NMDC, Midhani ink pact for tungsten ore mining
Iron ore mining public sector major NMDC Limited and Mishra Dhatu Nigam Limited (Midhani), specialist in developing metals and alloys, have inked an agreement to work on tungsten ore mining and processing for use in strategic defence areas.
PK Satpathy, Director (Production) on behalf of NMDC, and SK Jha, Director of Midhani, signed the memorandum in presence of Narendra K Nanda, Director (Technical) of NMDC, among others at the NMDC Corporate Office, according to an NMDC statement.
The tungsten metal is of strategic importance to the country, and is used in the manufacture of tungsten-based heavy alloy ammunition systems for armed forces.
Availability of Tungsten in India is limited and not being mined due to the lean ores. India’s requirement of this strategic mineral is being currently met mainly through imports. China is the largest producer of Tungsten producing more than three quarters of world production.
With a strong mining background, NMDC has been working on to acquire mineral assets abroad. And Midhani, with its expertise in metals and alloys, is expected to provide technical support and coordination for Ammonium Para Tungstate (APT). Their complementary strengths can facilitate in developing a venture for tungsten mineral assets in India and abroad.
This alliance would strengthen both NMDC’s and Midhani’s resolve to explore jointly the available tungsten assets in India and consider investment and development abroad. The technology could also be used converting tungsten ore to APT and tungsten powder.
(This article was published on October 24, 2016)
Thanks to Coal’s Record Rally, Iron Ore Powers Higher With Steel
Iron ore is surging thanks to its bulk-commodity compatriot, coal. Iron ore futures in Singapore advanced to the highest level in two weeks and contracts in China went limit-up as coal’s rally pulled steel and other raw materials in the supply chain higher.
In Singapore, SGX AsiaClear futures for December gained as much as 3.1 percent to $58.05 a metric ton, the highest since Oct. 5, while iron ore for January delivery surged 3.9 percent to 471.5 yuan ($69.58) on the Dalian Commodity Exchange. On Monday, the spot price for 62 percent content ore added 1 percent to $59.28 a dry ton, according to Metal Bulletin Ltd.
“Iron ore alone can’t make steel, it needs the help of coking coal,” Dang Man, an analyst at brokerage Maike Futures Co. in Xi’an, China, said by phone. “The shortage in coal supply right now seems unlikely to improve before year-end. That’s driving steel prices and production higher, benefiting iron ore too.”
After three years of slumping prices as mine supply rose and China slowed, iron ore has gained 36 percent in 2016 as Asia’s top economy boosted stimulus. Steelmakers in the country that produces half of world output have fired up plants after stronger demand boosted prices and expanded profit margins. Coal prices have soared in 2016 on tight supplies, and HSBC Holdings Plc has said the surge in coking coal will probably keep global steel prices elevated.
Prices of hot-rolled coil climbed as much as 2.9 percent to 2,888 yuan a ton on the Shanghai Futures Exchange, the highest since August on an intraday basis. Coking coal futures in Dalian jumped as much as 3.7 percent to a record, while coke rose 4.3 percent.
Boost for Glencore on thermal coal price deal
Glencore has secured a price of almost $100 a tonne for high-quality thermal coal in its latest contract negotiations with a key Japanese buyer, highlighting the dramatic change in fortunes for one of the most unloved commodities in mining.
The agreement between the Swiss-based miner and Tohoku Electric was struck at $94.75 a tonne, up nearly 50 per cent from a year ago, and follows a dramatic surge in coal prices brought about by China’s surprise decision to curb domestic output in a desperate attempt to improve the profitability of its miners.
It will be closely followed by the rest of the industry because the quarterly talks between the two companies for high-quality Australian coal are used as a benchmark by other Japanese utilities and consumers in Asia.
While the annual contract that runs from April is the most important in the coal calendar — and has the most tonnage benchmark against it — the latest settlement is important because it shows how tight the market has become since the Chinese clampdown was announced six months ago.
