Sarda Energy surges on restoration of operations at iron ore mine
Sarda Energy & Minerals was trading 8% higher at Rs 249 on the BSE after the restoration of operations at iron ore mine of the company.
“The operations at the iron ore mine of the Company, which were suspended on March 07, 2016 due to naxal attack, have been restored,” Sarda Energy & Minerals said in a statement.
Over the last nine years, the G20 countries—led by China, Japan, Germany, South Korea and the United States— have financed $76 billion of coal development in countries such as Vietnam, South Africa, Australia and Indonesia. This figure comes from our new report: Carbon Trap: How International Coal Finance Undermines the Paris Agreement, which details the billions in financing provided to coal plants overseas. More importantly, it tracks the new coal projects that G20 countries are planning to finance abroad.
"Carbon Trap" Report: Limiting International Coal Finance
Finance for coal overseas supports coal power plants, coal mining and coal infrastructure. Even worse, it traps the world into decades of dangerous carbon emissions that will worsen climate change. To meet the Paris agreement’s goal of limiting that temperature rise to less than 2 degrees Celsius—and avoid major climate disruption—the world must transition to cleaner energy and phase out fossil fuels.
Unfortunately, key governments continue to invest in projects that further the world’s dependence on coal, making climate change worse.
Our key findings in the Carbon Trap report:
Between 2007 and 2015, G20 nations financed $76 billion worth of international coal projects. China, Japan, Germany, and South Korea accounted for four-fifths of this financing.
China financed $25 billion
Japan financed $21 billion
Germany financed $9 billion
South Korea financed $7 billion
G20 nations are considering financing new coal projects worth more than $24 billion.
Japan plans to finance $10 billion
China plans to finance $8 billion
South Korea plans to finance $2 billion
The top three recipient countries for G20 coal project financing are Indonesia ($11 billion), Vietnam ($10 billion), and South Africa ($7 billion). Indonesia and South Africa are G20 members.
Low-income countries received less than 2 percent of G20 international coal financing. Instead, most of the money went to middle- and high-income countries, contrary to frequent claims that public finance for coal is intended to help the poorest countries expand access to energy.
China has mechanisms in place that could limit its future coal finance. But Japan plans to greatly expand its financing of coal power plants and coal development abroad.
The report may underestimate the extent of overseas coal finance because it moves through opaque institutions, such as export credit agencies, which have hidden their support for fossil fuel development. The report compiled findings from export credit agency and public finance reporting, news articles, an international infrastructure journal and data from the Organisation for Economic Co-operation and Development.
The report makes these recommendations:
G20 nations that are members of the OECD should better restrict coal finance so they apply not only to coal plants but to all coal activities, such as exploration and mining.
Policymakers should develop clear guidelines for limiting coal finance—in line with their national circumstances, with clear criteria for ensuring that future energy financing is consistent with the Paris Agreement, and with appropriate accounting for the cost of externalities.
Governments and multilateral organizations should disclose coal financing from all public institutions, such as export credit agencies, development banks, majority state-owned banks, and others.
Coal infrastructure that will be around for decades is a carbon trap, locking countries into many years of harmful greenhouse gas emissions. Given the severe climate impacts of coal, it is time to end the irrational public support for coal projects overseas.
The Carbon Trap report and database of coal projects overseas is here:
https://www.nrdc.org/resources/carbon-trap-how-international-coal-finance-undermines-paris-agreement
Rio seeks iron ore premium from China mills in likely pricing war revival: sources
Australian miner Rio Tinto is asking Chinese steel mills to pay a premium for its highest grade iron ore product for the first time since an annual pricing system collapsed in 2010, two sources familiar with the situation said.
The demand by the world's No. 2 iron ore miner comes as Chinese steel producers recover from years of losses, buoying demand for the steelmaking raw material, but could revive tensions between miners and mills over pricing that they seemed to have ditched six years ago.
