Tag Archive for india

Bloomberg: India Fails to Get India Coal Trains Running…

Coal Field Express by Smeet Chowdhury, on Flickr

From Bloomberg, May 3, 2015: Prime Minster Narendra Modi’s plans to shift India’s economy toward manufacturing and away from agriculture and services are being held up by a coal shortage. Caused by the continued inability of the railroad to move the coal market “demanded” by its customers.

To read the entire article, go to http://bloom.bg/1PgQE9W

Observation

The railway simply does not have its service marketing act together yet. Promises are made, but progress is agonizingly slow. As a result, coal may actually be imported to get around the problems of poor rail service.

Critical points from Bloomberg report include these.

Actually, there’s plenty of coal, just not enough trains to get it to the power plants. While about 200 railway convoys arrive every day at Coal India Ltd.’s depots, Technical Director Nagendra Kumar said the company needs 230 of them.

“The (railway) infrastructure bottlenecks are stopping Coal India from rising to its full potential,” Choksey said.

Coal generates about 60 percent of India’s electricity. With output climbing at Coal India — and poor rail service — the fuel is piling up at the mines.

At the same time, slumping global prices mean customers are turning to imports from the likes of Glencore Plc, BHP Billiton Ltd. and Indonesia’s PT Bumi Resources. India’s coal imports jumped 33.5 percent to 242.4 million metric tons in the year ended March 31, according to data from Mjunction Services Ltd., a Kolkata. The figure may reach 260 million tons this year.

Power plants near ports often bring in imports by truck, unable to find enough railway cars. Dependence on coal imports is unjustified, as India has “huge” reserves of the fuel, Piyush Goyal, minister for coal, power and renewable energy, said in March. But it is the government that invests or does not invest in the necessary railways. Coal India has also called for the construction of three new railway lines that will help open new mines that can produce 300 million tons of the fuel every year.

Rail Giant Indian Railways, which has been in operation for 162 years, may be big, but it is not agile at modernizing its freight services.

“The logistical difficulties are a reason to worry,” said Debasish Mishra, a senior director at Deloitte Touche Tohmatsu India Pvt. in Mumbai. “My fear is we don’t have a quick solution to the (railway) problem.”

 

Bank of America has just dumped coal | is this the sustainable new pattern?

A gradual pattern shows that major capital backers are sliding away from coal projects.

Are global rail planners from India to South Africa and Mongolia paying attention? Or do they think this pattern will not affect their commercial fortune?

Time to ramp up the “due diligence.”

See story at: http://www.mining.com/bank-of-america-has-just-dumped-coal/

 

Iron ore global glut — Latest bad news suggests four years of very low prices

Iron ore mining in India by Peter Craven, on Flickr

Are we paying attention? This assessment below, if true, will shut off a lot of hoped for iron ore mine and rail products from Africa to Mongolia. Mine executives hoping for a return to market demand prices of $90 and higher are betting upwind based on the evidence this past two years.

Mining Weekly picked up the following iron ore demand/supply information from different sources. Reuters is one source. Bloomberg another. The predictions for a higher iron ore price market keep getting worse. Up to half of iron-ore output by miners outside the three mega producers in Australia and Brazil may be at risk of closure or at least significant production and export cutbacks. This will occur with global demand set to peak at about 1.4 billion tons next year, according to Goldman Sachs analysts. Production volumes among top miners – Vale, Rio Tinto and BHP Billiton – may not be at risk, the bank said. But their profit margins are dropping further.

Goldman Sachs, in contrast, predicted that the rest of the iron ore industry (and the railways and maritime forces that service the export industry) is “now facing an existential challenge..”

Goldman analysts Christian Lelong and Amber Cai said in a report that “We expect seaborne iron ore demand to peak in 2016 as the displacement of marginal Chinese iron ore production fails to offset a contraction in China’s domestic steel consumption.”

Goldman cut its 2015 iron-ore price estimate by 18% to $52 a tonne. It forecast $44 in 2016 and $40 in 2017 and 2018. That is down 29% to 33% from previous estimates. Other sources like Moody’s estimate that the delivered Iron ore price could drop to $40 this year and next. No one is seriously talking out loud anymore about a price surge up towards $90 or more.

Current China delivered price for Iron ore hit $46.70 on April 2. That is based on the current spot-based price system — compiled by Goldman Sachs. Strategic planners with projects depending upon iron ore new export projects coming on line before 2018 — or maybe even staying in business. — really need a Plan B. Their current plans are based on the iron ore world changes seen about four to ten years ago.

What is your prediction?