CIL revives talks with Alpha Resources for Massey

Monday, 06 Jun 2011

ET reported that Coal India Limited has revived talks to buy a stake in a mine of Massey energy as the new owners of the US based firm has approached the state run Indian giant in a JV.

CIL was in negotiations with Massey Energy Company's Sidney Underground Mines in the US for which Marston and Marston completed technical due diligence while Royal Bank of Scotland had concluded a financial due diligence. But talks did not make any headway after Alpha Natural Resources announced its acquisition of Massey. With Alpha Natural Resources gearing up to takeover Massey Energy, the Coal India management was not sure if it could take a stake in the mine for which negotiations were on.

But last week a team of officials from Alpha Natural Resources met the CIL chairman expressing their interest in taking the talks forward. However, CIL intends to conduct a physical verification of the assets being offered, before it proceeds further.

Mr NC Jha chairman of CIL said that "A team of officials from Alpha Natural Resources visited us last week and have shown their interest in striking a joint venture with Coal India. However, it is not clear if they want to take forward the negotiations that the Massey management was having with us. In case they are not, negotiations have to be started a fresh."

He said that Coal India will take less than 49% stake in the asset. He added that "We have concluded the financial due diligence of the asset but a physical verification is due. CIL management wants to physically visit the mine, see the way it functions, equipment used and the safety norms adhered at the mines."

Mr Jha is insisting on a physical verification since the Massey property for which CIL was in talks suffered an accident a few months ago.

The American Mine Safety & Health Administration has also filed a complaint in an US District Court asking for shut down of operations at the Sidney mines of Massey Energy allegedly due to violations in 2008. Reports also suggest that Massey has suffered several prominent disasters in recent years, including an explosion in April at the company's Upper Big Branch mine in West Virginia. (sourced ET)

Iron Ore-Prices rise for first time since May, China on holiday

Mon Jun 6, 2011 4:06am GMT

* Price bounce comes after fall to two-month lows
* Chinese mills restocking, BHP tender eyed
By Manolo Serapio Jr

SINGAPORE, June 6 (Reuters) - Spot iron ore prices are set to regain more ground this week after rising for the first time in about a month on Friday as Chinese steel mills returned to the market to replenish run-down inventories.

Prices of the steelmaking ingredient had fallen to more than two-month lows before Friday's recovery on limited interest from top buyer China.

"We believe there are quite a lot of people who are comfortable to buy at these levels. Also you have some mills who have not bought over the last few weeks and they're running low on inventories," said an iron ore trader in Singapore.

"I don't think we're in an explosive scenario but i think prices will correct up."

The Steel Index's benchmark for ore with 62 percent iron content .IO62-CNI=SI rose $1.40 to $170.20 a tonne on Friday, its first gain since May 4.

Platts 62 percent iron ore index IODBZ00-PLT edged up 75 cents to $171.75, rising for the first time since May 11. A similar index by Metal Bulletin .IO62-CNO=MB slipped 12 cents to $170.30.

But a public holiday in China is expected to limit activity in the physical market on Monday. "Today is going to be dead," said the Singapore trader.

For the rest of the week, traders are eyeing a tender by BHP Billiton which should help indicate where prices are headed.

BHP is selling a capesize cargo, half of which is 61.4 percent grade and the rest at 58 percent grade, with the tender closing on Tuesday, traders said.

Chinese traders said BHP is looking for a bid of at least $172 a tonne.

"For people thinking the market is going to surge, they will bid up, but it may not be representative of the entire market," said a Shenzhen-based trader, adding Chinese steel mills are still finding it hard to buy higher-grade 63.5 percent ore at $179 a tonne at this stage.

But gains in forwards swaps <0#SGXIOS:> on Friday suggest market players are looking at firmer spot prices ahead.

The Singapore Exchange-cleared July contract rose 49 cents to $167.12 a tonne, August edged up 31 cents to $166.25 and September added 43 cents to $165.37.

"We expect spot iron ore prices to stabilise over coming months. Continued strong demand for imported iron ore in China will be driven by ongoing fixed asset investment in social housing, and central/western province infrastructure," Commonwealth Bank of Australia said in a note. (Additional reporting by Ruby Lian in Shanghai; Editing by Randy Fabi, sourced Thomson Reuters)

McNally Bharat bags order from TATA Projects for SAIL RSP

Monday, 06 Jun 2011

McNally Bharat Engineering Company has received an order from TATA Projects for fabrication, supply & erection of coal grinding plant structure for SAIL-RSP BF#5 at a price of INR 252 million inclusive of tax, duties and transportation.

