Coal shortage hits power generation at NTPC Ramagundam unit

Tuesday, 04 Oct 2011

power generation at NTPC Ramagundam super thermal power project located in Andhra Pradesh has been adversely impacted due to shortage of coal supply from Singareni Collieries Company Ltd.

SCCL miners are agitating in support for separate statehood of Telangana. Of the 2,600-MW of installed capacity at Ramagundam, NTPC plant is able to generate about 1,520 MW from the six units of 2,100 MW. It has shut down the seventh unit of 500 MW from Saturday due to coal shortage as it does not make sense to generate power with low plant load factor.

A spokesperson of NTPC told Business Line that "In spite of making alterative arrangements from Mahanadi Coalfields, South Eastern Coalfields and from mines in Chhattisgarh and Orissa and making other alternative arrangements from Coal India Ltd, we are able to generate only about 1,520 MW today."

As against average requirement of about 36,000 tonnes per day, NTPC now has supplies for about 18,000 tonnes.

The power generated from NTPC Ramagundam is supplied as per the allocation made to various southern States. Accordingly Andhra Pradesh gets about 31.5%, Tamil Nadu 25%, Karnataka 19%, Kerala 15%, Puducherry and Goa about 5% respectively.

(sourced from thehindubusinessline)

ISMT all set to acquire coal mine in Indonesia

Tuesday, 04 Oct 2011

ET reported that ISMT which has announced plans to enter the infrastructure sector via its integrated port and power project in Tamil Nadu is looking at acquiring a coal mine in Indonesia as a backward linkage for its fuel requirements.

Mr Rajiv Goel CFPO of ISMT said "We will need 6 to 7 lakh tonnes of coal per annum for both our power plants, the 40 MW captive plants at Chandrapur, in Maharashtra, and the first phase of our Tamil Nadu power plant of 170 MW. This requires a small mine of 25 million tonnes which will then protect both plants."

He added that the first step of environmental clearance for the TN power plant is still awaited while the Indonesian coal mines will not happen just yet. By his estimate, it will be the end of FY 13 before they need to bring in investors for the integrated project.

He further stated "The Tamil Nadu power plant will be a group captive power plant, supplying power to industrial customers and not feed into the state grid. Under the government's rules, such customers have to take a stake totaling 26%, while we are comfortable holding a 50% stake in the special purpose vehicle, Tridem Port and Port Co Pvt Ltd."

Tridem is a proposed INR 10,000 crore integrated port and 2000 MW thermal power plant with the captive port ensuring coal supplies are not disrupted. While the power plant will come first, Mr Goel did not rule out bringing in strategic investors into the port project and scaling it up to handle containers.

Energy costs for the steel maker are a significant outgo which it is trying to curb through setting up captive power plants.

(Sourced from Economic Times)

CIL profit to be hit by about INR 2000 crore post new mines law

Tuesday, 04 Oct 2011

Maharatna Coal India today Profitability would be eroded by about INR 2,000 crore per annum post enactment of new mines legislation which mandates coal miners to share 26% of their profits with project affected people.

Mr NC Jha Coal India Chairman said "It would hit the profitability of the company by about INR 2,000 crore.”

He added that added that if the government wanted to maintain the profit of the state run PSU, it would have to resort to hike in coal prices. Mr Jha said "If the profit of the company has to be maintained it has to be done by increasing the prices of coal. Therefore, it is for the government which is the major shareholder of the company to decide whether to go for price hike or not."

Mr Jha earlier this month had said that the additional cost impact, due to the new act will eventually be passed on to the consumers. The Federation of Indian Mineral Industries too had said recently that prices of all minerals will go up due to the new Mines Bill.

He confidence that despite a dip in company profit post enactment of the new law, the state own firm would stand benefited in the long term by getting land without hindrances and would improve its bottomline.

Mr Jha said "In the short term Coal India would of course witness a dip in its profit but in the long term it would be beneficial as with more land with the public sector firm the business volume would increase and the profit would automatically increase."

The state owned miner which accounts for about 80% of the country total production of coal had reported a consolidated net profit of INR 10,867 crore in 2010-11.

