"Indian jump in coal imports led to 44pct rise in forex outgo last quarter"
Usually I would edit the below article to highlight the main points - but in this case - the whole article is a must read imo to grasp the current Indian power situation.
Aug 2
"Riding on the back of constrained domestic production, India’s coal imports jumped 33% in the quarter ended June 30th, leading to a foreign exchange (forex) outgo of close to USD 1.9 billion, up 44% against USD 1.3 billion in the year ago period.
According to data obtained from the Indian Ports Association, the jump in costly shipments of the commodity, and the associated forex outgo, comes at a time when the government is struggling to stem a widening current account deficit, which stood at a record 4.8% of gross domestic product last financial year. The energy-hungry country imported 27.7 million tonnes of coal between April and June, compared with 20.7 million tonne in the corresponding period last year.
The 44% rise in the forex outgo is based on an average coal price of USD 69.5 per tonne this financial year, a 7.7% increase over the average price of USD 64.5 per tonne last year.
Indonesian coal accounts for a bulk of India’s thermal coal imports of around 110 million tonne annually. Another 25 million tonne of steel-making coking coal is imported largely from Australia and South Africa. Overall, imports are likely to go up to 180 million tonne in FY14.
The impact of the rising imports has been heightened by a weakening rupee. In value terms, India saw a drain in forex worth INR 10,830 crore on account of coal imports in the first quarter based on an average conversion rate of INR 57 for every dollar the previous quarter. This is a 57% increase over the INR 6,890 crore outgo in the corresponding period last year at the then conversion rate of 53 per dollar.
Experts attribute the exponential increase in coal imports for the world’s third-largest producer to an ongoing decline in local output. and to a recent decision by the government to allow power generators to pass on the burden of high cost of fuel imports to consumers.
Dipesh Dipu, partner at resources focused consultancy Jenisse Management Consultants said that “Domestic coal demand has shown a rising trend because of the Union Cabinet’s approval for pass-through of imported coal cost. Also, Indian demand was subdued last year. I see global prices going up further, by at least five per cent, by the end of this financial year even as the ongoing scenario of economic gloom has partly dampened demand elsewhere.” __________________________________________ OK - that's the recent Indian coal scenario.
Its clear India is in dire need of a mechanism to utilise their domestic lignite. The rupee dropping cements that need.
Where do Exergen/Coldry fit in...?
Heck - Exergen are largely TATA/Indian owned...whats going on here...?
Questions...
WHY the need for TATA/Exergen to look outside of Indian lignite...IF Exergen can convert INDIAN lignite -> BCE...why the bother in going to LV let alone BM...?
Ok- the "absolutists" will say India must import xxxx mtpa...BUT fact is India domestically produces hundreds of mtpa. Plenty of room for niche markets like Coldry/Matmor/Exergen propose.
Why are Exergen/TATA not doing BOTH...India and Oz...?
Why are Exergen/TATA not demo'ing in India...? Is the 1km deep potential nightmare a worry in earthquake prone India...?
Exergen/TATA are after ~12-20 mtpa for export to India - why cant Exergen/TATA do a Coldry/Neyveli in India...?
Why have Neyveli seemingly chosen Coldry over Exergen?...is it the Matmor madness carrot...? __________________________________________________
ECT have built a progressive relationship with India's largest Govt lignite owner/burner - Neyveli. Its been ~2 years now. ____________________________________________________________ http://www.linkedin.com/profile/view?id=47351658&authType=NAME_SEARCH&authToken=zgHG&locale=en_US&srchid=664898041375624005308&srchindex=1&srchtotal=2&trk=vsrp_people_res_name&trkInfo=VSRPsearchId%3A664898041375624005308%2CVSRPtargetId%3A47351658%2CVSRPcmpt%3Aprimary
"Jeff is leading the Indian "route to market" business for ECT Coldry technology.
Greenard Willing are working with Yes Bank in India to establish Joint Venture Partnerships and capital raising for commercial scale projects in India.
Greenard Willing is also ECT's corporate advisors for the development of Coldry in Victoria, Australia. _______________ Realistically - the no-brainer scenario for India is to "somehow" utilise their existing domestic massive lignite reserves to burn it cleaner....hence helping to minimise the currency horror.
The no-brainer attractive scenario for ECT/shareholders/investors would be to NOT have to be "so" concerned about large infrastructure like rail/port to make the project actually happen/make profits. This to us is the major Indian carrot.
Re Indian Coldry patent. Apparently its a non-issue. Have you ever bought a product that has "patent pending" written on it...? Fact is you actually transacted the payment for the product...ditto here.
Matmor has a new lease of life re India too. It "was" on the back burner. Metallurgical coal substitute - metallurgical coal equivalent (MCE)...interesting - a new "term" ECT have originated. India has almost zero met coal for steel and the rupee nightmare is a crushing weight. Sounds like Coldry can be adapted to up the cv to met coal levels. Huge.
Next Steps
With the Coldry plant design and engineering nearing completion, the ability to rapidly adapt the core design to the conditions in India is expected to minimise engineering and design cost. This aspect, combined with cost-effective local fabrication and construction, has the ability to significantly impact the economics of the proposed project. Our current estimates place the cost of deploying Coldry in India at ~50% of an equivalent project here in Australia.
The development of partnerships with skilled equipment manufacturers and fabricators in India will provide benefit beyond Indian Coldry plants, with export of components from India to Coldry plant projects globally.
The expected timeframes to conclude discussions and move to formal agreements remains open, however NLC have signalled their intention to refine the timeframe in the near term _______________________________________________________
Do folks here really think Coldry Arup "construction ready" data wont be Highly sought after near term...?
There was enormous detail in the recent India release. The encouraging factor is the Indians have a genuine need/motivation to fast track Coldry....(is Matmor madness the ultimate carrot...whats this new MCE...?)
In summery - I would view the below as some of the "stand out" positives of India/Neyveli:
* India is highly motivated even short term. Eg... Coal demand and the rupee concern.
* India need to largely "avoid" the China pollution horror
* The Coldry "fabricator" export potential will help entice the Indian Govts support imo.
* ~50% less $ to build in India over LV.
* No need to ship to the other side of the world
* Dramatically less infrastructure requirements (compared to Vic) like rail/port needed for investors to realise profits. Hence the route to profits in India is quicker with more certainty.
* Coldry "construction ready end Aug". If you have held ESI for as long as I have - you will understand these Arup drawings will gain the immediate attention of the worlds lignite/black coal owners/burners etc...inc Indias. It will place ECT in a "deal making" posture. ECT have never had that before.
We are starting to view Vic/ALDP as a bonus. India is shaping up as the main game. Sure there are major challenges ahead for ECT. Don't underestimate Glenn coming on the Board. Things are heading in the right direction there too.
Great India progress/update ECT - now hopefully you can follow through and nail deals asap.
tick tock...
ESI Price at posting:
0.8¢ Sentiment: Buy Disclosure: Held
(20min delay)