VITAL INDUSTRY UPDATES – 09/07/2015

July 9, 2015 11:56 am Published by

Deepak Fert surges following resumption of fertiliser production

Even as the market remained insipid on Wednesday, with the benchmark indices losing over a per cent, the stock of fertiliser maker Deepak Fertilisers and Chemicals bucked the weakness. The stock zoomed over 9 per cent in trade, after the company announced that it has re-started production of ammonium nitrate phosphate (ANP) complex fertiliser, after a one year hiatus, using expensive imported re-gasified liquid natural gas.

On the BSE, the stock ended 7.63 per cent higher at Rs 142.55.

Supply of domestic gas produced from RIL’s KG D6 basin to Deepak Fertilisers’ Taloja (Mumbai) facility was stopped in May 2014 following the Department of Fertilisers’ decision to channelize the low cost domestic gas, used for producing complex fertilisers, towards urea.

This move was largely to reduce the Government’s fertiliser subsidy burden by giving priority to the highly subsidised urea. The Government provides almost three fourth of urea’s production cost as subsidy to the producer; the balance is paid by the farmer.

In the case of complex fertilisers, the Government subsidy accounts for just a fourth of the total production cost. Complex fertiliser producers have more leg room to pass on price increases to farmers, thanks to the implementation of the nutrient based pricing policy since April 2010.

Even as investors cheered the move, the benefit to Deepak’s profit on account of this move may be limited. This is because the cost of RLNG is more than twice that of domestic gas. Hence, while the commencement of ANP production will aid the company’s revenue growth in 2015-16, the accretion to profit may not be significant.

 

Thermal power generation dips marginally in June

Thermal power generation fell marginally in June despite continued momentum in Coal India’s production.

During the month, thermal power plants in the country generated about 0.4 per cent less power at 72,804.74 million units as against 73,134.59 million units in the same month last year, according to data from the Central Electricity Authority.

The units were operating at an average plant load factor of 59.43 per cent as against 66.31 per cent in the same month last year.

The overall power generation in the country, at 88,542.35 million units, was almost the same as in June last year (88,265.17 million units).

Specifically, generation by coal-based power plants remained flat at around 66,209.48 million units in June 2015.

Production up

While power generation from coal-fired power plants remained flat, the availability of the fuel increased sharply. During the month, Coal India produced 12.4 per cent more coal as compared to last year at 38.83 million tonne.

According to official data, the increased coal production meant only 13 of the 100 coal-based power plants had less than seven days of coal stocks. All these plants are non-pithead power plants.

 

Coal India to incentivise underground mining

Coal India plans to incentivise underground mining and consider reopening six such closed mines as contribution from underground mines to total coal production has fallen to just 8%.

According to Coal India officials, persistently declining coal production from underground mines has become a serious concern for the world’s largest coal producer. “Breaking this trend by enhancing production and productivity of underground mines is the biggest challenge before Coal India,” a senior Coal India official said. “Over the past few years, there is a growing consensus over the need for increasing coal production from underground coal mines,” the official said on condition of anonymity.

Contribution of underground mines in other major coal producing countries of China, USA and Australia are 95%, 30% and 25%, respectively.

“Keeping in view the trends of coal production from underground mines in Coal India, numerous challenges in underground coal mining and rapidly increasing demand for coal, there is urgent need for enhancing coal production from underground mines, its modernisation and to make underground coal mining competitive in the rapidly changing economic scenarios,” the Coal India official said.

As a prelude to enhancing production from underground mines, Coal India will assess various factors that are coming in the way of enhancing coal production from underground mines of different coal companies in Coal India. It will also study the available coal reserves suitable for underground mining in each coal subsidiary of the company. It will further assess the level of mechanisation of the underground mines and the trend in production from these mines.

The company also intends to assess the scope of mechanisation and deploy continuous miner with matching roof supporting mechanism. It plans to look into the possibilities of amalgamation of smaller units and strengthening the infrastructure for mechanisation of amalgamated units.

An official from the company said that Coal India will assess the preparedness of different coal companies in terms of shelf of projects for implementation. It will also look into the requirement of different infrastructure support for taking up greenfield and brownfield projects. Gap between availability and the requirement of skilled man power for underground mines over the next 10 years and training needs of technical manpower in underground mechanisation will also have to be assessed to boost underground production, the official said.

Coal India will also look into ways of addressing contract management issues for importing equipment for underground mines and examine issues involved in approvals by safety regulators for imported underground machinery.


Possible cooperation with various technology providers from different countries for taking up large scale underground mechanisation will also be looked into, the official said.

 

 

South Korea to buy 24,000 t of rapeseed meal from India

After a steep rise in prices of edible oil in Germany and other European markets, South Korea has decided to import 24,000 tonnes of rapeseed meal from India in the next two months, sources said.

It is reported that the South Korean foodgrain group Korea Feed Association recently bought 12,000 tonnes of Indian rapeseed meal at $275.98 per tonne.

 

 

 

South Korea to buy 24,000 t of rapeseed

                           

Coal India to incentivise underground

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This post was written by Atlantic Admin