Archive for ‘Natural resources’


Indian utility bets $10 billion on coal power despite surplus, green concerns | Reuters

India’s state-run power utility plans to invest $10 billion in new coal-fired power stations over the next five years despite the electricity regulator’s assessment that thermal plants now under construction will be able to meet demand until 2027.

In the first phase, India’s biggest power producer, NTPC (NTPC.NS), plans to build three new plants with a combined capacity of more than 5 gigawatts (GW), nearly double the capacity of those currently being phased out, five senior company officials said.

The company has not made the investment public because it has not yet received government approval.If approved, the plan could set back efforts by the world’s third-largest greenhouse gas emitter to control carbon output and raise questions about Prime Minister Narendra Modi’s vow to stand by commitments under the Paris climate accord.

The proposal also comes as several coal-fired stations built in the last power boom a decade ago are standing idle due to softer-than-expected demand. State-controlled Coal India (COAL.NS) is struggling to sell its stockpile as a result.

But other indicators indicate demand will pick up, a top NTPC executive said, asking not to be named because the plan had not yet been announced.

“I don’t think (the current) electricity surplus will be there for a long time,” he told Reuters. “We should not fool ourselves.”

More than 300 million of India’s 1.3 billion people are still not hooked up to the grid, according to NITI Aayog, which makes policy recommendations to the government.

As connections improve, the panel reckons, the country’s per-capita power consumption could jump around a third to up to 2,924 kilowatt-hours by 2040 from 2012 levels.

In the next decade, the around 50 GW of capacity from thermal plants due to come online by 2022 will meet demand, the Central Electricity Authority (CEA) said. Additional supplies will come from sources such as solar and wind, it said.

Asked about NTPC’s plan, CEA chairman RK Verma said the commercial decisions of the company were its own affair.

“NTPC is a commercial organization and they must be having their own commercial considerations,” Verma said.For its part, a spokesperson at NTPC would say only: “NTPC takes decisions after consulting both the CEA and the ministry of power.”


Solar power generation capacity in India has more than tripled in three years to more than 12 GW since Modi targeted raising energy generation from renewable sources to 175 GW by 2022, against total installed capacity at the end of May of 330.3 GW.

Around 78 percent of generated power in India at the moment still comes from coal-fired plants, however, making it one of the biggest users of the dirty and cheap fuel in the world.

Carbon dioxide emissions from India’s thermal plants are expected to jump to 1,165 million tonnes by 2026/27 from 462 million tonnes in 2005, the CEA estimates. Emission intensity, measured in carbon dioxide emissions versus GDP, is likely to fall, however.India is undergoing a program to retrofit several coal-fired plants to reduce emissions.

The plants planned by NTPC are “supercritical”, meaning they are 2-3 percent more efficient than conventional plants and therefore have lower emissions.

NTPC’s proposal is likely to be greeted with alarm by environmental activists who are already worried by the CEA’s statement that existing power plants are unlikely to meet India’s emission norms before the Paris deadline of December this year.

“Adding more power plants would aggravate health impacts even further,” said Sunil Dahiya, an energy activist with Greenpeace in New Delhi, when asked about the possibility of new coal-fired plants.NTPC’s proposal is to build plants of two 660 megawatt (MW) units each at Singrauli in central India’s Madhya Pradesh and Talcher in Odisha in the east.

The biggest plant, with a capacity of 2.4 GW in the eastern state of Jharkhand, was close to getting clearance from the environment ministry, one of many steps in the process of getting government approval, one of the senior company officials said.

A plan announced by NTPC last year to generate 10 GW of energy from renewable sources by 2022 was making slow progress due to land acquisition issues, another company official said.

Source: Exclusive: Indian utility bets $10 billion on coal power despite surplus, green concerns | Reuters


Birla Said to Plan $1 Billion Aluminum Exports: Corporate India – Businessweek

Hindalco Industries Ltd. (HNDL), owned by Indian billionaire Kumar Mangalam Birla, is targeting a record $1 billion of aluminum exports by March 31 buoyed by rising U.S. and European demand, people with knowledge of the matter said.

Overseas shipments may triple to as much as 400,000 metric tons in the 12 months ending March 31 from the previous year, said two people, who asked not to be identified because they aren’t authorized to speak to the media. The Mumbai-based company had exported less than half the target as of the middle of last month, the people said.

Stricter emission norms in the U.S. and Europe are prompting vehicle makers to choose the lighter alloy over steel, helping the owner of the world’s largest supplier of aluminum sheets to carmakers boost overseas sales and counter a domestic slowdown. The additional demand will aid Hindalco revive profit growth after five straight quarters of decline and find a market for its new capacity.

via Birla Said to Plan $1 Billion Aluminum Exports: Corporate India – Businessweek.


