The mining industry has responded swiftly to COVID-19 by prioritizing health and safety, and supporting economic recovery. Companies have collaborated through the ICMM to share guidance and accelerate learning. Key themes include health and safety as a fundamental value, communicating mining's role, and commitment to building forward better. Companies have implemented strict protocols like screening, testing, distancing and increased hygiene to safely operate. The response necessarily differs across countries and regions based on varying guidance, and continued information sharing is important.
- The Indian mining sector has struggled with bureaucratic hurdles and regulations that have slowed growth, but PM Modi is trying to attract private and foreign investment to revive the sector. Measures include allowing more foreign investment, auctioning mining licenses, and extending mining concessions to 50 years.
- Bhushan Power & Steel emerged as the preferred bidder for the Netrabandha Pahar iron ore block in Odisha, agreeing to share 87.15% of revenue with the state government. Adani Cementation plans to set up cement grinding and clinker facilities worth 3000 crore rupees in Gujarat and Karnataka to meet growing demand.
- A survey found that Indian mining
Coal auctions: Modi govt's policy push to private miners will cost Chhattisgarh Rs 900 crore a year
Odisha mining auction: 123 companies in race for 11 mineral blocks
Proposed amendments to Coal Bearing Areas Act will change
land acquisition for mining: Experts
JSW Steel seeks consent to surrender Gonua iron ore
mine in Odisha
MSMEs’ SOS to Odisha govt. over iron ore scarcity
NMDC, Ministry of Steel assists NINL to start iron ore mining
Atomic Minerals Directorate looks for lithium in
Karnataka, Rajasthan
Australian High Commissioner meets Chhattisgarh CM; holds
talks on mutual cooperation
Exercise due diligence in clearing mining leases, former
bureaucrat urges A.P. govt
Govt relaxes green norms for projects connecting mines
39 mining projects of Coal India face delays
The document summarizes opportunities in India's oil and gas pipeline industry. It discusses how pipeline transportation is established in India and globally for transporting oil, gas, and petrochemical products. It provides an overview of India's oil and gas market and production, including key players. It also outlines growth areas such as expanding India's natural gas pipeline network and opportunities for contractors in upcoming pipeline projects.
Another Issue of Geonesis monthly newsletter with sensational exclusive news.
MINING: A COMPLETE OVERHAUL IS NEEDED
ILLEGAL MINING, POLI C Y REFORMS AMONG PRIORITIES
ONE MINISTRY FOR STEEL & MINES IS A RECIPE TO REDEEM BOTH
After the successful first auction of a gold mine in India, the country is preparing to auction its first diamond mine located in Madhya Pradesh. The 136-hectare Hatupur diamond block is estimated to contain around 60 million tonnes of kimberlite reserves holding 500 carats of diamonds. The mine has projected reserves valued at Rs. 106 crore and a lifespan of 25 years. Meanwhile, Vedanta Resources was the winning bidder for India's first auctioned gold mine, the Baghmara block in Chhattisgarh. Vedanta is a major natural resources company that operates aluminum, zinc, lead, copper and other metals and mining businesses globally. However, a year after India
The mining industry has responded swiftly to COVID-19 by prioritizing health and safety, and supporting economic recovery. Companies have collaborated through the ICMM to share guidance and accelerate learning. Key themes include health and safety as a fundamental value, communicating mining's role, and commitment to building forward better. Companies have implemented strict protocols like screening, testing, distancing and increased hygiene to safely operate. The response necessarily differs across countries and regions based on varying guidance, and continued information sharing is important.
- The Indian mining sector has struggled with bureaucratic hurdles and regulations that have slowed growth, but PM Modi is trying to attract private and foreign investment to revive the sector. Measures include allowing more foreign investment, auctioning mining licenses, and extending mining concessions to 50 years.
- Bhushan Power & Steel emerged as the preferred bidder for the Netrabandha Pahar iron ore block in Odisha, agreeing to share 87.15% of revenue with the state government. Adani Cementation plans to set up cement grinding and clinker facilities worth 3000 crore rupees in Gujarat and Karnataka to meet growing demand.
- A survey found that Indian mining
Coal auctions: Modi govt's policy push to private miners will cost Chhattisgarh Rs 900 crore a year
Odisha mining auction: 123 companies in race for 11 mineral blocks
Proposed amendments to Coal Bearing Areas Act will change
land acquisition for mining: Experts
JSW Steel seeks consent to surrender Gonua iron ore
mine in Odisha
MSMEs’ SOS to Odisha govt. over iron ore scarcity
NMDC, Ministry of Steel assists NINL to start iron ore mining
Atomic Minerals Directorate looks for lithium in
Karnataka, Rajasthan
Australian High Commissioner meets Chhattisgarh CM; holds
talks on mutual cooperation
Exercise due diligence in clearing mining leases, former
bureaucrat urges A.P. govt
Govt relaxes green norms for projects connecting mines
39 mining projects of Coal India face delays
The document summarizes opportunities in India's oil and gas pipeline industry. It discusses how pipeline transportation is established in India and globally for transporting oil, gas, and petrochemical products. It provides an overview of India's oil and gas market and production, including key players. It also outlines growth areas such as expanding India's natural gas pipeline network and opportunities for contractors in upcoming pipeline projects.
Another Issue of Geonesis monthly newsletter with sensational exclusive news.
MINING: A COMPLETE OVERHAUL IS NEEDED
ILLEGAL MINING, POLI C Y REFORMS AMONG PRIORITIES
ONE MINISTRY FOR STEEL & MINES IS A RECIPE TO REDEEM BOTH
After the successful first auction of a gold mine in India, the country is preparing to auction its first diamond mine located in Madhya Pradesh. The 136-hectare Hatupur diamond block is estimated to contain around 60 million tonnes of kimberlite reserves holding 500 carats of diamonds. The mine has projected reserves valued at Rs. 106 crore and a lifespan of 25 years. Meanwhile, Vedanta Resources was the winning bidder for India's first auctioned gold mine, the Baghmara block in Chhattisgarh. Vedanta is a major natural resources company that operates aluminum, zinc, lead, copper and other metals and mining businesses globally. However, a year after India
Types of mineral & energy resources in indiaEbad Rahman
This document discusses mineral and energy resources in India. It defines minerals and describes their criteria and occurrence. The main types of minerals in India are ferrous, non-ferrous, non-metallic, and rock minerals. India's major mineral resources include iron ore, manganese, copper, bauxite, limestone, and mica. Energy resources are classified as conventional sources like coal, oil and gas, and non-conventional sources like solar, wind and tidal energy. Conservation of minerals and energy is important as they are finite resources and reducing consumption extends their availability.
The document provides an overview of labour conditions in 18 granite quarries in South India that were surveyed. It finds serious human rights violations, including child labour, bonded labour through debt, lack of payment of minimum wages and benefits, poor occupational health and safety standards, and gender-based wage discrimination. There was a decline in child labour found in the surveyed quarries in Tamil Nadu compared to previous studies, attributed to increased scrutiny by state government teams. However, child labour remains present in some quarries in Karnataka. Most workers have informal employment agreements and live in poor conditions at the quarry sites.
This document provides a summary of the Indian mining industry and recommendations to promote its growth. It analyzes production, demand, and reserves for various minerals in India, finding that while India has significant mineral resources, production has declined in recent years. The mining sector contributes significantly to India's GDP but faces issues with policy uncertainty, delays in approvals, and infrastructure bottlenecks. The report makes recommendations to address these problems through a stable regulatory framework, streamlined approval process, and investments in exploration and infrastructure to realize the sector's potential.
This document is a summer internship project report submitted by Dharmesh Jithara to Gujarat Technological University. It discusses his internship at Sentosa Ceramics Pvt. Ltd., a large-scale ceramic tile manufacturer located in Morbi, India. The report provides an overview of the ceramic tile industry in India, details about Sentosa Ceramics' history, organizational structure, production process, marketing, finance, and SWOT analysis. It also outlines the research methodology used for his study of Sentosa Ceramics' brand image positioning during the internship.
This document outlines a course on public finance. It begins by defining public finance and the public finance cycle. It then discusses the formulation of fiscal policy and the generation of revenue through taxation and other sources. It describes the various types of taxes and revenues. It also covers government expenditures through the national and local budget process. Other topics include public borrowing, budget accountability, and the role of the Commission on Audit in ensuring accountability.
GIS for Revenue Collection and ManagementEsri India
Presentation by Rajesh Mathur, Vice Chairman, Esri India (NIIT GIS Ltd) at 'ICT for Urban Governance' conference on how GIS can be used by municipal corporations / urban local bodies for enhancing revenue collection and management. The presentaion addresses following key aspects:
• How can ICT help in the collection and management of ULB revenues, especially property tax?
• What have been some of the more successful initiatives in this regard?
• What are the key issues and challenges in the Indian context?
3 Things Every Sales Team Needs to Be Thinking About in 2017Drift
Thinking about your sales team's goals for 2017? Drift's VP of Sales shares 3 things you can do to improve conversion rates and drive more revenue.
Read the full story on the Drift blog here: http://blog.drift.com/sales-team-tips
How to Become a Thought Leader in Your NicheLeslie Samuel
Are bloggers thought leaders? Here are some tips on how you can become one. Provide great value, put awesome content out there on a regular basis, and help others.
Singareni Collieries, India's second largest coal producer, will open the country's largest underground mine next month with an annual capacity of 2.8 million tonnes. This will help Singareni exceed its coal production target for the current fiscal year and ensure sufficient supplies to power plants in South India. Allocating natural resources requires balancing economic growth with environmental and social concerns. While auctioning resources can increase transparency and revenues, proper exploration is needed beforehand and conditions must be established to prevent discrimination. The role of central and state governments in allocating resources also needs clarification to resolve ongoing debates.
