Opening up of coal sector may run into pricing hurdle
The government's ambitious effort to open up coal mining to private and foreign players and end the virtual monopoly of Coal India Ltd (CIL) might come a cropper if some of the restrictive conditions put in the proposed guidelines are not reworked.
Private miners - Indian or foreign – would be allowed to sell coal mined by them only at a minimum price, which shouldn't be less than 20% above the price that CIL currently charges, the draft rules now put out for discussion says.
The provision, which surreptitiously aims at protecting CIL's interest, is being seen as restrictive defeating the very purpose of opening up the sector – to bring in greater efficiency and economy in mining through investment in state-of-the-art machinery, thereby bringing down costs leading to lowering of prices, feels industry experts.
"The condition of making the minimum selling price by a commercial miner fixed at 1.2 times the price at which CIL sells its coal is restrictive as it would discourage efficient mining. The whole purpose is to bring down costs and prices through higher mechanisation. Now that there is little scarcity of coal, why would anyone buy coal from a private miner if the same quality would be readily available from CIL at a lower price?" Partha Bhattacharya, former chairman of CIL and a key voice in the industry, told DNA Money.
"Making such a price the basis of a revenue sharing model makes the whole thing flawed," he said.
"While the successful bidder would be free to decide its marketing and pricing strategy, the revenue sharing would be calculated on the basis of actual revenue or actual production multiplied by 1.2 times the CIL ROM price for the average grade of coal for the specific mine, whichever is higher," the draft regulation says.
To begin with, the government plans to auction two to three large mines having peak-rated capacity of 30 million tonne a year and coal of grade-11 to grade 13 in the first phase, the discussion paper said.
"The minimum price fixed at 1.2 times is restrictive. Also, based on that, what would be the revenue sharing is still not clear," V K Arora, chairman of mining and construction equipment committee of industry body CII and chairman of Indian Mining Federation, said.
While Bhattacharya believes a "tangible net worth" criteria of Rs 1,500 crore might keep away many experienced miners, Arora said it wouldn't pose a problem as bidders can form joint venture even with foreign entities.
"You can have a joint venture with a partner, which could be a foreign entity having a combined mining experience of 25 million tonne. It is a reasonable condition and a welcome move," Arora said of the minimum work experience criteria.
"We welcome this major move to open up the coal mining sector and believe some of the contentious provision might get amended after feedback of stakeholders are taken care of," Subhasri Chaudhuri, Secretary General of Coal Consumers' Association said.
http://www.dnaindia.com/money/report-opening-up-of-coal-sector-may-run-into-pricing-hurdle-2397236
13/4/17
Anil Agarwal creates BHP-style Indian resources major
Anil Agarwal has sealed the merger of his mining and energy businesses in India, creating a BHP Billiton Ltd-like resources conglomerate, even as a recent investment in Anglo American Plc. raises questions about how far the billionaire’s ambitions stretch.
Vedanta Ltd combined with unit Cairn India Ltd on Tuesday and fixed 27 April as the record date for determining the list of the latter’s shareholders who will be allotted stock in the parent company, according to a joint statement. Vedanta will offer minority shareholders of oil producer Cairn India one equity share and four redeemable-preference shares with a face value of Rs10 each as part of the deal agreement.
The merger gives shareholders a company with a diverse portfolio encompassing iron ore, bauxite, aluminium, power, oil and gas that has the ability to ride out commodity cycles. Agarwal, a self-made billionaire, recently surprised the mining industry by becoming the second-biggest shareholder in Anglo American through an unusual deal that led analysts to speculate he might be planning to force a break up of or a merger with the century-old miner.
“This merger will increase the appeal of Vedanta Ltd to global investors as it simplifies the structure and increases the size and free float of the company,” Tom Albanese, chief executive officer of Vedanta, said in the statement. The firm will continue to focus on remaining a low-cost and low-debt operator, he said.
