Commercial coal mining to lower power tariff: Coal Secretary Susheel Kumar
The opening up of commercial coal mining to private companies will bring in competition in the coal sector and reduce power tariff, a top official said today.
"Let's begin by saying commercial coal mining is a very big reform in the coal sector and the idea is to bring in competition for the monopoly coal miner, which is a public sector company called Coal India (CIL)," Coal Secretary Susheel Kumar told PTI.
India is in the process of throwing open commercial coal mining to private firms for the first time in four decades, with the aim of shifting the world's third-biggest coal importer towards energy self-sufficiency.
"So, this is the intervention which the government wants to bring in. And what we wish to achieve ultimately in the coal sector is to reduce the prices of coal so that our ultimate end-use consumer who is a power consumer gets power at cheaper rates," the secretary explained.
The government, he said, wants to convey to potential investors that sustainable and efficient mining, not revenue maximisation, is the idea behind commercial coal auction.
"The objective of the government is not maximising the revenue. The idea is not to earn money... So, whatever model we work out, we will work out in such a way that objective (of sustainable and efficient mining) is met and prices of coal come down," Kumar added.
As per the Coal Mines Special Provision Act of 2015, the government can open up commercial coal mining for private players.
With a chunk of population going without electricity, Kumar suggested that the government should ensure these people get power.
"So, the entire (coal) sector is operating in such a way that we reduce prices, and what is the mechanism? The mechanism is competition, more efficiency, more mechanisation. What we hope to achieve through commercial mining is these mines will attract efficient power sector players who will invest in a big way and bring in that efficiency, ultimately reducing the prices," the secretary added.
The government plans to auction four blocks under commercial mining in the first phase.
A group of secretaries has also suggested that the government should create competition for CIL by opening up commercial coal mining.
Iron ore output hits new high, Odisha revenue crashes to new low
Even as revenue earning from the mining sector has crashed to below Rs 5000 crore mark, iron ore production in Odisha has reached a record high of 102.66 million tonne (MT) in 2016-17 with the State registering a growth of about 27 per cent.
Improving its own production rate of 80.8 MT in 2015-16, the State has crossed the 100 MT benchmark set for the last fiscal.
The State has also set another record by dispatching 120.11 MT of iron ore as against its target of 110 MT. Ore despatch in the last fiscal was 81.66 MT.
“Miners (both merchant and captive) of Odisha were able to better their performance because of pro-active action of the State Government by timely extending validity of mining leases after enactment of the amended Mines and Minerals Development and Regulation (MMDR) Act,” Minister of State for Steel and Mines Prafula Mallick told this paper.
Besides, increased mechanisation for excavation is another factor for the improved production level, he said.
The State Government has already extended the validity of 74 mines before January 11, 2017, the last date for execution of lease in favour of mines waiting for lease extension as per the amended MMDR Act.
“More mines are expected to restart operations this year. We are hopeful that iron ore production can touch 120 MT, the target set for 2017-18, if all the mines meet the production level as per their mining plans,” the Minister said.
The State has retained the top slot in iron ore production in the country despite a sluggish market and low price for the ore in international market.
The Minister said the State performed better in overall production and despatch of mineral in last financial year. It recorded a total production of minerals of 264.84 MT in 2016-17 compared to 239.45 million tonnes in 2015-16.
Odisha is a leading producer of iron, steel, ferro-alloy and aluminium and has a strong base for coal-based power generation.
The mining sector which drives the State’s economy that witnessed high growth between 2004-05 and 2015-16, was able to generate a revenue of Rs 4,500 crore against a target of Rs 6,500 crore. It is a substantial fall as compared to 2015-16 when the revenue collection from the sector was Rs 5,400 crore. A sharp drop in demand of iron ore and low prices in international markets are the reasons for decline in the income.
NMDC steel unit divestment: Govt firm despite Chhattisgarh CM warning
HomeEconomy NMDC steel unit divestment: Govt firm despite Chhattisgarh CM warning
NMDC steel unit divestment: Govt firm despite Chhattisgarh CM warning
The ministry’s latest move comes after Chhattisgarh chief minister Raman Singh reiterated his stance in a recent letter to the Centre that the disinvestment plan for the 3-million tonne plant should be abandoned.
Chhattisgarh chief minister Raman Singh has written to the Centre, saying that the disinvestment plan for the 3-million tonne plant could trigger unrest in the region
The Centre is firm on the strategic disinvestment plan for the under-construction, `15,525-crore steel plant of PSU miner NMDC at Nagarnar, Chhattisgarh, despite the recent deadly attack on CRPF personnel by left-wing extremists in the state. Sources told FE that the steel ministry will soon write to the state government, explaining why a private strategic partner was essential for the venture, while also assuring the state that the alliance won’t result in job losses or reckless exploitation of natural resources.
The ministry’s latest move comes after Chhattisgarh chief minister Raman Singh reiterated his stance in a recent letter to the Centre that the disinvestment plan for the 3-million tonne plant should be abandoned. Singh has warned that the move would result “in serious image deficit for the government” and could trigger unrest in the region.