North-East States of Assam & Arunachal Sets Prices of Coal on Fire with Aggressive Bids of 288.75 & 344.75% placed by State Mining Corporations
Centre firm on auctioning of Singareni coal mine blocks
4 coal conversion projects to help achieve gasification
by 2030: Joshi
Privatisation is the way forward to regulate coal industry hit by
price hike, shortages, say experts
Tata Steel arm to buy govt stake in NeelachalIspat for
Rs 12,100 crore
Restrictions on iron ore industry hampers socio-economic growth of Karnataka
The document summarizes India's coal industry and reserves. It notes that bulk of India's coal reserves are located in certain southeastern states. While India has substantial coal reserves, production has been insufficient and controversies like coal allocation scams have arisen. Coal remains a key energy source for India in the coming decades. The document also reviews India's regulatory framework governing the coal industry and the major players like Coal India.
The document summarizes India's coal industry and reserves. It notes that bulk of India's coal reserves are located in certain southeastern states. While India has substantial coal reserves, production has been insufficient and controversies like coal allocation scams have arisen. Coal remains a key energy source for India in the coming decades. The document also reviews India's regulatory framework for the coal industry and the major players like Coal India. It discusses issues like the coal blocks allocation scam where the CAG estimated a loss of 1.86 lakh crore to the exchequer.
The document discusses India's draft National Mineral Policy which proposes to offer mineral exploration companies the right of first refusal to mine any area they have explored. It also discusses upcoming expirations of mining leases in India and the risks to mineral production if new leases are not issued on time. Additionally, it provides updates on Vedanta Resources bagging bauxite mines in Odisha, their plans to expand aluminum production, and venturing into specialty glass manufacturing.
FERROALLOYS : POWERLESS IN INDIA? Presentation on Power Crisis & Ferroalloy ...PRABHASH GOKARN
Indian Power Shortage is Achilles Heel of the Ferroalloy Industry. Power Shortages are due to lower generation, Non - Availability of Thermal Coal results in further shortage. The Electric Transmission Grid is Collapsing and rising prices of fossile fuels leads to inevitable rise in power cost : will ferroalloy industry remain profitable ?
Nuclear Power in India remains Controversial.
India to see 6.7% shortage this fiscal
•In 2012-13, the energy shortfall touched 8.7 per cent while peak shortage reached 9 per cent.
•Overall, energy shortfall is expected to be 70,232 million units, resulting in a deficit of 6.7 per cent this fiscal.
•The requirement would be 10,48,533 million units whereas the availability is pegged at 9,78,301 million units.
•Transmission constraints between Northern-North Eastern-Eastern-Western - Southern Regional Grid restricts flow of power.
•The strains on India’s electricity network brutally exposed last summer when the grid collapsed for the best part of two days across north India - the world’s biggest power cut.
Thermal Coal supply by Coal India severely restricted – mines not expanded in time to take care of explosion in demand from the power sector.
•Overpricing of coal & poor coal quality of coal supplied by Coal India
•Mine stoppages due to flooding etc lead to severe seasonal shortages.
•Imported coal from Indonesia – rising coat and decreased availability. Restrictions on foreign ownership of coal mines & export of thermal coal – how long will the party last?
•60% of power generated in India comes from burning coal. Isn’t over dependence on thermal coal for power a dangerous situation?
•Many delayed projects due to lack of coal ….
Despite abundant reserves of coal, India faces a severe shortage of coal - India isn't producing enough to feed its power plants.
•Coal India, is constrained by primitive mining techniques and is rife with theft and corruption; Coal India has consistently missed production targets and growth targets.
•Poor coal transport infrastructure has worsened these problems.
•Most of India's coal lies under protected forests or designated tribal lands. Any mining activity or land acquisition for infrastructure in these coal-rich areas of India, has been rife with political demonstrations, social activism and public interest litigation.
Presentation ends with Ways out of the Crisis.
A transformation time for Indian tax system GST which was born out of patience & struggle; the uniformed tax system which is expected to roll out on 1st of July is a turning point in the Indian tax regime. The implementation of GST will bring lot more benefits at the consumer end. The main objective of GST is to eliminate excessive taxation. In the run-up to one of the biggest tax reforms in the country, the market is abuzz with new rules and guidelines about the Goods and Services Tax (GST).
Steel 360 Magazine June'17 Issue.
The document summarizes the key details of the Indian coal allocation scam that was uncovered in 2012. It discusses that the CAG accused the government of allocating coal blocks between 2004-2009 without a transparent and competitive bidding process, resulting in estimated losses of Rs. 1.86 lakh crore. It outlines the process of coal allocation to private and public firms, and lists some of the major beneficiaries of the scam, including Tata Group, Jindal Steel, and others estimated to have gained billions of rupees. The BJP strongly criticized the government and a CBI investigation was launched into the scandal.
The document provides information about the coal allocation scam in India that occurred from 2004-2009. Some key points:
- The CAG accused the Indian government of inefficiently allocating coal blocks and providing "undue benefits" totaling over $1 trillion to private companies.
- Historically coal mining was nationalized but exemptions allowed private companies in power, steel and cement to obtain coal blocks. The allocation process lacked transparency and clear criteria.
- Several political figures and their associates faced allegations of influencing allocation of valuable coal blocks to certain private companies, causing significant losses to the public exchequer.
- The scandal grew substantially amid media coverage, opposition attacks and a court-ordered CBI investigation
An Impending Trade War?
Steel 360 takes an in depth look into the recent diktat by the US President Donald Trump with regard to imposing hefty tariffs on imported steel products. In the April Edition, Steel 360 studies the depth of the impact such trade barriers may have on Indian manufacturers and how production patterns can change globally.
Reading between the lines, Steel 360 tries to analyze repercussions of a probable trade war between major world economies and more importantly, events that have led to the situation. At a time when world steel trade remains precariously volatile, the closure of the US steel market to China and India could well prove to be a catastrophe. The lack of scrap from US could in turn impact secondary steel production across Asia. The likelihood of trade dynamics balancing out in the short to medium term also remains note worthy. To understand how the markets may swing, what are the commodities that may be hit and to get a complete update on this developing story, read latest edition of Steel 360.
The document discusses various allegations of impropriety and corruption related to the allocation of coal mining blocks in India. It lists the top 20 beneficiaries of coal block allocations and the estimated windfall gains to them. It then details allegations against several prominent political figures from various parties, including Congress leaders Subodh Kant Sahay, Naveen Jindal, Vijay Darda, Premchand Gupta, and Sriprakash Jaiswal as well as BJP leader Nitin Gadkari, regarding their alleged role in influencing the allocation of coal blocks to companies with which they or their relatives were associated.
"We specialize in the development of process-driven, conceptual models to identify and improve the understanding of your mineral targets.
The spearhead of our services is delivering core drilling service in prompt and efficient manner.
A world of experience, technical knowledge, and understanding. That’s what Geonesis brings to your project. Profitable mining demands an independent, experienced, long-term perspective that gives you real clarity.
Whether its advice on project feasibility, property acquisitions or disposals, financing, geotechnical stability, sustainability or mine closure, we have an extensive breadth of knowledge and depth of experience to ensure you get the right advice, where and when you need it most."
The document discusses several topics related to mining in India:
1) India ranks poorly (97th out of 104 countries) on investment attractiveness for mining according to the Fraser Institute due to frequent bans and restrictions that have pushed the country out of the top 91.
2) The Supreme Court's ruling on mining leases in Goa will further damage India's image as an investment destination for mining.
3) The government has opened coal mining to private companies for commercial use, ending the monopoly of Coal India. This is expected to increase competition, investment, and jobs in the mining sector.
4) Allowing commercial coal mining is a possible but not guaranteed game changer due to various challenges around project sites,
The document discusses India's coal industry, which is the most important and abundant fossil fuel sector, contributing about 55% of India's total energy needs. Around 70% of coal production is used for electricity generation and the rest for industries like steel and cement. Coal mining first began in India in 1774. Usage of coal is expected to continue rising due to India's growing population and economy. Coal is classified into four types - anthracite, bituminous, lignite, and peat - based on carbon content and heat value. India has increased annual coal production to over 730 million tons through investments and modern technologies. Coal is also imported to meet demand and improve quality for industries like steel and power.
Types of mineral & energy resources in indiaEbad Rahman
This document discusses mineral and energy resources in India. It defines minerals and describes their criteria and occurrence. The main types of minerals in India are ferrous, non-ferrous, non-metallic, and rock minerals. India's major mineral resources include iron ore, manganese, copper, bauxite, limestone, and mica. Energy resources are classified as conventional sources like coal, oil and gas, and non-conventional sources like solar, wind and tidal energy. Conservation of minerals and energy is important as they are finite resources and reducing consumption extends their availability.
The document provides an overview of labour conditions in 18 granite quarries in South India that were surveyed. It finds serious human rights violations, including child labour, bonded labour through debt, lack of payment of minimum wages and benefits, poor occupational health and safety standards, and gender-based wage discrimination. There was a decline in child labour found in the surveyed quarries in Tamil Nadu compared to previous studies, attributed to increased scrutiny by state government teams. However, child labour remains present in some quarries in Karnataka. Most workers have informal employment agreements and live in poor conditions at the quarry sites.
This document provides a summary of the Indian mining industry and recommendations to promote its growth. It analyzes production, demand, and reserves for various minerals in India, finding that while India has significant mineral resources, production has declined in recent years. The mining sector contributes significantly to India's GDP but faces issues with policy uncertainty, delays in approvals, and infrastructure bottlenecks. The report makes recommendations to address these problems through a stable regulatory framework, streamlined approval process, and investments in exploration and infrastructure to realize the sector's potential.
This document is a summer internship project report submitted by Dharmesh Jithara to Gujarat Technological University. It discusses his internship at Sentosa Ceramics Pvt. Ltd., a large-scale ceramic tile manufacturer located in Morbi, India. The report provides an overview of the ceramic tile industry in India, details about Sentosa Ceramics' history, organizational structure, production process, marketing, finance, and SWOT analysis. It also outlines the research methodology used for his study of Sentosa Ceramics' brand image positioning during the internship.