Agarwal’s fortune has been built on a series of ambitious acquisitions: In 2001, he bought control of then government-owned Bharat Aluminium Co. in one of the first tests of India’s efforts to offload state holdings. He followed with another government entity, Hindustan Zinc Ltd, in a deal that drew the attention of the nation’s top investigating agency. He successfully bid for what was India’s largest iron ore producer Sesa Goa Ltd. in 2007 and for Cairn India in 2010, despite having no oil and gas experience.
Last year, Anglo American was said to have rebuffed informal approaches from the billionaire to discuss ideas including a combination with Hindustan Zinc Ltd.
The Vedanta-Cairn combine was proposed by Agarwal in 2015, but delayed after Cairn shareholders held out for a better deal, which was offered last year.
It will allow India’s most-indebted metals company after Tata Steel Ltd. to access Cairn’s cash pile, which stood at Rs26,000 crore ($4 billion) at the end of December. Vedanta’s debt at the time was Rs65,000 crore, while Cairn is debt-free.
“They are under pressure because of the heavy debt and the merger is planned only because of this,” said Kishor Ostwal, managing director of CNI Research Ltd, an equity research provider in Mumbai. The strong commodity cycle has benefited the group and improving raw material prices will give them a further advantage, he added.
Vedanta shares have nearly tripled in the past year, leading gains among India’s 100 largest companies. It advanced in March after unit Hindustan Zinc announced a special dividend of about $2.2 billion, of which the parent will get about $1.4 billion. The dividend payout will cover 68% of Vedanta’s debt maturities in the fiscal year ending March 2018 and alleviate near-term refinancing risk, according to Moody’s Investors Service.
“The stock looks very interesting and our bias is positive,” Ashish Chaturmohta, head of derivatives and technicals at Sanctum Wealth Management Ltd, said by phone. “The dividend mostly is going to go for debt reduction and so will the cash with Cairn,” he added, saying the stock can move up further.
Shares of Vedanta climbed 2.6% to Rs259.25 in Mumbai on Wednesday. The merged company will have a market-capitalization of about $15.6 billion and a higher free float of shares of 49.9%, according to Tuesday’s statement.
Vedanta’s 6% 2019 dollar notes rallied 42% in the past year as the company reduced its leverage and strengthened prospects for repayments with dividends
JSW Steel raises USD 500 million through unsecured notes
Sajjan Jindal-led JSW Steel has raised USD 500 million (around Rs 3,234 crore) through an issue of fixed rated senior unsecured notes.
"The company has raised USD 500 million by allotment of fixed rate senior unsecured notes," JSW Steel said in a filing to BSE today. The notes will be listed on Singapore Exchange Securities Trading Ltd, the company said.
The company had earlier said that it is "capable" of spending up to USD 1 billion (around Rs 6,500 crore) per annum on both capacity expansion and acquisitions.
The company plans to bid for iron ore and coking coal mines in the upcoming auctions, JSW Steel Joint MD and Group CFO Seshagiri Rao had said.
It would participate in the auction of two iron ore mines in Odisha and of coking coal mines in Jharkhand, he had said. The company imports around 8 million tonnes of coking coal every year.
JSW Steel, the flagship firm of USD 11 billion JSW Group, has plants spread across six locations in Karnataka, Maharashtra and Tamil Nadu. Shares of the company fell by 1.16 per cent to close at Rs 196.40 on BSE.
India hopes to auction coal blocks for commercial mining by end-December
India aims to auction coal blocks for commercial mining by end-December, coal secretary Susheel Kumar told television channel ET NOW on Thursday.
The country is the world's third-biggest producer and importer of the fuel, and with coal accounting for about 70 percent of India's power generation, the government wants to boost domestic output to cut imports.
http://in.reuters.com/article/india-coal-idINKBN17F0FT
Supreme Court to hear coal blocks allocation scam case today
The Supreme Court will on Thursday hear cases pertaining to the coal block scam.
