Indonesia’s coal mining law a blow for Indian units

The recent hike in coal prices have already spelt trouble for cement and power companies in India. Coal supply and coal prices are likely to suffer another massive blow, given new mining laws for coal in Indonesia. Indonesia, which is one the major suppliers of coal to India, now plans to cap its exports for domestic demand.

Analysts believe that cement and power companies have already planned their capacities over and above the potential coal supply from Indonesia. "Indonesia does not have the capacity to export sufficient coal to India. Moreover, Indian companies will now have to seek coal from other places. Since many cement companies as well as power producers from the coastal areas have tied up with Indonesia for coal supply, the shortage will adversely affect them,” said an analyst from a leading brokerage.
 
After issuance of a new mining law, the Indonesian government is planning to cap around 150 million tonnes coal exports annually from 2010 onwards. Given India’s high dependence on Indonesian coal, sectors like cement and power are likely to be hit adversely. Indonesia wants to secure coal supply for its domestic power plants under the 10GW fast-track project.
 
Cement industry players, on the other hand, are now desperately seeking help from the Indian government to tackle the coal shortage.
 
"We are in constant talks with the government for increasing coal allotments to the cement industry which has been brought down to 50% from 75%. We have been asking for 100% allotment. Now that we have a stable Union government in place, they will understand and support the industry," said R Gurumoorthy, spokesperson, Dalmia Cement Ltd.
-Amritha Pillay [email protected]
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    COMMENTS

    Edi

    10 years ago

    india and indonesia will make good relationship in mining business

    China faces massive steel oversupply

    China’s steel trade body fears a rapidly worsening situation in the December quarter and early 2010

    While Indian steel stocks are rallying, China Iron and Steel Association (CISA) has warned that oversupply is the major problem that the Chinese steel sector would need to confront. The trade body expects the situation to worsen in the fourth quarter and in early 2010. Steel is a globally-traded commodity and overcapacity in China is bound to lead to lower global prices and pressure on Indian steel companies.

    According to CISA statistics, the steel inventories of 26 large and medium-sized cities totalled 11.13 million tonnes (MT) at September 2009, up 5.3MT or 90.9% from the beginning of this year. Further, the 68 large- and medium-sized steel enterprises’ steel and billet steel inventories totalled 11.55MT at September’s closing, up 1.44MT or 14.26% from the beginning of the year. Of the 70 large- and medium-sized steel enterprises, 10 suffered losses in the first nine months as compared to seven in the same period last year. China’s crude steel output was 420.40MT, up 7.5% year-on-year over the first nine months of this year, up 29.37MT. China’s current steel capacity is around 600MT per year, with around another 58MT per year under construction.

    Meanwhile, the entire year’s output is estimated at 550MT, up 50MT or 10% from 2008. In the first nine months of this year China imported 1.37MT of crude steel as compared with the 39.47MT of net exports in the same period last year.

    As total net crude steel exports reached 47.63MT for the entire 2008, some 47MT will be shifted from the international market to the domestic market. China’s apparent steel demand rose 20% year-on-year in the first nine months, to 421.8MT, mainly driven by the government’s expansion of fixed asset investment, and the growth is predicted to sustain into the fourth quarter and early next year.

    China has also imported 1.005MT of stainless steel in the first nine months, up by 4.3% year-on-year and exported 4,76,800 tonnes, down by 45.5% year-on-year. During January 2009 to September 2009 the Chinese stainless steel output was 6.569MT, up by 37.5% year-on-year.

    As per reports, the output growth of crude steel and the change in imports and exports would bring the supply of crude steel in the Chinese market at 20% above last year’s figures. In October 2009 alone, Chinese crude steel production growth has sharply grown by 44% year-on-year to 51.75MT.
    —Swapnil Suvarna [email protected]

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