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Coal India agrees to higher penalty on lower coal supply

Coal India Ltd. said that it has agreed to a higher penalty for the Fuel Supply Agreements (FSAs) to be signed with power producers which have commissioned units after March 30, 2009.The state-run coal producer will pay 1.5% penalty for supplies below 80% and up to 65%, Chairman S. Narsing Rao was quoted as saying today.

Coal India will pay 5% penalty for supplies below 65% of FSAs and up to 60%; 10% penalty for supplies below 60% and up to 55%, Rao added. The company will pay 20% penalty for supplies below 55% and up to 50%; 40% penalty for supplies below 50% of fuel supply agreement.

Coal India will supply coal at 80% trigger level, which would be a mix of indigenous and imported coal.

Rao said that the company's Board of Directors has agreed in-principle for pool pricing of coal.

Rao said that if all players agree to pay higher cost, then CIL would have no objection to price-pooling. It cannot be done on a case to case basis, and it will have to be for the entire sector, he said.

Initially, Coal India would import coal via MMTC and STC. Later, the company would also start importing coal by itself, Rao said.

Moody's lowers Tata Steel UK's ratings to B3

Moody's Investors Service has downgraded the corporate family rating of Tata Steel UK Holdings Limited ("TSUKH") to B3 from B2, and its EUR3.4 billion term loan facility and EUR690 million revolving credit facility to B3/LGD 3(49%) ratings from B2/LGD 3(49%). The rating outlook remains negative.

At the same time Moody's has changed the outlook on the Ba3 corporate family rating of India-based Tata Steel Limited ("TSL") to negative from stable.

"The downgrade of TSUKH's ratings reflects our expectation of further weakness in the operating environment facing the European steel industry, for which Moody's has a negative outlook," says Alan Greene, a Moody's VP and Senior Credit Officer. "The weak industry fundamentals in Europe, driven mainly by the depressed economic environment in the region, are raising significant challenges for TSUKH, and will likely lead to slower recovery in its operating and financial profile," says Greene, adding,"as such, TSUKH's debt coverage metrics are no longer consistent with the previous B2 rating."

"The change in TSL's outlook to negative also considers our view that steel supply/demand fundamentals in India will soften, as the Indian economy undergoes a period of slower growth, and domestic capacity continues to be added, albeit the country remains a net importer of steel," says Greene.

In Focus Stories

NMDC orders complete steelmaking plant from Siemens

A consortium led by Siemens VAI Metals Technologies received an order from the Government of India’s fully owned public enterprise “National Mineral Development Corporation Limited (NMDC)” for the supply of a complete LD (BOF) steelmaking plant. The order volume for the consortium amounts to approximately 290 million Euro.

The steel works will be built at Nagarnar in the state of Chhattisgarh as part of an integrated production complex with an annual capacity of approximately three million tons of steel. The project is scheduled for completion by mid-2015. NMDC had already ordered a sintering plant from Siemens for the Nagarnar project site.

The integrated steelmaking plant of NMDC in Nagarnar is part of a national program to increase the steel production capacity in India. Siemens will be in charge of the design and the “turnkey” supply of the steel plant, including two LD (BOF) converters, two 175-ton desulfurization plants (HMDS), two ladle furnaces (LF), and a RH degassing plant. The “turnkey” project scope of supply also includes the material handling systems, the primary and secondary dedusting systems, a gas recovery plant and a water treatment plant.

The project will be executed in collaboration with the Indian Siemens VAI Metals Technologies Pvt. Ltd. and the consortium members - SEW Infrastructure Ltd. and Mukand Engineers Ltd., who will be responsible for the civil works, the manufacturing and the erection of the steel structures, as well as for general erection of equipment. Siemens will supply the complete basic (Level 1) and process automation (Level 2). The installation of state-of-the-art automation and process technology will allow NMDC to produce high-quality steel at low specific raw material and energy consumption. At the same time, the plant will comply with environmental standards in India as well as in Europe.

Domestic News

Govt to promote clean coal technology

The Government has taken various steps including notifying the activities like coal gasification including Underground Coal Gasification (UCG) and Surface Fasificaiton of coal, coal Liquefaction, Washing of coal as one of the end uses under Coal Mines (Nationalization) Act 1974 to promote clean coal technologies like coal washing, development of Underground Coal Gasification (UCG), Surface coal gasification and Coal Liquefaction or coal to Liquids (CTL) and to facilitate allotment of blocks to the potential entrepreneurs.

Further, under a separate policy for development of Coal Bed Methane (CBM)/Coal Mine Methane (CMM) has been put in place for extraction and exploitation of Methane gas from coal seams. This was informed by Pratik Prakashbapu Patil, Minister of State in the Ministry of Coal while replying a written question in Lok Sabha today.

The minister said that the Government and UNDP/Global Enviornment Facility funded Coalbed Methane Demonstration & Utilization project at Moonidih mine of Bharat Coking Coal Ltd. (BCCL) has been successfully implemented by CMPDI & BCCL, which has proved the efficacy of the process in the Indian geo-mining conditions. The methane gas extracted is being used to run 500 KW electricity generation.

Coal India plans to acquire coal mines in South Africa: reports

Coal India Ltd is planning to acquire coal mines abroad by initiating the process of forming a subsidiary in South Africa, according to reports.

Reports stated that this development follows CIL signing pact with the Limpopo province of South Africa, for jointly identifying, exploring and developing coal mines.

The company has invited bids for appointing consultants to help it form a wholly-owned subsidiary in Africa, report says.

SAIL Q1 net profit at Rs. 6.96bn

SAIL has reported a net profit of Rs. 6.96bn on net sales of Rs. 106.41bn for the fiscal first quarter ended June 30, 2012.

The company has suffered a forex loss of Rs. 2.57bn in Q1 FY13 vs a forex loss of Rs. 116mn in the year-ago period.

SAIL to outsource development of two virgin mines

Global News

China cuts rare earth mine production

China is planning to cut production of rare earths -- minerals vital for technology makers worldwide -- by 20%, according to reports.

Reports stated that Rare earths are 17 minerals with magnetic and conductive properties that are used in most of today's electronic devices, including flat-screen televisions, smart phones, hybrid cars and weapons.

China changed production rules, which will close down one-third of the nation's 23 mines and about half of 99 smelting companies, says report.