Black Diamond 311016

Maithan Ispat bags India’s second gold mine in auction

India’s second gold mine auction in Jharkhand has been won by MESCO Group’s Maithan Ispat Ltd.

In the auction that took place on 26 October with Adani Enterprises Ltd, Rungta Mines Ltd, and Ramgad Minerals and Mining Ltd vying for the Pahadia block, spread across 272.651 hectare, Maithan Ispat Ltd won the bid.

Maithan Ispat Ltd is a subsidiary of Mideast Integrated Steels Ltd and manufacturers iron, and heavy melting steel. Chhattisgarh auctioned the country’s first gold mine, Baghmara, in February which was won by Vedanta Ltd.

“The gold block in Jharkhand has been bagged by Maithan Ispat Ltd and it had put in bids which are over 28% of the reserve price to emerge as the preferred bidder,” said a senior government official requesting anonymity.

The mineral resources available in the Pahadia block include 1.162 million tonne (MT) of gold ore, with 2.12 gram per tonne of the metal, besides 1.162 tonne of silver, 232.4 tonne of copper, 581 tonne of lead, 1,859 tonne of zinc, 2,905 tonne of nickel and 1.162 MT of quartz.

“After the Mines and Minerals (Development and Regulatory) Amendment Act, 2015 came into effect, 17 blocks have been auctioned across seven states fetching  Rs.59,639 crore for state governments over a period of 50 years including royalty,” said another government official aware of the development, who also didn’t want to be named.

Jharkhand had invited revised bids for auctioning the deposit under the composite licence route after few miners showed interest in the earlier bid called in January. A composite licence holder conducts the geophysical exploration of the area to find out the exact reserve of the mineral and starts mining later.

Queries emailed to the spokespersons of the union mines ministry, Jharkhand government’s mines and geology department and Maithan Ispat Ltd on 27 October remained unanswered.

Experts welcomed the move.

“Prospects for these mines are good. As these are being given under composite route, detailed investigation of the reserves will also be done. Also, base metals including gold and copper are deep seated, and are less available in surface, hence chances of reserves increases after further mineralisation,” said Harbans Singh, former director general of the Geological Survey of India.

According to the World Gold Council, a lobby group, India and China were most influential in driving gold jewellery demand during the period April-June, when demand for most countries remained subdued. However, consumer demand for gold during the second quarter of this year (April-June 2016) fell by 18% to 131 tonne compared with 160 tonne in the year-ago period due to steep prices.

India has gold deposits spread across several states, including Chhattisgarh, Jharkhand, Madhya Pradesh, Rajasthan, Andhra Pradesh, Karnataka, Kerala and Tamil Nadu.

 

http://infracircle.vccircle.com/maithan-ispat-bags-indias-second-gold-mine/

 

NTPC net profit down 18% to Rs 2,496 crore

NTPC, India’s largest power generating company, reported an 18 per cent drop in its stand-alone net profit at Rs 2,496 crore for the September 2016 quarter compared to Rs 3,039 crore in the year-ago period. According a company statement, its total income rose seven per cent to Rs 19,588 crore compared to Rs 18,218 crore a year ago. 

 

NTPC has a total installed capacity of 47,228 Mw. It generated 125 billion units during the second quarter of FY17 against 119 billion units last year. The company said NTPC’s coal stations achieved a plant load factor (PLF, or proportion of generation capacity utilisation) of 77.98 per cent against national PLF of 59.04 per cent. 

 

The company also incurred an outgo of Rs 4.43 crore due to the Central Electricity Regulatory Commission ruling on changing incentive schemes for power generation companies. Under the tariff guidelines of the Commission, generation companies would earn incentives based on PLF they maintain at their power plants and not on plant availability factor. 

 

The company said it benefitted from tax refunds and other receivables during the second quarter of the current financial year. “Revenue from electricity generation increased to Rs 19,491.54 crore in the quarter under review, compared to Rs 17,993.50 crore in same period last year,” it added. 

 

According to a post-result report of Emkay Global Financial Services, NTPC's generation during July-September 2016 was flat at 61 billion units, while realisation increased three per cent over last year to Rs 3.4 a unit. The rise in tariff was mainly due to hike in coal cess, railway freight and increase in fuel price by Coal India during May 2016. This led to a 22-paise rise in fuel cost/unit. 

