Export of iron ore through MMTC

Tuesday, 20 Mar 2012

Mr Jyotiraditya M Scindia minister of state for commerce and industry, said that under the extant Foreign Trade Policy, export of iron ore with Fe content 64% and above (except iron ore of Goa & Redi origin) is under the State Trading Regime through MMTC Limited.

However, the feasibility of nodal agency operation, as an interim measure, to cover exports of most grades of iron ore as an accounting procedure is under examination, to enforce legitimacy and tighter regulation of iron-ore exports and compliance with mining regulations. Procedures for end-to end monitoring of mineral movement (from mining stage to end-use/export) and mandatory registration of and reporting by all stakeholders would help to establish the traceability of the ore thereby ensuring that it is sourced through legal mining operations.

To ensure domestic availability of iron ore, Government has raised the ad-valorem export duty on iron ore lumps and fines to 30% and imposed differential railway freight on iron ore meant for export.

Source - PIB

Indonesia forces miners into new deals

Tuesday, 20 Mar 2012

BHP Billiton and Newcrest will be forced to renegotiate their long standing mining leases under controversial new divestment laws in Indonesia.

A senior official in Indonesia's Department of Mines and Energy has confirmed that all companies without exception, must implement the new policy under which foreigners cannot own more than 49% of a mining project in the country.

But the details of the divestment for projects operating under existing contracts are subject to negotiation.

The regulation, which was signed by the Indonesian President, Susilo Bambang Yudhoyono, last month but only published last week, has caused turmoil in the global mining industry as companies that have billions in assets try to work out what it means.

The divestment must start taking place after a mine has been in production for five years, and be complete after 10 years.

BHP and Newcrest have both stated recently that they expect to be unaffected by the new rules, despite holding majority stakes in Indonesia's Indomet and Gosowong mines respectively.

But Mr Sujatmiko a senior adviser to Thamrin Sihite, the director-general of mines and energy, told BusinessDay that even existing miners working under older leases, called contracts of work, would be required to divest.

Mr Sujatmiko said that "In the case of contract of work like PT Nusa Halmahera Minerals [Newcrest's Gosowong project] and Coal Contract of Work like Indomet Project-BHP group, applying [the law] will depends on result of renegotiation between Government and company.”

"To adjust those contracts, government and companies [are] doing renegotiation now and agreement hasn't happened between both parties to date."

Source - www.watoday.com.au

Transnet delivers wagons to Mozambique

Tuesday, 20 Mar 2012

Public Enterprises Minister Malusi Gigaba marked the shipping of the last 98 of the 200 wagons and spare parts designed, engineered and manufactured in Transnet Rail Engineering's facility in Uitenhage, Eastern Cape.

The wagons, which were built for global mining giant Rio Tinto, will be carrying coal from the company's coking coal mine at Moatize in Mozambique's Tete province to the port of Beira.

The wagons and two containers with spare parts were railed from Transnet Rail Engineering's Wagon Business at Uitenhage about 23km from Port Elizabeth to the Port Elizabeth harbour where they were loaded on the MV Thorco Sunrise SW cargo vessel, which departs for Mozambique on Friday.

Gigaba said that "This is a particularly proud moment for us not only because of the significance of this achievement but because of the stringent standards we imposed on ourselves to satisfy our customer. The design, development, prototyping, industrialization and starting production of this new wagon were accomplished in less than five months an impressive lead time by any international standards."

In line with Transnet's commitment to the competitive supplier development program, 85% of the raw materials and components used to manufacture the wagons were sourced locally or built in-house. Only the draw gear and a few specialized components were imported.

Chief executive Brian Molefe said that "A total service solution is key to our customer satisfaction strategy. For this reason and to maximize the life-cycle of the wagons and to ensure a low total cost of ownership, we will be sending our experts to train and supervise local staff in the maintenance of these wagons in Mozambique.”

