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Modi needs to reform electricity to power India recovery – by Clyde Russell (Reuters India – May 19, 2014)

http://in.reuters.com/

LAUNCESTON Australia – (Reuters) – Narendra Modi’s crushing election win has given rise to hopes for an economic revival in India, but much will depend on whether he can replicate the electricity success of his home state.

India’s financial markets have been buoyed by Modi’s victory, betting that the Hindu nationalist politician can work the same economic wonders for the whole country that he did while running the western state of Gujarat for 13 years.

The alliance led by Modi’s Bharatiya Janata Party (BJP) won 336 of the 543 seats in India’s lower house of parliament when election results were announced last week, giving India a majority government for the first time in a quarter of a century.

While Modi’s authority will be bolstered by the massive win and his legislative programme will be easier to implement given he doesn’t need to negotiate with coalition partners, the scale of the challenge facing him is enormous.

India is structurally short of electricity, and it’s hard to see how the economy can be ramped up significantly, especially in power-hungry sectors such as manufacturing, without the provision of reliable power at prices high enough to ensure sustainable supply, but not so high as to choke growth.

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Jakarta jubilant as nickel soars, China plans smelters – by Melanie Burton and Fergus Jensen (Reuters India – May 19, 2014)

http://in.reuters.com/

SYDNEY/JAKARTA – May 19 (Reuters) – When Indonesia vowed to halt exports of mineral ore to wring more profit from its rich resources, many predicted the policy would be an economic own-goal.

But in the case of nickel, at least, Indonesia is proving its doubters wrong as the price of the metal soars and Chinese producers starved of raw material begin to ship equipment for processing plants to the Southeast Asian nation.

Just four months after a ban on ore exports, one smelter is under construction and equipment for two others has been shipped from China to Indonesia, including a dismantled blast furnace, industry sources told Reuters.

At least two other firms plan to start construction of processing plants by year-end or shortly after, amid fears that China’s nickel-pig iron industry is running out of raw material.

“It’s been a success,” Energy and Mineral Resources Minister Jero Wacik told Reuters. One Chinese firm that told Reuters it expected to start production by year-end at the earliest said the smelter would produce nickel pig iron with 4 percent metal content, which then would be shipped back to China for production of higher value grades with 10-15 percent metal.

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Pro-business Modi storms to historic election win – by RAJESH KUMAR SINGH AND ADITI SHAH (Reuters India – May 16, 2014)

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(Reuters) – Narendra Modi thundered to victory on Friday in election, trouncing the ruling Nehru-Gandhi dynasty in a seismic political shift that gives the Hindu nationalist and his party a mandate for sweeping economic reform.

Modi’s landslide, the most resounding election victory India has seen in 30 years, was welcomed with a blistering rally on India’s stock markets and raucous celebrations at offices across the country of his Bharatiya Janata Party (BJP), where supporters danced, let off fireworks and handed out sweets.

The BJP looked certain of a parliamentary majority, giving the 63-year-old former tea-seller ample room to advance reforms started 23 years ago by current Prime Minister Manmohan Singh but which stalled in recent years.

Speaking to a sea of people dressed in the party’s official orange colours and chanting his name in his home state of Gujarat, Modi thanked the nation, and immediately addressed concerns his pro-Hindu leanings would sideline minorities.

“The age of divisive politics has ended, from today onwards the politics of uniting people will begin,” Modi said. “We want more strength for the wellbeing of the country … I see a glorious and prosperous India.”

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What does Modi’s victory mean for gold in India? – by Lawrence Williams (Mineweb.com – May 16, 2014)

http://www.mineweb.com/

While Narendra Modi may be pro-gold in principle, there are doubts whether there will be any quick major gold policy changes following his BJP party’s Indian election victory.

LONDON (MINEWEB) – As I write it has become apparent that Narendra Modi’s Bharatiya Janata Party (BJP) party has won the Indian election with what in Indian terms looks like being a landslide victory. The ruling Congress party has conceded defeat. The only unknown as I write is whether the BJP will have won enough seats in India’s parliament to rule on its own without the support of its potential coalition partners or not.

It is widely believed that Modi is favourably inclined towards gold and one suspects the very big Indian gold fabrication and trading sector will have voted en masse for the BJP in the hope that the import restrictions on gold will be eased at the very least.

This will have followed on in particular from Modi’s address at a Bombay Bullion Association meeting last October where he expressed sympathy for the plight of the Indian gold sector and poured scorn on the then government’s gold policies to try and reduce the country’s balance of payments problems. However it should be recognised that Modi is an astute politician and he would have been in full pre-election mode addressing a sector with a potentially significant electoral impact given India’s love affair with gold.

