India will auction about 20 major iron ore mines this year in its first such sale ever, a top government official said, as it looks to revive its corruption-tainted mining industry. India's mining sector has been mired in controversy over illegal allocation of resources. Once the world's third-biggest iron ore exporter, the country now imports the steelmaking ingredient due to a court-led crackdown on illegal mining. The government hopes auctions will help curb wrongdoing. While it is unlikely to lead to an immediate boost in iron ore output at a time when there is a global glut, mine sales will bring India closer to its target of tripling its steel capacity to 300 million tonnes by 2025 and relying less on ore imports. "Most of the states are in the midst of carrying out their pre-auction activities and hopefully by the end of October and November onwards they will start (auctions)," Mines Secretary Balvinder Kumar told Reuters in an interview on Monday evening. He expects about 80 mines to be auctioned in the first phase, including limestone, gold and "about 20 iron ore mines". States are estimating reserves, Kumar added. India produced 136 million tonnes of iron ore last fiscal year ended March 31. About 1.5 million tonnes of ore are needed to make 1 tonne of steel, implying India's ore output will have to more than triple in 10 years if steel companies are to be self sufficient. Most of the iron ore mines being sold are in the southern state of Karnataka, known for its high-quality ore. This will greatly benefit local steelmakers like JSW Steel. Led by JSW's purchases, India's ore imports hit a record of over 15 million tonnes last fiscal year as global prices collapsed. Kumar expects prices to improve by the time the mines start. "The mining process takes two to three years because they will need all kinds of clearances: forest, environment, from pollution control board. (It) takes a lot of time to comply." POSCO STEELIndia's new law to auction mines instead of handing them over to private firms without competition could, however, prompt South Korea's POSCO to scrap plans for a $12 billion steel project it agreed to set up in India a decade ago. While a withdrawal by POSCO could dent Prime Minister Narendra Modi's "Make in India" manufacturing push, Kumar said the government cannot change its laws for individual companies. Kumar attended a meeting in Prime Minister Narendra Modi's office on Tuesday to consider options for POSCO's plans for the steel plant in Odisha state that was billed as India's biggest foreign direct investment. A source at the meeting said there was no concrete result from it and Odisha and POSCO have been asked to look at other options. Odisha's state mining company can be allotted a mine, iron ore from which can be sent to POSCO if they form a joint venture, Kumar said. Odisha has said that was a possibility but POSCO wants to see the details first.(Reuters)
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Coal futures have fallen to 12-year lows, hit by soaring production and a slowdown in global buying, including from India and China which until recently have been pillars of strong demand. Benchmark API2 2016 coal futures last settled at $52.85 a tonne, a level not seen since November 2003. The contract is now over 75 percent below its 2008 all-time peak and more than 60 percent below its most recent high following the 2011 Fukushima nuclear disaster in Japan. The steady and sharp fall in coal prices has knocked down shares of big mining companies like BHP Billiton, Glencore and Rio Tinto, and it has seen many financers exit the sector. The price fall follows a rise in output from exporters like Australia at the same time as a sharp slowdown in overseas orders from major importers like the United States, and now also China and India. "Indian coal imports are now under pressure ... Both thermal and met coal imports ran at their weakest annualised rates since October 2014," Australian bank Macquarie said on Wednesday. "Such a fall might not be just a temporary blip. On the thermal coal side we have seen power plant inventories reach record high levels, domestic production growth improve significantly and demand growth slow," it added. Thermal coal is used in power plants while metallurgical coal is used to make iron ore. Demand from China has also slowed as its economy grows at its slowest pace in decades and the government has started a fight against rampant pollution, to which coal contributes significantly. In the United States, soaring natural gas from shale formations has made gas much cheaper, eating into coal's U.S. power generation share, and the government also plans to move away from coal for environmental reasons. Demand in Europe has been flat as energy efficiency improves, renewables take increasing shares of the power mix and many of its economies struggle to grow. Yet at some point the low coal prices could also start to stimulate demand as it has made the fuel super-competitive against its main competitor, natural gas. Reuters calculations show that the revenues from selling electricity generated from coal in Germany are around 20 euros per megawatt-hour higher than those produced from natural gas. Emerging markets which have yet to provide blanket electricity to its households and need cheap energy to develop their industry also still mostly rely on coal as their main fuel as they prioritize low costs over environmental concerns. (Reuters)
