We welcome article submissions from experts in the areas of coal, mining,
shipping, etc.
To Submit your article please click here.
|
|
|
Wednesday, 20 November 19
FOREIGN DIRECT INVESTMENTS IN COMMERCIAL COAL MINING IN INDIA? - DIPESH DIPU
 In August 2019, Government of India announced its approval for Foreign Direct Investment (FDI) for coal mining, processing and sale. Not that FDI in coal mining sector was new, but novelty in that was that government now permitted foreign ownership of coal mines for commercial sale of coal produced from such mines. He justifications provided by government sources included need for competition in a sector that has been traditionally dominated by government-owned companies Coal India Limited and Singareni Collieries Company Limited; need for enhanced production as here has been shortfall in meeting demand; and, need for newer technologies that may bring in sustainability to coal mining. These indeed are commendable objectives and opening up the sector for foreign participation may certainly be considered a step in the right direction. However, public policy needs to be grounded in realism, and the reality of attractiveness of commercial coal mining in India does not bode well for foreign participation.
The response of government-owned companies for coal blocks on offer for allotment for commercial coal mining was announced in early August 2019 provides the evidence. Nine coal blocks were put on offer for sale of coal in markets and the eligibility for these were restricted to government-owned companies including the state government-owned ones. There were, however, only three coal blocks[1] that received applications by NMDC Limited, Jharkhand State Mineral Development Corporation and Madhya Pradesh State Mining Corporation. This lukewarm response may indicate towards the market sentiments for commercial coal mining in India. It must also be considered here that the coal blocks for allotment for government-owned companies do not have the two-stage auction based bidding for winning the blocks and, thus, the pay-out required to win these coal blocks may be lower in comparison to coal blocks put out for auctions. So, even with lower additional pay-out to government in the form of premium the coal blocks have not found many takers. There may be several underlying economic reasons, which are amplified for foreign participants, and thus, require consideration to evaluate if this approval for FDI in commercial coal mining would have any impact and if it would meet its stated objectives.
The first and the foremost is the economic feasibility of these mines. The foreign, and indeed any private company, would have to participate in auction process for winning a coal block, and commit to a competitive premium to access the resources. This has been an impediment for private sector participation in India, given the evidence of coal blocks awarded for captive consumption in power and non-regulated sectors that include cement, steel and other approved end users. There seems to be some sanity dawning on participants on these auction with every successive rounds of auction, seen from the lower winning premiums, and hence, it may be expected that the trend may continue. Nonetheless, the premium will certainly erode the margins for commercial miners, the extent of this erosion would be a function of degree of competition for the coal blocks. The margins are also likely to be uncertain in view of the price volatility of coal, which in Indian market is pegged with CIL price and a certain premium that reflects typically the discount that IL prices tend to have over energy-equivalent international prices. This uncertainty of prices is likely to be confounded by the uncertainty in demand-supply gap that these commercial miners are required to fulfil. There has been a shortfall in supply in the recent past, evident from the rise in coal imports in the last two years even with the stated objective of the government to reduce coal imports. This may present itself as an opportunity. However, the question is whether this shortfall is likely to sustain, and thus, create a marketplace for commercial miners. With a slump in thermal power generation and nearly absent pipeline of new coal based projects, this assumption may be quite a big one to make and decide in favour of making foreign direct investment in Indian coal mining.
Other important risks pertain to project execution. There have been several impediments in coal mining project implementations, such as procurement of licenses and permits, acquisition of land and rehabilitation and resettlement of project affected people. These, apart from the procedural challenges, involve risk of reputation. Business practices on all these accounts in mining sector have often been marred with controversies and have led to perceptions of externalities in these processes having significant influence on the outcomes. Foreign participants in Indian mining have been wary of these, and hence, have had little success to show even though they have had offices and a few exploration and contract mining projects in India. Apart from reputation, the risks in procurement of licenses and land acquisition create the risks of project delays, which may then translate into cost escalations, thereby impacting project economics. Coal mining projects may have such challenges in attracting foreign direct investment.