He did say at the beginning of his address that he personally had little connection with gold but did comment: “We have not seen gold just as money, it is related with all aspects of our social life.

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Nickel, aluminium show signs of revival – by Peter Ker (Sydney Morning Herald – May 16, 2014)

http://www.smh.com.au/

They’ve been the dregs at the bottom of the diversified miners’ bottle for years, but nickel and aluminium are starting to show signs of life.

The two commodities have been bywords for poor performance over recent years, having dealt financial losses and multi-billion dollar impairments on their hapless owners at the big end of the mining industry.

But evolving attitudes in the developing world seem to be changing the rules of engagement in both industries, and tempting investors to think again. The nickel resurgence is more advanced and better understood.

Prices for the metal – used to create stainless steel – soared 56 per cent after January 10 when the Indonesian government placed a ban on certain raw metal exports.

The decision was designed to create jobs by forcing exporters to build processing plants on Indonesian soil, rather than exporting their raw ores overseas. As the world’s biggest nickel exporter, Indonesia’s removal from global trade has led to expectations of a shortage and price rises.

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Nickel price to reach huge highs, says mining exec – by Staff (Northern Ontario Business – May 16, 2014)

Established in 1980, Northern Ontario Business  provides Canadians and international investors with relevant, current and insightful editorial content and business news information about Ontario’s vibrant and resource-rich North. 

The price of nickel could reach highs previously seen in 2007, said Mark Selby, president and CEO of Royal Nickel, at a Canadian Institute of Mining event in Sudbury, May 15. Selby expects nickel prices to $15 to $20 per pound by mid-2015.

The reason is Indonesia’s decision to cease nickel exports indefinitely. The Asian country contains 25 per cent of the world’s nickel supply.

“To give you an idea of just how much that is, in the oil business that would be the equivalent of waking up Monday morning and finding out that Saudi Arabia, Iran, Iraq, Kuwait and all of the other Gulf states decided not to produce oil anymore,” Selby said.

The country has stopped exporting the metal to build the ore processing infrastructure needed to create more value from its nickel. In 2009, when the Indonesian Parliament first discussed ceasing copper and nickel exports, nickel left the country with only 10 to 15 per cent of its end value.

“There’s a massive amount of value to be captured by building these plants in the country,” Selby said. In January 2014, just before Indonesia halted nickel exports, the metal sold for around $6 a pound. In mid-May, nickel prices were as high as $9.50 a pound.

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Narendra Modi’s manufacturing push cheers steel makers – by Krishna N Das (Reuters India – May 9, 2014)

http://in.reuters.com/

NEW DELHI – (Reuters) – When prime ministerial hopeful Narendra Modi asked at an election rally if anyone knew of a country that exported wheat but imported bread, steelmakers joined his followers to cheer.

For steel executives, it was just what they wanted to hear: their calls to restrict exports of iron ore further will be met if Modi’s Bharatiya Janata Party (BJP) wins the election.

While the move would mean a captive supply of iron ore for steelmakers, it would further dim the prospect of Indian iron ore returning in a big way to the world market. A steep drop in Indian shipments in the past two years has given Australia and Brazilian miners a bigger share of top market China.

“The government in Delhi is such that it exports iron ore but imports steel,” Modi said at the rally in the steel city of Jamshedpur last month. “If you run your business like this, how will the country’s steel industry survive?”

One of Modi’s main election planks is to crank up manufacturing to create millions of jobs by focusing on exporting steel, not iron ore; textiles not cotton. Results of the five-week election are due on May 16.

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Cleaning Up Coal in India (New York Times Editorial – May 12, 2014)

http://www.nytimes.com/

India’s Enforcement Directorate has filed charges of money laundering against a former minister of state for coal, Dasari Narayana Rao, and Naveen Jindal, a member of Parliament who also happens to be chairman of Jindal Steel and Power. This is the latest turn in a major corruption scandal in India, known as Coalgate, in which the coal ministry awarded a handful of companies lucrative mining rights on a noncompetitive basis. The charges are a hopeful sign that India is ready to clean up its coal industry. But much more needs to be done.

Coal mining has long enjoyed sweetheart status in India, whatever the social and environmental costs. An 1894 land acquisition law that became an instrument of abuse, eventually fueling a Maoist insurgency, was finally replaced this year by a statute promising transparency and fair compensation.

