ICVL scouring mines in Australia

State consortium International Coal Ventures Ltd (ICVL) is scouring remote outback regions in the hope of acquiring Australian coking coal mine assets, the former chairman of Coal India, which is part of the consortium, said. “ICVL is looking for a large-scale investment in Australia to supply coking coal to India,” MP Narayanan told journalists on a visit to Australia.

Narayanan is currently vice chairman for India in the World Mining Congress. ICVL comprises utility NTPC, Steel Authority of India, iron ore miner NMDC, Coal India and steelmaker Rashtriya Ispat Nigam Ltd. The World Mining Congress is a global body of mining engineers and experts with headquarters in Poland.

Metallurgical coal production in Australia is dominated by an alliance between BHP Billiton and Mitsubishi, which yields more than 58 million tonne per year and accounts for about a fifth of global trade. Narayanan said India was prepared to compete against other foreign interests with strong government backing, particularly from China, for mines in Australia, the world’s largest supplier of metallurgical coal.

Narayanan said ICVL was more interested in obtaining ground to mine coking coal to support projected growth in Indian steel making than thermal coal, which the country largely imports from South Africa and Indonesia to make up for shortfalls in domestic production. While India has the fourth-largest proven coal reserves in the world, they are low quality and coking coal makes up only 17% of total reserves.

In FY10, India imported 23 million tonne of coking coal to meet its requirement of around 40 million tonne, accounting for 34% of total coal imports, according to research by Ernst & Young. The demand for coking coal will only increase as new steel capacity comes online, with India’s coking coal requirement expected to reach 90 million tonne by FY20, according to Ernst & Young.

Narayanan said while ICVL was formed to scout out coal investments worldwide, Australia, with an abundance of prospecting ground, was the main target. “Our emphasis is on investment in Australia,” Narayanan said.

Chhatisgarh Hasdeo Arand coal mines in Environmental "No go" areas

The Chhattisgarh government has asked the ministry of environment and forests to reconsider the allocation of coal blocks in Hasdeo- Arand coalfield in the state. The coal blocks are stuck at the forest clearance level as several coalmines identified in the area would necessitate the diversion of forest land.

The ministry of power has also urged the MoEF to take an early decision in view of the urgent requirement of coal from these blocks.

As many as 20 coal blocks have been identified by the Ranchibased Central Mine Planning & Design Institute Ltd. Of these, the environment ministry has received proposals for diversion of forest land for seven coalmines. Proposals of at least four mines- Paturiya-Gidhmuri, Nakiya-I&II, Madanpur (South) and Tara-were examined and rejected by the forest advisory committee because of the dense forest area and the presence of Sal trees.

State Chief Secretary Parampath Joy Oommen said that the Centre must take a comprehensive view on development and admitted that some environment impact could not avoided. He noted that a lot of time, money and energy had already gone into these projects, as forest clearance was one of the last milestones to cross in the development of a power project or coalmine. He said that the forest area in these coal blocks was hardly 2 per cent of the total forest area of the state and that the state had little option but to develop its mineral resources for economic growth.

Oommen suggested thirdparty verification and creation of a special fund for environment management.

Commenting on the issue, Union Power Secretary H.S. Brahma said that the protection of forest land on one hand and economic development on the other should be considered in tandem rather than in isolation. He sought an early decision on the coalmines in the Hasdeo-Arand area so that coal could be made available to the power sector and investment in capacity addition projects did not remain idle.

Adani captures coal deal with Linc Energy Australia

Australia’s Linc Energy has agreed to sell its Galilee coal tenement to Adani Enterprises in a deal worth AUS $3 billion (US$ 2730 million), Linc’s chief executive told news agency.

Under the deal, Linc, whose primary business is underground coal gasification, will receive AUS $500 million in cash and AUS $2 per tonne in royalty for the first 20 years of coal production, Linc’s chief executive officer Peter Bond told Reuters.

Linc has been trying to sell its Teresa and Emerald coal tenements in Queensland for more than two years, after a deal with China’s Xinwen Mining Group for AUS $1.5 billion in 2008 and subsequent talks with Yanzhou Coal fell through. It later expanded sale process to include its Galilee and Pentland coal tenements, which Linc has said have excellent coal mining potential.

NTPC may get more cancellation, warns Govt- ET

After cancelling five National Thermal Power Corporation (NTPC) coal blocks last week, the coal ministry is likely to warn the power company that two more of its fields would be deallocated, if it does not develop them immediately.

“We will soon send letters to NTPC, warning and directing them to develop Pakri Barwadih (Jharkhand) and Talaipalli (Chhattisgarh) coal blocks,” an official in the coal ministry said.

"Any further failure in development of the block(s) would lead to necessary action as per the terms and conditions of allocation, including deallocation of the coal blocks,” the official said. The estimated production capacity of Pakri-Barwadih block in North Karanpura coalfield in Jharkhand is 15 million tonne (Mt), while in the case of Talaipalli block in Mand-Raigarh coalfield in Chhattisgarh, it is 18 Mt. The geological reserves of Pakri-Barwadih is 1,436 Mt and for Tallaipalli it is 1,267 Mt.

The coal ministry had issued show cause notices to the power major in September last year, asking it as to why its coal blocks should not be withdrawn for its failure to develop these within the stipulated time-frame.

In the notices, the ministry had said both the blocks weren’t developed despite the issue having being raised at the Prime Minister’s level in January, 2007. Pakri Barwadih was allotted to the public sector firm in 2004 and the production from this block was scheduled to start from 2008-09. Tallaipalli block was allocated to NTPC to feed its 4,000-Mw power projects which has to start production by March-end next year, according to the coal ministry.