There are challenges of talent shortage and financing as well. Innovative technologies that the foreign miners are likely to bring in India will require high quality geo-statisticians, geologists, mine planners and mining engineers. India does produce graduates in these areas of study but quantities do no necessarily reflect quality, which are further compounded by the brain drain of talent into other industries, primarily, information technology. Mining industry in general, and coal mining in particular, has not been able to retain relent in the last decade or so, with advent of opportunities for the smart geoscientists and engineers in alternate industries. Foreign mining companies may find this crippling.
There are challenges in financing too. Coal mining projects may have been good candidates for resource-based financing, but that has not happened on account of several factors, not the least of those being dominance of government-owned companies priding themselves on debt-free balance sheets, and the quality of geological information that may be inferior to global standards. The market for debt for coal mining then often reduces itself to equipment financing with the equipment being securitised to the lenders. Globally preferred model of equipment leasing is still in its relatively early stages of comprehension and acceptance in Indian mining. With limited options of raising finances, the higher degree of equity investments may also be a deterrent for foreign investors as the may have comparable projects competing for scarce capital.
Coal mining industry has been on a downward spiral globally. Foreign large miners have divested or are divesting their stakes in coal projects. Global bankers have committed themselves to not financing coal and coal based power projects. Insurance companies are shying away from coal projects too. The ecosystem for coal mining project execution is dying. Epitaphs are being written on coal and its demise is predicted by governments, investors and policy analysts wold over. But for the coal addiction of Asia, China and India in particular, the demise may have been sooner. Under such gloomy outlook for the industry, with coal mining companies filing for bankruptcies frequently, it would be tough to get these foreign companies to look at Indian destinations favourably. An industry staring at terminal decline may not witness new investors, and old ones that may have been facing severe challenges in their home countries to look out for opportunities in India.
Optimism at this point of time of foreign miners participating in Indian coal mining sector, that presents a challenging business environment, may be misplaced. Only when the government calls for applications for coal blocks for sale of coal with permitted participation for foreign direct investment that the final picture shall emerge.
By Dipesh Dipu
Energy, Natural Resources and Infrastructure Expert
This article originaly published on economictimes and Linkedin
If you believe an article violates your rights or the rights of others, please contact us.
|
|
Thursday, 25 January 24
THE RED SEA ESCALATION IMPLICATIONS ON GLOBAL SEABORNE TRADE - MARIA BERTZELETOU
In recent days, discussions have intensified about the potential impact on the seaborne trade and ton-miles due to the evolving dynamics of market ...
Thursday, 25 January 24
RED SEA SHIPPING DISRUPTIONS KEEP GEOPOLITICAL PREMIUM FOR COMMODITIES - FITCH RATINGS
Shipping disruptions and re-routing away from the Red Sea will maintain the geopolitical premium in the main commodity markets, including for oil a ...
Friday, 19 January 24
INDONESIA TARGETS 710 MLN METRIC TONS COAL OUTPUT IN 2024 AFTER RECORD 2023 - REUTERS
Indonesia, a major thermal coal exporter, aims to produce 710 million metric tons of coal in 2024, its mining minister said on Monday, after postin ...
Friday, 19 January 24
DRUMMOND COLOMBIA COAL OUTPUT ROSE 7.1% IN 2023 - REUTERS
Coal production from miner Drummond’s Colombia operations rose 7.1% in 2023 to 29.5 million metric tons, while exports declined by 2.6% to 27 ...
