VITAL INDUSTRY UPDATES – 15/05/2015

May 15, 2015 11:19 am Published by

Essar Ports to develop iron ore handling facility of Vizag port

Essar Ports Ltd (EPL) today announced the taking over of the iron ore handling complex of Visakhapatnam port on a build-operate-transfer (BOT) basis, for a period of 30 years. Essar Vizag Terminals Ltd, a wholly-owned subsidiary of EPL, will comprise three berths -two outer harbour and one inner harbour berths – with a combined capacity of 23 million tonnes per annum to be developed in two phases. The project will be developed at a cost of Rs 1,200 crore over a period of three years, and will cover the upgradation of outer harbour berths (OB I & II) in Phase I and mechanisation of inner harbour berth (WQ-I) in Phase II.

“Enhancing the cargo handling capacity and mechanisation of port facilities for efficient management is crucial for long-term sustenance. We are sure Essar will develop the facility with latest state-of-the-art handling facilities and achieve higher loading rate thereby reducing the overall turnaround by at least 50 per cent,” MT Krishna Babu, chairman, Vizag Port, said. Commenting on the development, Rajiv Agarwal, CEO & managing director, Essar Ports, said the facility was well-placed to cater to both domestic and international steel industry. It will serve major iron ore consuming countries like China, Japan and Korea in addition to coastal movement within India. The facility has a dedicated rail connectivity to India’s iron ore mining belt and would will take Essar Port’s total east-coast iron ore handling capacity to 39 mtpa.

The company has three operational terminals at Hazira, Vadinar and Paradip ports with a current capacity of 104 million tonnes. It has plans to expand the capacity to more than 200 million tonnes over the next few years. Essar Vizag Terminals has paid an upfront payment of Rs 185 crore to Vizag port for the complex. In addition, it will also pay a revenue share to the port, said Satyanand, CEO, of Essar Vizag Terminals. Vizag port handled close to 14 million tonnes of iron ore during 2014-15, highest by any port in the country.

 

Government plans to hold exclusive coal auction likely for steel, cement plants

The government plans to hold an exclusive round of coal mines auction for steel and cement plants, considering a huge demand supply gap for coal.

The coal ministry could offer about 12 coal blocks in the next round of auction to the two sectors classified as unregulated, government officials said. “We are considering if we can meet the demand of steel and cement sectors first this time. We did not realise that there is so much demand for coal in the unregulated sector a senior coal ministry official said. “So far, power sector was our priority. But the sector is already getting 75% of Coal India supply and has been getting priority so far in mines allocation,” the official said.

In the first two auction rounds, when coal blocks were offered simultaneously to the regulated power sector as well as unregulated sectors, aluminium and cement companies won most of the blocks that were earlier attached to steel plants.

Steel plants, which collectively owned 83% of the coal reserves present in the 31 auctioned blocks, now hold just 32%. Prior to the auctions, aluminium plants had 1% of the coal reserves; they now own 36%. Coal reserves with cement companies have doubled to 33% from 16% earlier. Experts said this has happened because the government clubbed three different industries under one category of end-use, called the “unregulated sector”, while power plants, where the output price is regulated, were offered a separate set of mines with different rules.

For example, Hindalco Industries has bagged three mines that earlier belonged to Monnet Ispat & Energy, Jayswal Neco and Nilachal Steel. The company has won Gare Palma IV/5 coal block at .`3,502 per tonne and another Gare Palma IV/4 at .`3,001 per tonne, inching close to imported coal prices.

Cement sector eyes growth in FY16

The cement sector is hoping for a revival this financial year.

After a gap of four years, the industry is optimistic on demand and capacity utilisation increasing.

The first half of FY15 nurtured hopes of better growth but the second half was shot by a slowdown, especially in the quarter ending in March because of the government cutting expenditure.

Despite the slowdown, sector insiders and analysts are hopeful of increase in production — by at least seven to 7.5 per cent — in the current financial year.

Credit rating firm Icra said all-India cement production increased only 1.8 per cent in the period between October, 2014 and March, 2015. In the April-September, 2014 period it grew by 9.7 per cent.

The pre-election spending and a delayed monsoon had led to a spurt in growth of demand for cement in the first half of FY15 but it slowed down after the elections got over.”

In the final quarter of FY15, government spending was cut, demand from the real estate and construction sectors was mute and income from agriculture decreased because kharif production saw a decline in due to poor monsoon. All of this affected demand for cement. The trend, however, is expected to reverse.

Centre for Monitoring Indian Economy Private Limited said: “This trend in cement demand is likely to reverse during FY16 on account of higher government spending on infrastructure as announced in the Union Budget. This is likely to boost the demand for cement from real estate and infrastructure sectors. Therefore, we expect the growth in cement output to accelerate to nine per cent during the year. A total of 289.4 million tonnes of cement is likely to be man

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