Ministry raps UP government for allowing arbitrary mining lease allotment
The mines ministry has reprimanded Uttar Pradesh for its decision to allow arbitrary allotment instead of a transparent auction for mining leases and contracts for some minerals such as gypsum, mica, quartz and sand, and is considering issuing a directive to overrule the state action.
Mines Secretary Balvinder Kumar said the Centre has taken cognizance of the matter and has given a stern warning to Uttar Pradesh to amend the minor mineral concession rules. “The Centre may issue a directive to Uttar Pradesh if the state does not change the concession rules. MMDR (Mines and Minerals Development and Regulation Amendment Act) empowers Centre to do so,” he told ET.
Last June, Uttar Pradesh amended its minor mineral concession rules as per which applications will be called by the state for awarding mining contracts for minerals such as gypsum, mica, quartz and sand. Government officials say that the state’s action is contrary to the spirit of the Supreme Court’s orders against arbitrary allotment of mines.
The state has been mired in controversies surrounding illegal mining. On September 9, Allahabad High Court rejected its plea seeking withdrawal of a previous order directing a CBI enquiry into allegations of illegal mining across Uttar Pradesh. Following this, Uttar Pradesh Chief Minister Akhilesh Yadav sacked mines minister Gayatri Prasad Prajapati for alleged nexus with the mining mafia. Prajapati was, however, re-inducted in the state cabinet on Monday. As per new rules, Uttar Pradesh will allot mining contracts based on assessment of applicant’s capabilities in some cases and on first-come-first-serve basis in other cases. New rules do not provide for auctioning the blocks as mandated by the MMDR Act.
Kumar has written to Uttar Pradesh Chief Secretary Deepak Singhal seeking modification to the process of arbitrarily allotting mining contracts.
“Recently, the state has amended the Uttar Pradesh Minor Mineral (Concession) Rules, 1963, wherein it is observed that state government has more or less reiterated the old method of grant of mineral concessions. However, this falls short of a transparent and non-discriminatory method of grant of minerals concession, which is the need of the hour. In this day, when the Hon’ble Supreme Court has observed upholding for such a method of grant of mineral concessions as suction, it would be improper to say the least if we still continue with age old method of grant of mineral concessions,” Kumar said in the letter.
New Mining Law: No prior clearance for stuck mining proposals, says Environment ministry
Before January, 2015, while signing the letter of intent (LOI) with any company, a number of state governments — such as Rajasthan and Madhya Pradesh — had promised them an environment or forest clearance before the grant of mining licence. However, the environment ministry has now told the Union mines ministry that there is no provision in the law which obliges it to give a prior clearance for any such proposal.
As per government data, around 65 and 45 such proposals are stuck for the want of the environment and forest clearance respectively, either with the state or the Centre. In total, around 288 non-coal mining proposals are stuck at various levels. With the January 11, 2017, deadline looming large, the Centre is learnt to be working overtime to clear them as soon as possible.
“Gyanesh Bharti, joint secretary, Ministry of Environment, Forest and Climate Change, ruled out the prospect of granting any sort of general or conditional or provisional environment clearance by the environment division, for facilitating lease execution in such cases, under the provision of Environment Protection Act (EPA) and rules there off,” the minutes of the meeting, which took place on September 20, between environment ministry and mines ministry, noted.
The 288 cases — including the 65 and 45 cases stuck for the want of environment and forest clearance respectively — are unique as the proposals were under process either with the state government or the Centre even before January 2015, when the new mining law came into effect. Under the old law, the firms were granted mining licences by the states on a discretionary basis. The new law introduced a new way of granting mining licences — through auction.
While the new law stipulated that all licences henceforth would be granted only via auctions by the respective state governments, it also said that if any firm was issued a LOI by the state under the old law, the license for that block should be directly granted by January 2017. Moreover, if any proposal has been approved by a state government under the earlier law, but got stuck with the Centre, the licence for that too was required to be issued by January 2017.
With environment ministry showing the red flag, the mines ministry is likely to take the opinion of law ministry regarding this issue. It is checking if the mining licence could be granted by the state governments by imposing a condition that all legal requirements of the EPA (including getting an environment clearance) would have to be fully met by the company itself before the mining operations commence.
About forest clearance, the Union environment ministry has given a similar opinion as that for environment clearance. During the meeting, it told the mines ministry that in case a conditional clearance is given, the company would be free to mutate the forest land in its favour and would use it for non-forest activities and the very purpose of the need for ‘forest clearance’ would be defeated. Therefore, no prior or conditional or provisional forest clearances can be given for quicker grant of mining licences.
The central government is likely to auction the 288 mines, in case they are not granted to the companies — by respective state governments — by January, 2017. However, the companies may then take the cases to court as the new mining law clearly stipulates that they should get the licences for these mines on discretionary basis by the state governments as mentioned in the LOI.