Friday, 19 January 24
CHINA'S 2023 COAL OUTPUT HITS RECORD HIGH - REUTERS
China’s coal output reached a record high in 2023, data from the statistics bureau showed on Wednesday, amid an ongoing focus on energy secur ...
|
|
|
Showing 51 to 55 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- International Coal Ventures Pvt Ltd - India
- Edison Trading Spa - Italy
- PNOC Exploration Corporation - Philippines
- Indian Energy Exchange, India
- Asmin Koalindo Tuhup - Indonesia
- Aboitiz Power Corporation - Philippines
- Bhatia International Limited - India
- GAC Shipping (India) Pvt Ltd
- Bayan Resources Tbk. - Indonesia
- Jindal Steel & Power Ltd - India
- Directorate Of Revenue Intelligence - India
- LBH Netherlands Bv - Netherlands
- Merrill Lynch Commodities Europe
- Sojitz Corporation - Japan
- Parliament of New Zealand
- Krishnapatnam Port Company Ltd. - India
- Agrawal Coal Company - India
- Electricity Generating Authority of Thailand
- India Bulls Power Limited - India
- Eastern Energy - Thailand
- Vizag Seaport Private Limited - India
- Gujarat Sidhee Cement - India
- Carbofer General Trading SA - India
- Pendopo Energi Batubara - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Barasentosa Lestari - Indonesia
- Kumho Petrochemical, South Korea
- Indika Energy - Indonesia
- Mercator Lines Limited - India
- Singapore Mercantile Exchange
- Bhoruka Overseas - Indonesia
- Eastern Coal Council - USA
- Coastal Gujarat Power Limited - India
- South Luzon Thermal Energy Corporation
- Kobexindo Tractors - Indoneisa
- Salva Resources Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Chamber of Mines of South Africa
- Riau Bara Harum - Indonesia
- Planning Commission, India
- Dalmia Cement Bharat India
- Baramulti Group, Indonesia
- Banpu Public Company Limited - Thailand
- Bukit Makmur.PT - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Australian Coal Association
- Kohat Cement Company Ltd. - Pakistan
- Energy Link Ltd, New Zealand
- SN Aboitiz Power Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- Straits Asia Resources Limited - Singapore
- Bangladesh Power Developement Board
- Makarim & Taira - Indonesia
- Indogreen Group - Indonesia
- Central Java Power - Indonesia
- Mercuria Energy - Indonesia
- Aditya Birla Group - India
- GVK Power & Infra Limited - India
- Meralco Power Generation, Philippines
- Meenaskhi Energy Private Limited - India
- Maheswari Brothers Coal Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Australian Commodity Traders Exchange
- Madhucon Powers Ltd - India
- IEA Clean Coal Centre - UK
- Global Coal Blending Company Limited - Australia
- Tata Chemicals Ltd - India
- Antam Resourcindo - Indonesia
- Indo Tambangraya Megah - Indonesia
- Mintek Dendrill Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Miang Besar Coal Terminal - Indonesia
- Binh Thuan Hamico - Vietnam
- Intertek Mineral Services - Indonesia
- Star Paper Mills Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Renaissance Capital - South Africa
- Anglo American - United Kingdom
- Wilmar Investment Holdings
- Independent Power Producers Association of India
- Larsen & Toubro Limited - India
- Ministry of Finance - Indonesia
- Malabar Cements Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- SMG Consultants - Indonesia
- SMC Global Power, Philippines
- Maharashtra Electricity Regulatory Commission - India
- San Jose City I Power Corp, Philippines
- Samtan Co., Ltd - South Korea
- Videocon Industries ltd - India
- Semirara Mining Corp, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Indian Oil Corporation Limited
- Bulk Trading Sa - Switzerland
- Power Finance Corporation Ltd., India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- The University of Queensland
- London Commodity Brokers - England
- Trasteel International SA, Italy
- PTC India Limited - India
- Borneo Indobara - Indonesia
- Price Waterhouse Coopers - Russia
- Grasim Industreis Ltd - India
- Uttam Galva Steels Limited - India
- Rashtriya Ispat Nigam Limited - India
- Cement Manufacturers Association - India
- White Energy Company Limited
- Holcim Trading Pte Ltd - Singapore
- Timah Investasi Mineral - Indoneisa
- ASAPP Information Group - India
- Metalloyd Limited - United Kingdom
- Mjunction Services Limited - India
- PowerSource Philippines DevCo
- Alfred C Toepfer International GmbH - Germany
- Rio Tinto Coal - Australia
- Kalimantan Lumbung Energi - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Central Electricity Authority - India
- Electricity Authority, New Zealand
- Interocean Group of Companies - India
- Africa Commodities Group - South Africa
- Chettinad Cement Corporation Ltd - India
- Jaiprakash Power Ventures ltd
- Petron Corporation, Philippines
- Orica Australia Pty. Ltd.