The special Central Bureau of Investigation (CBI) court on April 10 granted interim bail to all five fresh accused in the coal scam case involving the Jindal coal block matter.
Earlier, the court took cognizance on the fresh chargesheet in which CBI named the five persons as accused in the scam.
The CBI had mentioned names of Jindal Steel and Power Ltd's adviser Anand Goel, Gurgaon-based Green Infra's vice-president Siddharth Madra, Nihar Stocks Ltd director B S N Suryanarayan, Mumbai-based KE International's chief financial officer Rajeev Aggarwal, and Mumbai's Essar Power Limited executive vice-chairman Sushil Kumar Maroo.
While opposing the regular bail plea of Sushil Kr Maroo and Anand Goel, the CBI lawyer alleged that both the accused are a threat to the witness (Suresh Singhal) and have also allegedly slapped him in the court premises.
The (CBI) on March 24 charged five more persons in a coal block allocation case against former Congress lawmaker and industrialist Naveen Jindal and others.
The fresh supplementary chargesheet was filed before Special Judge Bharat Parashar.
Reliance starts CBM gas production from two blocks in Madhya Pradesh
Reliance Industries Ltd (RIL) has begun commercial production of coal bed methane (CBM) gas from two blocks in Madhya Pradesh, two people familiar with the development said.
RIL’s move comes after the government approved pricing and marketing freedom for producers of natural gas from CBM on 15 March. The company has deferred production for a while due to lack of clarity over pricing CBM gas. The two blocks are located in Sohagpur East and West.
“RIL has commenced commercial production from 24 March 2017 and expects sales to third party customers from May. RIL has appointed Crisil to help in price discovery process based on CCEA (cabinet committee on economic affairs) approval dated 15 March 2017. We are currently in ramp-up phase and expect to reach around 0.4 mmscmd of production by June 2017. The ramp-up phase will continue further for 15-18 months till we reach plateau production in CBM,” a RIL spokesperson said in response to a Mint query.
RIL had begun test production from the block last April. “But wells had been shut as RIL wanted clarity on gas pricing. In CBM production, you need to de-water many small wells. And the de-watering sometimes takes nearly three years. Thus, RIL may take two-three years to reach peak production,” said the second of the two people mentioned above. RIL was awarded the CBM blocks in 2001, in the first round of CBM auctions.
With this, RIL has become the third company in India to begin CBM gas production. Great Eastern Energy Corp. Ltd (GEECL) and Essar Oil Ltd are the two existing players selling CBM gas in the market. RIL holds another CBM block in Sonhat, Chhattisgarh.
CBM is natural gas stored or absorbed in coal seams. India, with the world’s fourth largest proven coal reserves, holds significant potential for CBM exploration and production. CBM gas is similar to natural gas, containing 90-95% methane.
Reliance Gas Pipeline Ltd (RGPL), an RIL subsidiary, has laid around 312km of pipeline to carry natural gas from Shahdol in Madhya Pradesh close to its CBM blocks to Phulpur in Uttar Pradesh.
An RIL executive, one of the two mentioned earlier, added that initial gas output from RIL block could be around 0.4 million metric standard cubic metres per day(mmscmd). Peak output, however, is envisaged at 2.5-3 mmscmd.
“RIL is best placed to sell its CBM gas as its blocks are centrally located and there will be good demand by industries nearby. Also, the cost of production for RIL may be around $3 per million British thermal unit (mBtu) and even if RIL sells the gas at around $7-8 per mBtu, it would be in a good spot,” said an oil and gas analyst with a domestic broking firm, asking not to be identified.
After SC order, Adani Power might have to write-off Rs 3,500 cr
Adani Power, which has recognised about Rs 4,400 crore from compensatory tariffs (rates) up to December 2016 as part of revenues from its Mundra project, might have to reverse or write off about 80 per cent of this.