This document outlines a course on public finance. It begins by defining public finance and the public finance cycle. It then discusses the formulation of fiscal policy and the generation of revenue through taxation and other sources. It describes the various types of taxes and revenues. It also covers government expenditures through the national and local budget process. Other topics include public borrowing, budget accountability, and the role of the Commission on Audit in ensuring accountability.
GIS for Revenue Collection and ManagementEsri India
Presentation by Rajesh Mathur, Vice Chairman, Esri India (NIIT GIS Ltd) at 'ICT for Urban Governance' conference on how GIS can be used by municipal corporations / urban local bodies for enhancing revenue collection and management. The presentaion addresses following key aspects:
• How can ICT help in the collection and management of ULB revenues, especially property tax?
• What have been some of the more successful initiatives in this regard?
• What are the key issues and challenges in the Indian context?
3 Things Every Sales Team Needs to Be Thinking About in 2017Drift
Thinking about your sales team's goals for 2017? Drift's VP of Sales shares 3 things you can do to improve conversion rates and drive more revenue.
Read the full story on the Drift blog here: http://blog.drift.com/sales-team-tips
How to Become a Thought Leader in Your NicheLeslie Samuel
Are bloggers thought leaders? Here are some tips on how you can become one. Provide great value, put awesome content out there on a regular basis, and help others.
Singareni Collieries, India's second largest coal producer, will open the country's largest underground mine next month with an annual capacity of 2.8 million tonnes. This will help Singareni exceed its coal production target for the current fiscal year and ensure sufficient supplies to power plants in South India. Allocating natural resources requires balancing economic growth with environmental and social concerns. While auctioning resources can increase transparency and revenues, proper exploration is needed beforehand and conditions must be established to prevent discrimination. The role of central and state governments in allocating resources also needs clarification to resolve ongoing debates.
North-East States of Assam & Arunachal Sets Prices of Coal on Fire with Aggressive Bids of 288.75 & 344.75% placed by State Mining Corporations
Centre firm on auctioning of Singareni coal mine blocks
4 coal conversion projects to help achieve gasification
by 2030: Joshi
Privatisation is the way forward to regulate coal industry hit by
price hike, shortages, say experts
Tata Steel arm to buy govt stake in NeelachalIspat for
Rs 12,100 crore
Restrictions on iron ore industry hampers socio-economic growth of Karnataka
The document summarizes India's coal industry and reserves. It notes that bulk of India's coal reserves are located in certain southeastern states. While India has substantial coal reserves, production has been insufficient and controversies like coal allocation scams have arisen. Coal remains a key energy source for India in the coming decades. The document also reviews India's regulatory framework governing the coal industry and the major players like Coal India.
The document summarizes India's coal industry and reserves. It notes that bulk of India's coal reserves are located in certain southeastern states. While India has substantial coal reserves, production has been insufficient and controversies like coal allocation scams have arisen. Coal remains a key energy source for India in the coming decades. The document also reviews India's regulatory framework for the coal industry and the major players like Coal India. It discusses issues like the coal blocks allocation scam where the CAG estimated a loss of 1.86 lakh crore to the exchequer.
The document discusses India's draft National Mineral Policy which proposes to offer mineral exploration companies the right of first refusal to mine any area they have explored. It also discusses upcoming expirations of mining leases in India and the risks to mineral production if new leases are not issued on time. Additionally, it provides updates on Vedanta Resources bagging bauxite mines in Odisha, their plans to expand aluminum production, and venturing into specialty glass manufacturing.
FERROALLOYS : POWERLESS IN INDIA? Presentation on Power Crisis & Ferroalloy ...PRABHASH GOKARN
Indian Power Shortage is Achilles Heel of the Ferroalloy Industry. Power Shortages are due to lower generation, Non - Availability of Thermal Coal results in further shortage. The Electric Transmission Grid is Collapsing and rising prices of fossile fuels leads to inevitable rise in power cost : will ferroalloy industry remain profitable ?
Nuclear Power in India remains Controversial.
India to see 6.7% shortage this fiscal
•In 2012-13, the energy shortfall touched 8.7 per cent while peak shortage reached 9 per cent.
•Overall, energy shortfall is expected to be 70,232 million units, resulting in a deficit of 6.7 per cent this fiscal.
•The requirement would be 10,48,533 million units whereas the availability is pegged at 9,78,301 million units.
•Transmission constraints between Northern-North Eastern-Eastern-Western - Southern Regional Grid restricts flow of power.
•The strains on India’s electricity network brutally exposed last summer when the grid collapsed for the best part of two days across north India - the world’s biggest power cut.
Thermal Coal supply by Coal India severely restricted – mines not expanded in time to take care of explosion in demand from the power sector.
•Overpricing of coal & poor coal quality of coal supplied by Coal India
•Mine stoppages due to flooding etc lead to severe seasonal shortages.
•Imported coal from Indonesia – rising coat and decreased availability. Restrictions on foreign ownership of coal mines & export of thermal coal – how long will the party last?
•60% of power generated in India comes from burning coal. Isn’t over dependence on thermal coal for power a dangerous situation?
•Many delayed projects due to lack of coal ….
Despite abundant reserves of coal, India faces a severe shortage of coal - India isn't producing enough to feed its power plants.
•Coal India, is constrained by primitive mining techniques and is rife with theft and corruption; Coal India has consistently missed production targets and growth targets.
•Poor coal transport infrastructure has worsened these problems.
•Most of India's coal lies under protected forests or designated tribal lands. Any mining activity or land acquisition for infrastructure in these coal-rich areas of India, has been rife with political demonstrations, social activism and public interest litigation.
Presentation ends with Ways out of the Crisis.
A transformation time for Indian tax system GST which was born out of patience & struggle; the uniformed tax system which is expected to roll out on 1st of July is a turning point in the Indian tax regime. The implementation of GST will bring lot more benefits at the consumer end. The main objective of GST is to eliminate excessive taxation. In the run-up to one of the biggest tax reforms in the country, the market is abuzz with new rules and guidelines about the Goods and Services Tax (GST).
Steel 360 Magazine June'17 Issue.
The document summarizes the key details of the Indian coal allocation scam that was uncovered in 2012. It discusses that the CAG accused the government of allocating coal blocks between 2004-2009 without a transparent and competitive bidding process, resulting in estimated losses of Rs. 1.86 lakh crore. It outlines the process of coal allocation to private and public firms, and lists some of the major beneficiaries of the scam, including Tata Group, Jindal Steel, and others estimated to have gained billions of rupees. The BJP strongly criticized the government and a CBI investigation was launched into the scandal.
The document provides information about the coal allocation scam in India that occurred from 2004-2009. Some key points:
- The CAG accused the Indian government of inefficiently allocating coal blocks and providing "undue benefits" totaling over $1 trillion to private companies.
- Historically coal mining was nationalized but exemptions allowed private companies in power, steel and cement to obtain coal blocks. The allocation process lacked transparency and clear criteria.
- Several political figures and their associates faced allegations of influencing allocation of valuable coal blocks to certain private companies, causing significant losses to the public exchequer.
- The scandal grew substantially amid media coverage, opposition attacks and a court-ordered CBI investigation
An Impending Trade War?
Steel 360 takes an in depth look into the recent diktat by the US President Donald Trump with regard to imposing hefty tariffs on imported steel products. In the April Edition, Steel 360 studies the depth of the impact such trade barriers may have on Indian manufacturers and how production patterns can change globally.
Reading between the lines, Steel 360 tries to analyze repercussions of a probable trade war between major world economies and more importantly, events that have led to the situation. At a time when world steel trade remains precariously volatile, the closure of the US steel market to China and India could well prove to be a catastrophe. The lack of scrap from US could in turn impact secondary steel production across Asia. The likelihood of trade dynamics balancing out in the short to medium term also remains note worthy. To understand how the markets may swing, what are the commodities that may be hit and to get a complete update on this developing story, read latest edition of Steel 360.
The document discusses various allegations of impropriety and corruption related to the allocation of coal mining blocks in India. It lists the top 20 beneficiaries of coal block allocations and the estimated windfall gains to them. It then details allegations against several prominent political figures from various parties, including Congress leaders Subodh Kant Sahay, Naveen Jindal, Vijay Darda, Premchand Gupta, and Sriprakash Jaiswal as well as BJP leader Nitin Gadkari, regarding their alleged role in influencing the allocation of coal blocks to companies with which they or their relatives were associated.
"We specialize in the development of process-driven, conceptual models to identify and improve the understanding of your mineral targets.
The spearhead of our services is delivering core drilling service in prompt and efficient manner.
A world of experience, technical knowledge, and understanding. That’s what Geonesis brings to your project. Profitable mining demands an independent, experienced, long-term perspective that gives you real clarity.
Whether its advice on project feasibility, property acquisitions or disposals, financing, geotechnical stability, sustainability or mine closure, we have an extensive breadth of knowledge and depth of experience to ensure you get the right advice, where and when you need it most."
The document discusses several topics related to mining in India:
1) India ranks poorly (97th out of 104 countries) on investment attractiveness for mining according to the Fraser Institute due to frequent bans and restrictions that have pushed the country out of the top 91.
2) The Supreme Court's ruling on mining leases in Goa will further damage India's image as an investment destination for mining.
3) The government has opened coal mining to private companies for commercial use, ending the monopoly of Coal India. This is expected to increase competition, investment, and jobs in the mining sector.
4) Allowing commercial coal mining is a possible but not guaranteed game changer due to various challenges around project sites,
The document discusses India's coal industry, which is the most important and abundant fossil fuel sector, contributing about 55% of India's total energy needs. Around 70% of coal production is used for electricity generation and the rest for industries like steel and cement. Coal mining first began in India in 1774. Usage of coal is expected to continue rising due to India's growing population and economy. Coal is classified into four types - anthracite, bituminous, lignite, and peat - based on carbon content and heat value. India has increased annual coal production to over 730 million tons through investments and modern technologies. Coal is also imported to meet demand and improve quality for industries like steel and power.