The schedule time for completion for supply is 6 months and for erection is 8 months. (By steelguru)

Hindustan Steelworks ties up with VOZ to build coal washeries

Monday, 06 Jun 2011

ET reported that state run Hindustan Steelworks Construction Limited has entered into a pact with Russia's Vo Zarubezhugol to jointly bid for building coal washeries in India for major producers.

Mr Malay Chatterjee CMD of HSCL said that "HSCL is in a position to procure business for setting up of coal washeries in India on turnkey basis. We have signed a MoU with VOZ in relation to this today. VOZ will provide turnkey solution to us."

VOZ is engaged in building coal washeries, mining and trading of coal. HSCL is engaged in building steel and various other infrastructure projects.

Washeries help reduce the ash content in coal and improve its calorific value among others things.

Coal India has already announced its plan to set up 20 new washeries with a combined capacity of 111 million tonnes to help realize a better price for its produce with an outlay of INR 2,500 crore.

HSCL, which is looking at entering into the coal sector in a large way, might look at this opportunity following the tie up with VOZ. (sourced ET)

POSCO war zone - Political parties to stage civil disobedience agitation

Monday, 06 Jun 2011

PTI reported that accusing the Orissa government of resorting to forcible land acquisition for POSCO steel project in Jagatsinghpur district, five political parties have decided to stage civil disobedience agitation in Bhubaneswar.

Leaders of CPI, CPI-M, Forward Bloc, RJD and Samajwadi Party at a meeting alleged that the state government used force to acquire land from the residents of the three gram panchayats under Ersama block near Paradip.

Mr Dibakar Nayak CPI state secretary said that "Though chief minister Mr Naveen Patnaik had earlier promised not to use force for land acquisition, the police on Friday assaulted people unwilling to hand over their betel vines for the steel project."

Around 4,000 families had been earning their livelihood by undertaking cultivation on forest land in Ersama block for generations, the five parties said in a joint statement accusing Orissa government of violating provisions of Forest Rights Act, 2006 and setting aside interest of farmers for POSCO project.

Demanding shifting of the proposed plant site from fertile land of the three gram panchayats, they pointed out that earlier Indian Oil Corporation's oil refinery project was relocated to Paradip from Dhinkia area. Similarly, the proposed POSCO project should also be set up elsewhere.

Defending villagers identified as encroachers by the state government for undertaking cultivation on government land generations, they said the villagers have rights over the land on which they have been cultivating for generations.

In protest against government's move and alleged use of force for land acquisition, the workers of the five parties would start civil disobedience agitation near the state secretariat.

(sourced from PTI)

Coal imports by China is likely to increase -Vistaar Singapore

05 June 11

The freight market softened this week except for the BDI and Cape index was up, but even in these sectors the momentum was compared to last week, Capt. Reddy says.

The BDI was marginally up by 1.02 pct and the Cape index was up by 6.48 pct. The Panamax index was down by 3.97 pct and closed at 1,791 points, whereas the Supramax and handy size index was down by about 1 pct.

Supramax delivery Far east have been reported fixed around US$ 12,500-13,000 per day for single trips. Short period rates on Supramax were seen reported around US$ 14,000 per day . The freight market is likely to be soft next week.

The iron imports by China seems to be slowing with the prices of iron ore softening. However the coal imports by China is likely to increase and is expected that the market may be fairly stable. The sale of second hand of ships remained fairly good and prices were holding firm , which seems to show many owners are bullish on the market.

The average charter rates was at Cape/US$ 11,773 per day , Panamax/US$ 14,360 per day , Supramax/US$ 15,004 per day and Handy size/US$ 11,365 per day.

The Supramax index in the far east (S6 route) softened as expected by 3.12 pct and closed at US$ 12,832 per day (last week US$ 13,345 per day). The EC India/China (S7 route) also softened by 2.07 pct and closed at US$ 12,738 per day (last week US$ 13,008 per day). The S6 and S7 routes likely to be soft next week.

The futures for three years (2011-2013) was at around Cape/US$ 15,000 per day, Panamax/US$ 14,000 per day, Supramax/US$ 13,500 per day , Handy size/US$ 10,500 per day.

