Coal India subsidiary to outsource drilling work

ET reported that Central Mine Planning and Design Institute Ltd, the only agency to undertake exploration of coal reserves in the country is outsourcing about 10 million meters drilling task to other companies. This move will help to speed up production of coal for power and steel sectors.

A coal ministry official said that the subsidiary of Coal India Ltd has been asked to step up its exploration and drilling activities to meet future demands of coal.

A senior official in the coal ministry said that "The India government is taking measures to strengthen CMPDIL. It will double its in house drilling capacity to 4 million meters per annum and outsource most of the task to public and private sector companies."

Since June the company has already outsourced 3.87 million meters drilling task for detailed exploration of eight blocks. The blocks will either be developed by CIL or the ministry will allot them as captive blocks.

Mr B Dayal GM of CMPDIL said that "Mineral Exploration Corp Ltd, a public sector undertaking under ministry of mines is one of the major vendors, while rest has been tendered to various private players including Maitrey group and Mining Associate."

He said that the company is in the process of finalizing another deal for outsourcing 6.5 million meters drilling with private players. It is likely that the exploration would be carried out in another 3 to 4 years.

Meanwhile the company is likely to invest INR 1500 crore in replacing the old drilling machines and bringing new technology to enhance its drilling capacity.

Moreover, the company would have to work on resource evaluation and documentation for investment and exploitation decisions as more coal mines develop and begin production in Eleventh Plan Period. India Government has also asked CMPDI to increase its mapping capacities to match the spiraling demand for raw materials. Besides, the company would also have to recruit more qualified, trained and experienced professionals for its exploration activities.

In the Eleventh Plan period the PSU plans to carry out 23.44 mullion metres of drilling in the through in house drills as well as outsourcing services on the back of soaring domestic demand of coal.

Essel Mining eyeing overseas assets

BL reported that Essel Mining and Industries Limited is looking to acquire overseas mining assets during the current economic downturn.

Mr Ravi Kastia MD of Essel Mining said that “The global meltdown in commodity prices has also brought down the mining asset value substantially. We expect such asset prices to rule at low levels for the next 12 months to 18 months and the company is looking forward to grab the opportunity. e will look forward to destinations having low country risks such as Australia and Canada for such acquisitions.”

Mr Kastia said that while the meltdown in spot prices of iron ore has affected the top line during the last 3 weeks, an upward correction in prices was expected.

He said that “Barring the aberrations of the last few years, spot iron ore prices always ruled marginally below the benchmark Australian prices. Following the meltdown, spot prices are now ruling 30% below the benchmark. As Chinese demand continues, we are expecting spot prices to firm up from its present levels.”

As per report, the INR 3,000 crore company has 8 million tonnes existing iron ore mining operations in Orissa in India and has recently expressed its interest to Coal India for development and operation of high capacity underground mines. Essel exports nearly half of its total production at spot prices.”

Indian coal SPV mulls global asset buys amid financial crisis

The Financial Express reported that the global economic meltdown has come as a blessing to Coal Ventures International Limited with the prices of coal assets coming down across the globe. The Mega SPV of Coal India Limited, NTPC Limited, Rashtriya Ispat Nigam Limited and National Mineral Corporation is now trying to acquire Appalachia coal block in the US, which till recently had been pricing out CVIL’s USD 2.7 billion war chest.

CVIL has been scouting for coal blocks abroad to secure coking coal supplies for existing as well as new steel projects. But its USD 2.7 billion corpus was dwarfed because of sharp increase of coking coal prices for which it could not go for acquisitions aggressively.

Mr PS Bhattacharyya chairman of CIL said that the prices of coal assets have become one-third of what it was being quoted before the meltdown. CVIL is trying to take full advantage of this current situation and is aggressively hunting for coal assets in Canada and Indonesia, besides the US.

But as a commodity, coal will continue to have its demand worldwide and prices of coal assets will start rising shortly. A team, comprising the Union coal minister of state Mr Santosh Bagrodia, Mr Partha Bhattacharyya and other senior CVIL officials recently visited the US and has initiated talks on acquiring the Appalachian coal mines.

If CVIL acquires the US mine, it might be its second acquisition after Mozambique. A 6 member technical team visited Mozambique in January and identified a 230 square kilometer block of which a 20 square kilometer patch is assumed to have coal reserves. CVIL is currently conducting a techno feasibility study on it.

Mr Bhattacharyya said that there are several mines in the Appalachian mountain region, which is in the east of the US and acquiring that would benefit CVIL to a large extent. Each mine is supposed to have a reserve of over 40 million tonnes. He said that “Before acquiring the coal mines, we have to ensure that the metallurgical coal available there suits Indian steel plants’ requirement.”

The team has also initiated talks with 6 merchant bankers Royal Bank of Canada, Royal Bank of Scotland, Union Bank of Switzerland, Merill Lynch, Citi Bank and Deutche Bank, to help them scout for coal assets in the US and Canada.