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Backing the controversy-hit Indian mining giant Adani's coal mine venture in Australia, Prime Minister Tony Abbott has said the 16.5 billion dollar project was "vitally important" and "sabotaging" of such developmental plans using legal means was "dangerous" for the country. "If the courts can be turned into a means of sabotaging projects which are striving to meet the highest environmental standards, then we have a real problem as a nation," he said. "We can't become a nation of naysayers; we have to remain a nation that gives people a fair go if they play by the rules," Abbott said. His remarks came after a court this week revoked the environmental approval for the Adani project, which aims to build one of the world's largest coal mine in Queensland, opposed by green groups and local residents. Commonwealth Bank of Australia, the country's largest lender, has ended its role as financial adviser to Adani Mining's multibillion dollar Carmichael Mine, in a further blow to the controversial project. Environmentalists hailed the CBA's decision and said it cast more doubt on the project's future. In his strongest defence yet of coal production in Australia, Abbott stated that the overturning of the proposed Queensland Carmichael mega coal mine project means courts can be used to "sabotage" worthy projects. "As a country we must, in principle, favour projects like this," he told The Australian newspaper. "This is a vitally important project for the economic development of Queensland and it's absolutely critical for the human welfare literally of tens of millions of people in India," the Prime Minister said. Abbott said he is "frustrated" at the court's decision and asserted that the projects like Adani mine were too vital to be hindered by red tape. "If we get to the stage where the rules are such that projects like this can be endlessly frustrated, that's dangerous for our country and it's tragic for the wider world," Abbott said. "So we've got to get these projects right...but once they are fully complying with high environmental standards, let them go ahead. While it's absolutely true that we want the highest environmental standards to apply to projects in Australia, and while it's absolutely true that people have a right to go to court, this is a US$21 billion investment, it will create 10,000 jobs in Queensland and elsewhere in our country," he said. Abbott also said the mine would have a positive impact in India, where Adani is headquartered. "Let them go ahead for the workers of Australia and for the people of countries like India who right at the moment have no electricity. Imagine what it's like to live in the modern world with no electricity," the Prime Minister said. "Australian resources can give them electricity and the interesting thing about Australian resources is that invariably they're much better for the environment than the alternative," he added. (Agencies)
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Commonwealth Bank of Australia, the country's largest lender, has ended its role as financial adviser to Indian conglomerate Adani Mining's multibillion dollar Carmichael Mine, a further blow to the controversial project. The exit of CBA comes hard on the heels of a court decision on Wednesday revoking the Australian government's environmental approval for the coal mine, which at an estimated cost of up to $16 billion, is one of the world's biggest under construction. "We confirm that our advisory role has concluded. Due to client confidentiality we are unable to comment further," a CBA spokesman said. The development was first reported by Fairfax Media. Environmentalists hailed the CBA's decision and said it cast more doubt on the project's future. "As an adviser, Commonwealth Bank was in line to be a leading lender to Adani's Carmichael mega coal mine," said Julien Vincent, Executive Director at environmental campaigning group Market Forces. "Adani has not just lost hundreds of millions of dollars in debt finance that CBA could have brought, but the credibility that a major Australian institution's support brought to the project. That's a bigger, more embarrassing blow and could cost this project billions of dollars." "Eleven banks around the world have ruled out involvement in the Galilee Basin coal mines exporting through the Reef. With the US, China, Europe and India increasingly embracing renewables and the coal price in structural decline, pouring money into this dying industry doesn't make sense," said Senator Larissa Waters, Australian Greens deputy leader and climate spokesperson. Adani, which had suspended work in a number of areas on the mine because of delays in obtaining government approvals, said it had ended the bank's mandate over the holdups. "In the event the (government) approvals framework is not further undermined by activists seeking to exploit legal loopholes - thus enabling the project and the thousands of jobs and billions of dollars of investment it would bring to be delivered - Adani would happily work with the bank in future." (Agencies)