This document discusses the upcoming third round of auction for 10 Indian coal blocks. It provides details on the geological reserves, production capacity, and state of each block. It encourages participation in the auction to secure long-term coal supply. Key highlights of the auction process include two-stage e-auctioning, eligibility conditions based on project expenditure and coal requirements, and limits on the number and use of successful bids. Timelines for activities in the third round auction process are also outlined.
This document discusses the upcoming third round of auctioning of coal mines in India. 10 coal blocks totaling 856 MT of geological reserves and 356 MT of extractable reserves across 6 states will be auctioned. The auction process began on June 8th, 2015 and companies are participating to secure fuel supplies. Details on the auction timelines, eligibility criteria, and utilization of extracted coal are provided. E-auction of coal linkages to the non-regulated sector is also being considered. Opportunities for participating in auctions of lignite blocks and other mines containing minerals like iron ore are mentioned. An overview of the progress made in the first two rounds of coal mine auctions is given.
India has the fifth largest coal reserves in the world at 298.914 billion tonnes as of 2013. Coal production has increased from 457 MT in 2007-08 to 557.6 MT in 2012-13, with Coal India Limited producing around 81% of India's coal. However, India is still unable to meet domestic coal demand, resulting in imports growing at a CAGR of 25.38% between 2009-2013 to reach 140.63 MT. The power sector consumes 71% of coal in India.
1) India has decided to delink diamond mining rights from exploration rights to reduce corruption. The government will now pay for exploration and put any findings up for an open bidding process.
2) The article also discusses India's plans to auction commercial coal mines separately from exploration rights to increase transparency. It aims to end arbitrary allocation of mining rights.
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The document summarizes the key issues in India's coal allocation scam from 2004-2009. It describes how coal deposits were historically allocated by the government to public and private firms, and the process the Coal Ministry used to screen applications and allocate blocks. The CAG draft report from 2012 alleged major irregularities and losses worth Rs. 1.06 trillion due to blocks being allocated without a transparent bidding process. This sparked significant political controversy, with investigations launched into various firms' allocations.
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Indian Mining and Exploration - March issue released!
1. Geonesis
MARCH 2015
(A GEMCO KATI INITIATIVE)
Indian Mining & Exploration Updates
VOLUME 2,ISSUE 4
COAL BLOCK ALLOCATION
AND THE WINNER IS !
2. COAL AUCTION WINNERS AND LOSERS
Mines Earmarked for Power Sector
S.No. Coal Mine Name of Successful Bidder Bid price previous owner
1 Amelia North
Jaiprakash Power Ventures Lim-
ited 712
Jaiprakash Power Ven-
tures Limited
2 Sarisatolli CESC Limited 470 CESC Limited
3 Talabira-I
GMR Chhattisgarh Energy Lim-
ited 478
Hindalco Industries
Limited
4 Tokisud North Essar Power M.P. Limited 1110
GVK Power (Goindwal
Sahib) Ltd
5 Trans Damodar The Durgapur Projects Limited 940
West Bengal Mineral
Development and Trad-
ing Corporation Ltd
Mines Earmarked for Iron & Steel, Cement and Captive Power Sector
1 Ardhagram OCL Iron & Steel Limited 2302 Sova Ispat
2 Belgaon
Sunflag Iron & Steel Company
Limited 1785
Sunflag Iron & Steel
Company Limited
3 Bicharpur Ultratech Cement Limited 3003 ACC
4 Chotia
Bharat Aluminium Company
Limited 3025
Prakash Industries
Ltd
5 Gare Palma IV/4 Hindalco Industries Limited 3001
Jayaswal Neco In-
dustries
6 Gare Palma IV/5 Hindalco Industries Limited 3502 Monnet Ispat
7 Gare Palma IV/7 Monnet Ispat & Energy Limited 2619
Raipur Alloys &
Steel Ltd
8 Kathautia Hindalco Industries Limited 2860 Usha Martin
9 Mandla North Jaiprakash Associates Limited 2505
Jaiprakash Associates
Limited
10 Sial Ghogri
Reliance Cement Company Pri-
vate Limited 1402 Prism Cement
Schedule III Coal Mines | List of Successful Bidders
Mines Earmarked for Power Sector
1 Jitpur Adani Power Limited 302
Jindal Steel & Power
Ltd
2 Mandakini
Mandakini Exploration & Mining
Ltd 650
Tata power Monnet Is-
pat & Jindal Photo
3 Tara Jindal Power Limited 126
Chhatisgarh Mineral
Development
Corporation(CMDC)
4 Ganeshpur
GMR Chhattisgarh Energy Lim-
ited 704
Tata Steel and Adhunik
Power and Natural Re-
source Limited
(Continued on page 2)...
Page 1
VOLUME 2, ISSUE 4 — MARCH 2015
3. S.No. Coal Mine Name of Successful Bidder Bid price previous owner
5 Utkal C Monnet Power Company Ltd 770 Utkal Coal Ltd
Mines Earmarked for Non Power
1 Moitra JSW STEEL LIMITED 1512 Jayaswal Neco
2 Brinda & Sasai USHA MARTIN LIMITED 1804 Abhijeet Infrastructure
3 Meral Trimula Industries 727
Abhijeet Infrastructure
Ltd
4
Ne-
rad Malegaon Indrajit Power Private Ltd 660 Gupta
5 Dumri Hindalco Industries Limited 2127
Nilachal Iron & Power
Ltd.
6 MandlaSouth Jaypee cement Corporation 1852
MP State Mining Corpo-
ration Ltd.
7
GarePalma Sec
torIV/8 Ambuja Cements ltd 2291
Jayaswal Neco Industies
Ltd
8 Lohari Araanya Mines P Ltd 2438 Usha Martin
DISCLAIMER: This is a compilation of various news appeared in different sources. In this issue we have tried to do
an honest compilation. This edition is exclusively for information purpose and not for any commercial use. Your sug-
gestions are most valuable.
Your suggestions and feedback is awaited at :-
editor@geonesis.org
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VOLUME 2, ISSUE 4 — MARCH 2015
4. VOLUME 2, ISSUE 4 — MARCH 2015
Page 3
The Indian government will ensure that power companies that
won coal mines in auctions reduce rates for customers, rather
than seeking to recover their costs by including them in capital
expenses in their tariff applications.
“We will make sure the intended aim of tariff reduction is
achieved,” Coal Secretary Anil Swarup said in a phone inter-
view Monday. “That was the whole purpose of conducting the
reverse auctions for power companies.”
While winning the mines will ensure companies are able to run
their plants without disruption, returns for some utilities will
be crimped, said analysts including Kameswara Rao, executive
director for energy and utilities at PricewaterhouseCoopers
LLP in India. The first round of auctions for 18 producing
mines ended Sunday, Feb. 22.
“There’s no doubt that returns for some of these companies will
be hit,” said Rao. “The concession on merchant power is too
small to make up,” he said, referring to an auction rule that
allows the winners to sell as much as 15 percent of power pro-
duced from the mines in the open market.
India is conducting the coal-mine auctions after the nation’s top
court in September canceled 214 of the 218 coal mine permits
given to companies, calling the allocations “arbitrary and ille-
gal.” After the auctions, some mines will be retained by their
original permit-holders and some will have new owners.
Reverse Auctions
Six of the mines in the most recent sales were reserved for pow-
er companies and were bid for in reverse auctions, where the
lowest bidder wins, to help reduce the cost of coal and electrici-
ty.
In such bidding, on reaching zero, the direction of the auction
reverses to an ascending order. Among power companies, Es-
sar Power M.P. made the highest bid of 1,110 rupees ($17.85) a
metric ton. That means Essar will have to charge zero fuel cost
in its tariff from the power plant that uses the coal and addi-
tionally pay the bid amount to the eastern state of Jharkhand,
where the mine is located.
Mutually agreed power tariffs are made of two components --
one is fixed, which is the capital cost and the other is the varia-
ble component, which is the fuel cost. Power producers pass on
increases in fuel costs to distribution companies, which in turn
pass them on to electricity consumers through tariff increases.
1 Trillion Rupees
The auction of the 18 mines will generate proceeds of more
than 1 trillion rupees ($16 billion) over a mine-life of 30 years,
Swarup said Feb. 22 in a posting on Twitter. The proceeds will
go the states where the mines are located. In addition, the six
mines sold to power companies will produce a benefit of 370
billion rupees through tariff reductions for users, his Tweet
said.
“The bids indicate there was an assumption of continued coal
scarcity, a substantial increase in imported coal prices in the fu-
ture and a massive depreciation in the rupee against the dollar,”
said Debasish Mishra, a senior director at Deloitte Touche
Tohmatsu India Pvt. in Mumbai. “All three assumptions are un-
founded.”
Still, depending on state monopoly Coal India Ltd. for most sup-
plies and filling in the balance with imports could be expensive
and drive away potential customers, mostly state power retailers
battling high debt and losses.
“It was like you were living in a house, and you were asked to
win back the house in an auction or be forced to leave it,” Manoj
Gaur, chairman of Jaiprakash Power Ventures Ltd., said in a
phone interview. “The choice before us was to take this risk or
lock up our plant. We will see what happens in future.”
Jaiprakash Power, Jindal Steel
Jaiprakash Power agreed to pay 712 rupees a ton for coal extract-
ed from the Amelia North block in Madhya Pradesh to win back
the mine that feed its Nigrie power plant in the same state.
The concern over costs was reflected in a almost 30 percent jump
in the stock of Jindal Steel & Power Ltd. after the company won
back its biggest mine by offering 108 rupees a ton, the lowest
among all the six mines auctioned to power companies.