According to analysts at Nomura, at least 80 per cent of the CT would be attributed to change in Indonesian coal pricing regulations, which the Supreme Court has disallowed in a ruling on Tuesday. The ruling set aside the Appellate Tribunal for Electricity's (Aptel's) order on CT in April 2016 and comes as a major setback for Adani Power.
Aptel allowed the CT, given the change in coal pricing policy by Indonesia and the unavailability and shortfall of domestic coal. This had been challenged by state electricity boards in the apex court.
On the Tiroda and Kawai projects which have no linkage coal entitlements, interpretation by the Rajasthan Electricity Regulator (RERC) and Maharashtra Regulator (MERC) of shortfall/non-availability of domestic coal as a 'change in law' would be critical, say Anirudh Gangahar and Archit Singhal at brokerage agency Nomura. In their view, full recovery of CT (Rs 3,300 crore recognised so far for the two projects) is still debatable and hence considering the uncertainty on earnings/cash flows outlook in the context of the SC judgment. Nomura maintains a 'reduce' rating on the stock.
While the SC has denied compensation for fuel cost under recovery in the case of units operating on imported coal, it has referred the case back to CERC to quantify the rate relief to be provided to plants that had to resort to higher use of imported coal due to lack of availability of domestic coal. Kotak Institutional Equities says while the fine print of the order makes little change to its interpretation for Tata Power, it brings relief for Adani Power, as not all power purchase agreements (PPAs) will be denied CT. The brokerage maintains its 'sell' rating and target price on Adani Power.
Most analysts have been cautious on the stock. Those at Reliance securities had said after the December quarter results that the company continued to report dismal numbers due to lack of adequate coal supply from its Bunyu mines in Indonesia. This had been forcing it company to blend expensive spot coal inventory, as well as importing more, due to limited availability of domestic coal and PPAs signed at low rates.
Analysts at Edelweiss will review the SC order for legal interpretations, to assess the impact on earnings and valuations of private developers. On the face of it, though, they envisage a Rs 13-18 hit on their sum-of-the-parts (SOTP) target price of Rs 85 for Tata Power. They await further clarity on the Aptel order for Adani Power (SOTP of Rs 28).
Analysts at Ambit Research say Tata Power might look at alternatives like sourcing of domestic coal at competitive prices and raising the plant load factor to sell power to merchant markets. They remain positive on Tata Power, on the back of rising investments in its Mumbai circle and return on equity improvements.
Rio Tinto Wins Coal Exit After $2.45 Billion China Deal Cleared
Rio Tinto Group is closer to an exit from thermal coal after winning approval from Australia’s foreign investment regulator to sell the bulk of its mines to a company controlled by China’s Yanzhou Coal Mining Co. for $2.45 billion.
The Foreign Investment Review Board approved the Coal & Allied deal leaving the world’s second-biggest miner with only two producing coal mines in the country that was once the cornerstone of its energy business. Both Rio and Yancoal Australia Ltd. require shareholder approval with the transaction expected to complete in the third quarter of 2017.
"Today’s FIRB approval is a positive step forward for Yancoal, its shareholders and the Hunter Valley, demonstrating the Australian Government’s support for continued investment into the local resources sector," Yancoal Chief Executive Officer Reinhold Schmidt said in a statement Thursday.
The deal is the first major transaction by Rio under Chief Executive Officer Jean Sebastien Jacques, and may build momentum for other takeover deals in Australia involving Asian companies to proceed.
Foreign investment remains a sensitive issue after Australia’s Treasurer Scott Morrison barred separate bids for state-owned power network Ausgrid last year from Hong Kong billionaire Li Ka-Shing and China’s State Grid Corp. Li now hopes to buy Duet Group in a A$7.4 billion deal and Hong Kong’s Chow Tai Fook Enterprises Ltd. is set to acquire Alinta Energy Holdings Ltd. for A$4 billion. Both takeovers are subject to approval by FIRB.