(Sourced from Economic Times)

Rio deal gets FIRB approval - Australia Coal & Allied

Tuesday, 04 Oct 2011

MarketWatch quoted Australian coal producer Coal & Allied Industries Ltd said an offer from Rio Tinto PLC RIO -5.02% and partner Mitsubishi Corp to buy outstanding shares they don't currently hold in the company has met with approval conditions set by the Foreign Investment Review Board or FIRB.

Rio and Mitsubishi are offering 125 Australian dollars a share an increase of AUD 3 on the indicative price offered early in August to value Coal & Allied at AUD 10.8 billion.

Coal & Allied said it will lodge a draft for regulatory review with the Australian Securities & Investments Commission in the week starting Monday October 3 and aims to host a meeting of shareholders on November 28.

Rio currently owns 75.7% of Coal & Allied and Mitsubishi 10.2%.

(sourced MarketWatch)

Ikwezi Mining acquires rights in Waterberg Coal field

Tuesday, 04 Oct 2011

Recently minted Ikwezi Mining is progressing operations quickly in South Africa and has now executed agreements to acquire 70% of two prospecting rights in the Waterberg Coal field.

The rights cover five farms, and are expected to yield coal for both export and local markets. The prospects cover an extensive 5700 hectares, and already have a significant exploration target of 2 to 4 billion tonnes.

The coal fields in the Limpopo province of South Africa are split into the Springbok Flats, Waterberg, Limpopo and Soutpansberg coal fields. The Waterberg Coal field trends east-west and extends westward into Botswana.

The coal seams are developed in both the Vryheid and Grootegeluk Formations, and coal occurs in 11 zones averaging 115 metres in thickness.

Ikwezi said that the upper seven zones consist of alternating bands of coal and mudstone of varying thicknesses averaging in total to 60 metres, with the lower four coal zones having an average thickness of 1.5 metres to 5.5 metres.

The Waterberg coal field contains predominately thermal coal although in certain areas of the field there is also a coking coal fraction that can be derived.

Importantly, mining is relatively easy in the field as the deposit lends itself to large scale opencast mining of very low strip ratios.

(sourced proactiveinvestors)

Guildford Coal increases exploration targets in its Mongolian coal projects

Tuesday, 04 Oct 2011

Guildford Coal is evaluating an IPO of its 70% owned subsidiary Terra Energy after an upgrade in its Exploration Targets in its Mongolian coal projects to 30 million tonnes to 1.38 billion tonnes.

Guildford would remain a significant shareholder in Terra Energy. Both the South Gobi Project and the Middle Gobi Project are held via the stake in Terra Energy.

The South Gobi Project is edging closer to a maiden JORC resource in October 2011 and a Mining Licence application is being prepared for the project. The Exploration Target has been increased from 0 to 700 million tonnes.

The project is also strategically located approximately 50 kilometres east of Nariin Sukhait which includes SouthGobi Resources' Ovoot Tolgoi mine and the MAK mine which currently produce and export coking and thermal coal to customers in China.

The near surface coal geology of the South Gobi region and competitive labour rates allow for low-cost production with average ROM cash costs estimated at USD 20 a tonne. Selling prices for unwashed ROM coal are estimated at between USD 40 a tonne and USUSD 50 a tonne purchased at mine gate.

The South Gobi Project has the potential for near term development into a 1-to-2 million tonne per annum open-cut coking and thermal coal mine.

Preliminary estimates of the project are that it could have potential for high quality low sulphur coking coal.

(sourced from ProActiveInvestors)

China thermal coal price may rise further

Tue, Oct04, 2011

It is reported that after dropping for about two months, thermal coal price along China coastal areas had rebounded since late August, thanks mainly to active buying from end users. And the price is likely gain further strength for the following supportive factors.

1. Supply from coal-rich Shanxi province is predicted to be affected by the deadly accident on September 16 at a mine in Shuozhou which belongs to China National Coal Group. The provincial government ordered all underground mines of China Coal in Shanxi to stop production before passing the inspection. From sources available to CCR and our own data base and we believe that the impact to supply which will be primarily thermal coal is about 6 million tonnes to 8 million tonnes.