 

“This was, however, partially offset by fuel cost saving by coal rationalisation by NTPC. Consequently, net revenue (after adjustments of prior period sales and income tax adjustments) increased four per cent year-on-year to Rs 19,110 crore in Q2FY17 (above our estimate of Rs 18,150 crore),” it added.

 

It said fall in PLF impacted the incentive income during the quarter, which led to a 8.1 per cent y-o-y decline in adjusted profit after (PAT) tax to Rs 2,400 crore. PAT was also impacted due to 26.1 per cent decline in other income to Rs 350 crore. “Adjusted PAT was, however, marginally above the estimate of Rs 2,320 crore for the quarter.”

http://www.business-standard.com/article/companies/ntpc-net-profit-down-18-to-rs-2-496-crore-116102801658_1.html

 

 

Coal price rally comes to the rescue of commodity trading giants

An unprecedented surge in coal prices in the past few months to more than double their June levels is a big fillip for Glencore and Noble , who are among the biggest traders of thermal coal, which is used to produce electricity.

They are taking advantage of their mine production, storage facilities and shipping fleets to provide users of coal with cargoes at short notice and at premium prices, sources familiar with recent deals told Reuters. They are also striking longer-term supply deals, also on rich terms, the sources said.

The turnaround in their prospects in the coal market is remarkable for two companies who have reported poor financial results in the past 12 months partly because of an earlier collapse in coal prices, and whose shares had fallen to record lows. In particular, Noble has struggled with credit downgrades, questions about its accounting practices, and a management shakeup.

For Glencore, the boost would have been greater but for an ill-timed decision last year to sell 55 million tonnes of coal forward - representing about half of its 2016 and 2017 production capacity - at $53 a tonne, against current prices almost double that level. In August it said the lost profit opportunity from that decision was almost $400 million and Glencore sources said this has likely increased since, though they noted that the impact was fading as the hedge is gradually worked through.

The firm made the forward sales because at the time it was urgently seeking to reduce debt and conserve cash, a source at Glencore said. The coal is still being sold at a profit given the firm has a very low production cost base of about $37 a tonne, this person said.

Coal prices were trading at around $140 a tonne back in March 2011 before the collapse in prices.

Glencore and Noble declined to comment for this article.

HOT COMMODITY

The rise in coal prices has been so sharp and sudden, the steepest on record, that it has been branded by Goldman Sachs and Citi as the year's hot commodity. The gains were largely the result of an unexpected move by China, which is the world's biggest consumer of coal, to slash its coal production.

Trading houses were in a perfect position, given their command of the coal and transport markets, to maximize their opportunities, said Patrick Markey, managing director of commodity advisory Sierra Vista Resources in Singapore.

Glencore's Head of Coal Marketing Tor Peterson, who has almost legendary status for deal making in the opaque coal market, has been at the forefront of some of the firm's recent deals, several sources said.

The firm locked in a Russian spot market coal deal at $99 per tonne with Korea Southern Power (KOSPO) in mid-October, according to several sources familiar with the matter. That was $7.25 higher than the Pacific benchmark Newcastle coal price, and at a level not seen since 2012. The coal would have been worth just $50 a tonne in June.

One source with knowledge of the matter said similar deals, to other countries in Asia, had since been made at $103 per tonne.

"These recent deals have Tor's writing all over them. They were swiftly implemented, at a good price for the seller," a senior coal trader at one of Glencore's main competitors said.

Peterson, an American in his early 50s who has worked for Glencore since 1992, gained his reputation for savvy trading by taking advantage of sudden changes in market conditions to make a profit through quick sourcing of supplies that he then offers for sale, often before competitors can react. It is unclear whether he signed off on the decision to sell so much of the production forward.

In the longer-term market, Glencore and Japanese power utility Japan's Tohoku Electric this week settled quarterly thermal coal contract prices at $94.75 a tonne, up from around $64 last quarter. That was for more than 2 million tonnes, meaning its value is more than $60 million higher than three months earlier.

Despite the forward sales, British investment bank Liberum says it thinks Glencore will be a winner from the coal rally as utilities in South Korea, China and Japan stock up for the colder months.

"Glencore is the greatest beneficiary" of the soaring coal prices "and remains our most preferred of the (mining) majors," it said in a note this month.