The stock surge was because winning back the mine ensures there
won’t be disruptions at its power plants, and for a “reasonable
price,” Jindal’s Chief Financial Officer K. Rajagopal said Feb. 19.
Among the 12 mines offered to non-regulated sectors, such as
steel, aluminum and cement, Hindalco Industries Ltd. won three
blocks.
Hindalco
The Mumbai-based maker of aluminum products offered the
highest price of 3,502 rupees a ton for the Gare Palma IV-5 mine
in central state of Chhattisgarh. That compares with the 3,134
rupee-a-ton average price of coal sold by Coal India at market
rates in the three months ended Dec. 31.
“The aggressive bids show how bad things are in terms of coal
availability,” said Neelkanth Mishra, an analyst at Credit Suisse
Group AG in Mumbai. “At these costs, some companies like the
ones in sponge iron will find it hard to make money.”
Hindalco needs coal to produce electricity for its smelters in
Madhya Pradesh, Uttar Pradesh and Jharkhand, states where
moving coal from ports may not be readily feasible.
The next round of auctions will start on March 4 and end on
March 8, Swarup said in a Tweet Tuesday, Feb. 24. Previously,
the second round had been scheduled to begin on Feb. 25, accord-
ing to the website of MSTC Ltd., which is conducting the electron-
ic auctions.
INDIA COAL-MINE BID WINNERS RISK FUTURE EARNINGS PRESSURE
5. VOLUME 2, ISSUE 4 — MARCH 2015
Page 4
INDIA TO MINE INDIAN OCEAN SEABED FOR GOLD, SILVER
According to a top scientist, the earth sciences ministry is fi-
nalising a contract with the International Seabed Authority
(ISA) to formally enable India exploit 10,000 sq kms of the
Indian Ocean seabed for minerals including gold, silver and
platinum.
Director of the National Centre for Antarctic and Ocean Re-
search (NCAOR) S Rajan, who attended a three-day Bharatiya
Vigyan Sammelan at Panaji over the weekend, said the legal
and technical commission to the Jamaica-based authority had
also approved exploration plans submitted by India.
"Action has been initiated to formalise a contract with the ISA
facilitating the initiation of a 15-year programme of mineral ex-
ploration in the allocated area," Rajan said.
The Goa-based NCAOR had been designated as the lead agency
for this programme by the Union Earth Sciences ministry.
The scientist said mid-ocean ridges in the central and south
western parts of the Indian Ocean were rich in metals like cop-
per, lead, zinc as well as other noble metals like gold, silver,
palladium and platinum.
"The deep ocean realm along the mid-ocean ridges has kindled a
lot of interest, primarily on account of the high concentration of
base metals and many noble metals in them," Rajan added.
TATA STEEL TO CASH OUT OF MOZAMBIQUE ASSET: TV NARENDRAN
Tata Steel Ltd has decided not to make further investments in
its Benga coal asset in Mozambique and is looking to sell its
35% stake in the mine, the alloy producer’s managing direc-
tor for India and South-East Asia T.V. Narendran said. Last
year, Tata Steel took a one-time impairment charge of
Rs.1,577 crore on the Benga investment after the Rio Tinto
Group sold its controlling stake in the mine at a huge loss to
an Indian mining consortium led by Steel Authority of India
Ltd (SAIL). “We don’t want to spend more money on this
asset,” Narendran said in an interview, adding that Tata Steel
has made its decision known to SAIL. “For them, there may
be an upside because they got in cheap...whereas for us, it is
only a commercial call (on when to exit).” Tata Steel’s deci-
sion to exit the Benga coking coal project illustrates the diffi-
culties that the company is facing in mining and evacuating
coal from overseas mines for steel plants located in India and
Europe. Instead, Narendran plans to focus on expanding Tata
Steel’s steel manufacturing and mining interests in India,
given the Tata Group’s position and brand equity in Asia’s
third-largest economy.
The Tata Steel management’s focus now is to get the Kalin-
ganagar plant in Odisha running. It has already spent
Rs.25,000 crore on this yet-to-be commissioned unit, which is
to be eventually scaled up to produce 6 million tonnes of
steel—twice its initial capacity. The controversy over the pro-
ject has taught Tata Steel many lessons. “You cannot take
people’s trust for granted despite your track record of work-
ing closely with tribal communities,” said Narendran. The
Kalinganagar project was mired in controversy after locals
protesting against land acquisition were killed in police firing
in 2006. Delayed by five years, the plant is set to start produc-
tion this year. The company is now investing in building rela-
tionships with local communities in Chhattisgarh and Karna-
taka, which it sees as potential sites for expansion. And ac-
cording to Narendran, this exercise shall go on for years be-
fore the company starts any kind of business development in
these states. Edited excerpts: Commodity prices are weak
across the world. Is it an opportunity to acquire raw material
reserves?
Mines are not going to be cheap unless they are in distress. Peo-
ple are not going to sell, at a loss, quality assets in which they
have invested. It’s a pity that India still has to import iron ore.
We should ask ourselves, why should we import something we
have in plenty? To my mind, acquiring iron ore assets overseas
does not make sense. It makes more business sense to invest in
coal mining, but investing in raw material reserves is more
about laying railway tracks and building port connectivity. For
mining, you need to work closely with the local government.
We have not been successful in Africa. Given the Tata Group’s
brand equity in India, it is easier to work in India than in other
countries. We have presence in Africa, too, but it’s not the same
as in India—you can’t operate there as easily as in India though,
in many ways, the difficulties are similar. But then, the question
for me is, would you go through the difficulties of mining coal
or rather buy it? You would go through the difficulties if you
think there’s going to be a shortage and the only way of secur-
ing coal is by owning mines. We are closely watching the situa-
tion in India. If India allows mining leases for coal, we will eval-
uate opportunities of investing in Indian coal assets, though the
coal in India is of inferior quality. As the plant at Kalinganagar
gets ready to be commissioned, is the ground situation there
completely under control? It is not perfect, but far more peaceful
than it was previously. We still have to bring under our control
around 900 acres of the project site of 3,000 acres, but the
ground situation is easing because people are beginning to see
the changes that we have brought about in the region. We got
off to a bad start, and that cost us five years. The key lesson
from Kalinganagar is that if you are interested in a site, you
need to start building trust there before you start building the
factory walls. But typically, we do exactly the opposite: we start
engaging with the community only after we have acquired the
land and built the factory walls. But by then, people become
suspicious. We have already started doing some work in
Chhattisgarh and in Karnataka, seeing them as potential sites
for expansion. Ideally, we should be doing it for a few years—
connect with the people to build trust—before we start any busi-
ness development at these sites. When you live and work in
Jamshedpur, where you already have a healthy relationship
with (Continued on page 5)...
6. Page 5
VOLUME 2, ISSUE 4 — MARCH 2015
the local community, you take people’s trust for granted. You
know the community, and the community knows you; you
promise to do things, and the community believes you, but
that happens here because you have kept your promises for
100 years. But it does not necessarily mean you are going to
get the same treatment when you go to a new place. It takes a
while to build trust. Also, we need to be sensi-
tive to the fact that people do not always wel-
come change, more so in developing countries
where people are transiting from an agrarian
economy to an industrial economy. Have the
two acquisitions in South-East Asia from a
decade ago fulfilled Tata Steel’s internal expec-
tations? NatSteel was our first overseas acqui-
sition, which we bought at a time when we
were hungry for growth. Downstream prod-
ucts—fabricated steel cut and moulded to size
as required at construction sites—are its core
strength. It had, at that time, presence in six
countries and a production capacity of two million tonnes. We
bought the asset for around $300 million, which wasn’t expen-
sive. And within a few years, Tata Steel recovered the money
it spent on acquiring NatSteel. But NatSteel operates on a thin
scrap-rebar margin (because it produces everything out of
scrap). Scrap accounts for almost 70% of its input costs and the
company has traditionally had an operating profit margin of
5%. Running the battle between scrap and rebar prices wasn’t
seen to be going on forever because we had thought of sup-
plying semi-finished steel to NatSteel from India. The story
was the same with the Thailand acquisition as well. But what
happened was demand in India started to firm up, and
though we raised production capacity by 2-3 million tonnes in
India, we found that it was more profitable to sell in the do-
mestic market than to export semi-finished steel to South-East
Asia. We could never build capacity in India fast enough to
feed our operations in South-East Asia, so in that sense, could
not support these operations in the manner we had originally
envisaged. But having said that, NatSteel didn’t make losses
for years even after the 2008 collapse of Lehman Brothers
when all other steel companies were struggling. Only in the
last couple of years, we had a few challenges. We had grown
quite fast in China, where we have a plant. We had some lease
agreements with partners in China, and took a hit when our
partners landed in financial difficulties. We were exposed and
we had to take a write down in the December quarter. But by
now, we have recovered some money that we had previously
thought we had lost in China. Also, we have exited from the
asset in Australia where we were losing money. If an oppor-
tunity like NatSteel were to arise again, will Tata Steel go for
it? If such an opportunity is found in India, we will go for it,
but may be not if it is outside India. What are your takeaways
from heading NatSteel? When you work for a large enterpris-
esuch as Tata Steel, which operates on a healthy Ebitda mar-
gin of 40%, sometimes you don’t appreciate what it is like to
work in a company that routinely operates on a 5% margin.
I had only months earlier taken over as the CEO when, follow-
ing the Lehman Brothers collapse, we had an overnight situa-
tion: we had inventory and the price had crashed. From a
healthy situation, there was a complete reversal and the key con-
cern immediately was how to pay our workers.
The dynamics of working for such a company are very different
and they teach you to be far more alert than at
large organizations. Tata Steel, too, has always
been a very cost-conscious company, but at
NatSteel, it was always a matter of life and death
on a monthly basis. It is somewhat like coming
from a wealthy family versus coming from an
underprivileged one. We have seen how the clo-
sure of Tata Steel’s mines impacted its earnings.
