said that “In terms of thermal coal, China Coal, Shenhua Group and the Cosmos can completely control domestic thermal coal prices."

Finally the monopoly of railway transportation is also the bottleneck of power plants. Huang said that China's tight rail transport could only feed half of the brisk freight demand. As a result China's coal supply does not depend on how much coal can be produced but how much coal can be shipped.

Meanwhile, international coal prices continue to rise as a result of greatly increased demand for domestic coal, domestic coal transportation monopoly will further boost the role of the show.

3. New Round of Coal Shortage

Mr Huang also points out that the price gap between foreign and domestic coal drives China imports about 150 million tonnes of coal annually. As per NBS national coal output in 2010 is seen at 3.24 billion tonnes, which is sufficient to meet domestic demand whereas the spread still pushes China to import more. This will boost international coal prices and curb imports, and finally end-users will turn to domestic coal.

On the other hand, coal imports will be curtailed in pace with the recovery of international especially Japan economy. Coal prices may hike by 15% by these two factors, thus coal shortage will be inevitable next year.

(Sourced from MySteel.net)
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India's Lanco finalises Australia's Griffin coal purchase

Fri Mar 4, 2011 5:54am GMT

PERTH, March 4 (Reuters) - India's Lanco Infratech has finalized its acquisition of Australia's Griffin Coal assets for A$750 million ($760 million), in what it said was the largest investment in Australia by an Indian company.

"We are focused on growing the Griffin coal business, and further developing the mining and infrastructure (rail and port) facilities in the region," Lanco Chairman L. Madhusudan Rao said on Friday.

Previous estimates has put the value of the deal at $800 million to $850 million.

Western Australia-based Griffin Coal's assets included thermal coal mines with a production of more than 4 million tonnes per annum, which Lanco plans to boost almost four-fold to over 15 million tonnes per annum, in addition to adding rail linkages, and expanding facilities at Bunbury port.

The coal from the thermal coal mines will feed Lanco's rapidly expanding power plants-- the company plans to expand to 9,500 MW by 2014 from 2,100 MW at present, and is developing eight new projects, with a combined capacity of about 10,500 MW.

The assets had attracted bidders like Reliance Power , Adani Power and GMR from India, apart from interested parties from Australia and China.

The company has said it will seek more acquisitions in Australia, Africa and Indonesia. ($1 = 0.986 Australian Dollars) (Reporting by Rebekah Kebede; Editing by Ed Davies,sourced:Thomson Reuters)

Tags : Reliance Power, Adani Power, GMR, raw mat