“The settlement is higher than expected,” said Colin Hamilton, head of commodities research at Macquarie. “Glencore have driven a hard bargain.”
The contracts are usually settled at small premium to prices in the futures market, according to traders. Coal for the first quarter of next year was trading at $88 a tonne before news of the latest agreement broke.
Thermal coal, which is used to generate electricity in power stations, is a key source of profit for many companies including Glencore, the world’s biggest supplier to the export market, Anglo American, BHP Billiton and Rio Tinto.
The commodity has more than doubled to $100 a tonne this year after policymakers in Beijing cut the number of working days at its domestic coal mines. The move forced Chinese power plants and traders to source more material from overseas.
Beijing’s directive turned on its head the widely held view that Chinese imports of thermal coal would dwindle from the 140m tonnes purchased last year. But the price surge has yet to be fully reflected in earnings forecast for big producers partly because analysts and investors are sceptical the rally will be sustained or that policy will be reversed.
That may change now that Glencore has locked in a price of almost $95 a tonne for the latest contracts, which cover a 12-month period starting from October. In a recent presentation Glencore said its production costs in Australia were about $37 a tonne.
The Chinese production curbs have roiled the much smaller market for premium hard coking coal, where the price of the steelmaking ingredient has surged more than 200 per cent this year to $245 a tonne as mills have scrambled to buy cargoes.
For years China has been trying to put its heavily indebted coal industry on a more stable footing, but latest reforms are some of the first to have an immediate impact on the broader market.
They have been so successful that the Chinese government has partially relaxed the 276-working day rule because of concerns that prices have risen too far too fast. However, that has yet to have any impact on the market.
“Given the level of financial distress in Chinese coal, we estimate that this implicit tax may have to last until the end of decade,” analysts at Goldman Sachs wrote in a recent report.
“Over this period, power utilities may experience margin compression unless regulators allow tariffs for coal-fired plants to increase. Meanwhile, Chinese households are likely to experience a reduction in disposable income due to higher inflation in energy-intensive goods.”
https://www.ft.com/content/612534cc-9a05-11e6-b8c6-568a43813464
Centre throws lifeline to stranded power plants, ropes in cash-rich PSUs like NTPC, Coal India
Paying heed to the Reserve Bank of India's (RBI) advice to improve operational efficiency of companies whose loan accounts have gone sticky through induction of new owners or managers, the government has lined up a plan under which cash-rich public sector undertakings like NTPC, Coal India, Power Finance Corpn and Rural Electrification Corpn will buy equity stakes in stranded power plants.
Paying heed to the Reserve Bank of India’s (RBI) advice to improve operational efficiency of companies whose loan accounts have gone sticky through induction of new owners or managers, the government has lined up a plan under which cash-rich public sector undertakings like NTPC, Coal India, Power Finance Corpn and Rural Electrification Corpn will buy equity stakes in stranded power plants.
The country added an average of 20,000 MW annually to its thermal power capacity over the last five years. But lower-than-projected growth in demand, fuel shortage and the inability of debt-laden power distribution companies to enter into new long-term power purchase agreements (PPAs) have left a sizeable portion of these new capacities stranded. According to an estimate, a total of 25,000 MW capacity — commissioned or under-construction — is lying idle for want of buyers or assured fuel supply agreements. Tenders for just 11,000 MW have been floated by the states since 2011 for new PPAs.
Dwelling on resolution of non-performing assets, the RBI had said: “Creative search for new management teams, including the possible use of public sector firms or private sector agents, is necessary, as are well-structured performance incentives such as bonuses for meeting cash flow/ profit benchmarks and stock options.”