Waterway project flows on
: The first phase of National Waterway No. 5 project from Kalinga Nagar to Paradip and Dhamra has moved forward with the completion of dredging covering an 11-km stretch in the non-tidal zone of the Kani river.
Dredging has been taken up between Erada and Padanipal in Jajpur and Kendrapara districts, respectively, covering a collective stretch of 36km.
In the first phase, the waterway will be operational between Jokadia near Kalinga Nagar industrial hub and Dhamra and Paradip ports. The length between these destinations is nearly 201km.
Once it becomes operational, the waterway will help industries in Kalinga Nagar and Vyasa Nagar industrial hub and mines in Talcher and Daitary to transport goods using two major ports of the state.
While several steel plants have come up in the Kalinga Nagar region, there are several coalmines in Talcher and iron ore and chromite mines in Daitary.
The Inland Waterways Authority of India had signed an MoU with the state government, Paradip Port Trust and Dhamra Port Company Limited on June 30, 2014, to undertake the first phase of the waterway project.
In the second phase, the stretch between Talcher and Jokadia (131km) will be developed. The Rs 2,000-crore project will cover a distance of 332km in two phases.
The first phase, considered the most viable, will be part of the National Waterway No. 5 that will connect Talcher coalfields to Haldia port in Bengal.
An official said dredging was on in the three stretches of Erada-Angaispur (11km), Angaispur to Badamanatira (14km) and Badamanatira to Padinipal (11km). Dredging has been completed in 2.7km in the first stretch, half kilometre in the second and 7.7km in the third stretch.
Official sources said dredging was slow in the second stretch because of local resistance. Local residents had resisted dredging as once the depth of the river increased it would become impossible to cross the river on foot with their livestock. "The problem has been sorted out and work has picked up. The dredging in the first and third stretches is going on in full swing," said an official.
The dredging is being carried out to ensure 2-metre water depth in the non-tidal zone of the waterway. The job is expected to be over in July, the official said.
As the dredging goes on, the Inland Waterways Authority has appointed a consultant to prepare engineering design and bid documents for construction of structures such as weir by March next year, he said.
The authorities plans to make the waterway operational by 2020 and trial run will begin by the end of this year.
The authorities will build a temporary terminal at Erada for trial run of the project's first phase. A patch of land measuring 6.7 acres has been taken on lease basis for the purpose at Erada.
A joint venture company - Inland Water Consortium of Odisha Limited - has been formed with the Odisha government, Paradip Port Trust and Dhamra Port Company Limited as partners for construction and operation of a permanent terminal near Kalinga Nagar. The Inland Waterways Authority has been requested to provide technical support for preparation of request for proposal documents for the construction of the terminal.
Dhamra, however, has already moved forward with its terminal plan. The Dhamra Port Company has constructed a terminal near its port on its own cost, while as of now the Paradip Port Trust will utilise its existing jetty for the purpose. Later, it will construct a permanent terminal.
In January last year, the Inland Waterways Authority of India started trial run of cargo vessel ( MV Lal Bahadur Sastri) from Dhamra in Bhadrak district to Rajnagar in Kendrapara district to gauge the depth of river water and ascertain the possible hindrances on the route in the tidal zone. A 300-tonne barge was supposed to go up to Padanipal, but high-tension overhead power supply line hindered further progress of the vessel from Rajnagar area.
https://www.telegraphindia.com/1170428/jsp/frontpage/story_148689.jsp#.WQL6jkWGN0w
GST loss to be reduced by slice of service tax
Even as the Jharkhand assembly on Thursday ratified the state Goods and Services Tax Bill, 2017, experts said the state will suffer significant losses under the new tax regime expected to be rolled out on July 1.
Under the GST regime, taxes will be levied at the place a particular commodity is consumed instead of the place where it is produced. Jharkhand being a production-centric state in terms of iron and steel, aluminium, copper, heavy motor vehicles and cement, will not be benefited whereas the destination states where the finished products reach would gain in terms of tax.
The state hopes to compensate for this loss from a share of the service tax worth around Rs 2,700 crore that it is likely to be received from the Centre. Additional chief secretary, planning and finance-cum-development commissioner Amit Khare said the Centre has also agreed to compensate the states suffering losses for the first five years.
"The exact volume of losses or the rate at which the Centre will be required to compensate is not known because the list of items to be placed against the five tax slabs of 5%, 12%, 18% and 28% is yet to be finalised," he said. Khare also added that since the state governments would now get a share of the service tax, which was earlier solely collected by the Centre, job contracts and other service sectors would add to the kitty of the state exchequer.
While royalty on coal, iron ore and other minerals obtained by the state will remain unaffected, the state would be at its liberty to levy taxes on petrol, diesel, crude oil, natural gas, aviation fuel and liquor as these items have been kept out of the purview of GST. The state will also be able to levy taxes on goods and services brought into Jharkhand through e-commerce.