Even so, activists are regularly harassed and even assassinated by thugs paid by powerful business interests to force people from their land. Ramesh Agrawal, who used India’s Right to Information Act to expose an illegal coal-mining venture by Jindal Steel and Power in Chhattisgarh, was shot and left for dead after he refused to back off. He accuses Mr. Jindal of ordering the attack. Mr. Agrawal was honored with a 2014 Goldman Environmental Prize for his fight for the communities threatened by the venture.

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COLUMN-China the hidden culprit behind Australia’s tough budget – by Clyde Russell (Reuters U.K. – May 14, 2014)

http://uk.reuters.com/

(The opinions expressed here are those of the author, a columnist for Reuters.)

May 14 (Reuters) – Many Australians will castigate the country’s new conservative government for a tough first budget that saw cuts to welfare and hikes to taxes, but some of the blame lies with China.

Just as China’s rapid growth of the past decade fuelled a commodity boom in Australia, the slowing of the Chinese economy and its uncomfortable transition to a more consumer-led model means the end of the resource bonanza down under.

While the headlines from the Liberal/National coalition’s federal budget on Tuesday focused on Treasurer Joe Hockey’s cuts to family payments and health, and tax increases for the wealthy, much of the underlying story was contained in the economic forecasts.

Australia’s two biggest export earners are iron ore and coal, and they will be joined by liquefied natural gas (LNG) once the seven projects currently under construction are operating. The last is slated to come onstream by 2018.

China is Australia’s biggest trading partner, accounting for about 36.7 percent of exports. The government’s budget papers paint a picture of muted prices for these commodities, which will impact on the collection of royalties and taxes.

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Will a Goa-type crisis befall Odisha iron ore mines? – by Kunal Bose (Business Standard – May 12, 2014)

http://www.business-standard.com/ [India]

Unlike India, China is becoming increasingly dependent on iron ore imports to sustain its ever-rising steel production

When he was chairman of Steel Authority of India Ltd (SAIL), Sushil Kumar Roongta had a major role in convincing New Delhi that India was advantageously placed to become the world’s second-largest steelmaker. He argued the rich deposits of iron ore here, if properly harnessed, would enhance India’s steel capacity to 300 million tonnes (mt). This is despite our growing dependence on coking coal imports which in 2013-14, stood at 33.3 mt.

Roongta said while the blast furnace would remain the principal steelmaking route for India, technology breakthroughs such as Finex, developed by South Korean company Posco, would allow us to make steel with iron ore fines and non-coking coal, local deposits of which are 295 billion tonnes (bt). India has iron ore resources of 30 bt and these are to rise 5-10 bt as the cut-off point of iron content in ore is reduced from 55 per cent to 45 per cent. So, the country’s long-term self-reliance in this critical steel input is not to be doubted.

India’s high ore imports in recent times have resulted from significant dislocations in mining in more than one state. Unlike India, China is becoming increasingly dependent on iron ore imports to sustain its ever-rising steel production. In 2013, as China raised its share of world crude steel production to 48.5 per cent, with production of 779 mt, it also imported a record 820 mt to supplement domestic supplies.

To the dismay of our steel, sponge iron and pellet producers, dark clouds have started gathering over the iron ore sector in Odisha. The mineral produced in Odisha has a strategic bearing on the steel sector in eastern states, which account for 60 per cent of the country’s 80-mt annual metal output.

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UPDATE 2-Japan’s Sumitomo Metal sees rising risk of ferronickel output cut – by Yuka Obayashi (Reuters India – May 13, 2014)

 http://in.reuters.com/

TOKYO, May 13 (Reuters) – Sumitomo Metal Mining Co Ltd , Japan’s biggest nickel smelter, said there was an increasing risk it could cut production of key stainless steel ingredient ferronickel, amid growing concerns about ore shortages.

But for now the firm is still aiming to produce 21,400 tonnes of ferronickel in the year through March 2015, Toru Higo, general manager of nickel sales and raw materials at Sumitomo Metal, told Reuters on Tuesday.

Any cut in ferronickel output could tighten supplies for stainless steel producers in Japan and overseas as they grapple with a cut in the growth outlook in formerly fast-growing developing economies.

Ferronickel smelters have been hit by Indonesian bans on exports of unprocessed mineral ores that took effect in January, with Japan importing around half its ferronickel materials from the Southeast Asian nation in 2013. That ban has fuelled a rise in ore prices and driven up benchmark prices for refined nickel by more than 50 percent so far this year.