Karnataka plans to club iron ore mines getting poor response
Karnataka is planning to club 7 iron ore mines that have failed to generate adequate response from the private sector in the ongoing mines auction and is likely to approach the Supreme Court for approval.
The second phase of mines auction kicked off on a mixed note with 10 firms including NMDC, JSW Steel and Vedanta vying for 7 mines out of the total 14 as the rest did not find favour with industry.
Firms say lower quantity of reserves and low quality of iron ore coupled with other factors impact the economic viability of these mines, a government official said.
"Karnataka government is now working on clubbing these mines so that they become viable for the companies, especially for pig iron and pellet makers. The state will have to approach the Supreme Court for this as these 14 mines are the same ones that were allowed for auction," the official said.
On the timeframe, he said it is also being discussed with the Union Mines Ministry and after that the state government will decide when to approach the apex court.
In July 2015, Supreme Court directed Karnataka government to commence the auction 'C' category iron ore mines in which end-user firms dealing in steel, sponge iron or pelletisation only would be able to take part.
The state government had in September 2013 cancelled 51 'C' category mining leases following an apex court order.
Karnataka has offered a total of 14 'C' category iron ore mines, which have average Fe content in the range of 40 to 59 per cent. The eAuction is slated for the first and second week of October. The total estimated iron ore reserve is close to 200 million tonnes (MT).
Ten companies including state-run iron ore miner NMDC, Sajjan Jindal-Led JSW Steel and billionaire Anil Agrawal-led Vedanta Ltd have shown interest in 7 mines, which have a total estimated reserve of around 140 MT.
The rest did not get adequate bids as the firms felt that low reserves does not make it viable from them to bid. Another issue was their distance from production facilities, he added.
Only exception in these 7 rejected mines is the Nidhi Mining block, which has a little over 10 MT of reserves and has an average Fe content of more than 58 per cent.
According to the government data, domestic production of iron ore was 169 MT in 2011-12 and 137 MT in 2012-13 as against consumption of 101 MT and 103 MT.
In 2015-16, the country mined about 155 MT of the ore as against 129 MT in the preceding year.
CIL to offer 20 MT coal under special spot e-auction
State-owned CIL today announced one-time offer of 20 million tonnes of coal under special spot e-auction in the ongoing fiscal.
"...One time offer of 20 MT Coal under Special Spot e-auction 2016-17," Coal India (CIL) said in a filing to BSE.
It added: "The relevant modalities, coal company-wise tentative offer, registration modalities, schedule dates of the auction and other details will be available on the website of...Subsidiary coal companies of CIL and those of Service providers viz. MSTC Ltd and Mjunction Services Ltd from September 28, 2016."
The Coal Ministry had earlier said that power producers being supplied coal through the MoU route by CIL will have to take it via special e-auction being conducted for the power sector.
CIL, a major supplier of coal to the power sector, is eyeing 1 billion tonne production by 2020.
Coal India buyback offer to open on October 3
The share buyback programme worth Rs 3,650 crore of Coal India would open next week on October 3. The state-owned company informed about the "Letter of Offer" in a BSE filing. SBI Capital Markets is the manager to the buyback offer that closes on October 18. The offer would be for buyback of equity shares not exceeding 10,89,55,223 of face value of Rs 10 each at a price of Rs 335 per equity share for cash aggregating up to Rs 3,650 crore on a proportionate basis, from the eligible shareholders by way of a tender offer through the stock exchange mechanism, the filing said. "The offer size represents approximately 24.95 percent of the aggregate of the fully paid-up share capital and free reserves, as per the audited accounts of the company for the financial year ended March 31, 2016 and is within the statutory limits of 25 percent of the aggregate of the fully paid up share capital and free reserves...," it said. The government has approved buyback of shares by PSUs as it feels leveraging surplus cash would be the best option for them rather than going for disinvestment. Buyback helps a company reduce equity by using idle cash and hence provide better returns to shareholders. The government aims to collect Rs 56,500 crore through disinvestment in PSUs this fiscal.
http://www.moneycontrol.com/news/business/coal-india-buyback-offer-to-openoctober-3_7525801.html?utm_source=ref_article
Lanco Infratech Limited is looking to sell 1200mw coal-fired Anpara Power plant in Uttar Pradesh to bring in additional equity required to complete the under-construction power plants totalling 4000mw
Reliance Power to double two power plant capacities
Reliance PowerBSE 0.39 % is all set to double the capacity of its Rosa and Butibori power plants to 2,400 MW and 1,200 MW, respectively, even as a solar plant will be set up with a capacity of 300-400 MW, the company's Chairman Anil Ambani said on Tuesday.
"We look at future opportunities with great caution. We will not expand just for the heck of it. In the near future, we will expand the capacity of our existing thermal plants at Rosa in Uttar Pradesh and Butibori in Maharashtra," Ambani told the company's shareholders here.
