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, 26 September 19
INDIA INCREASES ITS ANNUAL COAL PRODUCTION BY 2.7% PER YEAR FROM 850 MILLION SHORT TONS IN 2018 TO 2 BILLION SHORT TONS BY 2050 - EIA
Worldwide coal production holds steady at about 8 billion short tons, or 160 quadrillion British thermal units (Btu), per year through 2040. Inc ...
Wednesday, 25 September 19
SHIPPING MARKET INSIGHT - INTERMODAL
In the past five months there has been significant activity in the asset market with the dry bulk segment being by far the most volatile in terms o ...
Tuesday, 24 September 19
9TH ANNUAL SUPPLY CHAIN INNOVATION SUMMIT 2019 ASIA PACIFIC
Summit: 9th Annual Supply Chain Innovation Summit 2019 Asia Pacific
Host: Ace Events
Website: http: ...
Monday, 23 September 19
SUPRAMAX: THE ASIAN ARENA IT WAS A SLOW START, BUT DEMAND INCREASED AS THE WEEK WENT ON - BALTIC BRIEFING
Capesize
The market trended down over this past week, breaking the market out of its upward trending range. While the market traded sideways at ...
Monday, 23 September 19
CHINA RECORDS SLOWER GROWTH IN COAL PRODUCTION - XINHUA
The growth of China’s raw coal production slowed down in August, data from the National Bureau of Statistics (NBS) showed.
Aro ...
|
|
|
Showing 1326 to 1330 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Sinarmas Energy and Mining - Indonesia
- Orica Mining Services - Indonesia
- Orica Australia Pty. Ltd.
- Uttam Galva Steels Limited - India
- Wood Mackenzie - Singapore
- Coal and Oil Company - UAE
- Planning Commission, India
- Bayan Resources Tbk. - Indonesia
- Sarangani Energy Corporation, Philippines
- Medco Energi Mining Internasional
- South Luzon Thermal Energy Corporation
- Indian Energy Exchange, India
- The State Trading Corporation of India Ltd
- Bahari Cakrawala Sebuku - Indonesia
- Therma Luzon, Inc, Philippines
- Indika Energy - Indonesia
- Grasim Industreis Ltd - India
- Bangladesh Power Developement Board
- Minerals Council of Australia
- Eastern Coal Council - USA
- Asmin Koalindo Tuhup - Indonesia
- Sojitz Corporation - Japan
- Videocon Industries ltd - India
- Intertek Mineral Services - Indonesia
- Parry Sugars Refinery, India
- Jindal Steel & Power Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Directorate Of Revenue Intelligence - India
- Carbofer General Trading SA - India
- Neyveli Lignite Corporation Ltd, - India
- New Zealand Coal & Carbon
- Kapuas Tunggal Persada - Indonesia
- Mintek Dendrill Indonesia
- Pendopo Energi Batubara - Indonesia
- Salva Resources Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Electricity Generating Authority of Thailand
- International Coal Ventures Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Wilmar Investment Holdings
- Goldman Sachs - Singapore
- Australian Commodity Traders Exchange
- Power Finance Corporation Ltd., India
- Sindya Power Generating Company Private Ltd
- Anglo American - United Kingdom
- Eastern Energy - Thailand
- Ministry of Finance - Indonesia
- VISA Power Limited - India
- PTC India Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Ministry of Mines - Canada
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Maheswari Brothers Coal Limited - India
- Meralco Power Generation, Philippines
- Georgia Ports Authority, United States
- Posco Energy - South Korea
- Price Waterhouse Coopers - Russia
- Indogreen Group - Indonesia
- Tata Chemicals Ltd - India
- Aboitiz Power Corporation - Philippines
- Gujarat Electricity Regulatory Commission - India
- Mjunction Services Limited - India
- Attock Cement Pakistan Limited
- Bharathi Cement Corporation - India
- Commonwealth Bank - Australia
- Oldendorff Carriers - Singapore
- Jaiprakash Power Ventures ltd
- Kartika Selabumi Mining - Indonesia
- Marubeni Corporation - India
- Ceylon Electricity Board - Sri Lanka
- Interocean Group of Companies - India
- Merrill Lynch Commodities Europe
- Dalmia Cement Bharat India
- Central Java Power - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Port Waratah Coal Services - Australia
- Energy Development Corp, Philippines
- Toyota Tsusho Corporation, Japan
- Singapore Mercantile Exchange
- CIMB Investment Bank - Malaysia
- Mercuria Energy - Indonesia
- Coastal Gujarat Power Limited - India
- Bhushan Steel Limited - India
- PetroVietnam Power Coal Import and Supply Company
- McConnell Dowell - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- India Bulls Power Limited - India
- Straits Asia Resources Limited - Singapore
