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.
|
|
Wednesday, 20 November 19
AUSTRALIA'S NEW HOPE POSTS 66% SURGE IN Q1 SALEABLE COAL OUTPUT - REUTERS
Australian coal producer New Hope Corp Ltd reported on Tuesday a 66% jump in saleable coal production in the first quarter, as output ramped up at ...
Wednesday, 20 November 19
THE IMO AND THE PRICE OF GAS OR THE IMPACT OF THE INTERNATIONAL MARITIME ORGANISATION'S SULPHUR 2020 LIMIT FOR MARINE FUEL OIL ON THE PRICE OF GAS - KING & SPALDING
The main bunker fuel for ships is High Sulphur Fuel Oil (HSFO, with sulphur up to 3.5% m/m (mass by mass)). This will all change on 1 January 2020 ...
Wednesday, 20 November 19
SHIPPING MARKET INSIGHT - INTERMODAL
While the market expects the next OPEC meeting, there are still no clear signs indicating that the organization will keep supporting oil prices, wh ...
Monday, 18 November 19
CHINA RECORDS STABLE COAL PRODUCTION IN JAN-OCT: XINHUA
China’s raw coal output registered stable growth in the first 10 months, while its imports remained robust, official data showed.
...
Monday, 18 November 19
SUPRAMAX: IN THE INDONESIAN COAL BUSINESS, A 58KDWT VESSEL FIXED DELIVERY PHILIPPINES, REDELIVERY INDIA AT CLOSE TO $8,000 - BALTIC BRIEFING
Capesize
For most of the week the rates were nudging up under a flurry of activity in the Pacific as levels for the West Australia to China C5 ...
|
|
|
Showing 1281 to 1285 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Maharashtra Electricity Regulatory Commission - India
- Riau Bara Harum - Indonesia
- SN Aboitiz Power Inc, Philippines
- Commonwealth Bank - Australia
- Bhatia International Limited - India
- Indogreen Group - Indonesia
- CNBM International Corporation - China
- Romanian Commodities Exchange
- Orica Australia Pty. Ltd.
- Maheswari Brothers Coal Limited - India
- Trasteel International SA, Italy
- Power Finance Corporation Ltd., India
- GN Power Mariveles Coal Plant, Philippines
- Deloitte Consulting - India
- Eastern Energy - Thailand
- Meenaskhi Energy Private Limited - India
- McConnell Dowell - Australia
- MS Steel International - UAE
- Price Waterhouse Coopers - Russia
- GVK Power & Infra Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Xindia Steels Limited - India
- Bayan Resources Tbk. - Indonesia
- IEA Clean Coal Centre - UK
- Siam City Cement PLC, Thailand
- Sojitz Corporation - Japan
- Ind-Barath Power Infra Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Electricity Authority, New Zealand
- Meralco Power Generation, Philippines
- Kaltim Prima Coal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Simpson Spence & Young - Indonesia
- Metalloyd Limited - United Kingdom
- Central Electricity Authority - India
- Australian Commodity Traders Exchange
- Thai Mozambique Logistica
- PTC India Limited - India
- Gujarat Sidhee Cement - India
- Indo Tambangraya Megah - Indonesia
- CIMB Investment Bank - Malaysia
- Jindal Steel & Power Ltd - India
- Cement Manufacturers Association - India
- Madhucon Powers Ltd - India
- Mjunction Services Limited - India
- Jorong Barutama Greston.PT - Indonesia
- The Treasury - Australian Government
- Vedanta Resources Plc - India
- TeaM Sual Corporation - Philippines
- Ministry of Transport, Egypt
- Anglo American - United Kingdom
- Baramulti Group, Indonesia
- Bangladesh Power Developement Board
- Energy Link Ltd, New Zealand
- VISA Power Limited - India
- PowerSource Philippines DevCo
- Indika Energy - Indonesia
- OPG Power Generation Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- GMR Energy Limited - India
- Toyota Tsusho Corporation, Japan
- Global Green Power PLC Corporation, Philippines
- The University of Queensland
- Kepco SPC Power Corporation, Philippines
- Indian Oil Corporation Limited
- Orica Mining Services - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kalimantan Lumbung Energi - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Posco Energy - South Korea
- Krishnapatnam Port Company Ltd. - India
- Altura Mining Limited, Indonesia
- Bukit Makmur.PT - Indonesia
- Singapore Mercantile Exchange
- Interocean Group of Companies - India
- Billiton Holdings Pty Ltd - Australia
- Borneo Indobara - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Goldman Sachs - Singapore
- Grasim Industreis Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Uttam Galva Steels Limited - India
- Timah Investasi Mineral - Indoneisa
- Kohat Cement Company Ltd. - Pakistan
- Rio Tinto Coal - Australia
- London Commodity Brokers - England
- Lanco Infratech Ltd - India