“The risk of a cut in production is rising,” Higo said, “It is getting harder to get the kind of ores we want when we want.” Sumitomo Metal has enough contracted supplies of nickel ore for the financial year through March, but is facing quality issues and delivery holdups after a switch to suppliers in the Philippines, he said.

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Goro suspension pushes nickel price to two-year high (Northern Miner – May 9, 2014)

The Northern Miner, first published in 1915, during the Cobalt Silver Rush, is considered Canada’s leading authority on the mining industry.

VANCOUVER – With nickel prices already up almost 40% in 2014, a suspension at Vale’s (NYSE: VALE) Goro mine in New Caledonia has pushed the price of the steelmaking component to a two-year high.

The Goro mine has limited impact on global nickel supplies whether it is running or not, so a stable metal market would react little to the suspension. However, the nickel market is far from stable and so the Goro news acted as fuel on the fire that has been heating up nickel for months.

Indonesia started that fire in January when it banned exports of nickel ore. For years China and Japan have imported raw nickel laterite ore from Indonesia and turned it into nickel pig iron (NPI), a cheaper alternative for steelmakers to pure nickel. The trade amounts to 450,000 tonnes a year, or almost a quarter of the 2-million-tonne global annual nickel market.

The export ban is intended to spur local processing and thereby capture more of the metal’s value domestically, but it will be years until Indonesia develops significant NPI production capacity.

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Nine Nickel Smelters Seen in Indonesia This Yr After Ban – by Yoga Rusmana and Eko Listiyorini (Bloomberg News – May 12, 2014)

http://www.bloomberg.com/

Indonesia forecasts that nine nickel-processing plants may be completed this year after the largest mined producer banned raw ore exports in January, spurring a rally in refined prices to the highest level since 2012.

The plants comprise two ferronickel and seven nickel-pig-iron smelters, according to data from the Energy and Mineral Resources Ministry. One chemical-grade alumina plant is also scheduled to be completed this year, the data showed.

Southeast Asia’s largest economy is seeking to force a move toward processed commodities, betting that repercussions from the ban such as job losses will be offset by investment in new plants and output of higher-value products. The metal used in stainless steel is the biggest gainer this year among the six main metals traded on the London Metal Exchange amid concern that the ban will raise costs and spur a global deficit.

“Greenfield smelters are horribly expensive and drag down the profitability of even the best ore-mining operations,” said Xavier Jean, a credit analyst at Standard & Poor’s in Singapore. The prospects for completions this year are unrealistic, Jean said in an interview.

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What Sudbury can teach China about air pollution – by Kate Allen (Toronto Star – May 10, 2014)

The Toronto Star has the largest circulation in Canada. The paper has an enormous impact on federal and Ontario politics as well as shaping public opinion.

Air pollution was once so bad in Sudbury it literally blackened the earth. Now countries such as China can turn to cleaned-up Canadian city for hope. In so many stock images of Beijing, someone is wearing a face mask. Air pollution has become a feature of the urban Chinese landscape.

There was another city where debilitating air pollution once seemed permanent. In this other city in the 1960s, housewives reportedly planted their tomatoes in wagons: when a plume of bad air descended, the tomatoes could be wheeled out of the toxic cloud.

As for sulphur, “you could taste it when you were outdoors,” says Bill Keller. Keller is the director of the Climate Change and Multiple Stressor Aquatic Research program at Laurentian University, and a resident of Sudbury for the past 40 years.

In Sudbury, he remembers, air pollution was so bad it literally blackened the earth: acid rain, along with mining operations, stripped the land of vegetation, leaving 100,000 hectares of barren or semi-barren moonscape.

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Vedanta shelves Odisha bauxite plan pending local approval – by Karen Rebelo (Reuters India – May 9, 2014)

http://in.reuters.com/

REUTERS – Vedanta Resources Plc said on Friday it would not mine bauxite at a controversial project in Odisha until it can win over local communities opposed to its plan.

The Environment Ministry had already rejected Vedanta’s request to mine in the Niyamgiri hills of Odisha following persistent protests from local communities that consider the region sacred..

While Vedanta stopped short of saying it had abandoned the project, its decision to await the consent of local communities will require it to look elsewhere for the raw material to feed its alumina refinery in the same state.

Analysts said Vedanta’s announcement is an early hint of plans by Tom Albanese, the former Rio Tinto head who became Vedanta’s chief executive last month, to make the London-listed company a more attractive sell to international investors.

Vedanta, a company with a market capitalisation of $4.2 billion and base metal mines in several countries, relies on aluminium production – exclusively in India – for about 12 percent of its revenue.

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