The congestion in EC Australia increased sharply up and was at 49 vessels this week (last week 67 vessels). The vessels waiting at main coal loading ports were at Hay point/1, DBCT/16, Gladstone/8, Abbot Point/Nil, New Castle/23, Port Kembla/1 vessels.

On the WC Australia iron ore vessels waiting also increased to 32 vessels (last week 37 vessels).

The Brent crude oil prices increased slightly and was up by 0.887 pct and closed at US$ 116.00 per barrel (last week US$ 114.98 per barrel). Bunker prices also firmed up and was at US$ 659.00 pmt (last week US$ 646.50 pmt) for IFO 380 cst ex Singapore on 3rd June 2011.

If you believe an article violates your rights or the rights of others, please contact us. (sourced coalspot)

CIL wants change in coal distribution policy

5 Jun, 2011, 11.37AM IST,PTI

KOLKATA: State-owned Coal India Ltd has said it is in favour of an amendment to the New Coal Distribution Policy (NCDP) of 2007 which is scheduled to come up for review this week.

"The current coal distribution policy needs to be changed as a few things are just not practical. CIL should not be asked to meet everybody's demand and verify end use of its coal. We want change mainly on these two issues," Coal India Chairman N C Jha told PTI here.

He said Coal India could be asked to produce coal from domestic sources to the extent allowed. When coal was under OGL, CIL should not be asked to meet everybody's coal demand, he argued.

Jha said the end use verification of CIL coal should not be thrust upon it, as it required a large number of people and should be done by a separate agency.

Preliminary talks were held in the coal ministry and it would now get response from different sectors, he said.

He said the NCDP was scheduled to come up for review on June 8.

Turning to meeting the coal requirement of upcoming thermal power projects, he said letters of assurance (LOAs) were given for over 82,000 MW power in the 11th plan period which needed additional production of 400 million tonne (MT) if all the projects were implemented.

But as per projection CIL could produce 560 MT of coal by 2016-17 which indicated that the company could produce slightly over an additional 100 MT from its current level of production, Jha said.

CIL's production target for this fiscal has been fixed at 452 MT.

The CIL chairman said if the company has to meet the country's increased demand, it should not only get coal blocks but be allowed mining and timely clearance.

"We are asked to fulfil everybody's demand even if it requires importing coal on one hand, while the company is not allowed to mine in many areas due to various environmental issues," he said.

The CIL chairman said the company has offered to supply 347 MT of coal to power utilities in the current financial year, which is 43 MT more than the previous year. (sourced ET)

India's Rashtriya Ispat to raise $5 bln debt

Sun Jun 5, 2011 6:39am GMT

MUMBAI, June 5 (Reuters) - State-owned unlisted steelmaker Rashtriya Ispat Nigam Ltd (RINL) is gearing up to raise 225 billion rupees ($5 billion) through debt to part-finance its 11.5 million tonne expansion plans by March 2016, the Business Standard newspaper reported on Sunday.

The firm, which plans to spend 350 billion rupees for the expansion, currently runs a 3 million tonne steel plant, its chairman and managing direcor P.K. Bishnoi told the paper.

RINL hopes to raise the remainder through internal accruals, an initial public offering of shares and possible joint ventures with state-run Steel Authority of India and power equipment maker Bharat Heavy Electricals Ltd , it said.

RINL has already appointed consultants to conduct studies for the project and reports are expected in two months, the paper said, adding Bishnoi met close to 50 banks in Mumbai on Saturday to discuss the structure of the debt.

"BHEL is more likely to happen, SAIL is further down the line," Bishnoi told the paper, without giving details of the joint ventures. ($1 = 44.825 Indian Rupees) (sourced Thomson Reuters)

ArcelorMittal SA seeks iron ore discount

Sunday, 05 Jun 2011

AFP reported that ArcelorMittal SA was seeking to join Kumba Iron Ore in its case against the Department of Mineral Resources and Imperial Crown Trading to protect its right to receive iron ore at cost plus 3%.

The steel maker's application to join Kumba as an applicant in the case was heard by the North Gauteng High Court. Judgment was reserved and is expected to be delivered early next week.

The company said that "ArcelorMittal anticipates receiving a positive ruling."

It did, however, clarify that by seeking to be joined as an applicant, it was not siding with any of the parties.

Kumba initiated proceedings to join ArcelorMittal as a co respondent in its application against the Department of Mineral Resources and Imperial Crown Trading. This was opposed by both.