China’s Oil Pipeline Through Myanmar Brings Energy—and Resentment – Businessweek

Until recently, 80 percent of China’s oil and gas imports were transported by ship through a narrow waterway separating Indonesia and Malaysia, known as the Strait of Malacca. The possibility that hostile forces could one day block that crucial passageway and starve the country of energy has long made China’s leaders nervous.

Oil and gas pipeline

Oil and gas pipeline (Photo credit: Wikipedia)

In 2009, two state-owned energy giants inked a $2.5 billion agreement to loosen the pinch: China National Petroleum and Myanmar Oil & Gas Enterprise agreed to lay down more than 500 miles of oil and gas pipelines from Myanmar’s western coast to China’s southwestern Yunnan province. When the oil pipeline goes online later this year, tankers carrying crude from the Middle East and Africa will be able to dock at Myanmar’s port of Kyaukpyu and send as many as 440,000 barrels of oil a day overland to China. Industry news service Platts (MHFI) reports that the oil pipeline is 75 percent complete and should be operational by June.

A parallel gas pipeline went into operation last July, capable of transporting as much as 12 billion cubic meters of natural gas per year across Myanmar to China. “China’s piped gas is mainly imported from areas around the Malacca Strait,” Lin Boqiang, a professor with the China Center for Energy Economics Research at Xiamen University, told the state-run Global Times. “Now we have one more pipeline from the land instead of the seabed, which will decrease” China’s energy vulnerability.

via China’s Oil Pipeline Through Myanmar Brings Energy—and Resentment – Businessweek.

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Indonesia to China: Stop Buying Our Stuff – Businessweek

Indonesian mines account for about 20 percent of the world’s nickel supply and a hefty chunk of the bauxite (used to make aluminum). China has been importing ever-larger amounts of these and other minerals from its Asian neighbor. Ironically, the more the Chinese buy, the angrier Indonesians become: Rather than purchasing refined minerals from Indonesia, China imports the raw rocks and does the processing itself, thus depriving Indonesians of jobs and tax revenue. Miners took more than 250,000 tons of nickel out of Indonesian mines last year but processed only about 16,000 tons in-country, exporting the rest. Meanwhile, China refined more than half a million tons.

A miner sprays water over tin ore at the PT Timah operations in Sungai Liat, Bangka Island, Indonesia on Nov. 19

To make matters worse, through much of last year, China stockpiled Indonesian ore to hedge against any action the government in Jakarta might take to encourage more of the value-added work to stay home. The stockpiling makes Indonesian officials even more irritated. “I just returned from China, and I saw with my own eyes there are 3 million tons of bauxite and 20 million tons of nickel over there,” Industry Minister M.S. Hidayat told reporters on Jan. 8. “That’s what we want to stop.”

Indonesian President Susilo Bambang Yudhoyono is taking action do just that. On Jan. 12 a new rule took effect prohibiting companies from exporting nickel ore and other raw minerals—while allowing miners to ship minerals that first go through processing or refining in Indonesia. The goal is simple: “No more ore exports,” Energy and Mineral Resources Minister Jero Wacik said last month. “There should be refining or smelting.”

via Indonesia to China: Stop Buying Our Stuff – Businessweek.

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* China’s Xi tells Africa he seeks relationship of equals

Reuters: “China’s new president told Africans on Monday he wanted a relationship of equals that would help the continent develop, responding to concerns that Beijing is only interested in shipping out its raw materials.


On the first stop on an African tour that will include a BRICS summit of major emerging economies, Xi Jinping told Tanzanian President Jakaya Kikwete that China’s involvement in Africa would help the continent grow richer.

“China sincerely hopes to see faster development in African countries and a better life for African people,” Xi said in a speech laying out China’s policy on Africa, delivered at a conference center in Dar es Salaam built with Chinese money.

Renewing an offer of $20 billion of loans to Africa between 2013 and 2015, Xi pledged to “help African countries turn resource endowment into development strength and achieve independent and sustainable development”.

Africans broadly see China as a healthy counterbalance to Western influence but, as ties mature, there are growing calls from policymakers and economists for a more balanced trade deal.

“China will continue to offer, as always, necessary assistance to Africa with no political strings attached,” Xi said to applause. “We get on well and treat each others as equals.”

But gratitude for that aid is increasingly tinged with resentment about the way Chinese companies operate in Africa where industrial complexes staffed exclusively by Chinese workers have occasionally provoked riots by locals looking for work.

Countering concerns that Africa is not benefitting from developing skills or technology from Chinese investment, Xi said China would train 30,000 African professionals, offer 18,000 scholarships to African students and “increase technology transfer and experience”.”

via China’s Xi tells Africa he seeks relationship of equals | Reuters.


* Canada OK’s foreign energy takeovers, but slams door on any more

China acquires more natural resources.