The wagon business at Uitenhage specializes in manufacturing, conversion, heavy repair and upgrading of railway wagons for domestic fleets. It supplies wagons to the east coast intermodal operators of Tanzania and the west coast mines of Ghana.

Source - www.businesslive.co.za

Vale to reopen Carajas iron ore rail track

Tuesday, 20 Mar 2012

Bloomberg reported that Vale SA said that it will reopen operations at a railroad that transports production from the world’s largest iron ore mine after an accident lowered shipments by 300,000 tonnes.

It said “Vale has taken all the necessary measures to restore the railway traffic.”

Vale said “Traffic at the Carajas railroad in northern Brazil will resume and the expected iron ore shipment loss is relatively small. The company may be able to offset the loss by increasing shipments from other ports such as Tubarao, Ilha de Guaiba and Itaguai.”

Vale shut the Carajas railroad after part of a bridge it was building next to the railroad collapsed March 16 when 7 workers suffered light injuries.

The railroad links the Carajas mine with the Ponta da Madeira port in Brazil’s northeastern state of Maranhao, from which Vale exports iron ore to clients as far away as Asia. Vale produced a record 109.8 million tonnes of iron ore in Carajas last year, or about 34% of its total output.

Source - Bloomberg

Resource super profit tax - Australian miners unhappy

Tuesday, 20 Mar 2012

The Association of Mining and Exploration Companies, which represents small and mid tier miners, condemned the tax.

Association chief executive Mr Simon Bennison said “The tax is simply unfair to smaller emerging miners, and is so complex that the administrative and compliance burden on industry and government will be extreme. “The introduction of this anti-competitive legislation in Australia will only further push investment capital offshore, and change our reputation as a safe place in which to invest.”

Source - Reuters

More coal imports likely following duty reduction

Monday, 19 Mar 2012

Seeking to address the coal shortage affecting the power and steel sectors, government has announced a slew of measures for enhancing its availability in the Budget, a development welcomed by Coal India Ltd.

Mr Zohra Chatterji CMD of CIL said that "We welcome the removal of import duty on coal.”

The Coal Ministry is of the view that development would lead to an increase in import of fossil fuel to the country.

While presenting the Budget for 2012-13, Finance Minister Pranab Mukherjee said that "I propose to ease the situation by providing full exemption from basic customs duty and a concessional CVD (Countervailing Duty) of 1% to steam coal for a period of two years till March 31, 2014."

On the proposals, Coal Secretary Mr Alok Perti said that "The exemption will result in increase in import of non-coking coal by around one million tonnes as the prices of the dry fuel would come down.”

The coal ministry had pitched for the reduction in the duty and had even written to the Finance Ministry on the same prior to the budget announcement.

Singareni Collieries Company Ltd CMD S Narsing Rao, however, said the duty exemption would not have much impact on the domestic coal industry.

The government has proposed to remove 5% customs duty on non-coking coal.

According to an official in the state-owned firm, the duty exemption will also result in reducing the demand-supply gap of fossil fuel.

Power sector is one of the main consumers of non coking coal and nearly two third of the electricity generation in the country is coal based.

The power sector is likely to miss the non-coking coal import target of 55 million tonnes for the current fiscal as companies have imported only 30 million tonnes till December.

Source - www.indianexpress.com

Supply shortage continues in Karnataka

Monday, 19 Mar 2012

Business Standard reported that the postponement of the Supreme Court verdict on illegal mining in Karnataka has put steel producers in a quandary as most of them have already cut production because only low grade iron ore is available from the E auctions of the Metal Scrap Trading Company.

The Supreme Court said that the three judges hearing the case will not be available for hearing on March 16. Last month, the apex court had adjourned the hearing on the case by two weeks to enable the Central Empowered Committee to hear the responses of the affected companies and the State Government.

Mr Seshagiri Rao joint MD of JSW Steel said the company has to cut down its capacity utilization to 70 per cent in February against 90% in January due to poor quality of iron ore being supplied by Metal Scrap.

