INTRODUCTION - Goel Agencies Pvt. Ltd.

We are pleased to introduce ourselves as Goel Agencies Pvt. Ltd. (GAPL) a privately held company (headquartered in New Delhi) that has been associated with the coal and mining industries for the last four decades. It started with trading in steel wire ropes, coal cutting machines, haulages and ventilation fans for mines and other accessories, but with the nationalization of mines in 1971, the group diversified into civil and mining related construction, office buildings, airstrip, and site preparation works for washeries and mines. Infact, the promoters of GAPL built the first Beehive Hardcoke manufacturing unit of 0.24 million tonnes per year of low ash metallurgical coke with 350 beehive coke ovens for Tata Iron & Steel Co. Ltd. at Dhanbad. This construction was achieved in a record time of less than 18 months. 

GAPL and its associated companies under the same promoters has executed and managed various jobs and made exceptional strides in transportation of coal and other minerals handling more than 1.5 million tonnes of coal a year and are one of the principle contractors for Tata Steel Ltd., a leader in the manufacture of iron and steel, for their mining activities for over 40 years. GAPL is a key resource for mining site preparation, earth-moving and over burden removal for open cast mines, transporting, Conversion Services, supply of low ash metallurgical coke etc. 

GAPL furthers its base with actual mining to the reclamation of coal from slurry ponds. Being associated with the Tata Steel Ltd. (TSL) at their mines, the group gained immense knowledge of eco-friendly measures adopted for mining and are well conversant and acclimatized to eco-friendly mining. GAPL is reputed to move enormous quantities of coal in a day to both short and long haul end-users. Heavy earth-moving machinery has been deployed to move and sell over 1.2 million tonnes of slurry from ponds (washery bye-products used in brick-making plants, sponge-iron plants, etc), and fulfill various transportation contracts with TSL from time to time. GAPL has an excellent retail network to sell coal products and residuals of washed coal. 

GAPL has undertaken production of over 1.5 million tonnes of low ash metallurgical coke cumulatively for TSL’s blast furnaces. The group has also been involved in various heavy earth-moving jobs, evacuation jobs, plant and site leveling works, embankments, airfields, etc. for over four decades. GAPL has also carried out transportation for Tata Power Ltd. a power producer for their plant at Jamshedpur. 

GAPL is an established trading and mining organization with good financial strengths and has continuing contracts in various sectors ranging from mining to civil works. It has a manpower pool of over 150 people.

Looking at the growth prospects and market demand, the promoters have started a development plan to get into steel industry. Resources are actively being collected, and joint-ventures being negotiated, to enter into larger mining projects including leasing a mine for private-mining. Additionally, to keep pace with the growing demand of coal, contracts are being pursued to venture into coal imports. The company has added to its fleet of trucks and adding to its transport capacity and capabilities by getting into large and sustained transportation nationwide.Further the group has also diversified into power generation and has completed the commissioning of its windmills of 2.50 MW in Maharashtra. All these efforts should yield in GAPL becoming a major player in the industry in the next five years.

Promoters

Mr. Satish Goel, Chairman & Managing Director of GAPL, aged 65 years, started his career early with trading in mining accessories before diversifying into actual mining and transportation. He then diversified further into construction of office buildings, a hostel, airstrip, other civil works and hardcoke manufacturing units. A commerce graduate, he manages new business development efforts, existing business, vendor and customer maintenance, along with the sales & marketing efforts of the company. 

Mr. Anil Goel, Executive Director of GAPL, aged 61 years, is the group’s operational head. Primarily responsible for the production processes of the coke units, he has been instrumental in the diversification and growth of the group’s foray into transportation activities among other mining and excavation activities. He also addresses the budgetary requirements of the group in addition to assisting in matters of finance and taxation. 

Mr. Sanjay Goel, Executive Director, aged 41 years manages the finance activities of the group companies including administrative works. He is an Economics major who is also responsible for the group’s marketing efforts. He has been instrumental in setting up a coal distribution network for the Tata Steel Ltd. for sale of their excess coal. His financial planning has helped achieve positive cash flows year-on-year while establishing the group as a financial powerhouse. 

Mr. Sachin Goel, Executive Director, aged 36 years, is primarily responsible for business development and management practices of the group. An MBA with a specialization in finance and management processes, he works in the area of finance and investment activities of the group. He has created new investment opportunities for the group by diversifying into new businesses. 

Mr. Sumeet Goel, Director aged 35 years is primarily responsible for the marketing and sales of coal and coke by-products of the group. He has been instrumental is developing new markets for the material both within the eastern and northern regions of the country and is well conversant with the technical of coal and its derivatives.