Reuters: “Canada approved China’s biggest ever foreign takeover on Friday, a $15.1 billion bid by state-controlled CNOOC Ltd for energy company Nexen Inc., but drew a line in the sand against future buys by state-owned enterprises.

A man walks into the Nexen building in downtown Calgary, Alberta, July 23, 2012. REUTERS/Todd Korol

In a fierce defense of a tough, new foreign investment framework, Prime Minister Stephen Harper said Canada would not deliver control of the oil sands – the world’s third-largest proven reserves of crude – to a foreign government.

The ruling, anxiously awaited by investors and politicians alike, followed months of heated debate about how much of Canada’s energy sector could and should be absorbed by companies run by other nations.

The bid triggered unusually open dissent among legislators in the ruling right-of-center Conservatives, many of whom were particularly nervous about the idea of allowing China to gain control of the oil sands.

Canada said yes to this deal, but will not do so next time.

“To be blunt, Canadians have not spent years reducing the ownership of sectors of the economy by our own governments, only to see them bought and controlled by foreign governments instead,” Harper told reporters after Ottawa gave the deal the green light, along with approval for the less controversial takeover of gas company Progress Energy Resources Corp by another state-owned energy company, Petronas of Malaysia.

“Foreign state control of oil sands development has reached the point at which further such foreign state control would not be of net benefit to Canada,” he added.”

via Canada OK’s foreign energy takeovers, but slams door on any more | Reuters.

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* For Beijing, expansion is not a big deal, it’s lots of them

The Times: “China’s slowing economy has failed to dent its global ambitions, with an increasingly hungry dragon scouring the globe for higher-value corporate deals, according to new research.

It made 177 outbound acquisitions worth a combined $63.1 billion last year, five times more than in 2005, the study by Mergermarket and Squire Sanders, the law firm, found. Deals are also growing in value, with the planned $15.1 billion takeover of Nexen, the Canadian oil sands explorer, by the state-owned CNOOC set to be China’s biggest-ever foreign acquisition, if it goes ahead.

Next month China will release its third-quarter GDP data, with some economists suggesting that growth could fall below the 7.6 per cent it brushed in the second quarter, despite assurances from Beijing that the economy would stabilise in the second half.

Natural resources and energy, the sectors most critical to China’s future growth, continue to dominate purchases, accounting for almost one in three M&A targets between 2011 and the year to date. Almost all these buyers are state-owned companies making investments at the behest of the Government.

Mao Tong, a Hong Kong-based partner at Squire Sanders, said: “We are seeing companies becoming more interested in making a strategic play, rather than just adding to their portfolio. These are big deals designed to position them in a global context.

“Even if the Chinese economy slows sharply, I think this will continue for a while. China is still the world’s most important manufacturing base, using huge amounts of iron ore, for example.”

China is eager to deploy its $3 trillion of foreign exchange reserves, mainly held in dollars, to counter the gradual depreciation of the currency and put its national wealth to good use. Yet the number of private sector deals is also expected to increase as the Government encourages state-owned banks to step up lending to the corporate sector.Britain is the favoured destination for Chinese dealmaking in Western Europe, accounting for a third of deals and two thirds of all outbound investment to the region, thanks to its reputation for transparency and a large number of Russian and Central Asian resources companies, Mr Mao suggested.

China has shown an increasing taste for European luxury brands, such as Shandong Heavy Industry’s buyout of the Italian yacht group Ferretti this year. Recent British brands going East include Weetabix, bought by the Shanghai dairy group Bright Food, and the $7.8 billion buyout of Northumbrian Water by Cheung Kong Infrastructure, a Hong Kong group chaired by Li Ka-shing.

The Dragon Index, a quarterly measure of China’s overseas direct investment by the private equity firm A Capital, which was released last week, hit an historic high in the second quarter, with ODI said to grow by 67 per cent between April and June on the previous quarter, to $24 billion.

André Loesekrug-Pietri, founder of A Capital, said: “State-owned enterprises remain the dominant force behind China’s ODI, with 90 per cent of the total deal value in the second quarter 2012.”

European companies accounted for 95 per cent of all non-resources deals in the quarter, the figures suggested. China’s share of US deals has slowed this year, owing to the sensitive political climate before the presidential election.”

via For Beijing, expansion is not a big deal, it’s lots of them | The Times.

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* India coal scandal: Hundreds protest against PM Singh

BBC News: “Police in the Indian capital Delhi have baton-charged hundreds of anti-corruption protesters angered by the government’s sale of coalfields without open bidding.

An auditors’ report last week said the mis-selling cost India $33bn (£20bn).

Police also used water cannon and tear gas to turn back protesters trying to reach the house of Indian Prime Minister Manmohan Singh

Opposition calls for Mr Singh to resign have deadlocked parliament.