A couple of days back the Coal Ministry had sent letters to Gondwana Ispat and Andhra Pradesh Development Corp warning that coal blocks allocated to them would be cancelled if they failed to develop them in time. The government had last month said that the panel set up by the Ministry to look into the process of deallocation of coal blocks had recommended issuing warnings to 29 coal and three lignite blocks allocatees for bringing their production at the earliest. The panel had also suggested cancellation of 14 coal blocks and one lignite block to six PSUs, including NTPC and three private firms for failing to develop the mines. As part of its deallocation drive, this year the government has deallocated coal blocks of various firms, including NTPC, Damodar Valley Corporation, Jharkhand State Electricity Board, Baidyanath Ayurved Bhavan, Andhra Pradesh Power Generation Corporation Limited, and Bhatia International Limited.

Indonesian imported coal price hike set to hurt and power tariff

Private power producers, including Reliance and Tata, have sought the government intervention to tackle the possible spurt in imported coal prices, apparently making a case for increase in power tariff for consumers.

The plea of the private power utilities comes at a time when Indonesia's -- the largest coal supplier to India -- mining laws are making it mandatory that coal prices be based on international market rate.

In a letter to Power Secretary P Uma Shankar, the 14-member Association of Power Producers (APP) has called for setting up of an "expert committee" to find an appropriate solution to price issues related to imported coal.

Apart from Reliance Power and Tata Power, other association members include Essar Power , Adani Power, GMR Energy and Jindal Power.

Many private utilities have won projects via competitive tariff-bidding route and the imported coal supply was based on bilateral agreements with fuel suppliers, mainly from Indonesia.

"Current contractual framework does not protect power companies from coal price changes triggered by any 'change in law' event in the coal exporting country," the letter written by AAP Director General Ashok Khurana said.

Similarly, Australia is planning to collect taxes on general additional revenues from exports of coal and iron ore as well as impose carbon tax on Australian coal production.

According to the letter, these laws would push coal prices by $ 20-25 per tonne.

India imports about 50 per cent of its imported coal from Indonesia and around five per cent from Australia.

The letter has said that there should be a suitable tariff structure that would "allow pass through of fuel prices to the power purchasers".

Out of the 43,000 MW capacity worth power projects awarded through competitive bidding, about 13,000 MW generation is dependent on imported coal.

Power project developers should get protection in the power purchase contracts for coal price changes triggered by legal and regulatory changes in coal exporting nations, the letter said.

The utilisation of imported coal is expected to rise in the coming years, especially since domestic coal production has slowed down mainly on account of environmental issues.

Status report sought on captive coal blocks by June end

Intensifying drive against the firms sitting idle on coal blocks, the government today asked companies to give status report on the development of captive blocks allocated to them for the April-June quarter. “You are requested to send the detailed information for the quarter ending June 2011 in respect of allocated coal/ lignite block and associated end use project to this office by June 27, 2011,” the Coal Ministry has said.

The development comes on the heels of the ministry’s issuing warning letters last week to two coal block allocatees — Gondwana Ispat and Andhra Pradesh Development Corporation — that their allotments would be cancelled if they failed to develop them in time.

In May, the coal ministry took a decision to deallocate 14 coal blocks and one lignite block and to issue warning to 29 coal and 3 lignite allocatees asking them to commence production in time.

Since last month, the government has deallocated coal blocks of companies like NTPC, Andhra Pradesh Power Generation Corporation, Bhatia International, Shree Bhaidyanath Ayurved Bhavan, Jharkhand State Electricity Board, Damodar Valley Corporation and Gondawana Ispat Ltd.

It has also started issuing warning letters to firms asking them to either begin production of the blocks or see them being taken back.

NTPC coal block de-allocation issue hits a low

The coal ministry has cancelled allotment of five coal acreages, including three given to state-run generation utility NTPC, on the ground that the companies “were not serious in developing them”. This issue was highlighted by us in the article on competitve bidding for coal blocks The utility hit back, saying the decision was “irrational” and lacked “transparency” since the company has completed more work in its blocks than other private firms had done in their mines. The cancellation is contrary to coal minister Sriprakash Jaiswal’s recent statement, saying he would review the decision.

“NTPC is committed to timely development of these blocks and has put all-out efforts for early development… The whole process/decision of de-allocation is not at all transparent and needs a holistic and rational review,” a top company executive said. “If compared with the contemporary coal blocks, NTPC is ahead of others. Even the blocks adjoining to these coal blocks in North Karanpura coalfield are much behind NTPC’s blocks and yet they are not in the de-allocation list,” the executive said.

NTPC was given Chhati Bariatu (South), Chatti Bariatu and Kerandari blocks in Jharkhand. Chatti Bariatu and Kerandari blocks in North Karanpura coalfields were allocated in 2006, while it got Chatti Bariatu (South) in 2007.

The power ministry had written a letter to the coal ministry earlier this month, asking for an “urgent” review of the decision to cancel allocations to NTPC. The power ministry had expressed concern that NTPC’s plans of adding over 15,000-mw generation capacity were likely to get hit if the allocations were cancelled. The letter prompted Jaiswal to say his ministry would review its decision, provided the reasons put forward by the power major for its failure to develop the blocks were genuine.

Saharpur Jamarpani and Banhardih — both in Jharkhand — are the other blocks, where the allocation has been cancelled. Saharpur Jamarpani was allocated to Damodar Valley Corporation in 2007, and Banhardih given to Jharkhand State Electricity Board in 2006.Last year, the coal ministry had issued notices on allocation of 84 coal and four lignite blocks. It had sought explanations from the companies about why their allocation should not be cancelled.