Addressing the media, urban development minister C P Singh said that for effective implementation of GST, the state has constituted a GST advisory committee comprising members of Federation Chamber of Commerce, chartered accountants and the bar association. "PWC has been appointed as consultants for the GST implementation and training of stakeholders which includes chartered accountants and government officials," he said.
The minister ruled out apprehensions of traders in registering for the GST saying that of around 1.25 lakh people registered under the prevailing system of sales tax, more than 55,000 have registered for the new tax system. "It is because the GST registration has been made mandatory for those having an annual turn over of over Rs 20 lakh whereas it was fixed at Rs10 lakh under the previous system," Singh said.
Iron ore has further to fall to knock out unconventional supplies: Russell
Now that the euphoria of iron ore's all too brief rally has evaporated, the question the market is grappling with is what is a fair price level for the steel-making ingredient.
Spot iron ore prices in China <.IO62-CNO=MB> ended Thursday at $66.42 a tonne, down 30 percent from the 17-month peak of $94.86 reached on Feb. 21.
The problem for industry participants is how to wrestle with the factors that have driven, or are likely to drive, prices for the rest of the year.
The traditional method of looking at the supply-demand balance and assessing the cost of marginal supply does provide a starting point.
But if there is one thing that the market has learnt in the past year, it's that the main driver of the market is policy decisions in China, and how participants react to them.
The nearly 150 percent rally between the low of $38.52 a tonne on Dec. 10, 2015, and the peak in February caught most observers by surprise as it was largely driven by Beijing's decision to add stimulus to infrastructure spending and construction, the major demand centres for steel in the world's largest producer and consumer of the metal.
This year the expectation is that Beijing will wind some of the stimulus back, thereby trimming demand growth for steel and iron ore.
If this is the case for the remainder of 2017, this is a bearish signal for steel and iron ore prices.
A poll of the hundreds of industry participants at the Singapore Exchange's (SGX) Iron Ore Forum in Singapore on Thursday showed an increasing pessimism about the price for iron ore.
While about a third of respondents thought the spot price would average between $60 and $70 a tonne over 2017, about half thought the price would be below $60 over the course of the year.
This brings the market back to the question as to what is the price of the marginal tonne of iron ore supplied to China, and how far below that does the price have to fall to knock enough supply out to balance the market.
The majority of estimates seem to be grouped around the $60 a tonne level, this being the point at which 90 percent of seaborne iron ore suppliers are still profitable.
Certainly the higher prices of recent months led to a flurry of tonnes being shipped to China from what can broadly be described as alternative suppliers, which are countries outside the three major exporters Australia, Brazil and South Africa.
KNOCKING OUT SMALL SUPPLIERS
Chinese customs data shows that a total of 270.9 million tonnes was imported in the first quarter, a gain of 12.2 percent over the same period last year.
While the major suppliers did increase their contributions, their growth rates were below the overall increase, with Australian supplies up 10.8 percent, those from Brazil by 3.8 percent and from South Africa by 3.3 percent.
India leapt into fourth spot with a massive 332.4 percent increase, supplying 9.9 million tonnes in the first quarter, or almost two-thirds of the total it supplied to China for the whole of 2016.
China's imports from Iran rose 113.4 percent in the first quarter, while those from Peru gained by 20 percent.
To be sure, China's imports are still dominated by the three major exporters, but the point is that the higher iron ore price brought alternative suppliers back to the market, and fairly rapidly.
Suppliers outside the big three provided China with 13.9 percent of its iron ore imports in the first quarter, up from 12.2 percent for the whole of 2016.
The question for the market is how quickly these extra tonnes will exit the seaborne market in response to the recent sharp decline in prices.
An iron ore miner based near India's east coast, speaking on the sidelines of the SGX iron ore event, said his company had managed to ship some cargoes to China this year, but when the price dropped below $70 a tonne it knocked them out of the market.
Industry consultants CRU presented data at a forum on Wednesday that estimated that about 50 million tonnes of the around 100 million tonnes supplied annually to China by producers outside the big three was fairly elastic, meaning it will respond to lower prices and exit the market.
But it's also possible the market will have to lose more higher-cost tonnes, given the expected arrival of more than 100 million tonnes of new low-cost production from Australia and Brazil by the end of 2018, as the last of the major projects ramp up output.
The top Australian miners, Rio Tinto, BHP Billiton and Fortescue Metals Group have reduced the cash cost of producing a tonne of iron ore to below $15 a tonne, meaning that once all the other costs, such as freight and taxes, are added in they can still be profitable at a spot price of less than $40.
It's a similar story for Brazil's Vale, even though its freight charges are higher given the longer shipping distance to China.
Overall, it would appear that iron ore will have to spend some time below $60 a tonne in order to knock out alternative seaborne supplies, as well as ensure that high-cost Chinese domestic miners don't resume operations.
But of course, this assumes that the authorities in Beijing don't spring any surprises on the market.
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