NEWS ANALYSIS
RAJESH DESAI
INFRASTRUCTURE
KNR order deals downsized
· KNR Constructions Ltd has informed BSE that the size of two road contracts has been downsized from Rs 580.17 crore to Rs 150 crore.The order awarded from Sadhbhav Engineering Ltd was for rehabilitation and upgradation of a road to two lanes with paved shoulders in Madhya Pradesh.
· The order requires KNR to execute and maintain Chhindwara-Linga-Umarnala-Saoner section of National Highway-26B over 86 km stretch. This includes Chhindwara bypass road between 23 and 29 km stretch.The company also had an order for another stretch of road between Multai up to Imlikhara over 77 km in Maharashtra. The project is to be completed in 36 months from the appointed date.
Give de-allocated mines to 12th Plan projects: Power Ministry
· The Power Ministry proposes to ask the Coal Ministry to de-allocate the captive coal blocks from projects that have not progressed to those that will be commissioned during the 12th Five-Year Plan period. This comes at a time when the Inter-Ministerial Group is reviewing progress and de-allocation of coal blocks awarded to private power, steel, sponge iron and cement companies. The Power Ministry is working out the number of such projects where this block re-jig can be done.
· The new capacity addition target during the 12th Plan period has been fixed at 88,425 MW. The Government has not planned any natural gas-based projects in the new Plan period because of non-availability of domestic gas. Of the 195 captive blocks allocated between 1993 and 2011, 79 mines have been given to private and public sector power companies.
· An Inter-Ministerial Group (IMG), headed by Additional Secretary at Coal Ministry Zohra Chatterji has recommended de-allocation of four blocks given to three private companies. The panel is again meeting on Friday to take up more cases. Currently, IMG is reviewing 29 captive coal blocks awarded to private companies.
METALS & MINING
4 coal blocks de-allocated; Ministerial group to meet again today
· Three little-known private companies — Castron Mining, Field mining & Ispat, and Domco Smokeless Fuel — are the first casualties of the coal block allocation scam. Based on the recommendations of an inter-ministerial group (IMG), the Coal Ministry today de-allocated four coal blocks, and encashed/issued warnings on the bank guarantees of two companies — Veerangana Steel and Monnet Ispat and Energy.
· While Castron Mining, Fieldmining and Ispat and Domco Smokeless Fuel face de-allocation, Veerangana Steel will have to forego nearly Rs 2.5 crore, a part of its bank guarantee for three blocks. Further, Monnet Ispat and Energy has been asked to deposit about Rs 90 crore of bank guarantee. If Monnet fails to commence production from the Utkal-B2 block in Odisha by March 2013, its bank guarantee will be forfeited.
· Barring Monnet, little is known about the other companies. They are neither listed on the bourses nor do they have an operational Web site. Monnet Ispat and Energy, is a subsidiary of the Monnet Group, promoted by Sandeep Jajodia. The IMG decided to de-allocate the blocks after it found that work on the end-use plants to be set up by these companies has not progressed. On the other hand, Veerangana and Monnet missed achieving certain milestones and thus face loss of bank guarantees.
· However, none of them has been named till now by the CBI in its first set of FIRs, alleging that companies have obtained coal blocks through false means. The agency is probing the allocation of 64 blocks. It is yet to be seen if the blocks given to big corporate houses and linked to politicians face de-allocation. Coal Ministry officials expect the IMG to recommend more mines for de-allocation and forfeiting of bank guarantee after it meets again on Friday.
· The panel has already met several times. It also gave one last hearing to mine-owners in a three-day marathon from September 6-8. A set of private companies, including Reliance Power, Jindal Steel Power Ltd, Tata Sponge Iron Ltd, Bhushan Steel & Strips Ltd, GVK Power & Infrastructure Ltd, Arcelor Mittal India Ltd and DB Power Ltd, presented their cases to the IMG.