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An Australian court on Wednesday revoked the government's environmental approval for one of the world's biggest coal mines under construction in the Australian outback by Indian conglomerate Adani Mining. Environmentalists hailed the ruling against the controversial Carmichael mine as another setback for the project, estimated to cost up to $16 billion, which they say threatens two vulnerable species and will endanger the Great Barrier Reef. Adani, which recently suspended work in a number of areas on the mine as it awaits government approvals, attributed the ruling to a "technical legal error" and said it was confident the matter would be rectified. The Federal court ruled that the environmental approval granted to Adani in July 2014 by Australian Environment Minister Greg Hunt's office failed to include conditions to protect the yakka skink and ornamental snake. The Environment Department said Hunt would reconsider his approval in six to eight weeks, after taking into account an assessment of the impact on the two species. The challenge was launched by Mackay Conservation Group in January. Adani, which wants to ship millions tonnes of coal a year to India, has battled environmental opposition since starting work on the mine five years ago. "It's not project dead because of a stuff up by the environment department," Adani spokesman Andrew Porter told Reuters. Proponents argue the project is needed if Indian Prime Minister Narendra Modi is to keep his promise to bring electricity to hundreds of millions of people presently living off the grid. In April, French banks BNP Paribas and Credit Agricole said they did not intend to provide financing for coal mining in the Galilee Basin, joining several other European banks that have ruled out involvement on environmental grounds. Adani rival GVK is also seeking approvals to dig a mine in the basin, a 247,000-square kilometere expanse in north-eastern Australia. Adani said in a statement emailed to Reuters that it had been advised that a "technical legal vulnerability" had arisen because certain documents were not presented by the environment department in finalising the approval. "Adani is confident the conditions imposed on the existing approval are robust and appropriate once the technicality is addressed," the company said. The Environment Department said a "technical administrative matter" had arisen in the way advice was provided to the minister. "Without pre-empting a final decision about the project, the department expects that it will take six to eight weeks to prepare its advice and the supporting documentation, and for the minister to reconsider his final decision," the department said on its website. (Reuters)
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Sutanu Guru on why a decline in coal imports is both good and bad news In July, 2015, coal imports declined by 11 per cent to 19.3 million tons. This is the first time in more than one year that coal imports have declined. This seems in tune with the claims made by Union Coal Secretary Anil Swarup in July that the next three months will see a dramatic fall in coal imports. The steep decline in July also seems to in tune with a forecast made recently by Union Power & Coal minister Piyush Goyal that the current financial year will see an overall decline in coal imports to 210 million tons. Why should Anil Swarup and Piyush Goyal be happy with the steep decline in coal imports? According to them, one key objective of the Modi government when it came to power was to execute a strategy to dramatically increase domestic coal production in the country. Indeed, going by government statistics, coal output from state owned Coal India Ltd and other private producers increased by more than 40 million tons in the previous financial year. This increased domestic availability apparently led to a lower dependence on imports. The power and coal ministry has ambitious targets of almost doubling coal output in the country by 2019. For many years, the steep rise in coal imports by India had only become an embarrassment, but also a symbol of the economic policy failures of the UPA government. A brief recap of recent history is telling. In January, 2012, there were media