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ambuja Cements Ltd - India
- Globalindo Alam Lestari - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Savvy Resources Ltd - HongKong
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Goldman Sachs - Singapore
- Bharathi Cement Corporation - India
- OPG Power Generation Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Orica Mining Services - Indonesia
- Coalindo Energy - Indonesia
- Attock Cement Pakistan Limited
- Tamil Nadu electricity Board
- Siam City Cement - Thailand
- Therma Luzon, Inc, Philippines
- Global Business Power Corporation, Philippines
- MS Steel International - UAE
- Romanian Commodities Exchange
- Kepco SPC Power Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Port Waratah Coal Services - Australia
- Parry Sugars Refinery, India
- Lanco Infratech Ltd - India
- Bhushan Steel Limited - India
- Thai Mozambique Logistica
- Minerals Council of Australia
- Economic Council, Georgia
- Cigading International Bulk Terminal - Indonesia
- Manunggal Multi Energi - Indonesia
- New Zealand Coal & Carbon
- Toyota Tsusho Corporation, Japan
- Latin American Coal - Colombia
- TeaM Sual Corporation - Philippines
- Gujarat Mineral Development Corp Ltd - India
- Simpson Spence & Young - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Jorong Barutama Greston.PT - Indonesia
- Sical Logistics Limited - India
- Ceylon Electricity Board - Sri Lanka
- ICICI Bank Limited - India
- Gujarat Electricity Regulatory Commission - India
- Deloitte Consulting - India
- Bukit Baiduri Energy - Indonesia
- European Bulk Services B.V. - Netherlands
- Thiess Contractors Indonesia
- Kaltim Prima Coal - Indonesia
- The State Trading Corporation of India Ltd
- Marubeni Corporation - India
- Indonesian Coal Mining Association
- Medco Energi Mining Internasional
- Vedanta Resources Plc - India
- Essar Steel Hazira Ltd - India
- Ministry of Mines - Canada
- Sarangani Energy Corporation, Philippines
- CNBM International Corporation - China
- Global Green Power PLC Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Wood Mackenzie - Singapore
- PetroVietnam Power Coal Import and Supply Company
- Sindya Power Generating Company Private Ltd
- Sree Jayajothi Cements Limited - India
- Energy Development Corp, Philippines
- Ministry of Transport, Egypt
- Altura Mining Limited, Indonesia
- Oldendorff Carriers - Singapore
- Karaikal Port Pvt Ltd - India
- VISA Power Limited - India
- AsiaOL BioFuels Corp., Philippines
- Georgia Ports Authority, United States
- Directorate General of MIneral and Coal - Indonesia
- Standard Chartered Bank - UAE
- Xindia Steels Limited - India
- Sakthi Sugars Limited - India
- McConnell Dowell - Australia
- Heidelberg Cement - Germany
- Leighton Contractors Pty Ltd - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Siam City Cement PLC, Thailand
- IHS Mccloskey Coal Group - USA
- GMR Energy Limited - India
- Posco Energy - South Korea
- Coal and Oil Company - UAE
- Sinarmas Energy and Mining - Indonesia
- Commonwealth Bank - Australia
- The Treasury - Australian Government
- Ind-Barath Power Infra Limited - India
- Kideco Jaya Agung - Indonesia
|
| |
| |
|