The sale to Yancoal Australia Ltd. includes an initial $1.95 billion cash payment and $500 million in annual installments of $100 million following completion. Yancoal is yet to secure financing for the deal with investors awaiting details of a capital raising and share offer. Yanzhou has said it would subscribe for $1 billion of its entitlement in the Yancoal offer.
Yancoal, which is 13 percent owned by Asian commodity trading giant Noble Group Ltd., said in January the acquisition would make it Australia’s largest pure-play producer of the commodity. Chinese state-owned Yanzhou Coal owns 78 percent of the Australian Securities Exchange-listed company.
Australian storm may fuel steel price hike in India
With the price of coking coal doubling in the past 10 days, steel in India is set to become dearer.
Coking coal is now priced at $300 a tonne — and expected to rise further — after Cyclone Debbie wreaked havoc at major mines and ports in Australia late last month, disrupting exports from that country.
As per the latest estimate, shipments of 13 million tonnes of coking coal from Queensland, accounting for 50 per cent of the global coking coal supply, is expected to be delayed. Over 32 large vessels are waiting in queue to load coal from the ports, which are limping back to normality.
Nearly all major steel makers in India import most of their coking coal from Australia, which is the biggest exporter of the key raw material.
Jayant Acharya, Director (Commercial & Marketing), JSW Steel, said that while the company is arranging for coking coal from other countries, managing the cost and time will be a major issue.
JSW Steel, which depends entirely on imported coking coal, manages an inventory of 60 days between high sea, port and plant.
It should take at least two months for Australia to regularise coking coal exports, he said.
Demand revives
Interestingly, prices of coking coal from other countries such as the US, Canada and Mozambique have begun rising, in sync with rising coking coal prices in Australia.
Steel companies are likely to pass on the increase in coking coal prices to consumers as demand has begun improving after the lull following demonetisation.
Moreover, steel prices across the globe are expected to go up with the rise in input cost.
Stakeholder consultations on commercial coal mining are going on: Susheel Kumar, Secretary, Ministry of Coal
In an exclusive chat with ET Now, Susheel Kumar, Secretary, Ministry of Coal speaks about what's ailing the coal demand, production targets missed & other future strategies. Edited excerpts:
ET Now: Coal India finished FY17 a smidge below the targeted production in offtake levels. What do you think did not work for Coal India?
Susheel Kumar: It's true that the production targets were not met but there is another way of looking at it. Actually, the production was 2.91% higher as compared to last year. Overall, country’s coal production was also about 3% higher as compared to last year. While meeting the target is good objective, but you should appreciate that the country has moved from adequate coal to surplus coal. Now, we are in a situation of surplus coal and my pithead stock has risen to about 69 million tonnes. So, actually Coal India did not need to produce more let us put it that way.
ET Now: What about all the resettlement and rehabilitation issue? There is delay in coal evacuation largely because of that. Are those issues behind Coal India and what also is the update on the new wage negotiations?
Susheel Kumar: These are areas of challenge. R&R is continuous process as you expand the mine, you need to resettle and rehabilitate more people and that is always difficult because it is movement of people, villages. Similarly, coal evacuation, if rail lines have to be built that also is a project which involves some R&R. These projects are delayed, Railways and Ministry of Coal we have been sitting together with the concerned state governments trying to push the projects. I cannot say that all these problems have been solved but things are moving not at the desired speed that we would have liked to but things are moving ahead and I am hoping that the most important rail link which is Tori-Shivpur would be ready by June 18 for the entire stretch.
ET Now: What about the demand scenario right now because we understand that it was only the last couple of months when the offtake for power companies finally improved. Has that sustained is the real question?
Susheel Kumar: Yes, demand scenario has improved and we have seen an increase of about 5.6% in the power generation. So, obviously coal correspondingly the demand has increased. Next year, we have been told by Ministry of Power that the power demand should increase at about 6%. So, we are hoping that our requirement of coal would also increase. Simultaneously, coal quality has improved. Specific fuel consumption has declined. Specific fuel consumption is how much coal you need for one unit of power. Despite that, improvement in SFC our coal demand is likely to increase and we will produce more to meet that demand.