He added that “We have about three to four million tonnes of iron ore stockpile left with us. The question now is whether we should be using it. Use of low grade iron ore is taking a heavy toll on our furnace.”

He added that “Unlike coal, iron ore cannot be imported as it will be unaffordable. The costs will increase substantially even if we have to source it from other states. Even if the Court allows opening up new mines in the state, it will take at least two to three months to start mining.”

Karnataka produces 16 million tonnes annually of iron and steel, constituting about 24% of the country's production of 66 million tonnes annually. Karnataka also supplies iron ore to companies located outside the State.

Source - Business Standard

FMG sees iron ore at USD 120 to USD 150 per tonne near term

Monday, 19 Mar 2012

Fortescue Metals Group chief executive Mr Nev Power sees iron ore prices holding between USD 120 and USD 150 per tonne in the near term, on Thursday after the company raised USD 2 billion to help fund a tripling in its iron ore capacity.

Source - Reuters

SA bulk export volumes dropped by 21.2pct MoM in February

Saturday, 17 Mar 2012

Transnet National Ports Authority data showed on March 13th 2012 that SA's bulk export volumes dropped by 21.2% MoM in February 2012 from January 2012 as mostly iron ore exports out of Saldanha slumped by 48.6% MoM to 2,571,174 tonnes.

Although 2012 is a leap year, there were still only 29 days in February 2012 compared with 31 days in January 2012, so ports had 6.5% less time to load goods. That is why the YoY comparison makes more sense, but weather can also disrupt port operations such as the recent Cyclone Irina.

The YoY change in February 2012 was a 9.4% drop to 10.651 million tonnes after January's 28.1% YoY surge to 13.513 tonnes. The high YoY growth rate is in part due to poor weather in January 2011 that disrupted port operations.

Bulk exports rose by 6.6% in 2011 to a record 141.493 tonnes after a 9.0% jump in 2010. The YoY increase in the first two months of 2012 was 8.3%.

The slower growth last year was in part due to weather related disruptions as well as cable theft on the Mpumalanga Richards Bay coal line, which has resulted in derailments and other disruptions to traffic.

The coal line was closed for 20 days in May and June 2011 to do necessary maintenance and in October exports out of Richards Bay exceeded 8 million tonnes or an annualized 96 million tonnes, but this eased to 7.3 million tonnes in November 2011 before rising to 7.5 million tonnes in December 2011 and 7.7 million tonnes or an annualized 92 million tonnes in January 2012. In February 2012 Richards Bay shipped 7 million tonnes and shipments for the first two months are up 22.8% YoY.

In 2011, shipments out of Richards Bay, which are mostly coal, disappointed with a 1.4% rise to 76 million tonnes in 2011, while mostly iron ore shipments out of Saldanha Bay increased by 12.3% to 53.3 Mt. In January 2012 the y/y increases were 34.4% and 25.0% respectively, indicating that demand for these commodities remains very strong despite the global growth concerns.

The star performer last year was agricultural and manganese exports out of the other South African ports, such as Durban and Port Elizabeth, which jumped by 18.7% to 12.2 million tonnes, but in January 2012 there was a small 1.8% YoY decline to 0.8 million tonnes, while February 2012 saw a larger 8.5% YoY decline.

The majority of bulk exports go to Asia as China, India and Japan require South African coal and iron ore to feed their steel mills and thermal coal power stations.

As nuclear power stations in Japan have reduced their output after the March 2011 earthquake, Japan requires more coal to burn in their thermal power stations.

Source - Net Bridge

Thermal power maintenance market expands

Tuesday, 13 Mar 2012

The Saudi Gazette reported that rising electricity demand and new installations in Asia Pacific and Middle East markets stimulate thermal power maintenance market to 2020.

GBI Research, a leading business intelligence provider, said in its study that the global maintenance services market generated revenue of USD 15,552.5 million in 2011, 2.3% growth from the 2008 revenue of USD 14,623.1 million.