- Siam City Cement - Thailand
- Iligan Light & Power Inc, Philippines
- AsiaOL BioFuels Corp., Philippines
- Directorate Of Revenue Intelligence - India
- Dalmia Cement Bharat India
- Pendopo Energi Batubara - Indonesia
- LBH Netherlands Bv - Netherlands
- Bhushan Steel Limited - India
- Aditya Birla Group - India
- Coalindo Energy - Indonesia
- Bhoruka Overseas - Indonesia
- Global Coal Blending Company Limited - Australia
- Carbofer General Trading SA - India
- Bukit Asam (Persero) Tbk - Indonesia
- The State Trading Corporation of India Ltd
- Georgia Ports Authority, United States
- Alfred C Toepfer International GmbH - Germany
- Manunggal Multi Energi - Indonesia
- Global Business Power Corporation, Philippines
- Bharathi Cement Corporation - India
- PNOC Exploration Corporation - Philippines
- Medco Energi Mining Internasional
- Salva Resources Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Coastal Gujarat Power Limited - India
- Australian Coal Association
- Larsen & Toubro Limited - India
- ASAPP Information Group - India
- Attock Cement Pakistan Limited
- Makarim & Taira - Indonesia
- Minerals Council of Australia
- Gujarat Electricity Regulatory Commission - India
- Tata Chemicals Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Ambuja Cements Ltd - India
- Bulk Trading Sa - Switzerland
- Kapuas Tunggal Persada - Indonesia
- SMC Global Power, Philippines
- Wood Mackenzie - Singapore
- Kumho Petrochemical, South Korea
- Antam Resourcindo - Indonesia
- Sindya Power Generating Company Private Ltd
- Chamber of Mines of South Africa
- Semirara Mining and Power Corporation, Philippines
- Sakthi Sugars Limited - India
- Sinarmas Energy and Mining - Indonesia
- Petron Corporation, Philippines
- Energy Development Corp, Philippines
- European Bulk Services B.V. - Netherlands
- Sarangani Energy Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Indian Energy Exchange, India
- Karaikal Port Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Wilmar Investment Holdings
- Parliament of New Zealand
- Straits Asia Resources Limited - Singapore
- ICICI Bank Limited - India
- Port Waratah Coal Services - Australia
- Chettinad Cement Corporation Ltd - India
- Independent Power Producers Association of India
- Binh Thuan Hamico - Vietnam
- Miang Besar Coal Terminal - Indonesia
- India Bulls Power Limited - India
- Edison Trading Spa - Italy
- Sree Jayajothi Cements Limited - India
- Videocon Industries ltd - India
- Malabar Cements Ltd - India
- Kartika Selabumi Mining - Indonesia
- Central Java Power - Indonesia
- Heidelberg Cement - Germany
- Leighton Contractors Pty Ltd - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Formosa Plastics Group - Taiwan
- Indonesian Coal Mining Association
- Bank of Tokyo Mitsubishi UFJ Ltd
- Tamil Nadu electricity Board
- Jaiprakash Power Ventures ltd
- Globalindo Alam Lestari - Indonesia
- Standard Chartered Bank - UAE
- Samtan Co., Ltd - South Korea
- Bukit Baiduri Energy - Indonesia
- Agrawal Coal Company - India
- Star Paper Mills Limited - India
- New Zealand Coal & Carbon
- Marubeni Corporation - India
- Bahari Cakrawala Sebuku - Indonesia
- South Luzon Thermal Energy Corporation
- Eastern Coal Council - USA
- Electricity Generating Authority of Thailand
- Gujarat Mineral Development Corp Ltd - India
- Africa Commodities Group - South Africa
- Semirara Mining Corp, Philippines
- Renaissance Capital - South Africa
- Cigading International Bulk Terminal - Indonesia
- Planning Commission, India
- Pipit Mutiara Jaya. PT, Indonesia
- SMG Consultants - Indonesia
- Vizag Seaport Private Limited - India
- Sical Logistics Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Banpu Public Company Limited - Thailand
- Merrill Lynch Commodities Europe
- Intertek Mineral Services - Indonesia
- Coal and Oil Company - UAE
- Latin American Coal - Colombia
- Ministry of Mines - Canada
- IHS Mccloskey Coal Group - USA
- Ministry of Finance - Indonesia
- Mercator Lines Limited - India
- Parry Sugars Refinery, India
- Mercuria Energy - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- GAC Shipping (India) Pvt Ltd
- Mintek Dendrill Indonesia
- White Energy Company Limited
- International Coal Ventures Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Economic Council, Georgia
- San Jose City I Power Corp, Philippines
- Aboitiz Power Corporation - Philippines
- Kideco Jaya Agung - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Thiess Contractors Indonesia
- Savvy Resources Ltd - HongKong
|
| |
| |
|