Imperial Crown Trading is the holder of a prospecting right over ArcelorMittal's previous 21.4% portion of Kumba's Sishen mine. The issue before the court is founded on the assumption that the state erred in granting a prospecting right over a share of Sishen to Imperial Crown Trading.

Kumba and Imperial Crown Trading have based their cases on the fact that a distinct right relating to 21.4% of the iron ore at Sishen exists and can be allocated, but ArcelorMittal contends that Sishen Iron Ore Company holds a 100% right on its conversion since the Mineral and Petroleum Resources Development Act does not allow for conversion of only a fraction of an old order mining right.

The portion that was said to have been held by ArcelorMittal could therefore also not have been converted. The fact that ArcelorMittal had not converted its portion of the mining right was the basis on which Kumba decided to stop supplying the steel maker with iron ore at a discounted price.

ArcelorMittal had until early last year been receiving 6.25 million tons of iron ore a year from Sishen Iron Ore Company at a discounted price of cost plus 3%. (sourced IOL)

Zone Resources adds to its Labrador trough iron project

Sunday, 05 Jun 2011

Zone Resources Inc announced that it has acquired an option to earn a 100% interest in the Bob Lake Iron Property, consisting of approximately 7,500 hectares, located in Nunavik, northern Quebec. The Property is situated between the Moore-Ross Mountain Property to the north and the Girard Lake Property to the south bringing the total project size to 41,500 hectares in the "Labrador Trough Iron Project".

The Property covers a historic Iron Formation occurrence, called Bob Lake, which was described in a 1952 Frobisher Limited report as a new showing associated with a syncline structure. In addition to this, a 1952 Fort Chimo Mines map outlines the Bob Lake occurrence as Enriched Iron Formation within an Upper Iron Formation.

Zone intends to include the Bob Lake Iron Property in the recently announced airborne survey which is scheduled to be flown during the time period of June 10-15th, 2011.

Pursuant to the terms of the option agreement, Zone will pay a cumulative amount of USD 150,000 cash and issue 1,500,000 common shares over a three year period. The Bob Lake Iron Property is subject to a 2.0% Net Smelter Royalty. Zone shall have an option to purchase 1% of the NSR for the sum of USD 1,000,000 at any time up to when a production decision is made. The terms of the agreement are subject to regulatory approval of the TSX Venture Exchange.(sourced steelguru)

Worker death shuts down NSW coal mine

Sunday, 05 Jun 2011

AAP reported that a central coast coal mine has been shut down following the death of a 52 year old miner underground.

The man was working around 3.30PM when a coal wall collapsed on him.

It took rescue teams about 40 minutes to bring him to the surface, where he was transferred to an ambulance but died on the way to Wyong Hospital.

The mine has been closed while inspectors from the NSW Department of Primary Industries investigate. Industry officers are interviewing witnesses and workers, with no findings expected for at least a week.

The United Mineworkers Union has extended its condolences to the miner's family. friends and colleagues. United Mineworkers Union spokesman Mr Grahame Kelly told the ABC that “Our thoughts and prayers go out to his family and friends and of course his workmates. This is a tragic event and we'll do everything we can to assist the family and his workmates to get through this.”

NSW resources and energy minister Mr Chris Hartcher offered his condolences to the miner's family on behalf of the government. He said “Our thoughts and prayers are with everyone who has been touched by this regretful and tragic accident.” (sourced from AAP)

Rio Tinto to increase purchases from China

Sunday, 05 Jun 2011

Rio Tinto Group, recently said that it will double its procurement of goods in China to reach USD 1 billion this year, further highlighting long term collaboration with the world's largest iron ore consumer.

Mr Scott Singer Rio Tinto's global head of procurement at a signing ceremony with the State owned Xiangtan Electric Manufacturing Corporation said that "In 2011, we expect to spend over USD 1 billion in raw material, marine freight, operational and capital goods in China.”

Under the agreement, the first such deal for a Chinese manufacturer to export haul trucks, XEMC will deliver four trucks to Rio Tinto's Pilbara project in Western Australia.

The company started procurement in China in 2003 and spent USD 500 million on manufacturing goods in 2010.

Mr Singer said the growth in procurement is due to Rio Tinto's business expansion, and he expects the group to make more purchases in China next year.

The XEMC trucks are scheduled to be operational at the Tom Price mine in Pilbara in early 2012. Mr Tom Palmer chief operating officer of the Pilbara Mines said that "For Rio, it's our first contract with a Chinese manufacturer for the supply of mining equipment, and it's also the first time that we will receive customized fit-for-purpose trucks that we can put straight to work in our mines.”

