States to mine deep this time, auction of 12 non-coal blocks to fetch Rs42,892 crore
Auction of 12 non-coal blocks will fetch the host state governments revenue of Rs42,892 crore over the next 50 years. Six state governments — Karnataka, Rajasthan, Andhra Pradesh, Odisha, Chhattisgarh and Jharkhand — will earn Rs36,654 crore revenue in addition to the Rs6,238 crore royalty and funds over the 50 years of life of the auctioned mines, said a senior official in the mines ministry that handholds the states for the bidding process.
JSW Steel won three of the four iron ore mines in Karnataka auctioned between October 1 till late night on Tuesday. It won two Tungabhadra iron ore blocks by offering 81% premium for one block and 58.90% for another. On October 1, it bagged the Rama Rao Paol mine in the state at 90.82% premium over average price.
Baldota Group's MSPL won Lakshminarayanan mine in Karnataka offering an aggressive bid at a premium of 100% over the average price. The mine has 10 million tonnes of reserves. Bidding for two more mines including one diamond mine in Madhya Pradesh and one iron ore mine in Karnataka was on at the time of this report going to press.
The Hatupur mine in Panna district, first diamond block to be auctioned, is spread over 133 hectares with expected 0.604 million tonnes of reserves of 10.20 carat diamonds. Currently, the Panna mine run by state-owned NMDC Ltd is the only operational diamond mine in the country. Bidding for Hotur Traders mine in Karnataka was also going on, the official said.
Essar Steel had in February won the Ghoraburhani-Sagasahi iron ore mine in Odisha, the first iron ore to be auctioned by the government, offering a premium of 44.35% of the average price. Anil Agarwal-led Vedanta had emerged as highest bidder for Baghmara gold mine in Chhattisgarh. Vedanta had put in the highest bid of 12.55% of Indian Bureau of Mining price of Rs74,712 per troy ounce. One troy ounce is equal to 31.10 gram. The government expects to auction over 50 mines by the end of ..
http://economictimes.indiatimes.com/articleshow/54705239.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
Mines Auction: States to garner revenues of over Rs 35,500 crore
After a lackluster start earlier this year, mines auction is gathering pace with states set to get over Rs 35,500 crore as buyers lapped up 11 mines containing minerals such as iron ore, gold and limestone.
The first phase of auction saw miners bid for 7 mines - five limestone and one each of iron ore and gold. States will garner revenues of around Rs 15,070 crore from the blocks over a lease period of 50 years. The estimated value of these reserves is around Rs 31,125 crore.
In the second round, states have so far auctioned 4 mines - three iron ore and 1 of limestone. Through this the revenue that is set to accrue is to the tune of Rs 20,515 crore. The estimated value of reserves is about Rs 24,325 crore.
"Auctions are picking up pace. Industry is now bidding for mines. So far 11 mines have been successfully auctioned and through this states will garner revenues of more than Rs 35,500 crore," a senior government official said.
The total estimated value of reserves in these mines is around Rs 55,550 crore, he added.
In the second phase of mines auction, which started last month, Karnataka, Andhra Pradesh, Madhya Pradesh, Rajasthan and Jharkhand have offered a total of 29 mines.
Of these 29 mines, 14 are of iron ore, 12 of limestone and 1 block each of gold, diamond and copper.
During the first round held in the last financial year, states offered nearly 47 mines bearing minerals such as gold, iron ore, bauxite and limestone.
Analysts expect that there will be good response for iron ore mines, and gold and diamond too will see interest.
Good response to mineral blocks auction: Mines Secretary
As many as nine mineral blocks on auction, including two from Karnataka iron ore plots, had received good response, Balvinder Kumar, Secretary of Ministry of Mines, said on Tuesday.
Bids for the first iron ore plot in Karnataka were 90 per cent above the reserve price.
In the second mine, the bid was almost 100 per cent over the reserve price, he said, adding that the government will be getting above ₹25,000 crore by way of royalties over a period of 50 years.