2. Daqin, China top coal dedicated rail line would kick off a 12 day maintenance starting from Sep 20, causing a direct impact on coal delivery to northern ports. Inbound coal transport to Qinhuangdao is estimated to drop by 100,000 tonnes each day during the maintenance period. Given by that, coal stocks at port may follow a downward track if the outbound shipment remains high.

3. Coal inventories at ports have fallen even before the maintenance starts. Despite efforts made by relevant departments to increase rail supply, coal stockpiled at northern ports has been on the decrease since the beginning of Sep due to high shipment amid active buying from downstream sectors. Data showed, Qinhuangdao held 7.07 million tonnes of coal in stock as of September 19 down 230,000 tonnes from month beginning. When the maintenance starts, ports would likely see a swift fall in coal stocks as shipment is expected to keep high for a while.

4. Total demand for coal may remain robust as backed by high production in most energy-guzzling sectors. In addition, China PMI increased by 0.2% from one month before to 50.9% for August the first rise in four months indicating a stable economic performance for the time being. Under this scenario, coal demand in China is expected to stay strong in the near term.

5. Hydro conditions have not yet improved notably in the southwest. Therefore, thermal power generation still faces huge pressure to make up the shortfall in electricity supply.

6. Coal imports by China may be somewhat impacted by the recent rise in global coal price. Thermal coal prices at Australia Newcastle port a benchmark for Asian coal prices rose for four straight weeks in the period from August 12 to September 9 jumping USD 4.58 per tonne or 3.82%.

Given by that, some coal demand may turn to seek domestic sources.

(sourced from sxcoal)

Kumba Iron employees share ownership plan

Tue, Oct04, 2011

Kumba Iron Ore employee share ownership plan which will generate about ZAR 1 billion for the taxman will not be available to an estimated 1000 contractors employed by the mining group.

Mr Vusani Malie Kumba company secretary said that legally it was not possible to include non permanent members of the workforce in the scheme. He said that this situation was regrettable and that in general Kumba tried to compensate contract staff for any disparity in earnings.

The exclusion of contractors from Esops which are set to become increasingly important aspects of black economic empowerment schemes is expected to add to political pressure around the use of labour brokers.

The spokesman for the National Union of Mineworkers Mr Lesiba Seshoka acknowledged that contractors would not benefit from the Kumba Esop and noted “This is why we are opposed to the use of labour brokers, they are eroding the benefits that have been earned by the workforce.”

He described the scheme as possibly the best such initiative in place in the country. He said that “We are very excited about the outcome of this scheme and believe it should be the model that is adopted by all mining companies.”

Mr Seshoka acknowledged that the current weakness in the share market could see the payout falling below the estimated ZAR 500 000 pretax cash expected to be paid out to each Kumba employee with five years service. He said that “Share prices rise and fall, that is how the market works and you can’t control the market.”

In terms of the Kumba scheme a cash payout of about ZARL 2.5 billion is expected to be made to Kumba employees in early December. The 6 014 members of the scheme are full time employees below management level.

NUM and trade union Solidarity have both commended Kumba management for engaging extensively with union representatives in the design of the Esop.

(sourced from IOL)

KIOCL looking at iron ore mines in Mozambique

Tue, Oct04, 2011

state owned KIOCL Ltd is looking at iron ore mines in Africa as part of its expansion plans and to address its resource security.

Mr K Ranganath CMD of KIOCL Ltd said “It is in a preliminary stage. We have received some proposals from owners of land in Mozambique that contain magnetite deposits. We are sending a team of officials next week to look at these deposits.”

He was speaking to reporters after the Steel Minister Mr Beni Prasad Verma reviewed the company quarterly performance. Further, Mr Ranganath said the company proposed expansion plans in India have taken a back seat in the aftermath of disruption of iron ore supplies from NMDC following the ban on mining in Bellary.

The company was looking to set up ductile iron spun pipe plant and install a coke oven battery besides setting up an integrated steel plant.