“NITI Aayog and Power Ministry are currently in discussion to see if PSUs such as NTPC and PFC can take over small projects,” a senior government official said. As on March 31, 2016, NTPC’s reserves and surplus stood at Rs 80,536 crore, PFC’s 34,445 crore, REC’s 27,630 crore and Coal India Rs 27,581 crore. A senior NTPC official said that no official communication has been received by the company about the plan and he enumerated several possible problems with such buyouts. “If the banks convert their loan into equity and looks for a buyer then NTPC can step in but there are always doubts regarding possible over-invoicing in buying projects directly from the private companies,” the official said.
While private power plants are left high and dry, lack of buyers is not affecting NTPC much as it had signed PPAs a capacity of 37,000 MW between October 2011 and January 5, 2011. That was just before the central electricity regulator made it mandatory for states to adopt competitive bidding for signing PPAs. As of now, NTPC capacity pipeline would itself be able to meet new demand from states, analysts said.
NTPC has an aggregate capacity of around 24,000 MW under implementation including 10,000 MW of renewable capacity to be commissioned by 2019. This translates into a capex of about Rs 1.6 lakh crore. NTPC has also formulated a long-term corporate plan to become a 1,28,000 MW company by 2032, while its current capacity of over 47,000 MW. The government wants the Maharatna to use inorganic route as well to meet this target, rather than relying completely on greenfield projects.
“The power sector is going through a phase of consolidation. This presents an opportunity for PSUs also to use their balance sheet and acquire some stressed assets, possibly at a discount,” another government official said. He cited the instance of JSW, which recently bought non-PPA assets from JSPL at about Rs 4 crore/MW.
The stressed assets (gross NPA and restructured loans) of public sector banks rose from Rs 7.46 lakh crore (14.62% of gross advances) as on March 2016 to Rs 7.83 lakh crore (15.74%) as on June 2016. The sectors that have high incidence of NPAs include power and roads. It is estimated that loans of about Rs 1 lakh crore to the power generation firms are under stress.
Chinese coal-mining boss sentenced to death
The former manager of a Chinese state-owned coal-mining firm has been found guilty of accepting bribes and given a death sentence.
From 2005 to 2011 Yu Tieyi was in charge of supplies to Heilongjiang Longmay Mining Holding Group Co Ltd, during which time he was accused of taking bribes in exchange for handing out bloated procurement contracts, according to a Monday report from Xinhua. In delivering the guilty verdict, the court in the northeastern province of Heilongjiang granted Yu Tieyi "leniency" for good behaviour, by giving him a two-year reprieve before the sentence is carried out.
The verdict stated the amount of Yu’s bribes was “extremely huge” and the state had suffered “a great loss,” both warranting the most severe penalty — death sentence without reprieve.
However, the court showed leniency because Yu had behaved well during investigation, reported the crimes of his accomplice, and returned most of the bribes.
The Chinese government under President Xi Jinping has cracked down on deep-rooted corruption since 2013 – with dozens of senior officials investigated or jailed. Known by its Orwellian title, the "Central Discipline Inspection Commission" has netted a number of big fish, including Jiang Jiemin, the former chairman of China National Petroleum Company (CNPC) who in September 2014 came under investigation. Oilprice.com named a number of other prominent oil industry figures swept up by the state that year, including:
Bo Qiliang, PetroChina vice president in charge of CNPC's overseas business, detained on or around May 13;
Zhang Benquan, general manager of CNPC's Iran subsidiary, detained in April;
Yan Cunzhang, general manager of PetroChina's foreign cooperation department, detained in April;
Li Hualin, former CNPC deputy general manager, reportedly a target of a Communist Party corruption probe;
Wang Daofu, former PetroChina chief geologist, under investigation along with Ran Xinquan, former general manager at PetroChina subsidiary Changqing Oilfield Co.;
Sun Weidong, former deputy manager of PetroChina subsidiary Yumen Oilfield Co., under investigation;
Yang Guoling, assistant general manager and senior accountant at Yumen Oilfield Co., indicted for corruption.
In March of this year the deputy general manager of Chinese coal conglomerate Kailuan Group came under investigation for "serious violations of discipline", Reuters said.
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