Rio is seeking up to $1 per ton more than the index price for its Pilbara iron ore product, or PB fines, from Chinese mills on long-term contracts for 2017, the sources said, in a break from a years-long trend of pricing at spot values. Previously, Rio was selling the ore at a premium only to traders.
The miner has also pushed up the premium it seeks from traders to between $2 and $2.50 per ton over the index price for the same product for January to April, they said.
That would be a record high and up from a premium of $1.50 for the four-month period through December this year, said one of the sources who works closely with Rio in China.
From Chinese mills, Rio initially sought a 15-cent premium, but this week increased it to about $1, said the same source.
"The steel market is so hot this year and they think it's something that buyers can accept," the source said. "If Rio gets it, other miners may follow."
Rio Tinto declined to comment.
A reduction in China's steel capacity along with a push to spend more on infrastructure has fueled an 81 percent spike in Chinese steel prices this year, sparking a similar rally in iron ore prices.
'UNFAIR'
After four decades of fixing iron ore contract prices annually, the miners and mills in 2010 began setting them more frequently and in shorter periods against spot index prices such as those published by Platts and Metal Bulletin.
"This is illogical," said the second source on Rio's planned premium for mills. "The index already reflects the spot market, why add a premium?"
The spot index breached $80 a ton on Monday for the first time since October 2014, gaining 86 percent this year after a three-year slide.
The China Iron and Steel Association (CISA), which groups the biggest steel producers in the world's top market, called the planned price markup "unfair" in a report by Xinhua News on Nov. 18 which did not identify the leading iron ore producer.
Li Xinchuang, vice-secretary general of CISA, said "currently it's not easy to demand" a premium for iron ore from Chinese mills.
"The steel market is still very weak, not only in China but globally," Li told Reuters by phone.
http://www.reuters.com/article/us-ironore-rio-idUSKBN13O12M
MCL lines up Rs 20,000 crore investments for power, coal, infra development
Mahanadi Coalfields Ltd (MCL), the largest coal producing subsidiary under Coal India (CIL) umbrella has lined up Rs 20,000 crore investment over next four years to bolster its business activities that include coal mining and evacuation, infrastructure strengthening and foray into power generation.
In contrast to these ambitious growth plans, the company, however, has immediate concerns over not meeting its production target in the current fiscal due to hurdles over land acquisition and delay in getting statutory clearances.
MCL had produced 137.8 million tonne coal in 2015-16 dislodging South Eastern Coalfields Ltd (SECL) as the largest coal producing subsidiary under CIL. This has earned the company the highest target of 167 million tonne coal production among all CIL subsidiaries in the current fiscal. Till date, it has produced 85.3 million tonne and despatched 92 million tonne coal.
"As the things stand now, we may fall short of the production target by the end of the fiscal", said a top official of the company citing problems in land acquisition and evacuation and delay in getting statutory clearance such as forest and environment approvals as the main road blocks in this regard.
MCL has its mines across four districts in Odisha-Sundergarh, Jharsuguda, Sambalpur and Angul with the Talcher coalfields in the last one being most problematic from operational point of view.
"There is frequent disruption in mining and evacuation activities in Talcher area due to agitation by the locals over land acquisition and jobs demand", said AK Jha, chairman and managing director of MCL.
Out of the total target of 167 million tonne, Talcher coalfield had lion's share of 105 million tonne. But the actual production may not cross 35 million tonne pulling down the overall performance. "If the operations remain hassle free during the next four months, we may produce 145 million tonne coal by the end of the year", he added.
The company has suffered output loss of 15 million tonne due to delay in forest and environment clearances, particularly with respect to two mines Garjanbahal in Sundergarh, a new area and Anant colliery, an existing mine.
Despite these hiccups, MCL has lined up massive capital investment as part of its long term growth plan. The biggest of these investments will be in the foray into power generation where MCL proposes to join hand with another public sector company, Neyveli Lignite Corporation (NLC) for setting up of a 2x800 MW power plant in Sundergarh district at a cost of Rs 12,000 crore.