KIOCL relies on NMDC for its iron ore supplies which are converted into pellets at its plant in Mangalore. Despite the challenges on the raw material supplies, the company produced 0.396 million tonnes of pellets against the targeted 0.516 million tonnes.

(sourced from TheHinduBusinessline)

Evraz UGOK’s iron ore concentrate and agglomerate production goes up in September

Tuesday, 04 October 2011

In September this year, Evraz UGOK (Southern Ore Mining and Processing Enterprise), a subsidiary of Russian mining and steel producing company Evraz Group, increased its iron ore concentrate production by 6.4 percent compared to September 2010, to 809,000 mt. Its output of agglomerate in the given period increased by three percent year on year to 137,000 mt.

In the January-September period of the current year, Evraz UGOK saw a 14.2 percent growth in its iron ore concentrate production to 7.572 million mt and an 11 percent increase in its agglomerate production to 1.376 million mt - both on year-on-year basis.

Tags: iron ore, CIS, production, mining, Evraz
(sourced steelorbis)

Indonesia heavies its coal producers with new regulations

Tue, Oct04, 2011

Indonesia only began selling thermal coal abroad 21 years ago but by 2006 it had overtaken Australia as the world biggest exporter now its government apparently wants to curb a business earning it more than USD 6 billion a year.

And by doing so hand back the advantage to Australian-based miners, by means of a technically dubious obligation on Indonesian producers to upgrade energy content of low grade coal or be banned from shipping it.

In the face of mounting opposition from the coal industry and trade bureaucrats, the Energy and Mineral Resources Ministry draft regulation has been revised and weakened for the third time leading some analysts to predict the measure will not be realized by the due date of January 2014.

Investment bank UBS dismissed the export ban recently as a non-event because the necessary technology is not yet workable at mining scale and if enforced the restriction would only cost revenue from a trade worth about USD 22 billion.

Mr Bob Kamandanu Indonesian Coal Mining Association chairman said the regulation when it first came to light, proposed to ban coal exports of calorific value below 5700 kilocalories per kilogram intending to force producers to upgrade such output by removing moisture. That would have affected about 170 million tonnes, 64% of last year total exports.

Mr Kamandanu says it is the wrong question because the concept is so flawed and risky to Indonesia key role as an exporter. He said that "Just don't do it. But resources law expert Mr Bill Sullivan warns that some mild version of the regulation is almost certain and, when on the books be available for upward adjustment.”

Mr Sullivan at the Jakarta legal firm Christian Teo Purwono and Partners says it is instructive to note which export producers are preparing to toe the ministry line, even while most of the industry remains firmly opposed.

Bumi Resources subsidiary Arutmin Coal is building one beneficiation plant in South Kalimantan partnered by Kobe Steel of Japan and plans another for South Sumatra.

Bumi controlled by the Bakrie family group is the most politically connected of the big coalminers and while Nirwan Bakrie runs the business side, elder brother and Golkar party chairman Mr Aburizal prepares for the 2014 presidential race.

(sourced from TheAustralian)

China’s Hanlong Resources to acquire 100 percent of Sundance shares

Tuesday, 04 October 2011

Hanlong Mining, a subsidiary of Chengdu-based Chinese private sector industrial conglomerate Sichuan Hanlong Group, has announced that it has reached an agreement with Australian miner Sundance Resources to acquire 100 percent of Sundance shares.

Hanlong has increased its initial offer to A$0.57 cash per Sundance share, totaling A$1.65 billion. The Sundance board has unanimously recommended the offer in the absence of a superior proposal.

The offer is subject to approval from Australia’s Foreign Investment Review Board and China’s National Development and Reform Commission and also to Hanlong securing approved financing.

As SteelOrbis previously reported , Hanlong Mining had previously acquired a 19 percent stake in Sundance Resources, becoming the largest shareholder in the miner.