"A total of seven blocks are also being put up for auctions by the state government of Karnataka and we expect extremely good response in these seven mineral areas," Kumar said, while inaugurating an Assocham conference on 'India Mining Summit 2016'.
On the issue of minimum import duty hike or minimum import price (MIP) on aluminium industry, Kumar said, "We are examining this matter in depth and two-three rounds of discussions have taken place with different segments of aluminium industry. So, either we may go for MIP or alternatively increase the import duty but we want to develop a consensus among the different segment of aluminium industry. We are working on it and in next 15 days will take a decision on this issue."
By the end of this fiscal year, minimum 40-50 mining leases are to be auctioned by various states. As many as 15 category C mines were re-auctioned, which were earlier cancelled by the Supreme Court.
To check illegal mining across the country through imaginary from National Remote Sensing Centre (NRSC), Kumar said, "We are going to monitor all the mining areas through the satellite imaginary. We will launch a mobile app where anybody can upload a photo of illegal mining."
Delhi high court says clubbing end-uses of coal mines can lead to arbitrariness
The Delhi high court on Wednesday held that clubbing separate and distinct end-uses of coal mines for an auction would result in unequals being treated equally and lead to arbitrariness.
A bench headed by Justice Badar Durrez Ahmed, however, dismissed pleas by four companies against the Centre's decision to classify coal blocks into either power or non-power categories during the 2015 auction due to different reasons.
The four companies -- Monnet Ispat and Energy Ltd, Jayaswal Neco Industries Ltd, Bhushan Power and Steel Ltd, and Utkal Coal Ltd—had challenged clubbing of specific end-uses of the mines and contended it to be in violation of provisions of the Coal Mines (Special Provisions) Ordinance, 2014, which has now been replaced by an Act.
Recognizing that clubbing of end-uses would have an adverse impact on the core sectors, the 94-page order held, "Requirements, mechanics and economics for bidding for coal blocks with specific end-uses would be different, putting them together in one category would be adversarial."
Prospective bidders who would want to use coal for a specified end-use such as 'iron and steel' would be different from bidders who wanted to utilize coal for 'cement' or for 'captive power plants', the order held.
It was alleged that the Centre did not have powers to club or split the end-uses of coal mines. For instance, the end-uses of 'iron and steel' and 'cement' could not be clubbed together. It was further submitted that the Centre could not create a new end-use called 'non-regulated sector'.
Monnet Ispat contested the change of end-use of the mine, Gare Palma IV/5, from the production of iron and steel to being classified for the non-regulated sector. Similarly, Bhushan Power said that it could not bid for Jamkhani coal block in Odisha if aluminium companies were also allowed to compete.
Jayaswal Neco, Monnet Ispat and Utkal Coal Ltd had also challenged the clubbing of end-uses after they found themselves unable to compete under the auction process.
It was submitted that allowing clubbing of specific end-uses would result in violation of a level playing field as one end-use would have an advantage over the other.
Specified end use has been defined to mean production of iron and steel, generation of power including the generation of power for captive use, washing of coal obtained from a mine, cement and other end-use as the Central government may specify.
Under a Central government notification dated 18 December, 2014, all coal blocks were categorised into 'regulated' and 'non-regulated sector' based on their end-use.
The new classification, 'non-regulated sector' was to include 'iron and steel', 'cement' and 'captive power plants'- all of which were separate end-uses. Such clubbing of distinct and specific end uses was challenged by the power companies.
HC faults centre move over coal blocks; check out why
The Delhi High Court on Wednesday faulted the Centre's decision to club the end uses, namely sponge iron and steel, cement, and captive power plants, within the non-regulated sector for coal block
auctions, saying it would "amount to arbitrariness".
"The objective behind the ordinance is for best utilising the reserves of coal and for allocating the same in such a manner that there is no adverse impact on the core sectors of iron and steel, cement and power. Therefore, the clubbing of different specified end-uses together runs counter to the logic of classification itself. This is apart from the other difficulties of treating unequals equally which in itself would amount to arbitrariness.