What did it do to the organization? It taught us to
encourage close collaboration between people.
There are situations when people need to work as
a team, irrespective of how good they are on their
own. Tata Steel has always been a hierarchical
organization—one where reporting structures are very clear. But
there are times when you have to go beyond your brief for the
sake of the organization. For the first time in 100 years, Tata Steel
saw all its mines closed. But we managed to keep the steel plant
running. At one point, we thought we will have to scale back
production by 50%, but we ran the plant at 80-85% even when all
our mines were closed. And logistically, we are not geared to
work with imported raw material. There is hardly any port in
eastern India designed for import of iron ore. There was a prob-
lem with the railways, too, because it could not decide tariff for
imported iron ore. Even Dhamra port, which we had built, was
intended for export of iron ore and import of coal—the convey-
ors there were not designed to receive iron ore from ships. Also,
we are not geared to keep 10-15 days’ stocks of iron ore—we
typically keep stocks for 2-3 days. It was a nightmare from the
operations point of view. But the team worked together beauti-
fully to deal with the situation. Does it mean that you are better
prepared to deal with such a situation if it were to arise again?
What takes us to be competitive in the future is not necessarily
what has kept us competitive in the past. I keep telling that be-
cause we have had our raw materials available from captive
sources, we sometimes feel we are more competitive than we
actually are. We were operating at 30% Ebitda margin when our
mines were running full steam; but our Ebitda fell to 20% when
we were forced to buy iron ore. Even with an Ebitda margin of
20%, we were among the top 2-3 steel producers in terms of prof-
itability. So, we have said that over the next few years our aim is
to have an Ebitda margin of 25% with raw materials at market
prices. That’s the goal that we have set for ourselves. We don’t
know yet how to get there. But unless we set that goal and work
towards it, we can’t be competitive 10 or 15 years from now. We
started this a year ago, when our mines were still in operation.
Some people initially thought that we were bracing for a hypo-
thetical situation, but when our mines were shut, they realized it
could someday become a reality, too.
7. VOLUME 2, ISSUE 4 — MARCH 2015
Page 6
a decade to secure approvals to start mining iron ore in India.
Japanese trading firms have recently been increasing invest-
ments in coal, but executives at two firms said they did not in-
tend to invest in India.
"We have no plan to consider joining coal mine projects in India
even (as) it opens up, as there are other countries which we are
focusing on and where it is easi-
er to manage projects," said an
official at a trading firm, declin-
ing to be identified.
Another senior executive at a
rival firm said the quality of coal
in India was not very high and
the firm preferred to sell coal to
the country rather than join in
projects.
Among global miners, a spokes-
man for BHP Billiton, the world's
biggest coking coal producer,
declined to comment on India
specifically but pointed to recent
management statements that the miner planned no new coal
investments.
Anglo American was also unlikely to be interested since it is
focusing on divesting South African coal assets, said a source
familiar with the miner's plans.
Rio Tinto Chief Executive Sam Walsh said the firm had not
looked at Indian coal investments yet but was open to opportu-
nities, while Peabody Energy said it would "evaluate invest-
ments to serve India's rising coal needs as appropriate".
India wants to more than double coal output to 1.5 billion tonnes
by 2020, but its mining is deeply inefficient. Coal India, the
world's largest coal miner, produces 1,100 tonnes of coal per
employee a year, compared with 36,700 tonnes for Peabody En-
ergy and 12,700 tonnes for China's Shenhua Energy.
Despite the lack of foreign interest in mining coal, both local and
overseas investors flocked to a 10 percent stake sale of state-run
Coal India that raised about $3.6 billion. However, this interest
may also indicate how government firms will continue to have
an edge in navigating India's maze of clearances.
AS INDIA OPENS UP COAL SECTOR, GLOBAL MINERS COOL ON INVESTING
India's plans to attract badly needed foreign investment and
technology to its coal sector are getting a cool response from
some miners and trading houses, even though the country is
one of the few bright spots for global coal demand.
Seeking to curb a growing reliance on imports, Prime Minister
Narendra Modi passed an order in December to allow private
firms to mine and sell coal for
the first time in more than 42
years.
But even with India on track to
overtake the United States as
the second-largest coal consum-
er after China this decade, exec-
utives at Japanese trading hous-
es and some of the biggest glob-
al miners said they were cur-
rently not looking to invest.
Red tape, problems with land
and environmental approvals,
and the quality of its coal have
been cited as issues deterring
investment, while on top of this Asian coal prices are languish-
ing near six-year lows.
Despite huge coal reserves, India's failure to modernise mining
means it has become the world's third-biggest importer, ship-
ping in coal from countries such as Australia and Indonesia.
Asked about progress attracting investors for auctions that may
start later this year, Coal Secretary Anil Swarup told Reuters
talks were going on with several global firms on upgrading
mining technology, although nothing had been finalised.
"It is not just about mining on their own but also to provide
technology to Coal India and Indian companies," he said.
Up to now only state firms have been allowed to mine coal, but
the sector is being opened up to help meet surging demand for
coal for power.
Indian conglomerates such as the Adani Group and GVK are
expected to bid for coal blocks, but foreign firms will be harder
to attract after previously facing obstacles to investing.
For example, global miner Rio Tinto has had to wait more than
WANT TO LEVERAGE THE WEAK MARKET, LOWER COST OF DRILLING WELLS:
TOM ALBANESE, CHIEF EXECUTIVE, SESA STERLITE
Sesa Sterlite — the metals, mining and energy firm of the Anil
Agarwal-led Vedanta Group — hopes to resume iron ore min-
ing in Karnataka over the next couple of weeks and restart
operations at its Goa iron ore mines before the next monsoon
season, says its chief executive Tom Albanese.
In an interview with Aveek Datta, Albanese, who was
appointed to the top job in March 2014, elaborates on how he
plans to leverage the current weakness in the global oil market to
permanently improve the cost economics of key projects being
undertaken by Cairn India. Excerpts.
Many of the challenges faced by the sector seem to be getting
(Continued on page 7)...
8. VOLUME 2, ISSUE 4 — MARCH 2015
Page 7
When the crude market was strong, a lot of service providers in
North America didn’t even think of coming to India because
they had all the work they wanted in their part of the world. But
with a slump in the industry, a lot of them are quite receptive to
the idea of working in India. We want to take advantage of these
weak market conditions and permanently improve the cost basis
of drilling oil and gas in India.
How much cost advantage do you expect to achieve at Cairn
India through these steps?
I would love it if the cost of drilling a well in India comes down
by half. If it costs twice as much to drill
a well in India than in Oklahoma, I
think achieving such a cost reduction is
realistic.
With declining commodity prices, what
is your outlook on Sesa Sterlite’s earnings?
In our oil business, we want to be in a position where we can
survive the trough in pricing and generate positive cash flows
after capital expenditure even when oil is trading at around $40
a barrel. If we can stay resilient at these low prices, we will be
well-positioned when prices rise again.
In the next couple of quarters, we expect to see robust growth in
our aluminium business and the market sees it as a near-term
catalyst for our volumes and earnings growth. So, if the London
Metal Exchange price and physical premium on aluminium pric-
es stay where they are, it will mitigate the impact of soft market
conditions at some of our other verticals. We have also increased
the production of zinc and the performance of this business is
expected to be strong in the coming quarter. We are seeing high-
er zinc production in an environment of higher pricing.
What is the rationale for the merger of Sesa Sterlite, Hindustan
Zinc and Cairn India, which is being contemplated? When is the
blueprint likely to be ready?
People have been speculating on this for quite a while. It was a
natural progression from the successful Sesa Sterlite merger that
happened a couple of years ago. The government of India itself
is saying that it is looking to do something with its stake in Hin-
dustan Zinc. That itself has created a lot of speculation and peo-
ple are pitching ideas on how to go about it. But,at this moment,
it is strictly exploratory and speculative. The government hasn’t
yet said what they are going to do with their stake in Hindustan
Zinc.
The Sesa Sterlite merger has helped us manage the company
better by exploring synergies on the marketing and procurement
side. We have seen tangible benefits. But as we meet prospective
investors, they appear wary of investing in the company as the
structure is too complicated. In that sense, to some extent, the
complex structure has compartmentalised us away from some of
the capital that would have been available to us. But that’s not
necessarily the immediate order of the day. The order is to in-
crease production and get our investments on the ground, espe-
cially in sectors like aluminium.
addressed. When do you expect to resume operations at your
mines in Karnataka and Goa?
Karnataka and Goa present two different sets of issues. We
will probably see an earlier resumption of mining activities in
Karnataka. We hope to see mining begin in Karnataka in the
next couple of weeks and, definitely, by the end of February.
The Goa government has renewed our mining leases but we
are awaiting some environmental clearances from the Centre.
Ideally, we should be in a position to begin mining in Goa
before the monsoon season.
During the Goa ban, many key ex-
port markets have been occupied by
producers from other countries.
How do you plan to regain the lost
market?
We lost a huge market share with the shutdown in Goa and
that encouraged other entrants. that said, globally, there is still
an increase in demand, albeit at a lower growth rate. I don’t
want to give up and not try to regain some of that market. We
are working on finding ways to rebuild those export markets
and our brand position there, and get back in touch with exist-
ing customers.
With prices falling drastically, would you look to sell Goan
iron ore to Indian steelmakers with plants near the coast, for
whom it is economically viable to do so?
I can tell you that a lot of Australian iron ore is being sold to
those steel mills in India. Certainly, if we can sell at competi-
tive terms to steel plants in coastal India, it would be a win-
win for everyone. We’d like to be in a position to sell wherev-
er we can.
While announcing your third quarter earnings, you men-
tioned that Sesa Sterlite will defer some of its investment plans
in the wake of declining commodity prices. Can you elabo-
rate?