Jharkhand SSI units facing acute coal shortage

A sizeable number of SSIs in Jharkhand are either facing acute shortage of coal or are forced to buy from open market because the State mines department did not initiate the process of the renewal of nodal agency for supply of coal at the appropriate time. According to the policies of the Central Government, an SSI, which has a requirement of up to 4,200 tonne of coal a year, is supplied coal at subsidised rates from the nodal agency chosen by the mines department of the State. The Jharkhand State Mineral Development Corporation (JSMDC) had been acting as the nodal agency for the purpose for the last several years. However, the mines department of the State needs to renew the agreement between the State and the nodal agency at the end of every financial year.

Source : Jharkhand SSI units facing acute coal shortage

Reliance Power to Renegotiate Commercial Issues in Gas Accord

May 11 (Bloomberg) -- Reliance Power Ltd., controlled by billionaire Anil Ambani, will renegotiate commercial terms to buy gas from Reliance Industries Ltd., which won backing from India’s top court to sell the fuel at state-set prices.

“There are 40 to 50 commercial issues,” Jayarama Chalasani, chief executive officer, said in a telephone interview yesterday, without elaborating. “Now there is clarity on how each issue needs to be resolved in line with the Supreme Court judgment.”

India’s Supreme Court said May 7 Reliance Industries, controlled by Mukesh Ambani, Asia’s richest man, should negotiate gas sales afresh with brother Anil’s Reliance Natural Resources Ltd., which sought to buy the fuel at a discount to a state-set price in accordance with a family agreement.

“This particular negotiation will obviously be highly difficult,” said Abhineet Anand, a Mumbai-based analyst with Antique Stock Broking Ltd. “The key will be the volume of gas. Lower amounts could be a big negative.”

Reliance Natural procures fuel for the Anil Ambani group, which is building 35,000 megawatts of power generating capacity. Of that, 10,000 megawatts is gas-based including a planned plant at Dadri in north India.

Gas from the Reliance Industries-operated KG-D6 field, India’s biggest, is not restricted to the plant at Dadri, about 50 kilometers (31 miles) east of New Delhi, Chalasani said. Projects other than the 7,480 megawatt Dadri plant can use the gas, he said, without being more specific.

“As soon as the gas is made available, we can start construction” of plants, Chalasani said. “Irrespective of whether Dadri is available or not, we can start using the gas in 24 to 36 months.”

Dadri Finances

Reliance Power shares gained 6.1 percent in Mumbai yesterday, rising for the first day in seven. Reliance Natural declined 4.8 percent and Reliance Industries rose 5.2 percent compared with a 3.4 percent increase in the benchmark Sensitive Index.

An agreement with Reliance Industries on supply of gas will help Reliance Power raise finances for the Dadri plant, Chalasani said.

Reliance Industries should start renegotiations with Reliance Natural within six weeks, according to the Supreme Court’s judgment. A revised agreement should be submitted to the company court within eight weeks of the talks starting, the court said.

The government’s gas utilization policy and national interests can’t be violated during the renegotiations and the family agreement, though not legally binding, should be taken into account, the court ruled.

Gas Allocation

The Ambani brothers will renegotiate volumes and tenure of gas to be supplied to Reliance Natural, Alok Deshpande, an analyst with Elara Capital Ltd., said in a report yesterday. Anil Ambani said he had an agreement with Mukesh to buy 28 million cubic meters a day of gas at $2.34 per million British thermal units for 17 years.

The Indian government fixed the price of gas to be sold from the KG-D6 field in September 2007 at $4.2 per million British thermal units for five years. The government has allocated the field’s current output of around 63 million cubic meters a day to priority customers, including power stations and fertilizer plants.

“The higher gas price will raise electricity prices,” Chalasani said. “For us, it is a pass-through.” He didn’t say how much electricity prices would rise.

India plans to add 78,000 megawatts of power generating capacity in the five years ending March 2012 and 100,000 megawatts in the next five years to reduce blackouts in Asia’s third-biggest energy consumer.

The court’s verdict will not affect Reliance Power’s plans to add 25,000 megawatts of generation capacity using coal and water, Chalasani said.

Source : Reliance Power to Renegotiate Commercial Issues in Gas Accord - BusinessWeek

Inter-Ministerial task Force on coal

An Inter-Ministerial Task Force would be set up to undertake a comprehensive review of existing coal sources and rationalization of these sources with a view to optimize transportation cost given various technical constraints. The Task Force will consider all the cases in power, cement and steel/sponge iron sectors where the consumers are already getting coal. The Task Force will its report within 3 months of its constitution and it would have members from major nodal ministries like power, steel, department of industrial policy and promotion, Railways and PSUs.

Source : Inter-Ministerial task Force on coal

Tata Steel to raise Rs 10,000 crore for expansion

Tata Steel plans to raise Rs 10,000 crore of debt to finance expansion of its Jamshedpur plant and to part-pay debt at Corus Plc, its UK-based business. The company will invest a total of Rs 13,000 crore to expand its steel production capacity from 6.8 million tonnes to 10 million tonnes by September 2011. The company also plans to use Rs 2,200 crore to reduce debt at Corus.