ET Now: What can we expect for FY18? What are the production and offtake targets and is that one billion tonne target here to stay for 2020?
Susheel Kumar: We have got a communication about demand of domestic coal for Ministry of Power which is 584 million tonnes. Now the normative calculations that we make is that power sector consumes about 75% of overall coal production so that would mean that our total coal requirement should be around 780 million tonnes. We also have a target of import substitution so adding the two together we would need about 790 million tonnes for the entire country not only Coal India so that is the target which we are looking at and I am hoping that the coal blocks which have been auctioned plus already existing private mines Singareni and Coal India combined together they will be able to produce as much coal as would be needed by the country.
ET Now: What does rather the one billion tonne target for 2020, what about that does that stay or would you change that target now?
Susheel Kumar: No that target stays as of now but I must tell you that we have instituted a study which is about vision 2030 and once the outcome is known when we have the recommendations of that study group about vision 2030 then we will look at this one billion target which is only for 2020. So we will know how the demand is likely to grow and whether this one billion needs to be retained or it needs to be revised and I hope that after the receipt of the report of that committee we will be able to tell you something concrete about this to you.
ET Now: There was a significant jump in e-auction allotment recently do you see that trend to continue?
Susheel Kumar: Yes, I think it will continue to grow for sometime as compared to 2015-2016 about 36 million tonnes additional coal was e-auctioned in the year 2016-2017 and some increase will happen in 2017-2018 depending on when we finalise the coal linkage auction policy thereafter may be e-auction of coal may slightly decrease but if that coal linkage policy takes longer then this 107 million tonnes would also further increase that is what my guess is.
ET Now: You are also expected to start the auction process for commercial coal mining have you received any feelers from potential takers already and if you could share with us any timelines for the same?
Susheel Kumar: Yes, we had meeting with stakeholders on 10th of April and this was to receive their feedback on a consultation paper which we had put in the public domain about commercial mining of coal. We have got very valuable suggestions and we are looking at it. We have requested the stakeholders to give their comments by 26th of April which is full one month from the day in which we put it in the public domain. Once we receive all of that we will have a look and then prepare our tender papers. I am hoping to conclude this by the third quarter of this fiscal.
Iron ore's descent into bear-market territory may herald further weakness, with Barclays pinning the blame for the slide on lower steel demand in China driving a shift from mills toward lower-quality ore and raising the prospect of a drop into the $50s.
Barclays report puts iron ore in bear grip
Ore with 62% content in Qingdao fell 1% to $74.71 a dry tonne on Monday, according to Metal Bulletin, following a 6.8% drop on Friday that pushed the commodity into a bear market from a February peak. Earlier in Asia, futures in Dalian sank to the lowest since November, and those in Singapore traded below $72.
Iron ore is in retreat after a procession of negative outlooks, with Barclays among banks saying that gains were unsustainable, along with Australia's central bank and even some mining companies.
There's concern that curbs in China may hurt steel consumption in the top user, as well as forecasts that a further expansion in mine supplies from Brazil, Australia and China will undermine prices. Steel in China has also sagged.
Australia greenlights Rio Tinto’s $2.45bn sale of coal mines to Yancoal
Australian authorities have given Yancoal (ASX:YAL), the subsidiary of China’s Yanzhou Coal Mining, the green light to go ahead with its planned $2.45 billion acquisition of Rio Tinto’s (ASX, LON:RIO) thermal coal assets in the Hunter Valley.
The Coal & Allied unit includes Rio’s stakes in the Hunter Valley Operations mine, Mount Thorley and Warkworth mines, as well as a stake in a coal export terminal at Newcastle.
The Foreign Investment Review Board approved the deal, the largest acquisition by a Chinese government-controlled firm of Australian assets, which leaves Rio with just two producing coal mines in the country.