Ambani said Reliance Power has signed an agreement with Bangladesh for setting up a 3,000 MW gas-based power project. "This will be the largest foreign investment there. The government of Bangladesh has granted approval for 750 MW of Phase I at Meghnaghat near Dhaka."
Ambani said the company has completed Phase I of Rs 50,000 crore capital infusion programme in record time. Reliance Power has an operating capacity of 6,000 MW. It is also the largest private sector coal producer in the country with 20 million tonnes per annum capacity.
In April 2015, Reliance Power terminated its deal for Tilaiya ultra mega power plant, as land acquisition was not fulfilled. This reduced the capital expenditure by Rs 36,000 crore, he said, adding that similar route was being examined for the Krishnapatnam ultra mega power project, with an impact of Rs 20,000 crore.
http://economictimes.indiatimes.com/articleshow/54552142.cms?
Iron ore dips as analysts temper bearish forecasts
The iron ore price has edged down for the second day in a row, even as another investment bank upgraded its assumptions after the commodity has remained stubbornly resilient this year.
Iron ore fell 0.4 per cent to $US56.20 overnight, according to The Steel Index, from $US56.40 the previous day.
Most analysts expect the commodity to continue declining from current levels, but its surprising strength over recent months has prompted a number of revisions to more bearish forecasts.
Analysts at Morgan Stanley have upgraded their iron ore forecasts by 11 per cent for 2016 and 27 per cent for 2017, the bank said in a research note.
The upgrade is a positive for mining giant BHP Billiton, one of the bank’s preferred mining stocks.
“Although we still expect iron ore prices to reach a low in the December quarter of 2016, we view fiscal 2016 as the trough year for free cashflow,” Morgan Stanley said.
The bank has lifted its net profit expectations, saying a previous estimate was low due to an “aggressively low iron ore price forecast”, increased its price target and reaffirmed its overweight rating on the company.
“On current prices [$21.50], our new price target [$27.50] offers the second most upside in our coverage universe,” Morgan Stanley said. “The company has the capacity to raise dividends, options to reinvest and the benefit of a slightly more diversified commodity mix.
“Ongoing unit cost reduction and a suite of quality assets remain fundamental drivers of our positive view.”
Meanwhile, the less bearish iron ore assumptions are also a positive for rival Rio Tinto, Morgan Stanley said, reaffirming an overweight rating and lifting its price target.
“There are some specific issues that warrant attention, but we remain positive on the equity,” the bank said.
In London trade, BHP shares fell 1.5 per cent, while Rio Tinto lost 1 per cent
Stunning coking coal rally wreaks havoc in steel, iron ore
The rise in the price of coking is upending the economics of the iron ore and steel markets with the Australian export benchmark price climbing 164% so far this year.
Metallurgical coal was exchanging hands at $206.40 on Monday according to data provided by Steel Index as it consolidates at higher levels following weeks of panic buying not seen since 2011, when floods in key export region in Queensland sent the price surging to $335 a tonne (albeit not for long).
The rally was triggered by Beijing’s decision to limit coal mines' operating days to 276 or fewer a year from 330 before as it seeks to restructure the industry. Safety closures and weather related supply curbs in China and Australia only added fuel to the fire.
In a new research note Adrian Lunt of the Singapore Exchange says margins for steelmakers in China, which forges almost as much steel as the rest of the world combined have come under pressure again and the tight conditions may continue:
"The recent spike in coking coal prices has sent spot steelmaker margins plummeting back to around their lows last seen in Q4 2015. And unless coking coal prices reverse course soon, this is likely to weigh on steelmaker earnings through the course of Q4 2016, particularly as restocking needs have provided some support to iron ore prices
"With Chinese steel output remaining strong and demand sentiment relatively robust (with continued support from both real estate and infrastructure in particular), steelmaker margin pressures appear likely to persist over the coming months."
While the price of iron ore has also recovered this year – up 31.5% year to date holding above $55 a tonne on Monday – the iron ore/coking coal ratio is now at its lowest level this century according the SGX calculations.
Analysts from Macquarie recently warned that speculation as much as fundamental factors are driving the price with a mere half-a-million tonnes (out of a seaborne trade of 200 million tonnes a year) responsible for the August-September surge to above $200.
Most producers, with the exception of BHP Billiton which set up globalCOAL a few years back, do not receive the spot price but the ruling quarterly contract price which is still in double digits.
In an earlier report The Steel Index noted that speculation that the upcoming quarterly contract negotiations for the October – December 2016 period "may be rather combative" and that according to market participants, Japanese steelmakers will undoubtedly face levels “at least above US$120/t” in the final quarter of 2016.
Warm Regards
Anurag Singal
Sr. Manager-Business Development
EMIL, Aditya Birla Group
+919088026252, 033-30518415
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