We have flagged to the market that we are looking at what we
can do to balance the need to keep production going while
being sensible about the environment of weaker commodity
prices, particularly at a time when crude oil prices are soft.
We’re working with our individual businesses on this and
many of them have their joint venture partners and other
stakeholders. We are not yet being prescriptive on a number
(regarding reduction in capital expenditure), but there will be
more clarity in coming months. What I can say at the moment
is that it will be a very meaningful deferral in capital costs
from what we would have otherwise expected to incur.
Also, in companies like Cairn India (Sesa Sterlite’s oil and gas
subsidiary), we are looking at ways to re-engineer processes
and find more competitive service providers who can help
reduce costs. I have myself joined the Cairn team in Calgary
(Canada) and Houston (US) to find ways of reducing the costs
of horizontal drilling and other technically complicated work
that costs quite a bit more in India, sometimes 50-100% more.
9. VOLUME 2, ISSUE 4 — MARCH 2015
Page 8
Dealing a body blow to the hopes of Rio Tinto, Vedanta Group
firm Sesa Sterlite and Aditya Birla Group's HindalcoIndustries,
the Odisha government has decided to scrap joint ventures (JV)
formed by these firms with its Odisha MiningCorporation
(OMC), for iron ore and bauxite. The government's decision to
wind up the three JVs is set to have wide ramifications across
the mining spectrum and upset the equations of companies
which had banked on assured raw material supply to run end-
use plants, where they've committed big investment.
In the standalone mining space, the government has scrapped
OMC's JV with Anglo Australian mining major Rio Tinto. This
comes more than two years after the state-run miner announced
its intent not to pursue the JV project, in September 2012. Now,
the state government has sealed the fate of the $1-billion project,
billed as one of the biggest bits of foreign direct investment in
the sector.
OMC's reluctance to revive the JV project stemmed from the
changed dynamics in iron ore mining. When the JV was signed
in 1995, the demand for ore in the domestic market was tepid
and OMC was a cash-strapped undertaking. This has changed,
with OMC in possession of a cash surplus of around Rs 5,000
crore. Also, with growing demand for iron ore within the coun-
try, OMC is being envisioned as a long-term supplier.
Rio Tinto had entered into a JV with OMC on February 24, 1995,
to develop the Gandhamardhan and Malangtoli iron ore depos-
its in Keonjhar and Sundergarh districts, with a mining capacity
of 25 million tonnes per annum.
However, the project hardly showed any sign of taking off the
ground. It ran into rough weather due to intractable differences
between the partners. Rio Tinto was keen to export half the ore
mined, while OMC emphasised on meeting the raw material
needs of local industries.
This led OMC to later seek an end to the JV, as advised by the
Solicitor General of India, sparking a legal battle. OMC had filed
a case at the high court here in 2003, to end the agreement. Rio
Tinto had approached the Company Law Board to contest this.
OMC has also initiated the process to annul JVs with Sesa Ster-
lite and Hindalco. “We have sent showcause notices. They have
been asked to send their replies within two weeks,” said Girish S
N, managing director of OMC. Notices were sent to the two
firms earlier this month. OMC had formed South
West Bauxite Mining Company (Pvt) Ltd, a JV with 26 per cent
equity of Sterlite Industries India Ltd in 2009 for supply of baux-
ite from deposits in Kalahandi and Rayagada districts to feed the
aluminium refinery of Vedanta Aluminium (now Sesa Sterlite).
Similarly, East Coast Bauxite Mining Company (Pvt) Ltd was
formed in 2005 with 26:74 equity holding between OMC and
Hindalco Industries. It was for development of the Kodingamali
bauxite mines (estimated reserve of 85 million tonnes) in Kora-
put district and supplying it to the alumina refinery of Hindalco.
Both the bauxite JV projects failed to take off due to stiff protests
from locals. Sesa Sterlite has invested about Rs 50,000 crore on
its projects and Hindalco’s investments in the state are pegged at
Rs 21,000 crore.
ODISHA NIXES JVS WITH RIO TINTO, SESA STERLITE, HINDALCO
COAL BLOCK AUCTIONS WILL LEAD TO LEVEL PLAYING FIELD FOR ALL: CS VER-
MA, SAIL
Chandra Shekhar Verma, chairman and managing director,
Steel Authority of India (SAIL), talks about steering the compa-
ny in the current tough times, when local as well as global de-
mand is depressed. He shares his action plan for the next 10
years and talks about his five years at the helm. Excerpts:
SAIL has been battling stagnant domestic demand in recent
years. How does the year ahead look?
Globally, steel production growth has been tepid with only 2%
increase in the calendar year against 3.5% in the corresponding
period a year ago. There is surplus capacity of about 23-24% as
utilisation is low. Demand in India is better than what it is glob-
ally. In April-December, production has grown at 5.3%. Howev-
er, there has been a surge in imports — to 7.4 million tonne (mt)
from 4.6 mt in the first three quarters of the current fiscal. Due
to the SIPA agreement, there is a lot of import from Japan and
Korea.
After consumption peaked in China, the country has been ex-
porting steel to India as well. The depreciation in the rouble has
also led to greater imports.
The demand situation should settle down and it is not a great
cause of worry. However, companies importing to India have to
bear freight and logistical costs also and, hence, the surge in
imports should be temporary. The demand scenario in India is
likely to improve as the country and the emerging markets as a
whole remain the demand centre. Our per capita steel con-
sumption is abysmally low at 55 kg per annum against the glob-
al average of kg p.a., which will only improve as we catch up
and urbanise more. Further, a number of new initiatives by the
government will gradually boost demand. We have also taken
steps to multiply capacity.
The government has decided to auction both iron ore and coal
mines, but SAIL, being a PSU, would get the resources through
nomination. Will the introduction of a reserve price impact
SAIL in terms of production cost?
We are the sole bidder for the block reserved for steel sector
among the mines earmarked for PSUs. We will also be taking
part in the next round of auctions to procure more coal blocks.
These auctions will provide a level playing field for all
10. VOLUME 2, ISSUE 4 — MARCH 2015
Page 9
We have prepared vision 2025 to enhance capacity to 50 mt from
23.46 mt, which will involve a total capex of Rs 1,50,000 crore.
funds will come through debt and equity in equal proportion as
opposed to our current expansion plan, which is being funded
with two-third equity and one-third debt.
What hurdles are you likely to face in achieving the 50-mt target
by 2025?
The Rourkela and Burnpur plants have started producing. In
conjunction with Bhilai, production will reach 23.46 mt per an-
num next year. Demand in India is not likely to slump in the
foreseeable future — cement-steel mixing ratio is not adequate
here as for every tonne of cement used in construction, only 0.3
tonne steel is used. In developed economies, the ratio is 1:1. In-
dia is slowly becoming quality conscious and there is a prefer-
ence for pre-fabricated steel and cement structure. Considering
that 50-60% of steel is used in the infrastructure and construction
sector, as we move to more qualitative products, steel demand
will only go up.
companies and facilitate faster development of coal blocks.
We will be able to take the advantage of our own coal blocks
as we have enough knowhow in the mining. Today, we are
operating four coal mines and, along with the Mozambique
mine, we are mining 30 mt coal on our own.
How much are you producing from the Mozambique mines?
Are there plans for more overseas acquisitions?
We are not averse to acquiring global assets, but we have to
keep an eye on location and market situation domestically as
well as globally. We are getting 3-4 shipments of more than 1
lakh tonne currently from Mozambique and also working out
the logistical issues, which will enable us to bring more coal
from there.
How are the modernisation and upgrade plans coming along?
What would be your capex for the next fiscal?
We have a planned expenditure of Rs 72,000 crore. Capex for
the individual year has been Rs 8,000-10,000 crore per year
and, this year, it will be about Rs 9,000 crore.
LEAVING PEOPLE OUT OF DEVELOPMENT
For some years now, the Ministry of Environment and For-
ests (MoEF)has been perceived as a roadblock to develop-
ment or a facilitator for the industry depending on which
side you are on. Former Union Environment Minister Jayan-
thi Natarajan’s recent letter to Sonia Gandhi also alludes to
the conflict in the Ministry.
The Ministry had humble beginnings: it began as a depart-
ment in 1980 and was set up as a Ministry in 1985 after In-
dia’s participation in the United Nations Conference on the
Human Environment in Stockholm. It was in many ways
Prime Minister Indira Gandhi’s leadership and participation
in Stockholm which prompted the Ministry’s inception. Now,
India has a plethora of laws which relate to the environment
and its regulation.
Over time, even as many notifications have come into force
after Supreme Court orders, the National Green Tribunal
(NGT) was set up in 2010 — infinitely more effective than the
earlier National Environment Appellate Authority. However,
enforcement is far from satisfactory.
The raging debate between environment and development is
even more intense now as the country is on an ambitious
growth path and there is scant regard for people’s rights or
natural resources. Union Minister of State for Environment,
Forest and Climate Change Prakash Javadekar has repeatedly
said there will be no destructive development. Yet, ordinanc-
es on the proposed changes to the Land Acquisition Act and
on mines and minerals have led to fears that amendments to
environmental laws will be brought in through ordinances.
All over the country there are struggles against projects
which threaten to displace people, deprive them of land and
livelihoods and give them no decent alternatives. Northeast
India, ignored by policymakers for long, has become the new
battleground against massive hydel projects. In this scenario,
protection of the environment and people’s livelihoods are pit-
ted against the powerful industry lobby and there are no prizes
for guessing who is winning. The recent ordinances on land ac-
quisition and mining leave no room for doubt that business in-
terests have prevailed.
Reviewing laws
There are also threats to dilute the Forest Rights Act (FRA). Last
August, the MoEF decided to appoint a High-Level Committee
(HLC) headed by a former Cabinet Secretary to review six envi-
ronmental laws. As the committee’s report created disquiet, it is
now being reviewed by the Parliamentary Standing Committee
on Environment which has already heard one round of criticism
from leading environmentalists in the country.