Tags: Australia , China , Oceania , Far East , Southeast Asia , M&A , mining , East Asia and Pacific
sourced steelorbis

Expanding iron ore supply weighs on price

Tue, Oct04, 2011

There is a growing rift between the major mining companies and investor forecasts for the future of iron ore prices. Investors are worried that a faltering economic recovery a slowing Chinese economy coupled with increasing supply of iron ore will cause a drop in price. While mining companies, the likes of BHP Billiton, Rio Tinto and Vale SA are still confident that demand will remain high supporting prices through 2015.

Most analysts point to flattening demand from China, the world largest producer and consumer of steel as a major factor. Iron ore makes up the bulk of revenue for these major mining firms. However, the lack of investor confidence concerning the Chinese and global economy is affecting steel demand and the share prices for iron ore mining firms are on a downward trajectory.

1. Iron Ore Supply Increases

The increased supply of iron ore will come from Brazil and Australia. For instance, BHP’s Pilabra projects in Western Australia are set to increase production dramatically over the next decade.

Mr Ian Ashby President of BHP’s iron ore division stated his company is setting a long term production target of 450 million tonnes of iron ore a year to full exploit the potential of his division assets. He added that BHP is well positioned for a drop in prices as the company’s production costs remain below USD 40 per tonne.

Rio Tinto has targeted increasing production in the region to 433 million tonnes from an existing capacity of 225 million tonnes per year.

2. Price Outlook

The increase in supply, estimated to increase 53 percent by 2015 has prompted analysts to take a bearish outlook for iron ore prices, and consequentially the earnings potential for the mining firms.

According to the median estimates of 10 analysts surveyed by Bloomberg News “Global prices may fall 29% to an average USD 123 a metric ton in 2015 from a record USD 173 this year. The survey also stated that reduced ore prices will cut the income of BHP and Vale as much as 50 percent by mid-decade.”

However, the dramatic increases in supply have not changed the optimistic outlook of the mining companies.

Mr Sam Walsh head of Rio Tinto iron ore division recently commented on the demand for iron ore “They are still very good price and we are shipping flat out.”

He added that he has had to smile at recent reports pointing to falling iron ore prices. Walsh also cited that the bulk of the new capacity will not come online until 2015, supporting prices over the next four years.

(sourced from ResourceInvestingNews)

Universal Coal increases coking coal resource for Berenice/Cygnus

Tuesday, 04 October 2011

South African-based coal producer Universal Coal has reported a 56 percent increase in the indicated and measured coal resource for its Berenice/Cygnus coking coal project in South Africa.

At the Berenice/Cygnus coking coal project, the JORC Resource has now increased to 1.3 billion mt, which was achieved after the company received analytical data from infill holes - which were completed during the first phase drilling program.

Universal Coal's chairman Tony Harwood commented on the positive news for the company, stating, "We are delighted with the increase in the resource base at Berenice/Cygnus and in particular the significant increase in the JORC indicated and now defined measured tonnages.

Universal Coal are now proceeding with a detailed interpretation of the data and with the results of the full coking coal and coke analysis, expected later this month. A feasibility study is forecast to commence in 2012.

Tags: iron ore , raw mat , S. Africa , Africa , production , mining , South Africa
(sourced steelorbis)

Labrador Iron Mines makes first shipment of iron ore to China

Tuesday, 04 Oct 2011

Labrador Iron Mines Holdings Limited announced that the first shipment of LIM iron ore sailed today bound for China.

The Salt Lake City departed the Port of Sept-Iles at 4.50am EDT on October 3rd 2011 carrying a total of 167,167 wet tonnes of iron ore.

This ore was sold to the Iron Ore Company of Canada under the arrangements LIM has entered into with IOC for the sale and shipping of all of LIM's calendar 2011 iron ore production. The sale price for the iron ore is based on the actual realized prices to Chinese customers, less an allocation for handling, loading, shipping and sales costs.

Mr John Kearney chairman & CEO of LIM stated "This is a momentous day in the history of LIM and is the culmination of six years of endeavor. We are very proud to join the limited group of Canadian mining companies exporting iron ore and we are particularly proud that we have done so whilst maintaining our independence and without taking on debt. We now look forward to expanding on this first sailing in the months and years to come.