A Xiangtan Electric Manufacturing Corporation booth at an energy exhibition in Shanghai. The Hunan based company will sell four haul trucks to Rio Tinto Group as the mining giant aims to double its procurement in China. (sourced from China Daily)

China starts coal mine crackdown after Inner Mongolia unrest

Sunday, 05 Jun 2011

State media said that China's vast northern region of Inner Mongolia began a month-long overhaul of its lucrative coal mining industry to ease public anger over the death of a herder who was struck by a coal truck.

Inner Mongolia has seen scattered protests over the past week or so by ethnic Mongolians, sparked by the death of the herder, but which have morphed into broader demands for protection of their culture.

The government, ever worried by threats to stability, is now trying to address some of the protesters' broader concerns about the damage caused by coal mining to traditional grazing lands of the Mongolian people in China.

The official Xinhua news agency, in an English-language report said that the death of the herder had "led to heightened concerns over industry practices in the resource-rich region's mining sector".

It said that "The regional coal mine industry bureau ordered local work safety watchdogs to strengthen supervision of the coal mines to ensure safe production practices, protection of the environment and attention to the welfare of local residents.”

Ethnic Mongolians, who make up less than 20 percent of the roughly 24 million population of Inner Mongolia, have complained that their traditional grazing lands have been ruined by mining and desertification, and that the government has tried to force them to settle in permanent houses.

Inner Mongolia, which covers more than a tenth of China's land mass, is supposed to offer a high degree of self-rule, but Mongolians say the Han Chinese majority run the show and have been the main beneficiaries of economic development. (sourced from Thomson Reuters)

Rio Tinto will study possible use of Chinese currency

Sunday, 05 Jun 2011

It is reported that Rio Tinto PLC will consider switching to the Chinese currency for settling iron ore prices, but has no immediate plans to do so.

Mr Sam Walsh chief executive of the mining giant's Australian operations said that "It is a complex issue adding that the company's financing was in US dollars.”

Mr Walsh said the company will study the possibility of adopting the yuan, adding he was aware that some other companies have said they would consider switching.

He added that "We always look at a range of things that develop in our business. While Rio doesn't hedge currency, use of the dollar acts as a natural hedge against currency fluctuations.”

Mr Walsh said “He expects to see a fall in the iron ore price in the future as supply catches up with demand, although at the moment some companies are finding it difficult to develop mining projects and work has been slowed by the financial crisis and last year's debate in Australia over the possible introduction of a tax on resources super profits.”

Key bulk commodities such as iron ore and coal, which are driving Rio Tinto's profits, are priced and settled in dollars. However, demand for the commodities is being driven by rapidly industrializing economies in Asia, particularly China, which is the world's biggest consumer of steel and iron ore. (sourced from Dow Jones Newswires)

SAIL to set up 4 iron ore pellet plants

Sunday, 05 Jun 2011

BL reported that Steel Authority of India Limited will set up four pellet plants over the next two to three years to utilize fines generated by its mines.

The company would set up a 4 million tonne per annum pellet plant each in the Gua mine in Jharkhand and the Bolani mine in Orissa, a 1.5 million tonne per annum plant in the Dalli Rajhara mine in Bhilai and a 2 million tonne per annum pellet plant near the Bokaro Steel Plant.

Mr GS Prasad executive director Centre for Engineering and Technology told Business Line that the use of pellets is aimed at increasing blast furnace productivity by 25% at its plants.

Mr Prasad said that “Three of the four pellet plants would be set up at pitheads, thereby saving on the cost of transportation as well as on environmental issues. The fourth one would be close to Bokaro Steel Plant. The pellet plants would entail a total investment of INR 3,600 crore. Close to 50% of the total investment would be funded through SAIL's internal accruals.”

Mr Prasad said that "The pellet plant in the Gua mine is in an advanced stage and will be operational by the end of this year or early next year. The approximate investment in the plant is about INR 1,200 crore."

He said that "The pellets from these plants will replace about 75 to 8% of the total iron ore requirement of the blast furnace in SAIL's existing steel plants and about 15% at the upcoming plants of Indian Iron and Steel Company, Rourkela Steel Plant and Bhilai."

The use of pellets would enhance the productivity of its blast furnaces to 2.25 tonne cubic meter per day. SAIL currently uses the sintering route for iron ore lumps.

(sourced Thehindubusinessline)