Monday, Aug 01,
Brazil’s Vale will introduce a new pricing system for iron ore pellets to reflect the market value of the product in a better way. The new pricing model includes a quality premium for each additional percentage of ferrous content above the 62% spot market reference and a “conversion premium” to reflect supply-demand, Vale said last Friday. “Although this change will not necessarily be translated into material price variations, its focus is to ensure that relative prices will be expressing more properly the market valuation of the different qualities of pellets, being an important tool to signal customers’ preferences, thus allowing us to better meet their demand,” Vale said. Vale’s average pellet price increased 13.6% from the previous three months to $206.07 per tonne in the second quarter.
Monday, Aug 01,
Hot rolled coil (HRC) prices in the domestic market are likely to remain stable in August as demand continues to be sluggish while imports have become cheaper.
Market participants are of the opinion that the fall in international prices of hot rolled coil was also a main reason for domestic mills to keep prices at the same levels in August.
Indian mills are currently selling HRC in the domestic market at Rs 34,500-35,500 ($784-806)/MT ex-mill.
Earlier attempts by domestic mills to raise prices by Rs 500/MT in June were unsuccessful and the increase had to be rolled back.
According to some officials, at least two mills including JSW Steel and Essar Steel both catering to the Western and southern markets will have more HRC production in August compared to July. The production may not be exponentially higher but the impact of even a small increase in an already over supplied market will not be pleasant.
“Importers have already booked HRC at $710 cfr levels which will be every competitive against domestic material these are expected at ports by August-September if they (mills) raise prices further, importers will be encouraged to import more,” said a market participant.
Monday, Aug 01,
The government will seek to isolate violators of law among mining companies and determine the amount of iron ore required by the steel industry in order to persuade the Supreme Court to modify its order issued on Friday suspending mining in Karnataka’s Bellary district.
The government has asked the court to review that order. On Friday, the court sought information on the amount of ore needed, the share of Bellary mines in the total requirement and the quantum of ore exported.
Ministry sources said Attorney-General GE Vahanvati has already asked the environment ministry to convene a meeting with secretaries of the ministries of mines, steel and commerce to provide information sought by the court. The report has to be tabled in a week. The meeting of secretaries is on Tuesday.
The people said there is no immediate crisis because there is not much mining during the monsoon. They said the court could modify its order to allow some mining in about three weeks, once it is provided with all the data.
The assessment sought by the Supreme Court ahead of its final order will be crucial in determining the fate of the Bellary region, which alone produces 80% of the total ore produced from Karnataka and employs more than a lakh people.
Source: The Economic Times
Saturday, July 30,
Sponge Iron manufacturers in Bhubaneswar have desperately sought the intervention of the State Government in facilitating easy and adequate flow of raw materials including iron ore and coal.
There is a tremendous mismatch in demand and supply which has led to gross escalation of prices of iron ore. As a result, a trend of shutting down of industries has set in. There are about 104 sponge iron plants in the State with a total installed capacity of 15 million tonne. But with shortage of raw materials gripping the industry, only around six million tonne are being produced, the manufacturers stated.
While only around 15 sponge iron plants have their own mines, the rest have to depend on OMC and to some extent the private sector. However, as only around 10 percent of the leases of OMC are operational, there is a serious short supply.
“Once the OMC performs to its full potential, the situation would definitely improve. The pricing has also to be dealt with immediately by the Government”, Chairman of the Orissa Sponge Iron Manufacturers Association (OSIMA), Mr. P L Mohanty told media persons here today.
“The Association placed these issues before the Industry Minister Raghunath Mohanty and Forests and Environment Minister Debi Prasad Mishra at its annual general meeting today. “The Ministers have assured of looking into our problems and are convening a meeting on August 3 in the connection, The industries, being more increasingly entangled in pollution issues, have announced strong moves to set its house in order. “The industries are adopting technologies to comply with the regulations and upgrading their units. However, ash disposal is an area of concern. The Government should provide common disposal grounds for ash waste and provide incentives to ash utilizing units” Mr. Mohanty added.
The case of coal is still worse as the sponge iron industry is given the least priority in allocation. Those having linkage have been allocated only 75 percent of their requirement and that too 50 percent of the allocation is made available. The industry has thus sought help of the Government in importing coal as a shortage of about 400 million tonne is envisaged in the country within the next five years.
Friday, July 29,
The 464-page report by Karnataka Lokayukta has exposed the state’s illegal mining scandal and the ways in which businessmen and politicians have exploited the mineral resource to enrich their wealth.
The report says that the scandal has made the state financially weaker and the loss in taxes and royalty is estimated at 16,085 crore.
And the surprising aspect of the report is the inclusion of the names of several corporate & bigger companies such as NMDC, Adani Enterprises & JSW Steel. The report accuses many of them of paying bribes, under-invoicing exports and dealing in fudged permits.
Realizing the futility of his desperate rearguard action to save his job, the Karnataka Chief Minister BS Yeddyurappa has resigned and others involved are also expected to soon follow.
Therefore, looking at the present scenario, one can say that the supply of iron ore in the state is likely to remain tight in the coming days until the entire matter of illegal mining is settled down.
Friday, 29th July,
According to the officials, Coal India, “Coal India, which is in advanced talks with Indonesia’s Golden Energy Mines, is set to ink a deal worth $1 billion.” The world’s largest coal miner, Coal India, is seeking approval from the Indian government to buy a 30% stake in this Indonesian Coal mine. By the Indian Government, it is restricted to buy a stake in any unlisted asset globally. But Coal India has sought approval for the stake buying.