reports that the then Joint Secretary Pulok Chatterjee of the PMO was given a specific task of heading a team to look into the problem of stagnating coal production and crippling power shortages. A few months after that, India had to face humiliation and derision as the entire grid in North India collapsed. From about 30 odd million tons a year of coal imports when he took over as Prime Minister in 2004, Dr Manmohan Singh left office in 2014 with annual coal imports in excess of 200 million tons. The relentless rise in imports continued even after Narendra Modi took over as PM and crossed 250 million tons in 2014-15. Not many mind the fact that India imports almost 80 per cent of its oil and gas needs. The country simply doesn’t have enough “discovered and recoverable” oil and gas. But India happens to have the third largest reserves of coal in the world. To import such massive amounts of coal when you are sitting on mountains of reserves is indeed scandalous. Add the coal block allocation scam that hit the UPA government and the dismal picture is complete. To that extent, the government deserves to pat itself on the back for at least reversing the trend of coal imports rising year after year. Yet, it is not all good news. The steep decline in imports in July reflects another ongoing crisis in the Indian power sector. Saddled with unpaid debts and dues in excess of Rs 4.5 lakh crores, power distribution companies in India simply do not have the cash to pay for power purchases. This, in turn, is forcing power generation companies to scale down output. The decline in July is evidence of that. Clearly, Minister Piyush Goyal has perhaps achieved just about 25 per cent of his ambitious targets related to coal and power. He has a little more than three years to achieve the balance 75 25 per cent.
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India's coal imports fell 11 percent to 19.3 million tonnes in July from a year earlier - the sharpest and the first drop in more than a year - as local supplies rose and money losing power generators held up purchases, commodities trader mjunction said. Prime Minister Narendra Modi has been credited with the turnaround in output by state-run Coal India, but he is now grappling with power distributors that are so deep in debt that they can't pay to buy power from generators. Power generators, as a result, are operating both below their capacity and last year's levels. "The demand for electricity from distribution companies is not growing the way it was projected to grow," mjunction Chief Executive and Managing Director Viresh Oberoi said in an email. "The poor financials (of distribution companies) that reduced their purchasing capacity is also one of the reasons for lower-than-expected electricity generation." India, the world's third largest buyer of foreign coal, imported 20 percent less of thermal coal used in power generation in July from a year ago, according to provisional data from mjunction. The last fall in total coal imports was in April 2015. Oberoi expects thermal coal imports to fall further, a prediction likely to cheer Coal Secretary Anil Swarup, who told Reuters late in July imports will come down "dramatically" in the next two to three months. Coal and power minister Piyush Goyal forecast imports will slide 3 percent in the year to next April, to 210 million tonnes, but government officials said actual purchases could be much lower. Government data on coal imports generally lags and varies from data from private firms such as mjunction, which collects information from more ports and includes additional coal grades. (Reuters)
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Former Jharkhand Chief Minister Madhu Koda, former coal secretary H.C. Gupta and seven others were on Friday put on trial by a special court in connection with a case pertaining to alleged irregularities in allocation of a coal block. Special Central Bureau of Investigation (CBI) Judge Bharat Parasar also framed charges against former Jharkhand Chief Secretary A.K. Basu, two public servants - Basant Kumar Bhattacharya and Bipin Bihari Singh - Vini Iron and Steel Udyog Ltd (VISUL), its director Vaibhav Tulsyan, Koda's alleged close aide Vijay Joshi and chartered accountant Navin Kumar Tulsyan in the case. The case pertains to alleged irregularities in allocation of Rajhara North (Central and Eastern) coal block in Jharkhand to VISUL. All these accused did not plead guilty to the charge framed against them and claimed trial after which the fixed the matter for August 17 for admission/denial of documents by them. "Separate charges against various accused persons have been framed. All the accused persons did not plead guilty and claimed trial," the court said. The court had ordered to put these accused on trial for the alleged offence of Section 120-B (criminal conspiracy) of the IPC. The court said Gupta also prima facie committed offence under section 