2ND INTERNATIONAL COAL CONFERENCE SECURING FUTURE NEEDS
SECURING FUTURE NEEDSFORMETALLURGICAL COAL 2ND INTERNATIONAL COAL CONFERENCE
HOW HAVE INTERNATIONAL MET COAL PRICES BEHAVED? 2ND INTERNATIONAL COAL CONFERENCE
2ND INTERNATIONAL COAL CONFERENCE • Mine owners were frustrated • They started selling off • Some companies bought them • No prizes for guessing these companies!
THUS OLIGOPOLY GOT CREATED 2ND INTERNATIONAL COAL CONFERENCE
2ND INTERNATIONAL COAL CONFERENCE FORTUNE FAVOURS THE BRAVE
2ND INTERNATIONAL COAL CONFERENCE Major Mining Blocks in Australia • Bellambi • Blackwater • Broadmeadow • Burton • Collinsville • Crinum • Curragh • German Creek • Goonyella • Gregory • Hail creek • 12. Metropolitan • 13. Kestrel • 14. Metropolitan • 15. Moorabah North • 16. Moura • 17. North Goonyella • 18. Norwick Park • 19. Oaky Creek • 20. Peak Downs • 21. Saraji • 22. Tahmoor 5 11 20 Queensland 15 9 21 17 16 18 4 7 3 6 8 13 10 19 2 • Leases of these coal blocks are distributed among large mining companies like BHP Billiton, Xstrata, Peabody, Anglo American, Rio Tinto, Wesfarmers etc. • Japanese Companies like Mitsubishi, Mitsui, Nippon Steel, Sumitomo, Itochu etc. have significant stakes in these assets. New South Wales 14 22 1 12 Victoria
2ND INTERNATIONAL COAL CONFERENCE • Opportunity lost by India. • An Union Coal Secretary (in the 1990s) told a coking coal mine producing 5 mtpa was available for US $25 Million • We did not decide & lost it • The same mine now would be earning upwards of US $500 Million dollar in PBT
INDIAN STEEL SECTOR 2ND INTERNATIONAL COAL CONFERENCE
2ND INTERNATIONAL COAL CONFERENCE 2011 DICE LOADED AGAINST STEEL COMPANIES Higher Capital Intensity Industry having lower Value Addition - Lopsided Situation
PRESCRIPTION FOR STEEL PLANTS • Enter into long term supply contract for coal (15 year plus) • Acquire insurance equity in Coal Mines a la Japanese Companies • Step up on R & D to use non-coking coal and other fuels • Iron Ore Suppliers to reduce Alumina content • More and more PCI
PRESCRIPTION FOR STEEL PLANTS • More efficient use of Met Coal & other fuels • Explore non-traditional Regions – Mozambique, Magnolia, South Africa, Indonesia etc. • Govt. of India to consider sovereign fund for such mineral acquisition • Consolidation/M&A amongst Steel & Mineral Companies likely
SECURING FUTURE NEEDS • There is enough for everybody’s need but not for their Greed • Availability is there – at what prices is the issue • Mineral companies to invest in more efficient mining, better quality minerals at lower cost is the need • Not to be Complacent, when there is plenty!