Glencore's share price has risen more than three-fold to be at 242 pence ($2.94) on Friday from a record low of 69 pence in January.

NEW SUPPLY CONTRACTS

If Glencore has good reason to be a keen rider of the coal bull-run, so does Noble Group, Asia's biggest commodity trading house.

For 2015, it reported its first annual loss in almost 20 years, much of this blamed on the coal price slump, triggering credit downgrades and pulling its market capitalisation below 1.5 billion Singapore dollars ($1.08 billion) by September.

Traditionally light on mining assets, Noble in March announced it had set up an Australian coal supply joint venture with Japan's Shikoku Electric, adding to other so-called participations - or offtake agreements - in Indonesia, South Africa and Australia.

Sources at the company said this gave Noble, whose co-CEO is now its former coal business head William Randall, more options to deliver coal profitably, globally, and at short notice.

The firm's shares have recovered some of their losses to be trading at 16.8 Singapore cents at the close of trading on Friday, up from a low of 11.2 cents in early September.

While the traders may be winners, the consumers are clearly losers as the coal price climbs.

South Korean utilities are being stung by the high prices and finding it difficult to generate electricity profitably.

"As fuel prices are rising, we won't get good returns," said a Korean utility source, who declined to be named due to company policy.

The big question is whether the price rises are sustainable.

Analysts predict continued strength through the peak-demand winter months, but the outlook into 2017 is less certain.

For the longer term, high prices are likely to accelerate a push by governments and environmentalists for lower carbon, less polluting energy.

Much depends on China, the world's biggest coal producer and consumer, where authorities have criticized the rally as unsustainable and told miners to increase output again, albeit not to full capacity.

Chinese coal futures <0#CRFRM:> indicate a peak around $82 per tonne later this year, and a fall to $70 by April, and then towards $60 per tonne by October 2017. ($1 = 0.821 pounds) ($1 = 1.3952 Singapore dollars)

http://in.reuters.com/article/coal-price-winners-idINL8N1CW38N

 

US challenges China’s imports of North Korean coal amid UN sanctions

 

China’s imports of North Korean coal run counter to global sanctions, a senior US official said on Saturday, adding that a US missile system deployed in South Korea should “motivate” Beijing to pressure Pyongyang over its nuclear programme.

North Korea’s exports of coal to China provide a lifeline for the country and are also seen by the United States as a crucial area where Beijing has leverage over its neighbour, which has carried out a series of missile and nuclear tests in defiance of international sanctions.

China announced in April that it would ban North Korean coal imports to comply with U.N. sanctions, though it made exemptions for deliveries intended for “livelihood purposes”.

Deputy Secretary of State Antony Blinken told journalists that China had reversed the burden of proof put forward under U.N. Security Council resolution 2270 adopted in March in response to a North Korean nuclear test.

“The plain language of 2270 makes it very clear that the export of coal, or the importation of coal if you are China, is prohibited unless you can demonstrate that the transaction in question goes to the livelihood of the North Korean people,” Blinken said in Beijing after visits to Japan and South Korea.

“The Chinese have reversed the presumption and their approach has been that the trade in coal is allowed unless you can demonstrate that it is going to the weapons programme. But that’s not what 2270 says,” he said.

Coal is particularly important to the economic health of North Korea because it is one of its only sources of hard currency. China imported $1 billion worth of North Korean coal in 2015, according to Chinese customs data.

Beijing fears strengthening sanctions could lead to collapse in North Korea, sending a flood of refugees across the border into China, and it also believes the United States and South Korea share responsibility for growing tensions in the region.

North Korea’s fourth nuclear test in January was followed by a satellite launch, a string of tests of various missiles, and its fifth and largest nuclear test in September.

China has repeatedly expressed anger at the United States and South Korea for their decision to deploy the U.S. Terminal High Altitude Area Defence (THAAD) system in the South to counter threats from North Korea. Beijing worries that the system’s powerful radar will compromise China’s security.

Blinken said THAAD “was the latest but not the last defensive step” that the U.S. would take if the North Korean nuclear threat persists, and that hopefully it would “motivate China to work with us to change the conduct of the North Korean regime”.

http://www.hindustantimes.com/world-news/us-challenges-china-s-imports-of-north-korean-coal-amid-un-sanctions/story-KjJxyVAJXmOWKsAcFGp8KO.html

 

 

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