In a bid to remove coal evacuation bottlenecks, the company is in the process of laying 53 km long rail network connecting Jharsuguda with Sardega at a cost of Rs 2000 crore. The line will be commissioned in June, next year. The work on another rail line, the 14 km long Angul-Jharpada link, is expected to start soon at a cost of about Rs 1000 crore.
MCL intends to set up two coal washeries each in Talcher and Ib Valley costing Rs 1400 crore and coal handling plant with an investment of Rs 600 crore. Similarly, it has set aside Rs 500 crore for development of road network.
In addition, there will be substantial investment for opening of Siarmal mines in Basundhara sector, which is expected to produce 40 million tonne of coal in next 4 years.
Coal India has set a target of producing 1 billion tonne of coal by 2020 and MCL will a major role in achieving this target with a share of 250 million tonne, Jha said.
China coal mining accident leaves 22 trapped underground
Rescuers in northeastern China searched Wednesday for 22 miners trapped underground in the latest accident to befall China’s mining industry.
State media reported that Tuesday night’s accident occurred at a mine in the city of Qitaihe in northeastern Heilongjiang province, a coal-mining region bordering Siberia. The cause of the accident was not immediately reported.
The director of the local coal production safety bureau, who gave his name as Liu, told The Associated Press that officials were trying to confirm exactly how many miners were trapped.
China is the world’s top producer and consumer of coal. It announced plans earlier this year to shutter more than 1,000 underperforming mines, though hundreds of new coal plants are also under construction.
An Oct. 31 explosion at a mine in the southwestern region of Chongqing killed 33 people, just weeks after a gas explosion in another mine in adjacent Guizhou province killed seven people.
China’s work safety administration reported 931 coal mine accident deaths in 2014, down from the thousands of deaths reported annually in previous years, though government figures are often questioned for their accuracy. Official numbers for 2015 or 2016 were not immediately available.
Government officials are trying to balance the vast energy demands of the country with the world’s largest population and the commitment China made to reduce carbon emissions as part of its ratification earlier this year of the Paris climate change agreement. With coal prices rising as winter approaches, China announced in October that “efficient coal producers” would be allowed to bypass an annual cap of 260 production days.
Saudi king showcases mining hub in push to move beyond oil
Saudi Arabia's King Salman underlined the kingdom's intention to invest heavily in speeding up is diversification away from oil exports with the inauguration on Tuesday of a $35 billion mining and minerals processing complex.
Riyadh has tried to reduce the economy's reliance on oil for decades, but the challenge has become particularly urgent in the past couple of years as low prices have pushed state finances deep into deficit and growth has slowed sharply.
King Salman and his top ministers visited the complex at Ras al-Khair on Saudi Arabia's eastern coast, where energy minister Khalid al-Falih said the government would invest in all available resources to develop strategic industries.
The vast complex showcases the government's ability to use its oil wealth to push big industrial projects, but also shows how dependent the economy remains on state spending in the absence of a dynamic private sector. Most of the $35 billion invested so far was arranged by the government.
Projects include a $5.6 billion phosphate complex which produces fertilizer and chemicals and is operated by Saudi Arabian Mining Co (Ma'aden) 1211.SE in partnership with petrochemical giant Saudi Basic Industries Corp (SABIC) (2010.SE); both companies are majority state-owned.
A $10.8 billion aluminum facility is operated by Ma’aden and U.S. firm Alcoa (AA.N), while the complex also features a 1,400 kilometer (875 mile) railway link, a port, and desalination and power plants.
Economic reform plans announced earlier this year aim to expand the mining sector's contribution to gross domestic product to 240 billion riyals ($64 billion) by 2030 from 64 billion riyals at present.
"Jubail was where the Saudi petrochemicals industry started with SABIC - Ras al-Khair is becoming just that for the mining industry," said Fadl al-Bouainain, a prominent Saudi economist.