The debt will be raised in two tranches — of Rs 4,000 crore and Rs 6,000 crore over the next two months.The first tranche of Rs 4,000 crore will be raised through a 15-year bond with an annualised coupon of 10.5

Source : Tata Steel to raise Rs 10,000 crore for expansion

Coal blocks allocated to Public and Private Sector

The Government has identified 229 coal blocks for captive end use. Out of this, a total of 208 coal blocks (including 61 coal blocks allocated to Central and State PSUs under government dispensation) with geological reserves of 48.82 billion tonnes have been allocated to various public and private sector companies. The year-wise details of coal blocks allocated to public and private sector companies for captive use is given below:-

Year	Public Sector/State PSUs	Private Sector
Till 2003	14	24
2004	03	0
2005	05	16
2006	06	21
2007	04	18
2008	01	20
2009	-	14
Total	34	113

The coal blocks are allocated for captive use and the Central Government does not earn any revenue out of the allocations made.

At present, allocation of coal blocks is done through the mechanism of an inter-Ministerial inter-Governmental body called the Screening Committee. The Screening Committee is chaired by the Secretary (Coal) and has representation from Ministry of Steel, Ministry of Power, Ministry of Industry and Commerce, Ministry of Railways, Ministry of Environment & Forests, Coal India Limited (CIL), Central Mine Planning & Design Institute Ltd. (CMPDIL) and the concerned State Governments. The application is received from the applicant in the Ministry of Coal along with its enclosures and is then sent to the concerned administrative Ministry as well as to the State Governments for their scrutiny and recommendations. It is also sent to CIL/CMPDIL for their scrutiny and recommendations. In the Screening Committee, the applicant is given an opportunity to present his case before the Screening Committee. Allocation of coal block is decided on merits through consultation/discussions in the Screening Committee. Guidelines for allocation of coal blocks both for the use of the Screening Committee and guidance to the applicants have been framed and necessary changes are made in the same from time to time based on the experience gained and the suggestions of the Screening Committee. The same are displayed on the website of the Ministry of Coal.

As on date, 26 coal blocks have come into production.

Allocation of coal blocks is an on-going process and as and when the coal blocks are identified and earmarked for allocation, the same are considered for allocation.

This information was given by the Minister of State for Coal (Independent Charge) Shri SriprakashJaiswal, in a written reply to a question the Rajya Sabha on May 3, 2010.

Source : Energetica-India : International Magazine on Renewable & Conventional Power Generation | Transmission | Distribution

Bidding for Coal Blocks

With a view to bringing in more transparency in the bidding for coal blocks, it is proposed to introduce auction through competitive bidding as a selection process in place of the captive dispensation through Screening Committee route for allocation of coal blocks for captive mining. For this purpose, the Mines and Minerals (Development & Regulation) Amendment Bill, 2008 was introduced in the Rajya Sabha. It was referred to the Standing Committee on Steel and Coal for detailed examination. The Standing Committee submitted its report on 19.02.2009 to the Parliament and made certain recommendations and suggested having further consultations with the stakeholders and State Governments. Minister of State (I/C) (Coal) held a meeting on 10th August, 2009 with the State Ministers of Mining and Geology of coal and lignite bearing States. During the meeting, the State representatives supported the proposed arrangement in the Amendment Bill. Based on these inputs, the Action Taken Note to the recommendations of the Standing Committee in the form of a Cabinet Note was placed before the Cabinet for passage of the Bill. The Cabinet approved the Note on 28.01.2010. The Minister of Mines has moved the motion on 18.02.2010 for passage of the Mines and Minerals (Development & Regulation) (Amendment) Bill, 2008 in the Budget Session of Parliament, 2010.

The system of competitive bidding shall be adopted only for the blocks to be allocated to private companies for captive use. The allocation of coal blocks to Government companies under the Government company dispensation or to power projects awarded through tariff based bidding process would not fall under the purview of new system of competitive bidding and as such there will be no adverse implications for Government owned steel and power companies.

This information was given by the Minister of State for Coal (Independent Charge) Shri Sriprakash Jaiswal, in a written reply to a question the Rajya Sabha on May 3, 2010.

Source : Energetica-India : International Magazine on Renewable & Conventional Power Generation | Transmission | Distribution

Coal ministry may two linkages to power projects

The Union coal ministry may cancel the Letters of Assurances (LoAs) for coal linkages issued to two proposed power projects in Orissa as these plans failed to achieve financial closure within six months of the issue of LoAs as per the terms and conditions of the LoAs.
These two power projects include GMR’s 1000 MW Kamalanga power project at Kamalanga in Dhenkanal district and Ind Barath Energy Utkal's 750 MW (3x250) project at Sahajbahal in Jharsuguda.
A notice will be soon issued to these project developers who have not achieved financial closure. These developers then need to respond to this notice within 15 days, explaining as to why the LoA issued to them should not be cancelled as they have failed to achieve financial closure within six months.