In the report last week, government auditors said private companies had made “windfall gains” by the allocation of coal mining rights from 2005-9 in a process that “lacked transparency”. India is one of the largest producers of coal in the world.

The main opposition Bharatiya Janata Party (BJP) says Mr Singh should quit because he was head of the coal ministry at the time of the sales.

The call has left parliament deadlocked since Tuesday. The Congress-led government insists there was no wrongdoing.”

via BBC News – India coal scandal: Hundreds protest against PM Singh.


* China approves Hanlong’s $1.3 billion bid for Australia’s Sundance

reuters: “China has approved Hanlong Mining’s long-delayed $1.3 billion takeover bid for Australian iron ore developer Sundance Resources (SDL.AX), a vote of confidence for a sector grappling with falling prices and weak demand as the global economy cools.

Sundance Resources Limited

Sundance Resources Limited (Photo credit: Wikipedia)

Hanlong, which already owns 17 percent of Sundance, wants the company for its $4.7 billion Mbalam iron ore project on the border of the republics of Congo and Cameroon in western Africa. The region is seen as a major new source of iron ore that could cut China’s dependence on Australia and Brazil.

“We have gotten approval from the National Development and Reform Commission. It was approved yesterday,” a media officer from Hanlong told Reuters on Wednesday.

With the approval from the top economic planner, Hanlong now needs finance from China Development Bank to complete the deal that was agreed a year ago, when the iron ore price outlook was far more positive.

The deal’s lengthy delays had pointed to China’s reluctance to make big bets on risky resources projects offshore amid uncertainty over economic growth at home.

China, the world’s second-largest economy, has seen six consecutive quarters of slower growth and commodity stockpiles mushroom, weighing on prices.

Iron ore prices are languishing near their lowest level in more than two and a half years.

Under the agreement, Hanlong must secure China Development Bank’s blessings by Aug 31 to buy the shares it does not already own at A$0.57 per share, valuing the company at A$1.74 billion.

Media reports in Australia on Wednesday said Hanlong had reduced the deal to 50 cents a share and Sundance board was expected to recommend the new offer. It was not immediately clear whether the offer had been cut. A Sundance spokeswoman declined to comment.

Sundance shares last traded at A$0.335 cents, 41 percent below Hanlong’s offer, reflecting concerns the deal would not proceed. The stock was placed on a trading halt on Tuesday.

Australia’s Foreign Investment Review Board approved Hanlong’s bid for Sundance in June.”

via China approves Hanlong’s $1.3 billion bid for Australia’s Sundance | Reuters.

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* CNOOC to buy Nexen for $15.1 billion in China’s largest foreign deal

Reuters: “State-controlled CNOOC Ltd launched China’s richest foreign takeover bid yet on Monday by agreeing to buy Canadian oil producer Nexen Inc for $15.1 billion, forcing Ottawa to decide whether security concerns outweigh its desire for foreign investment in its energy resources.

CNOOC, China’s third-largest oil company, hopes to sell the deal to shareholders and the government with a hefty 61 percent premium to Nexen’s Friday stock price. It promised to retain all employees and to make Canada home base for its Western Hemisphere operations.

CNOOC is offering $27.50 cash a share for Nexen, which has oil sands operations in the Canadian province of Alberta, shale gas in the province of British Columbia and extensive exploration and production holdings in the North Sea, Gulf of Mexico and offshore West Africa.

The initial shareholder reaction was enthusiastic. Shares of Nexen, whose board unanimously approved the deal, surged C$9.06, or 52 percent, to C$26.35 in Toronto on Monday.

The move is the most ambitious foray by resource-hungry China into North American energy since a 2005 attempt to buy U.S.-based Unocal for $18.5 billion was thwarted by a political backlash there.

Chinese companies have been among the most aggressive in targeting assets around the globe to help feed demand in the world’s second-biggest economy.

As for Canada, Prime Minister Stephen Harper has pushed to attract more energy investments from China. The CNOOC deal shows his efforts are bearing fruit, and Canada has more reasons to accept the deal than to veto it.

“For Canada, this agreement provides a stable source of investment for the many projects that Nexen operates, which includes the exploitation of bitumen in Alberta,” CNOOC Chief Executive Li Fanrong said in a conference call.

“Because we intend to be a local company as much as a global one, we also intend to seek a listing for CNOOC Ltd on the Toronto Stock Exchange.”

The deal is subject to a review by the Industry Ministry, which by law must decide if the takeover would bring a “net benefit” to Canada.

In its favor is both CNOOC’s commitments to Canada, and the fact that Nexen’s operations are mostly outside Canada.”

via CNOOC to buy Nexen for $15.1 billion in China’s largest foreign deal | Reuters.

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