"Therefore, in our view, the specified end-uses could not be clubbed together. Each coal mine had to be classified for a specific end-use," a division bench comprising justices BD Ahmed and Sanjeev Sachdeva said, accepting the stand of various companies on the issue. Monnet Ispat and Energy, Uktal Coal, Jayaswal Neco Industries and Bhushan Power and Steel (BPSL) had challenged the government's decision to clubbing of the end uses within the non-regulated sector, saying the move was against the provisions of the 2014 Coal Ordinance which state that core sectors -power, iron and steel and cement needed to be protected.
The companies argued that the auction process did not distinguish between what is the final use of the captive power plants and allows industries apart from the core sectors of iron, steel and cement, to bid for captive power plants.
As a result, the end use of a coal mine is altered on the basis of who bids the highest. A coal mine that was previously being used to produce captive power for a steel plant can thus be allotted to an aluminium producing company just because the latter is able to bid more, even though aluminium is not a specified end use under the coal ordinance, they stated.
However, the HC dismissed the petitions by the four companies for different reasons—like they had come to the court after delay and after participating in the tender/auction process.
Maintaining that such a decision had in many cases led to "cornering" of the mines by the aluminium companies like Hindalco Industries and Bharat Aluminium Company, BSPL had also challenged the two-round financial bidding process under the 2015 coal auction, saying such a method was "arbitrary and irrational" as the ordinance and the rules under it did not provide for such a procedure.
http://www.financialexpress.com/india-news/hc-faults-move-to-club-end-uses-of-coal-blocks/407837/
Arch Coal Emerges from Chapter 11
Arch Coal Inc. emerged from bankruptcy Wednesday after winning court approval on a turnaround plan that clears nearly $5 billion in debt from the coal producer's books.
Chief Executive John W. Eaves said Wednesday that the restructuring has repositioned Arch to succeed in a recovering energy market.
"We are particularly pleased to be emerging in a resurgent metallurgical market, and look forward to similar strengthening in thermal coal markets in the months ahead," Mr. Eaves said.
The reorganized company resumed trading Wednesday on the New York Stock Exchange under the ticker ARCH.
Shares of Arch Coal were at $63.75 in midday trading Wednesday.
Equity in the old Arch was wiped out under the company's chapter 11 plan.
Arch exits chapter 11 protection with more than $300 million of cash on its balance sheet and a debt level that is 7% of what it was before the reorganization.
Arch filed for chapter 11 protection in January after a failed effort to restructure its debts outside of bankruptcy court. At the time, over a quarter of U.S. coal production was in bankruptcy, trying to reorganize to cope with prices that had fallen 50% since 2011, battered by competition from natural gas and new environmental rules.
The U.S. Bankruptcy Court in St. Louis confirmed Arch's chapter 11 plan of reorganization in September.
The plan, a product of settlement talks with junior creditors, reduces Arch's debt load by about $4.7 billion and ensures that the company will be a "lean, mean, fighting machine for the coming era, which will remain challenging and complicated for the U.S. coal industry," Arch bankruptcy lawyer Marshall Huebner said in court last month.
Unsecured creditors including bondholders are slated to receive $30 million in cash and 6% of the new shares, according to court papers. Bondholders also get to choose between warrants to buy up to 12% of Arch's new common shares or $25 million in additional cash. All of the stock distributions are subject to dilution by the warrants and a management incentive program.
Arch's exit follows SandRidge Energy Inc.'s announcement Tuesday that it has emerged from chapter 11 protection. The oil and gas driller received approval to relist on the New York Stock Exchange under the ticker symbol "SD."
SandRidge's restructuring plan slashed $3.7 billion from its books and put the company in the hands of a group of bondholders.
—Jacqueline Palank contributed to this article.
http://www.wsj.com/articles/arch-coal-emerges-from-chapter-11-1475684184
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