GMDC floats tenders for bauxite calcination plant in Kutch
· State-promoted listed company Gujarat Mineral Development Corporation Ltd has floated tenders to sell its bauxite calcination plant in Kutch district. This comes at a time the PSU is busy setting up a Rs 12,000-crore joint venture with Nalco in the State.
· The plant, having a production capacity of 50,000 tonnes a year is in working condition but not producing at optimum levels, making it financially unviable. The current output is 160 tonnes a day. The plant, set up in 1994, has access to seven bauxite mines.
· These mines, collectively having about 70 lakh tonnes of reserves, are not being fully exploited due to the plant’s outdated technology. Besides, GMDC is likely to mine more bauxite from the Saurashtra districts such as Porbandar, Jamnagar and Junagarh where it is carrying out exploration.
· In all, GMDC would be mining about 10 lakh tonnes (lt) of bauxite annually in the State in the near future as the Union Government has approved its fresh mining plans of 7-8 lt in non-plant grade (lower grade) and 1.25 lt of plant grade bauxite.
· GMDC has set a floor price of Rs 2.5 crore for the BC plant sell-off, but expects a much higher valuation. The BC plant, requiring high grade bauxite, had been set up as a value additional alternative to check export of bauxite. The last date of submission of tenders is October 18.
Plan panel for rethink on allocation of scarce resources to private sector
· With scams concerning natural resources grabbing headlines, the Planning Commission has suggested a rethink on policies related to allocation of scarce resources to private companies for commercial exploitation. Scare resources include land, mining rights, spectrum and so on.
· In fact, the 12th Plan document, to be discussed at the full Planning Commission meeting chaired by the Prime Minister here on Saturday, lists this as one of the most important areas for policy rethink. The 12 {+t} {+h} Plan period began on April 1 and will end on March 31, 2017.
· Any such allocation for profit-making commercial activity involves some implicit ‘rent’ if the price at which transfer takes place is not market determined. This feeds the suspicion that ‘crony capitalism’ is at work”, says the Plan document, according to a highly placed source.
· The document further says that economic reforms had eliminated such discretionary decision-making in areas such as industrial and import licences, but there were other areas where discretionary allocations continued. However, it appreciates the fact that this weak spot has been recognised and the allocation of such resources in future to private sector companies will be done through a transparent auction.
Full halt to iron ore exports now |
· With environmental clearances (ECs) having been suspended of all 93 operational iron ore mines in the state, its export from India would come to a halt. Export from Karnataka and Odisha was already halted. The chances of revival of export during the current financial year is being almost ruled out. · The Federation of Indian Mineral Industries (Fimi), an apex body of mining companies, reported total iron ore exports at 61.8 million tonnes (mt) during 2011-12, as against 117 mt in the previous year from the three main states of Karnataka, Odisha and Goa. The states have been under a severe mineral crisis for two years. · It is a big disaster for the mining industry. The MoEF (union ministry of environment and forests) wants to clear mines one by one and the process would easily take up to six months, at least. This means a virtual halt on exports. Already, there are no exports from the eastern India states. Exports are already ruled out of Karnataka. Goa was the only saving grace. · For the year ended March 2012, iron ore export from Goa was lower by 20 per cent at 43.3 mt, compared to the previous year. Goa largely produces low-grade ore, a majority of which is exported. The Anil Agarwal-controlled Sesa Goa has planned to apply afresh for clearance to restart mineral extraction. Sesa Goa produced 12.7 mt of ore in Goa during 2011-12, as compared to 14.4 mt the previous year. It owns 374 mt of reserves in Goa and Karnataka. · Other mining companies are awaiting a government notification or order to individual leaseholders on the issue. “We have seen just the environment minster talking about the ban. No notification or order has been issued s o far. We are waiting for the state government’s notification suspending clearances (ECs) or any such order in this regard and draft procedures to obtain fresh ECs or revalidation of existing mines,” said Shivanand V Salgaocar, president, Goa Mineral Ore Exporters Association. |
Regards,
Team Microsec Research
Microsec Capital Limited
Tel: 91 33 30512100
Fax: 91 33 30512020
CA. Rajesh Desai