Source : Coal ministry may two linkages to power projects

‘N-power is a biz proposition that can be looked at'

Under the leadership of its current Chairman, Mr S.K. Roongta, the state-owned steelmaker Steel Authority India Ltd (SAIL) has risen from rank 17 in the list of global steel makers to No. 2 (according to World Steel Directory ratings).
The growing importance of SAIL in the world steel market has only been underlined by the fact that global steel majors such as ArcelorMittal, Posco and Nippon Steel are looking to have tie-ups with the company. In the midst of a mega-expansion plan, Mr Roongta took some time out to speak with Business Line about the company's future plans.
What is the progress on SAIL's expansion plans? When are they likely to be completed?
Expansion plans are moving along as per schedule. The process will be completed progressively by 2012-13. Some facilities though would be in place by 2011 itself. Burnpur will be commissioned in June 2011, Bokaro cold-rolling mill will be ready by December 2011, Rourkela, Durgapur and Bhilai also by 2011. The Salem steel plant could be commissioned by June-July 2010. In fact, in Salem, we are almost ready but we are facing some problems with regard to the availability of power from the Tamil Nadu Electricity Board. Although we had got their confirmation that they will meet our enhanced power requirement but due to some power crisis, we are having some difficulties in getting our power requirement. We have already approached the State Government on the issue and hope we get the required support.
Other PSUs such as Nalco and IOC are evincing interest in nuclear power, is SAIL also looking at this segment?
Though we have not given a serious thought to nuclear power, but power is an allied business for us. One should always be alive to business opportunities. We need power in some locations… It is (nuclear power) a business proposition which can be looked at. We are already there in thermal power for captive purposes and we need more power for captive uses, so one of the sources can be nuclear power. The plants need not be at the same location, it can be at a different location we can pass it on the grid and send it to the steel plants. We already have a joint venture with NTPC to manage our captive power plants, so this proposition can be looked at by that joint venture as well.
Have you also faced land acquisition problems in Jharkhand for a new Greenfield project?
Land acquisition is a big issue in States like Orissa and Jharkhand whether it is for us or private players. As far as SAIL is concerned, we have our mines on the eastern side in Jharkhand and Orissa. We have our infrastructure there with our capacity of 13 mtpa. With brownfield expansions at existing sites, we can ramp up capacity to 45 mtpa. So our first priority would be to ramp up capacity in our brownfield projects. For Greenfield plants, Karnataka can be an option for SAIL also.

We have a plant there, we have some extra infrastructure available there also, but right now we are primarily concentrating on brownfield expansion.
What is your outlook on steel prices in the coming months?
Two factors had driven steel prices up in the last three to four months. One was cost push on account of sharp increase in costs of inputs and second, the demand outlook has also improved. These two factors have helped in improved price outlook on the steel front globally. Going forward a lot will depend upon Chinese demand outlook for steel because they are a major factor in global steel output. They are producing and consuming 50 per cent of the world's steel. The next trigger will come with raw material prices for the July-September contracts. Coking coal and iron ore pricing regimes have moved to quarterly pricing. While this quarter's prices have been settled, the prices for the July-September quarter will be discussed from the end of this month till the middle of June. If there is an increase in raw material prices then surely it will reflect in steel prices.

Source : The Hindu Business Line : ‘N-power is a biz proposition that can be looked at'

Tapovan project leakages get plugged

National Thermal Power Corporation (NTPC) is currently working on plugging leakages in an underground tunnel their 520 MW Tapovan Vishnugad hydropower project. This was after there was water discharge started receding. This plugging work will be complete in another two to three months time.
From the underground tunnel 200 litres per second is discharged compared to 700 litres per second in December. For this NTPC carried a survey and found that there was no relation between the water discharge from the tunnel and drying up of water sources in and around the hill resort of Joshimath in Chamoli district of Uttarakhand.
The project is being opposed by locals and environmentalists citing that it is affecting the local sources of water and creating environment problems in the highly fragile zone. NPTC has clarified that the construction work on this project will continue as there are no such evidences. The Tapovan project is expected to be commissioned in 2012-13.

Source : Tapovan project leakages get plugged

Ansal to invest Rs 1,500 crore on real estate projects

Ansal Properties & Infrastructure Ltd will make investments worth Rs 1,500 crore over the next three years for expanding their existing integrated townships and development of a group housing project in Haryana.
The company has completed or is currently in the process of completion of our four townships projects at Sonepat, Karnal, Panipat and Kurushetra. The size of Panipat, Karnal and Sonepat townships is 300 acre while the Kurushetra township is 150 acre. The company further plans to extend each of these townships by 100 acre.
Apart from these projects, in the next year Ansal Properties will also begin with the development of the Yamunanagar township which is spread over 150 acre for which land has been already acquired.