The HLC went straight for the jugular and targeted the regulato-
ry mechanism. The only reasoned suggestion it seems to have
made is on genetically modified (GM) crops where it advocates
caution.
Besides that, that it has proposed a new Environment Law
(Management) Act under which new offences are prescribed,
applicants who want environmental clearances for projects are
expected to be honest and truthful, and the concept of ‘utmost
good faith’ is statutorily introduced. The HLC dilutes the role of
the NGT; the Tribunal will only be able to judicially review the
decision of Appellate Boards. It introduces special environment
courts and proposes new agencies — the National Environment
Management Authority at the national level and the State Envi-
ronment Management Authority to replace the Central Pollution
Control Board and State Pollution Control Boards, both of which
are notorious for their inaction and corruption. Replacing them
with a new set of committees is not going to improve efficiency
(Continued on page 10)...
11. VOLUME 2, ISSUE 4 — MARCH 2015
Page 10
or honesty. Little wonder then that the report of the HLC has
sparked nationwide outrage.
While Mr. Javadekar said the report was a historic achievement
that would strengthen processes to balance developmental com-
mitments and environment protection, the criticism is that it
seeks to dismantle the basic structure
of India’s environmental law. The
report violates Article 21 of the Con-
stitution since interests of industry
have been given importance, and
overrides the right to clean air, water
and a balanced ecosystem, said a cri-
tique titled “A Recipe for Climate
Disaster and Silencing People’s
Voice” by environmental lawyer Rit-
wick Dutta, and activists Himanshu
Thakkar and Manoj Mishra and Debi
Goenka. The critique notes that rec-
ommendations of the HLC suggest dispensing with public hear-
ings in projects of “strategic” and “national importance” and
dispensing with public hearings in most regions that are already
severely polluted. This is based on the theory that there is no
need to hear the affected public since the situation cannot possi-
bly get worse. The power sector and coal mining projects unde-
fined ‘fast track treatment’ through ‘Special Procedure’ that
appear likely to short-circuit or eliminate public hearings and
gram sabha approval. The way in which the revised procedure
is recommended, approval will be a matter of right, the critique
says.
Further, in the 113-page report, the word “speed” in the context
of speedy clearances is mentioned 13 times, the critique added.
The emphasis swiftly shifts from concern for the environment to
“time-consuming clearance processes.” In addition to exempt-
ing the public from hearing these projects, the committee has
also made recommendations on who can participate in the pub-
lic hearing and what issues can be raised. For instance, only
environmental, rehabilitation and resettlement issues can be
heard by the public, though the present Environment Impact
Assessment (EIA) notification 2006 allows all persons to partici-
pate in the public consultation process.
In addition, the report enforces the stereotype that environmen-
talists obstruct development. It refers to “genuine public partici-
pation” as though public hearings are not genuine otherwise.
Curbing laws
The government’s decisions to block funding for Greenpeace
and other environment NGOs and not allow a campaigner to go
abroad to speak on coal mining in Mahan are clear indications
that dissent is not going to be tolerated. Last year’s Intelligence
Bureau report on NGOs explicitly
sets out an agenda to curb move-
ments which question the current
development path. In Gujarat the
fisherfolk of Mundra who have been
displaced by a major power plant
have not been given project-affected
status; in Odisha, gram sabhas’ op-
position to coal mining has been
disregarded. People fighting battles
for survival have only one option: to
approach the courts or the NGT.
Sometimes, even court orders are
not obeyed.
The Ministry of Tribal Affairs, the nodal agency for the FRA, has
been writing stern letters to the Environment Ministry empha-
sising the fact that the FRA is not delaying project clearances.
The multilayered approach for project clearances is time-
consuming. While appreciating the need for speedy approvals,
public participation must not be lost sight of.
India is rife with examples of development refugees — farmers
have been displaced by the Bargi dam in Madhya Pradesh, the
Baiga are being evicted from forests where they once thrived,
fisherfolk are struggling for survival, among other examples. To
add to this, there is a new genre of climate refugees who are
affected by the rise in sea levels, changes in cropping patterns
and other climate change impacts.
Sustainable development needs serious commitment, capacity
building at the local level and urgent action. Science has clearly
underscored the need for urgent action if the world has to be
saved from the irreversible impacts of climate change. The HLC
is silent on climate change for the most part and it will be
astounding if India, poised to grow more, doesn’t factor in cli-
mate change while “streamlining” its environmental laws. In the
urgency to grant industry its due with promises of ‘Make in In-
dia,’ those already in India, especially the marginalised, cannot
continue to be victims of grave policy neglect and continuing
alienation.
COAL INDIA BOARD CLEARS PLAN TO RAMP UP OUTPUT TO 1 B TONNES A YEAR
Coal India Ltd will will spend 6,000 crore as capital expenditure
on mine development from 2015-16, as its board has approved a
road map for achieving 1 billion tonne annual production by
2020.
Chairman and Managing Director S Bhattacharya said on Fri-
day the company will earmark another 6,000 crore for invest-
ment into special purpose vehicles (SPVs) that it intends to
form with State Governments and the Indian Railways for coal
evacuation from its mines.
“We have prepared a mine-wise plan to achieve 908 million
tonnes (mt) annual production for the fiscal year-ending March
2020. We are also in the process of preparing a plan for the re-
maining 92 mt,” said Bhattacharya.
(Continued on page 11)...
12. VOLUME 2, ISSUE 4 — MARCH 2015
Page 11
will help in evacuation of the increased coal production, said the
Chairman
“The SPV will be an independent company and the financial
returns from it will accrue to the State. We are talking to Odisha,
Chhattisgarh and Jharkhand. We may also require West Bengal
and Uttar Pradesh,” he added.
Already, South Eastern Coalfields Ltd has formed two SPVs
with Chhattisgarh and involved the Railways.
The company will also focus on improvement in technology
upgrade in existing mines.
To achieve the target, the miner would need a compounded
annual growth rate of 12 per cent a year in production from
2015-16, he added.
“Two subsidiaries – Mahanadi Coalfields Ltd and South East-
ern Coalfields Ltd – will play a vital role in achieving the plan
as most virgin mines are with them,” said Bhattacharya.
According to the production ramp-up plan, Mahanadi Coal-
fields’ annual output in 2020 will be 250 mt and South Eastern
Coalfields’ will be 240 mt.
The planned SPVs with the Railways and State Governments
FIS LENDERS HELPING DEVELOPERS IN COAL AUCTIONS TO AVOID BAD ASSETS
In an interesting turn of events, banks and financial institu-
tions (FIs) that have funded stranded power plants are help-
ing developers to participate in the auction of coal fields to
avoid these projects from turning into non-performing assets
(NPAs).
Many power project developers can’t afford to participate in
the auctions, with their projects having run into delays, cost
over-runs and fuel shortages. They also owe money in interest
payments on loans taken earlier. Firms such as state-owned
Power Finance Corp. Ltd (PFC) and Rural Electrification
Corp. Ltd (REC), which are India’s largest power sector lend-
ers, have hit upon the idea of funding their purchase of coal
mines to recoup loans to these projects once they begin opera-
tions.
A PFC executive said, requesting anonymity “We are plan-
ning to bring out some product where we will be considering
the request of project developers to help them with the coal
block auctions for extending financial support.”
Projects with a capacity of about 69,842MW have been strand-
ed in the country at various stages of development; capacity
totalling 45,634MW is stalled because of insufficient coal sup-
ply. Construction has been completed on projects with a ca-
pacity to generate around 28,000MW, but these haven’t been
commissioned yet.
Banks’ exposure to the capital-intensive power sector is esti-
mated at INR 3 trillion, more than the total amount of gross
NPAs in the banking system. Lack of fuel supplies and ab-
sence of power purchase agreements with state-run utilities
have been blamed for stranded power plants. Some project
developers have not been commissioning constructed power
plants because once they start production, they would have to
start repaying their creditors.
Confirming the trend, an REC executive who also didn’t
wished to be identified, said that “A lot of people have ap-
proached us for providing them with financial support for the
coal block auctions. This route is being explored to protect the
loans already given out to these developers. Since it will have
to be a new product we will be appointing a consultant to
explore this option.”
For their part, banks and financial institutions that have funded
these projects are not insisting that the developers set a date for
the start of commercial operations.
In the event that the developers default, the loans would be
counted as NPAs, requiring the lenders to make additional pro-
visions, adding to the pile-up of bad loans and denting their
profitability.
Mr Debasish Mishra, senior director, consulting, Deloitte Touche
Tohmatsu India Pvt. Ltd, said that “With delayed commission-
ing, cost over-runs and accumulating interest during construc-
tion—many of the promoters do not have the funds to even par-
ticipate in the coal auction process. Lead lenders, in some cases,
are willing to fund it, provided there is a change of ownership
post allocation of the coal block.”
The National Democratic Alliance (NDA) government has re-
ceived 176 bids for the 21 operational coal mines that will be put
on the block in the first round of the landmark auction that will
begin this month.
In September, the Supreme Court cancelled the allocation of
more than 200 coal mines allocated by the government between
1993 and 2010, a month after ruling that the allotments had been
illegal and arbitrary and resulted in the “unfair distribution of
national wealth”. The government is preparing to auction or allo-
cate 101 coal mines.
Of these, 65 will be auctioned and 36 allotted to state entities in a
process to be completed before the end of the current fiscal year.
The Narendra Modi government has expressed concern about
the way in which loans were given to power projects totalling
around 28,000 MW during the tenure of the previous govern-
ment without fuel supply tie-ups and power purchase agree-
ments, rendering them unviable. Of India’s installed power gen-
eration capacity of 255,681.46 MW, around 60%, or 154,170.89
MW, is coal-based.
Growth in the production of coal has been unable to match the
demand for fuel in a country where the power sector consumes
nearly 78% of the domestic output of the mineral.