CIL to meet coal supply targets to power firms

It is reported Coal India would meet its target of supplying 292 million tonnes coal to domestic power firms in 2008-09.

Mr PS Bhattacharyya chairman of Coal India said in a news conference that "We are all set to meet supply commitments to power utilities." A coal shortage has forced India to delay plans to expand its electricity production by nearly 50% impending growth plans.

Official said that in April to September period, the coal miner supplied 138.7 million tonnes to power utilities up from 131.45 million tonnes in the same period a year ago.

Mr Bhattacharyya said that from October 1st to October 22nd it supplied 17.84 million tonnes of coal to power firms to meet shortages because of rains and logistic problems. He said that Coal India, aiming at 405 million tonnes of coal production and imports of about 4 million tonnes in 2008-09 also plans to list its shares in stock exchanges in 3 years.

BEML JV close to finalizing MAMC revival plan

Project today reported that JV of BEML, Coal India and Damodar Valley Corporation are close to finalizing the proposal for asset takeover and reopening of Durgapur based Mining & Allied Machineries Corporation. The package will shortly be placed before the Calcutta High Court for due approval.

In the proposed facility, BEML will hold 48% controlling stake whereas CIL and DVC will hold 26% participatory interest each. The State Bank of India has agreed to restrict the total liability to INR 120 crore down from approximately INR 430 crore. Operation is expected to start in the H1 of 2008-09.

Coal India has more coal for e-auction than demand - Total coal allocated at e-auctions during the first five months is 20.10 million tonnes

The largest coal mining company of the country, Coal India Ltd (CIL), has more coal to offer through e-auctions than the actual demand, according to a company official. "The total coal allocated at e-auctions during the first five months (April to August) of the current fiscal is 20.10 million tonnes, against an offered quantity of 50.29 million tonnes," the source said requesting anonymity. This indicates that the coal major has more stocks to offer than the actual demand, which, however, is rising, the official said. The situation was just the opposite last fiscal, when 13.05 million tonnes were allotted for e-marketing, against an allocated of 10 million tonnes.


The demand rose after CIL reduced the floor price of coal sold through e-auction from 30 percent over and above the notified price to five percent. CIL introduced e-auctions to make coal available to non-core sectors and traders. The coal for e-auctions is sourced from the subsidiaries of CIL - Eastern Coalfields, Bharat Coking Coal, Central Coalfields, Northern Coalfields, Western Coalfields, South Eastern Coalfields, Mahanadi Coalfields and North Eastern Coalfields.

Coal shortage to continue in India

The shortage of coal will continue in India in near future. Ernst & Young (E&Y) has prepared a plan on proper supply of coal in the domestic market. It has recommended increase in the domestic coal production and contract mining to tame the shortage. It has also stressed the need of inclusion of private sector in the mining process along with foreign direct investment.

The report is released by Power Minister Sushilkumar Shinde at the India Coal Summit 2008 under the title ‘Coal — unearthing its potential in India’. The report has forecasted increase in domestic production by 680 million tonnes by 2012. The demand for fuel will increase in the near future to 10 percent. The report has pointed out that the demand would be balanced through import of fuel by 2012

CIL chairman and managing director Partha Bhattacharya said the demand for coal is increasing in the market. The company would import 4 million tonnes (MT) of coal besides increasing the production capacity.

Global warming concerns may blunt India's coal edge

The coal advantage that India and China have, would be offset by global warming concerns over the usage of the cheaper fossil fuel. According to a report by Standard & Poors, China accounts for 40% of total world coal usage and has already overtaken the US in carbon emissions as a result.

The report says India and other emerging Asian economies have an advantage that they depend more on coal and less on oil. “Although liquids are 37% of world energy production, they are only 29% for non-OECD Asian production. Coal is 55% of current Asian energy production compared to 27% of the world,” the report said. Although China is likely to increase nuclear production eight-fold by 2030, it will still depend largely on coal.

According to the US Energy Information Agency (EIA), non-OECD Asian demand will rise at 3.2% annually to 2030, a total rise of 119%. About half of the increased usage is expected to come from coal; by 2030 Asia will use nearly double the amount of coal the OECD uses. “But, although the use of liquids will rise slightly less than total energy use, non-OECD Asia will still account for 73% of rise in oil use over the period.”.

Developed countries in Asia will, however, record subdued growth in demand, which is expected to rise by only 0.7% per year. Japan will remain one of the world’s most energy-efficient nations. “With population growth negative and GDP growth soft, energy demand will be nearly flat, up an average of only 0.1% per year. Korea, Australia and New Zealand, however, will still increase energy usage over the period,” the report said.

According to S&P, India is an inefficient user of energy. The rating agency has highlighted that the practice of controlling electricity and petrol prices has left the country’s trade position exposed and made the overall energy efficiency lower.