Source : Ansal to invest Rs 1,500 crore on real estate projects

JSPL bid to acquire Ziscosteel rejected

Jindal Steel & Power Ltd's (JSPL's) attempt to acquire the Zimbabwe Iron & Steel Company (Ziscosteel) has failed. The Zimbabwe government has decided that they will not sell the company to large corporations.
JSPL and Lakshmi Mittal-owned Arcelor Mittal were among the main suitors for Ziscosteel, which is 89 per cent owned by the Zimbabwe government.
The technical team which analysed the bids of interested players has recommended not to accept these proposals as the interests of the bidders "could overwhelm Ziscosteel and work against the wishes and interests of the country
Ziscosteel has debt of around $300 million (Rs 1,390 crore) and its plant had stopped operations in 2008 post the economic meltdown. This year to revive the company, Zimbabwe government had made an announcement to privatise Ziscosteel.

Source : JSPL bid to acquire Ziscosteel rejected

GSECL plans 1000 MW gas based power plant in Mehsana

Gujarat State Electricity Corporation Limited (GSECL), a power generation subsidiary of state-run Gujarat Urja Vikas Nigam Ltd (GUVNL) plans to set up a 1000 MW greenfield power project in Mehsana.
This plant will be a gas-fired power project with a power generation capacity of 1000 MW. GSECL will begin with the project in the 12th five year plan period.
The land for this project is yet to be acquired. The additional project details of the project will be finalised once they acquire land for it. The cost of this gas based power project is estimated at around Rs 3500 crore.

Source : GSECL plans 1000 MW gas based power plant in Mehsana

Oil firms in Venezuela to get Indian push

India will soon start pumping in more oil from the oil fields in Venezuela. This would be used further processing in upcoming refining projects in India. This was recently conveyed by Petroleum Minister Murli Deora after he had discussions with Venezuelan Vice Minister for Foreign Affairs Temir Porras Poncelon.
ONGC Videsh, Indian Oil Corp and Oil India Ltd have been recently awarded 40 per cent participating interest for the development of two oil blocks by the Venezuelan government.
OVL has a 40 per cent participating interest in another oil field that was awarded in April 2008. The overseas arm of India's flagship oil explorer is also carrying out reserve assessment of Junin Norte in the Orinoco belt ofVenezuela.

Source : Oil firms in Venezuela to get Indian push

Six million tonne greenfield project to be developed by SAIL

Steel Authority of India Ltd (SAIL) plans to set up an integrated greenfield steel plant with an annual capacity of 6 million tonne The company already which has five integrated steel plants under its umbrella.
For the proposed steel plant, the company is yet to identify the location. SAIL is having discussions with state governments where it can get land. This greenfield project will be implemented along with the brownfield expansions being executed by the company.
SAIL currently has surplus land at Bokaro and Durgapur, but that would not be sufficient for setting up the proposed 6 million tonne plant which would be expanded to 10 million tonne later.
Apart from this, the company is also augmenting the capacity of the Bhilai Steel Plant (BSP) to 7.5 million tonne from 5 million tonne and the capacity of Rourkela Steel Plant (RSP) will be taken up to 4.5 million tonne from 2 million tonne.

Source : Six million tonne greenfield project to be developed by SAIL

Green panel refuses expansion of Tata's Dhanbad project

An environment panel has denied approval for the expansion of Tata Power’s project in Dhanbad in Jharkhand citing a moratorium imposed on construction activities in the critically polluted areas till August in the country.
Tata Power wanted to expand the project by adding two units of 660 MW coal-based thermal power plant from existing two units of 525 MW at Maithon in Dhanbad district which has been identified as the most polluted city in Jharkhand .
EAC dropped the project after they realised that the area is located in critically polluted areas identified by Central Pollution Control Board (CPCB) and for which the Environment Ministry has issued a circular on moratorium of projects until August.

Source : Green panel refuses expansion of Tata's Dhanbad project

NMDC, Coal India in coal JV talks - report

NEW DELHI (Reuters) - India's largest iron ore miner, NMDC Ltd, is in talks to form a coal mining joint venture with state-owned Coal India Ltd, the Financial Express reported on Wednesday.

The newspaper quoted an unnamed NMDC official as saying Coal India, the world largest coal miner that is planning an initial public offer, had written to the government for an in-principal approval for allocation of a coal block.

Further talks on the joint venture will be after the approval comes through for the coal block in West Bengal state in eastern India, the paper said.

An official at Coal India said he could not immediately comment on the report.

(Reporting by Ruchira Singh)

(For more business news on Reuters Money visit http://www.reutersmoney.in)

European steel makers fight to stick to annual iron ore pricing

Europe’s steel makers are in tough negotiations with powerful iron ore miners who are pushing to end a decades-old annual benchmark pricing system for the steel making ingredient in favour of a more flexible mechanism.

The world’s top three iron ore miners — Brazil’s Vale, BHP Billiton and Rio Tinto — are either in talks with their customers or have reached an agreement to supply ore priced on a quarterly basis.

But major steel makers including ArcelorMittal, the world’s biggest, as well as Germany’s Thyssenkrupp  said they still prefer the annual system as a fluctuating pricing scheme will force them to renegotiate regularly with their own customers.