409 (criminal breach of trust by public servant) of the IPC while Vaibhav Tulsyan, Joshi and VISUL prima facie committed offence of cheating under section 420 of the IPC. The charges under relevant provisions of the Prevention of Corruption Act were framed against five public servants -- Koda, Gupta, Basu, Singh and Bhattacharya. On July 14, the court had ordered to put these accused on trial noting that various acts of omission and commission committed by the accused prima facie made it clear that they had conspired with a "sole objective" to accommodate VISUL in Rajhara North (Central and Eastern) coal block in Jharkhand. The CBI, in its charge sheet, had said that VISUL had applied for allocation of Rajhara North coal block on January 8, 2007 to the Ministry of Coal. The CBI had alleged that although Jharkhand government and the Steel Ministry did not recommend VISUL's case for the coal block allocation, the 36th Screening Committee recommended the block to the accused firm. (PTI)
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To boost coal production , the government is working on a methodology for allocation of coal mines for commercial mining. "In order to augment production of coal to meet the demand in the country especially of the medium and small scale enterprises, the government is considering allocation of coal mines for commercial mining," Coal and Power Minister Piyush Goyal has said in a written reply to Rajya Sabha. "The methodology for allocation of coal mines for commercial mining is under deliberation," Goyal said. The minister further said Chhattisgarh Mineral Development Corp Ltd may apply for the allotment of coal mines for commercial mining as and when the notice inviting application is published by the Nominated Authority under the provisions of Coal Mines (Special Provisions) Act, 2015. In a separate reply, the minister said that a draft 'Model Contract Agreement' for mining of coal from auctioned/alloted coal mines in under finalisation. The government auctioned 29 coal blocks in two tranches early this year and had also alloted 38 coal blocks.(PTI)
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Adani Mining has suspended two major contractors on its $7.4 billion Carmichael coal project in Australia, the Sydney Morning Herald reported on Wednesday, raising fresh doubts about the project's future. Project manager Parsons Brinckerhoff and Korea's POSCO Engineering & Construction Co Ltd, which is also touted as an investor in the final project, were told late last week to stop work on the Carmichael mine, rail and port project, the newspaper said, citing sources. Company sources told the newspaper that senior Adani executives flew to India at the weekend for talks about the project's future. Both contractors have big roles in the project. Parsons Brinckerhoff are the principal project management consultants, while POSCO is due to build Adani's 388-kilometre (242 mile) rail line from the mine to the sea and take a financial stake in the development. Adani Mining said the latest suspension of work was due to delays in government approvals for the project. "The preliminary works contracts were previously sustained due to the level of investment Adani had maintained for more than 12 months in anticipation of a range of government decisions and approvals timeframes," Adani said in a statement. POSCO E&C said Adani had asked it to halt its design work as of July 16, with tentative plans to resume work in early October. Adani had raised concerns about the project's financing last month when it said it was rejigging the budget for the mine. Adani intends to ship most of the coal to India for use in generating household power, which would help Prime Minister Narendra Modi achieve his goal of connecting the whole country to the electricity grid during his tenure. The company said then that the project's budget, based on previous anticipated approval timelines and milestones, was no longer achievable due to delays in receiving various approvals from the Queensland state government. It also confirmed it had suspended the contracts of four engineering firms while waiting for those approvals. Adani has signed up buyers for about 70 per cent of the 40 million tonnes of coal the Carmichael project is due to produce in its first phase. The project mainly hinges on environmental approval to deepen a port on the fringe of the Great Barrier Reef in order to ship the coal, a proposal generating opposition worldwide. Greenpeace on Wednesday called on the Federal Environment Minister Greg Hunt to revoke the project's mining licence. "The burning of coal from Carmichael would produce 121 million tonnes of deadly carbon dioxide emissions every year at maximum production," said Nikola Casule,a Greenpeace climate and energy campaigner, "It would be a catastrophe for the climate and for the Great Barrier Reef." (Agencies)
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