The coal fired power plant segment contributed the majority share of 62% to the total thermal power maintenance market with revenue from this segment amounting to USD 9,666.8 million in 2011. The gas fired power plants segment contributed a share of 32% in 2011 with revenue contribution of USD 5,017.3 million.

The oil plants segment contributed the remaining share of 6 percent with a total revenue contribution of USD 868.1 million in 2011. The maintenance services market is largely driven by electricity demand and the aging power infrastructure leading to increased demand for maintenance services.

Source - Saudi Gazette

China iron ore imports in Feb up by 34pct YoY

Tuesday, 13 Mar 2012

China Knowledge quoted according to the latest statistics released by the General Administration of Customs said China, the world largest iron ore importer and steel maker saw its iron ore import surged 33.6%YoY to 64.98 million tonnes in February this year.

The iron ore imports last month reflected a 9.5% increase from the previous month. In the first two months of this year, the country iron imports rose 5.7%YoY to 124.26 million tonnes.

The average import price of iron ore dropped 12.9%YoY to USD 136.4 per tonne in two-month period.

According to figures from the China Iron and Steel Association the 80 large and medium sized steel enterprises in China suffered a loss of CNY 2.32 billion in January this year whereas they made profit of CNY 7.91 billion in the same month of last year.

Sourced - China Knowledge

South African Coal prices fall to lowest level in three months

Tuesday, 13 Mar 2012

Bloomberg reported that coal export prices at South Africa Richards Bay, the continent biggest terminal for shipping the fuel fell to their lowest level in three months.

According to IHS McCloskey data on Bloomberg prices declined 50 cents or 0.5% to USD 103.85 per tonne in the week ended March 9, the least since December 16.

The price is quoted on a free-on-board basis, which excludes delivery costs.

Source - Bloomberg

Mozambique issues coal prospecting licenses

Monday, 12 Mar 2012

Bloomberg citing Mr Eduardo Alexandre National Mines Director as saying that Vale SA and Rio Tinto Plc are among the recipients of 20 coal prospecting licences issued by Mozambique for the Maniamba basin in northwestern Niassa province.

Mr Alexandre said the Maniamba basin covers 4,000 square kilometers and studies carried out so far have covered 870 square kilometres. He said that the government is working on a coal transportation system connecting the province.

Source - Bloomberg

Coking coal in US spot market falls

Monday, 12 Mar 2012

Bloomberg quoted Energy Publishing as saying that metallurgical coal prices on the US spot market fell last week because of slack demand.

According to Energy Publishing low volatility coal decreased USD 3.87 or 1.9% to USD 201.13 a ton and high volatility coal dropped USD 1.75 or 0.9% to USD 187.50.

The data provider wrote in a weekly report that “Price sentiment hasn’t collapsed on the buy or on the sell side, though it has gotten more bearish.”

Energy Publishing says it surveys buyers and sellers of coal to determine pricing.

Source - Bloomberg

Ethiopia to Partner with Progress Gulf to import coal

Monday, 12 Mar 2012

It is reported that Ethiopia petroleum enterprise is negotiating with delegates of Progress Gulf to import 25,000 tons of anthracite coal for use in smaller cement factories with vertical furnaces.

The shipment is expected to cost an estimated USD 4.2 million to supply a portion of the 360,000 tons of coal which is the projected annual demand for the small cement plants in the country.

The procedure to procure the coal was conducted by the Ethiopian Petroleum Enterprise, under mandate from the Ministry of Trade, which invited 6 companies to make offers in a closed tender. Progress Gulf won the tender making an offer of 168.4 dollars per ton of anthracite coal according to sources at EPE.

Smaller factories expected to make use of the anthracite coal due to their vertical kilns that make the use of steam coal unfeasible include Abyssinia, CH Clinker, Enchini Medrock, Jemma and Huang Shan.

Source - 2merkato