Miners have not dislosed the price hike they obtained so far in this year’s talks but analysts estimate a rise of around 80-90 per cent in iron ore, which has more than doubled since September in the spot market. Below are some possible moves by steel makers to adjust their business model in a changing environment:

* Convince steel customers to adopt flexible pricing
Flat steel users such as engineering companies as well as automakers are expected to fight to maintain the current annual pricing system that would allow fixed costs.

Analysts say steel makers do not have the same bargaining power as miners due to the industry’s fragmented structure, compared with the three big miners controlling around 70 per cent of total sea-borne iron ore trade. “If you look at the balance of power between the various levels of value chain, then it looks like steel makers will have to absorb more volatility, brought by the quarterly pricing,” said Frederic Gits, head of EMEA Industrials at Fitch Ratings.

Austrian steelmaker Voestalpine said last week that its customers were extremely reluctant to adopt quarterly contracts as negotiating a price so often would make it very difficult to keep project costs within their orignial budgets.

Analysts say life could be particularly difficult for Germany’s largest steelmaker Thyssenkrupp, whose contracts are primarily on a long-term basis.

However, Thyssenkrupp produces high value-added, specialty products, some of which it develops jointly with its automaker customers, who may not be able to switch to another supplier and that could give Thyssen more bargaining power.

* Vertical integration
Self-sufficiency in key steelmaking raw materials iron ore and coking coal is set to be a top priority for steel makers globally with sky-rocketing prices for both resources.

ArcelorMittal is thought to be the best-positioned with 50 percent self-sufficiency in iron ore and a strategy to boost this to 75 per cent by 2014. In Europe, Thyssenkrupp looks vulnerable as it does not own any mines and has traditionally focused on investing in downstream such as production of high-tech steel.

Voestalpine has 25 per cent integration in iron ore, which it aims to raise to one-third of its total needs in the medium term. The company purchases its iron ore from various miners and is not dependant on one big supplier.

* Start using hedging tools to mitigate price risk
The conservative steel industry has traditionally been criticial of hedging instruments, saying the involvement of financial markets distort prices — an argument reflected in industry leader ArcelorMittal’s opposition to steel futures.

But analysts say with their raw material purchases based on a fluctuating period while their sales are tied up under annual contracts, the $500 billion industry may have to dive into hedging — whether they like it or not.

“Essentially somebody will need some sort of hedging mechanisms; whether it’s the automakers hedging their steel prices or whether it’s the steel producers hedging their input raw material prices — that’s not completely clear,” analyst Gavin Wood at Nomura said.

The financial community could be the obvious winner of such a move as banks, brokers and exchanges have invested heavily to introduce new hedging tools for steel and iron ore.

Source: http://www.business-standard.com/india/news/steel-makers-weigh-options-as-iron-ore-pricing-changes/392044/

GAIL to invest Rs 15,000 cr in new pipelines by 2013

GAIL India, the country’s biggest gas marketing company, will invest about Rs 15,000 crore over the next two-three years in expanding its pipeline network to connect consumption centres.

Addressing a meet organised by the PHD Chamber of Commerce and Industry here, company Chairman and Managing Director B C Tripathi said his company was laying new pipelines to connect cities in the Northern states of Uttar Pradesh, Uttarakhand, Punjab and Haryana.

“Gas demand in northern India is expected to grow at the rate of 20-25 per cent over the next two-three years. To meet this demand, we are investing Rs 15,000 crore in laying new lines,” he said.

GAIL has planned pipelines to connect cities like Meerut, Saharanpur and Moradabad in UP, Dehradun in Uttarakhand, Bathinda and Nangal in Punjab and Panipat, Hissar and Gurgaon in Haryana by 2013. In addition, GAIL is expanding its 10,700 km of cross-country pipeline network. It is laying 5,000 km of pipeline to connect gas sources on the western coast to consumption centres in the north by 2013.

Of this, about 1,000 km of pipelines would be commissioned by year-end and 1,500 km would be added every year over the next two years. GAIL is also laying pipelines to connect to Bangalore, Mangalore and Kochi in next the three-four years.

Tripathi said the share of natural gas in the energy basket will rise to 12 per cent by 2012-13 from the current 10 per cent. Domestic gas production, he said, will rise to 170-175 million standard cubic metres a day (mscmd) in the next four-five years from 135 mscmd currently after new fields of companies like Oil and Natural Gas Corporation and Gujarat State Petroleum Corporation go on stream.

He, however, cautioned that future gas supplies may not come cheap. Liquefied natural gas (LNG) from international suppliers like Qatar was available at no less than 14-15 per cent of crude oil price.

At prevailing crude oil price of $80-85 per barrel, this translates into a gas price of around $10 per barrel, more than double the rate at which Reliance Industries sells gas from its eastern offshore KG-D6 fields.

“I don’t think that prices are going to come into as demand is bound to go up with the revival of world economy,” he said.

