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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