"Today’s FIRB approval is a positive step forward for Yancoal, its shareholders and the Hunter Valley, demonstrating the Australian Government’s support for continued investment into the local resources sector," the company’s chief executive officer Reinhold Schmidt said in a statement.
The transaction involves an initial payment of $1.95 billion for Rio’s Coal & Allied Industries Ltd., followed by further annual payments, taking the total price up to $2.45 billion. Yancoal also has an option to pay a single cash payment of $2.35 billion, Rio said in January.
The Coal & Allied unit includes Rio Tinto’s interests in the Hunter Valley Operations mine, an 80% interest in the Mount Thorley mine, a 55.6% stake in the Warkworth mine, and a 36.5% share in a coal export terminal at Newcastle.
With the approval of the acquisition, Yancoal Australia becomes the largest pure-play coal producer, though the deal is still subject to approval by the shareholders of both Rio Tinto and Yanzhou Coal.
Should the transaction fall apart, Yancoal will be able to walk away from it without a severe financial penalty, as Rio Tinto set the termination fee at just $23.5 million.
http://www.mining.com/australia-greenlights-rio-tintos-2-45bn-sale-of-coal-mines-to-yancoal/
Essar, Adani and JSW to build LNG terminals at ports
Conglomerates in India now have a Rs 17,000-crore investment theme built around an industrial fuel: liquefied natural gas (LNG).
The Essar, Adani and JSW Groups, among others, are setting up LNG terminals along India’s eastern and western water margins as natural extensions to the port infrastructure, reflecting the increasing demand for the gas as an alternative energy source in the country as global prices of the fuel head south.
Essar Ports, part of the Essar Group, has won the recent bid for a Rs 450 crore, 1-million-tonne LNG import terminal at the Haldia port in West Bengal, according to two people aware of the developments. The Kolkata Port Trust had called bids for the terminal, for which staterun Petronet LNG and V Energy were also in the race.
"As a group, we keep looking at growth opportunities in its businesses. But it is not our policy to comment on any specific proposal," a spokesperson for the Essar Group told ET.
Essar, Adani, and JSW Groups' planned investments on their respective LNG terminal projects total Rs 17,000 crore: At its Dhamra port in Odisha, Adani Ports and SEZ is building an LNG terminal of 5 million ton capacity, entailing an investment of Rs 5,200 crore, and an LPG terminal of 2.5 million ton capacity, which would see an additional investment of Rs 2,300 crore. The JSW group has also tied up with the Hiranandandani Group, spending up to Rs 4,000 crore to set up an LNG terminal at JSW's Jaigarh port in Maharashtra.
Essar might sign the 30-year licence agreement in the next couple of months. It has already sought environmental clearance for the project that may come up in the next two years. The majority of the equipment would be on lease, keeping the investments relatively low, one of the two sources quoted above said. Later, Essar might set up a 5-million-ton LNG terminal at its facility at Hazira in Gujarat. "Going forward, LNG will be the focus for Essar," the person said.
A consortium led by Russia's oil giant Rosneft has bought the group's oil business for $12.9 billion putting the ports out of almost all liquid cargo. The resultant shift is toward hydrocarbons. "On a group level, Essar could be a large user of LNG, through its steel plants," said the source.
A fall in LNG prices amid rising demand stoked new investments in the fuel’s storage and transportation infrastructure. "There is high demand for LNG, and shift towards alternative sources of energy," said Kalpana Jain, partner at Deloitte India. "Of course, the prices are a reason too. Landed rates in Japan, for instance, have fallen to $5 per unit from $16 in the last two years."
The Adani Group's two terminals in Odisha would help close the gap in the state's energy requirements, and support various local ancillary industries. At Mundra in Gujarat, the Adani Group is currently working on an LNG terminal that will have an initial annual capacity of 5 million tons a year. It is also working on a 1.6 million ton LPG import terminal. The project cost of the LNG import terminal is estimated to be about Rs 4,500 crore.
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
A NEW MARK FOR NEW MILESTONES
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