GAIL, EIL eye tie-up for distributing city gas
Meanwhile the State-run gas utility today said it was in talks with Engineers India Ltd (EIL) to set up a joint venture (JV) to sell compressed natural gas (CNG) to automobiles and piped natural gas to households in cities. “EIL has a long association with GAIL. We are interested in having them as partners even in city gas distribution (CGD) projects,” GAIL CMD B C Tripathi told reporters here.

The two companies are discussing bidding jointly for CGD projects in cities that would be put on offer by the sector regulator, Petroleum and Natural Gas Regulatory Board (PNGRB), in the future.

Source: http://www.business-standard.com/india/news/gail-to-invest-rs-15000-cr-in-new-pipelines-by-2013/391722/

MoC asks CIL to take firm action on coal linkages to power projects

With a view to expedite coal linkages for power projects proposed to be set up during the 11th Plan Period, the Ministry of Coal (MoC) has directed state run Coal India Limited (CIL) to take appropriate action on areas like issuance of Letters of Assurance (LoAs) and entering into Fuel Supply Agreements (FSAs) with the power consumers.

As the validity period of most of the LoAs issued in 2006 and 2007 has expired, the MoC observed that there is a need to review each case in terms of completion of the stipulated milestones. It may be noted that the validity period of the LoAs ranges from 24-30 months.

The Standing Linkage Committee (SLC) on coal chaired by Alok Perti, Additional Secretary (Coal) will meet on April 8 to discuss issues like conversion of valid linkage into LoAs or FSAs and review of the old LOAs issued to the power consumers with a validity period of 30 months.

The agenda of the meeting has been communicated to the CIL chairman, Partha S Bhattacharyya.

In its last meeting held on January 29, 2010, Additional Secretary (Coal) had suggested that in view of open ended approach for processing and issuance of LoAs, there are some delays and hence it would be desirable to have a time schedule for processing of LoA by state run coal companies like CIL and Singareni Collieries Limited.

Accordingly, it was decided that the coal companies shall complete the process of issuing Notices inviting commitment guarantee from the consumers within 30 days of the SLC meeting. CIL has been asked to send a copy of this notice to the Central Electricity Authority (CEA) and furnish a compliance report to the MoC after completing the process of issuing LoA.

The SLC has decided that for the power sector consumers, the financial closure in case of private sector companies or investment decision duly approved by the board in the case of public sector companies need to be achieved within three months from the date of issue of LoA. If the companies fail to meet this milestone, the LoA shall stand withdrawn and the LoA holder will have to apply afresh. When contacted, a top CIL official said, “A large number of cases wherein the power consumers have submitted their milestones are under scrutiny. However, in some cases, either the commitment guarantee has not been furnished as required or the validity period of LoA has expired.”

Responding to CIL's concerns of negative coal balance, the Additional Secretary (Coal) observed that while the issues raised by CIL are appreciated, it has to be noted that under the 'New Coal Distribution Policy', the requirement of genuine coal consumers need to be addressed by state owned coal companies like CIL in accordance with the provisions made in the policy.

CIL has been advised to develop a 'Comprehensive Action Plan' to address the issue of the surging coal demand in the country. It has been suggested by the SLC that the actual coal demand based on various factors including commissioning schedule of capacity, generation target and fuel mix may be worked out on an annual basis by CIL in consultation with the CEA and the Union ministry of power.

Source: http://www.business-standard.com/india/news/moc-asks-cil-to-take-firm-actioncoal-linkages-to-power-projects/17/01/390922/

Asia Coal-Prices top $99 on tight supplies, stockbuilding

Australia's thermal coal

prices, a benchmark for Asia, rose to $99 a tonne on Thursday,

on tight regional supplies and as Asian utilities build stocks

to meet a summer season demand spike by industry and

households.

 Prices of power-station coal look set to leap above $100 a

tonne, some analysts said, bolstered by growing demand from

both Europe and Asia as well as supply constraints.

 Thermal coal prices on the globalCOAL Newcastle weekly

index gained 59 cents from a week ago to $99.06 a tonne

free-on-board (FOB) Australia's Newcastle port on Thursday.

 "Coal could punch through $100 a tonne with signs of

seasonal restocking emerging in Europe and Asia," said Mark

Pervan, a resource analyst at Australia & New Zealand Bank.

 "Potential industrial action in South Africa and falling

port stocks in China also flags a tighter supply backdrop."

 All eyes are on South Africa this week as some 50,000

workers threatened to go on strike at the Richards Bay port,

rail and pipeline operations should wage talks with logistics

group Transet [TRAN.UL] failed. [ID:nLDE63J293]

 A strike could cripple the transport of coal exports and

dramatically tighten seaborne supplies, as other main coal

exporting nations -- Indonesia and Australia -- are already

struggling to increase output due to infrastructure and weather

constraints.

 South Africa is a key supplier of coal to India and Europe,

where many power plants have begun experiencing shrinking coal

stocks. Any disruption to supplies would force the buyers,

particularly Indian utilities, to turn to Indonesian supplies.