“We have sought government clarification on buying stake in an unlisted asset of a listed firm. The issue is that the entity is not listed. We are only allowed to buy in a listed firm,” said Coal India chairman N.C. Jha.
Indonesia’s PT Golden Energy Mines is a coal producer that is 99% owned by PT Dian Swastatika Tbk, an energy and infrastructure company, that is set to upgrade its production capacity to 5-8 million tons this year. Reports indicate that the firm intends to increase production to 10 million metric tons per year to 4,200 to 5,300 kc/kg coal this year from 3 million in its Sumatra and Kalimantan mining companies.
The Indonesian government has already confirmed that Coal India is set to invest up to $3 billion in the mining sector, steel and ports in Kalimantan.
Coal India is the state-owned monopoly coal producer in India. The firm has also been in talks with U.S. based Massey Energy and Peabody Energy to buy stakes in their unlisted mining units.
All of last year, Coal India failed to make any headway in its overseas acquisition plans. It currently owns two new projects in Mozambique. The company had earlier said it was looking at five overseas proposals for equity infusion in countries such as United States, Australia and Indonesia.
Several delays have scuttled the company’s plans of increasing local production. The company supplies 80% of the coal India requires, but has been facing difficulties in getting the necessary clearances for their buys. The huge 142 million metric tonne demand supply gap in India, estimated in the current fiscal year, is sought to be alleviated by the foreign assets it was looking to buy.
Friday, July 29,
Domestic iron ore prices are likely to rise soon due to the following factors:
1) Higher sponge iron prices
2) Recent ban by the Supreme court on mining activities in Bellary
3) Higher royalty charges – Royalty on iron ore is likely to go up to 20% from the present rate of 10%
Sponge iron prices at most of the places have moved up Rs 500-1000/MT over 10-15 days and it has brought down the conversion cost for Ingot manufacturer to Rs. 7300/MT from the standard Rs. 7500-7800/MT.
Out 148 mines in Bellary only 6-7 were operational. So, now with the Supreme Court’s announcement of closure of all mining operation in Bellary, the supply from Karnataka will come to a standstill.
“Queries have been increasing day by day. We are over booked for next few months. We expect prices might go to soon looking at demand.” said a mines owner based in Orissa.
According to Industry experts, “One can expect the iron ore prices to go up by Rs 300-500/MT in the first week of August”
Friday, July 29th,
Illegal mining in Karnataka has already cost BS Yeddyurappa of the BJP his job as Chief Minister. Today, the Supreme Court ordered the suspension of all mining operations in the Bellary district.
The court said it was shocked by the extent of the environmental damage in the area. It wants the Karnataka government to take responsibility for restoring the ecological balance here by asking mining companies to pay for the clean-up required.
The court has also asked the government to explain how much iron-ore is required by industry, what percentage of this is met by Bellary, and how much steel produced in India is exported.
The court’s questions are similar to those raised by the Karnataka Lokayukta, Santosh Hedge. In his report on illegal mining submitted to the state government this week, Mr Hegde said that politicians like Mr Yeddyurappa have colluded with mining companies to sanction violation of basic laws. Mr Hegde listed a series of mining companies who illegally transport massive amounts of iron-ore to ports for export.
“The greed of a few is making everyone suffer,” the Supreme Court judges observed today.
Bellary has 148 mines, of which 98 are located in forest areas and are at the center of the controversy over the environmental problems in the area. At least 40 leases for mining in forests had been declared void a few months ago.
Friday, July 29,
Tight supply and firm demand keeps Spot iron ore prices firm on Friday.
China continues to produce steel like crazy, like above 1.9 million tonnes is becoming the norm now and margins are still positive. But the supply side is getting even tighter. Big miners are shipping more iron ore but most of them go to long-term contracts.
“We’re getting limited amount for the spot market and Indian supplies have been down due to the monsoon and the Karnataka ban”, said an iron ore trader in Singapore
Spot deals this week include the sale of Indian fines Fe 63.5/63 at $184-185/MT and a BHP Billiton’s 63-grade Newman fines cargo at $182/MT at a tender, up by $2 from last week’s tender.
According to traders based in China, “I don’t see prices moving up very high. However, as long as China continues its production levels and steel prices don’t collapse I see iron ore prices to be range bound between $185 to low $190s over the next few weeks”
Thursday, July 28,
Industry body FICCI today said the imposition of additional burden on the mining and mineral sector under the proposed Mines and Minerals (Development and Regulation) Act would lead India to become the highest taxed country in the sector.
“Indian mining sector is already one of the highly taxed sector globally, with an estimated effective tax rate of around 43 per cent for iron ore, as compared to 35-40 per cent for most of the major mining countries like Brazil, South Africa, Australia, Canada,” FICCI Mining Committee’s Chairman Tuhin Mukherjee said.
In Australia tax on mining currently stands at 39 per cent, in Brazil 35 per cent, in Chile 28 per cent, in Russia 35 per cent and in China, it is 32 per cent.
“In India, the effective tax rate will rise to over 60 per cent in case of coal and 55 per cent in case of iron ore after these new provisions are implemented,” Mukherjee said.
Anand Goel, Joint Managing Director,J indal Steel and Power and a member of the Committee, said that the imposition of 26 per cent profit sharing for coal and 100 per cent royalty sharing will create super rich pockets in the mining areas leading to a huge disparity and dissatisfaction among the rest”.
Sesa Goa Managing Director and Co-Chairman of the Committee P K Mukherjee said that the move might not encourage foreign direct investment to come in the sector, which has not seen much flow since the opening up of the sector in the last decade.
Source: The Economic Times