With its spending constrained by low oil prices, however, the government concedes it will have to rely more in future on private sector investment by local and foreign firms, and it has not yet fully made clear how it hopes to attract that money.
"The key question Saudi Arabia will need to answer is how quickly they want to develop the mining sector, how much they want foreign investors to participate, and the risks and rewards they would offer to investors and retain for the government," said Paul Robinson, director at mining consultancy CRU Group.
One of the next big projects planned for Ras al-Khair is the construction of a huge ship repair and shipbuilding complex costing over 20 billion riyals; construction is to start in 2018 and commercial operations in 2022.
State oil giant Saudi Aramco IPO-ARMO.SE is leading the project, which is to provide engineering, manufacturing and repair services for offshore rigs and commercial vessels - work that until now has largely been done outside the kingdom.
The project may face heavy competition from existing shipbuilding centers in South Korea and elsewhere, but Aramco estimates that it will create 80,000 jobs directly and indirectly while allowing Saudi Arabia to reduce its imports by $12 billion annually.
http://www.reuters.com/article/us-saudi-industry-idUSKBN13O2JN
Mining dividends are back - just don't expect a bonanza
The past year has been a lean one for anybody hoping to earn an income from mining shares.
Dividend yields on the Bloomberg World Mining Index fell to 1.4 per cent on Monday, the lowest level in five years and well below the 1.79 per cent that five-year US Treasuries are offering.
Things are looking up, however. Vale, the world's biggest iron ore miner, said it will resume dividends, just 10 months after management sought to suspend them. Glencore may also restart payments after skipping two instalments, according to Credit Suisse, UBS and Macquarie Group .
Analyst forecasts for dividend yields have been ticking up for four months. The last time they ran so far ahead of historical payouts was in late 2014, shortly before a runup in yields (largely as a result of slumping stock prices) through 2015.
A return to payouts would prove to be a welcome shift in the capital cycle for mining investors.
Faced with a grim overhang of debt and vanishing earnings as the past decade's commodity boom gave way to bust last year, big mining companies raided their shareholders to buy their way out of trouble.
Capital spending was reined in, but so were dividends from the mining giants. Investors who wanted to see their companies survive had to grit their teeth.
Belt-tightening is all very well, but it's starting to feel so last year after iron ore and thermal coal, which make up a major slice of revenue for mining heavyweights BHP Billiton and Rio Tinto, have risen more than 80 per cent. Glencore has benefited from the coal surge. And coking coal, of which BHP is the dominant producer, has jumped almost 300 per cent.
Back from the dead
There's good news and bad news there for mining investors. With the recovery in commodity prices, miners' share prices have rebounded too.
The bad news for those seeking dividend income is almost the same. Shareholders have been handsomely rewarded by capital gains, so they aren't in desperate need of relief from dividends.
The hangover from commodity crashes can be oddly long-lasting, too. Even earnings don't automatically benefit from rising prices. Glencore, for instance, forward-sold 15 million metric tons of coal in the first half of 2016, when prices were low, meaning it missed out on the subsequent spike. The company reported a $US395 million ($528 million) mark-to-market writedown in its first-half earnings.
Debt can be even more persistent. That mountain of borrowings built up during the boom is shrinking, but ever so slowly -- and until it gets significantly smaller, shareholders shouldn't expect the kind of payouts to which they were accustomed over the past decade.
A company's dividend policy is a sort of contract with the future. Managements' ability to hit their payout targets is a useful indicator of their credibility -- but there are few mining executives who think the coming decade will see a commodity boom to match the last one.
Mining dividends will return, but not on the scale of the past. The future is simply too uncertain to bank on.
Warm Regards
Anurag Singal
Sr Manager –Business Development
Essel Mining & Industries Ltd
14th Floor, Industry House
10,Camac Street –Kol-71
Ph: 033-30518415,9088026252
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