 However, an extended rainy season means many Indonesian

producers in the Kalimantan region are still struggling to keep

pace with existing orders.

 "Demand is beginning to pick up from all over but supplies

are slow to increase. So if the Chinese buyers decide to enter

the market in a big way, prices could really rock much higher,"

said a Sydney-based trader.

 In a sign that Chinese utilities were also about to begin

restocking activities, producers in Indonesia and Australia

said enquiries from Chinese power plants for supplies in the

second half of the year were starting to flow in again, after

experiencing a quiet month in March.

 Asian prices have gained about 18 percent so far this year

and last touched $100 in late January on the back of a Chinese

import frenzy as a cold winter halted domestic production and

drove up prices.

 Spot prices in China's top coal port Qinhuangdao rose

slightly on the week to as much as 740 yuan ($108.40) a tonne,

while coal stocks in the country's key power plants fell about

one percent on th week to 42.2 million tonnes, sufficient for

12 days of consumption, data showed.

Source: http://in.reuters.com/article/domesticNews/idINSGE63007E20100422

China May Import 29 Million Tons of Coking Coal, Citigroup Says

Coking coal imports by China, the world’s second-biggest buyer, may reach the second highest on record this year as domestic production can’t meet demand from steelmakers, Citigroup Inc. said.

Purchases may be 29 million metric tons, analyst Catherine Wang said at a conference in Shanghai today. Imports may exceed that level should domestic output fail to expand by 10 percent this year, she said.

Global supplies of coking coal will be crimped this year as Chinese imports near the 2009 record of 34.4 million tons, and demand from other nations picks up with the economic recovery, Teck Resources Ltd. said in March. Prices may reach $300 a ton in the second half, Citigroup said April 12.

Should Chinese production expand by 5 percent, there will be a coking coal shortage of 50 million tons, a deficit that mining companies globally may struggle to meet, Wang said today.

BHP Billiton Ltd., the largest exporter of the coal, this year won a 55 percent price increase from Japan’s JFE Holdings Inc., as the global economy picked up and Chinese purchases bolstered demand. Prices were settled at $200 a ton for the three months started April 1.

Chinese imports surged fivefold last year after the government closed smaller, unsafe mines.

Chinese miners are depleting coal resources quickly and the quality produced is declining, Citigroup’s Wang said.

Only 25 percent of coking coal resources in China is less than 400 meters (1,312 feet) below the ground, and half of that is in highly gaseous districts, making mining difficult, SouthGobi Energy Resources Ltd. said March 31. Chinese production is peaking or has peaked in Shandong, Henan and Anhui provinces, the three biggest producing provinces after Shanxi, SouthGobi President Alexander Molyneux said.

Source: http://www.businessweek.com/news/2010-04-22/china-may-import-29-million-tons-of-coking-coal-citigroup-says.html

Development of Coal Blocks

The Governments of coal and lignite bearing States have been requested to facilitate the development of coal blocks.

Out of 74 coal blocks allocated to government companies, 11 coal blocks have come into production till the end of March, 2010.

Development of coal blocks involves a gestation period of 3 to 7 years for reaching the production stage and another two to three years for reaching the optimal production capacity. As per the guidelines, coal production from a captive coal block should commence with 36 months (42 months incase the area falls in forest land) in case of open cast of open cast mines and in 48 months (54 months in case the area falls in forest land) in case of underground mine, from the date of allocation. If coal block is not explored additional two years are allowed for detailed exploration and three months for preparation of geological report. The allocattees of coal blocks, who have not started production so far, are in various stages of obtaining statutory clearances and mining lease, preparing mining plan, acquisition of land, procuring machinery and equipment etc. for both mining as well as end-use project.

This information was given by the Minister of State for Coal (Independent Charge) Shri Sriprakash Jaiswal, in a written reply to a question the Lok Sabha today.

The Minister said that the responsibility of developing the coal block as per the prescribed guidelines and milestone charge attached with the allocation letter rests entirely with the allocattee company. In the terms and conditions of the allocation letters, it is categorically mentioned that in the event of willful delay in the development of coal blocks and in setting up of the end use projects, the Government takes appropriate action to de-allocate the said block. Government periodically monitors and reviews the development of allocated blocks as well as end use plants by the allocattee companies in the Review Meetings. Wherever delays are noticed, Government issues show cause notices and advisories to such allocattees cautioning them to bring the coal blocks into production as per the guidelines/milestones chart. Further, the allocates have to submit Bank Guarantee which remains valid all the times till the production from the coal block reaches its peak rated capacity. The last review meeting was held on 22nd and 23rd June, 2009 with all the coal block allocattees to review the development of coal blocks and the end use projects. The State Governments have been requested to form a Monitoring Committee headed by the Chief Secretary to facilitate expeditious development of coal/lignite blocks. The Coal Controller’s office is also monitoring on regular basis the achievement of different molestones.

 Source: http://pib.nic.in/release/release.asp?relid=60688