- Global Business Power Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Deloitte Consulting - India
- Globalindo Alam Lestari - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Vedanta Resources Plc - India
- Global Green Power PLC Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Ind-Barath Power Infra Limited - India
- Barasentosa Lestari - Indonesia
- Standard Chartered Bank - UAE
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Trasteel International SA, Italy
- Latin American Coal - Colombia
- PNOC Exploration Corporation - Philippines
- Electricity Authority, New Zealand
- Central Electricity Authority - India
- Formosa Plastics Group - Taiwan
- Economic Council, Georgia
- Energy Link Ltd, New Zealand
- Miang Besar Coal Terminal - Indonesia
- Siam City Cement PLC, Thailand
- Mercator Lines Limited - India
- Tamil Nadu electricity Board
- Cigading International Bulk Terminal - Indonesia
- GVK Power & Infra Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Romanian Commodities Exchange
- Cement Manufacturers Association - India
- ICICI Bank Limited - India
- The University of Queensland
- Kideco Jaya Agung - Indonesia
- San Jose City I Power Corp, Philippines
- TeaM Sual Corporation - Philippines
- Malabar Cements Ltd - India
- PowerSource Philippines DevCo
- Leighton Contractors Pty Ltd - Australia
- White Energy Company Limited
- Kobexindo Tractors - Indoneisa
- Indo Tambangraya Megah - Indonesia
- IHS Mccloskey Coal Group - USA
- Manunggal Multi Energi - Indonesia
- Sree Jayajothi Cements Limited - India
- Thiess Contractors Indonesia
- Baramulti Group, Indonesia
- Binh Thuan Hamico - Vietnam
- Savvy Resources Ltd - HongKong
- Larsen & Toubro Limited - India
- Ministry of Transport, Egypt
- Kepco SPC Power Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Bulk Trading Sa - Switzerland
- Rio Tinto Coal - Australia
- Riau Bara Harum - Indonesia
- LBH Netherlands Bv - Netherlands
- TNB Fuel Sdn Bhd - Malaysia
- Petrochimia International Co. Ltd.- Taiwan
- Aditya Birla Group - India
- SN Aboitiz Power Inc, Philippines
- Altura Mining Limited, Indonesia
- Banpu Public Company Limited - Thailand
- Petron Corporation, Philippines
- Vizag Seaport Private Limited - India
- SMC Global Power, Philippines
- Thai Mozambique Logistica
- Chettinad Cement Corporation Ltd - India
- Heidelberg Cement - Germany
- Billiton Holdings Pty Ltd - Australia
- London Commodity Brokers - England
- Edison Trading Spa - Italy
- Bank of Tokyo Mitsubishi UFJ Ltd
- Australian Coal Association
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Africa Commodities Group - South Africa
- Global Coal Blending Company Limited - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- IEA Clean Coal Centre - UK
- Bhatia International Limited - India
- Metalloyd Limited - United Kingdom
- Gujarat Mineral Development Corp Ltd - India
- Independent Power Producers Association of India
- Offshore Bulk Terminal Pte Ltd, Singapore
- ASAPP Information Group - India
- Lanco Infratech Ltd - India
- European Bulk Services B.V. - Netherlands
- The Treasury - Australian Government
- GMR Energy Limited - India
- Gujarat Sidhee Cement - India
- Makarim & Taira - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- GAC Shipping (India) Pvt Ltd
- Agrawal Coal Company - India
- Coalindo Energy - Indonesia
- Karaikal Port Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Xindia Steels Limited - India
- Timah Investasi Mineral - Indoneisa
- Chamber of Mines of South Africa
- Essar Steel Hazira Ltd - India
- Siam City Cement - Thailand
- Semirara Mining and Power Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Renaissance Capital - South Africa
- GN Power Mariveles Coal Plant, Philippines
- CNBM International Corporation - China
- Sakthi Sugars Limited - India
- Iligan Light & Power Inc, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Kaltim Prima Coal - Indonesia
- Sical Logistics Limited - India
- Madhucon Powers Ltd - India
- Star Paper Mills Limited - India
- Ambuja Cements Ltd - India
- Bukit Makmur.PT - Indonesia
- Samtan Co., Ltd - South Korea
- Indian Oil Corporation Limited
- Indonesian Coal Mining Association
- Borneo Indobara - Indonesia
- Simpson Spence & Young - Indonesia
- Antam Resourcindo - Indonesia
- AsiaOL BioFuels Corp., Philippines
- OPG Power Generation Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Parliament of New Zealand
- SMG Consultants - Indonesia
- MS Steel International - UAE
|
| |
| |
|
