Coal Stealing on Unprecedented Scale by Indian Mafia contributes to Indian Power Woes

9 Jan, 2012
Coal,Energy,Fossil Fuels

Coal Stealing and Pilferage by the Coal Mafia has always been done on a massive multi million dollar  scale. In the coal rich states of Jharkhand, Bihar, West Bengal and Chattisgarh, Stealing of Coal is a major illegal industry. Everyone knows about it and nothing is done  as most officials and politicians get a cut of the illegal gains. Corruption in  India is institutionalized as governing bodies remain weak and powerless. Despite India’s much touted growth story,all these needling problems have contributed towards the Indian GDP slowing down sharply. Unless governance is improved,its tough to see how India can achieve its potential.

Dreaded Dons openly operate and steal millions of dollars in coal every day in the Indian coal districts. Coal India which is the state owned monopoly producer of coal has openly acknowledged the fact.India is facing a power crisis due to inadequate production of coal and the Coal Stealing is contributing. Note the Uses of Coal are more than just power and this stolen coal is  diversified and sold to these companies. There are a number of small private companies who buy this illegal coal at lower than market prices. In fact the entire business model of some of these smaller cement,steel companies is built on pilfered coal.

Not only Coal,but other Fossil Fuels like Petrol, Diesel and Gas also have related Mafias stealing and making billions out of their illegal trade. These Mafias are so powerful that they think nothing of killing honest government officials who take them on.

India’s Fossil Fuel Subsidies have led to a massive growth of the petrol and diesel mafia in the country.India gives subsidies on diesel,kerosene and cooking gas through its state owned petro/gas companies like BPCL,IOCL,HPCL etc.These subsidies have been given for a long time and have led to the growth of a parallel black economy in these products.They not only lead to capital misallocation but also to the massive illegal profits for a few.It is a well known fact that all petroleum pump owners adulterate petroleum ( which power most of the cars) with subsdized diesel and kerosene.This massive racket earns millions of dollars (if not billions) for a network of company officials,pump owners,government bureaucrats and politicians.The mafia is so strong and powerful that it thinks  nothing of burning alive a senior police official.The racketeers are so rich and well connected that despite common knowledge nothing gets done about it.

List of major Indian Coal Companies

1) Coal India Limited (CIL)- The State Owned Giant Coal Producer dwarfs the other companies through its sheer size,scale,cost and reach.The company has fared poorly in the current year after its IPO as its production growth has almost come to Zero.However its sells coal at such a low cost,that it could easily raise prices of coal in select categories to meet its financial goals.One of the safest investments in the stock market.It posseses high level of cash,low valuation compared to global peers and has a huge room to raise coal prices in the future.

2) Neyveli Lignite Corporation is a PSU like NTPC and is also involved in lignite mining company in India. The company is mainly based out of the southern state of Tamil Nadu and mines some 24 million ton of lignite per year with an installed capacity of 2490 MW

3) Singareni Collieries Company Limited (SCCL) is a PSU  jointly owned by Andhra Pradesh and the Federal Governm .The company is involved in mining coal  in the GodavariValley region, with reserves of around 8 Billion Tons with production of around 50 million tons a year.Note listed currently still one of the major coal companies in India.

Shocking Land Degradation and Pollution against Environmental Norms by Coal India revealed

4 Jan, 2012
Coal,Energy

Coal India the monopoly producer of Coal in India and responsible for providing almost half of India’s Energy Requirement is a very inefficient organization is well know.Corruption and pilferage of massive amounts of coal is a well known fact  to all industry participants.In fact stealing of coal is a  major livelihood for lakhs of poor Indians in coal belt areas.What is not well known is that Coal India has flouted all norms of environment and conservation.It has not restored sites of open cast and underground mining leading to massive losses for the local environment and citizens.Sand meant to fill up the old mines has been sold in the market for profits.RTI application has shown that this government maharatna has been negligent towards it duties in a huge scale.No wonder there are so many protests for land acquisitions by industry and the government given the degradation and pollution that these companies do.

The Disadvantages of Coal are many but still most of India’s power plants are being built using coal as fuel.Here is a recap of the major cons of Coal

Greenhouse Gas Emissions - One of the biggest cons of Coal Energy is that it releases Carbon Dioxide which has been sequestered for millions of years in the dead bodies of plant and animals.This transfer the Carbon from the Earth to the Environment leading to the Global Warming Effect.Global Treaties have failed in putting a Cost on this,though individual countries are tying to account for this through Carbon Taxes and Cap and Trade.

2) Coal Mining Deaths - Coal Mining has resulted in thousands of deaths each year ever since man discovered coal.Note Coal Deaths happen not only in countries which don’t have good safety regulations like China but also in developed countries like USA and New Zealand.

3) Devastation of Earth and Scenery Near Coal Mines – Open Cast Mining of Coal has resulted in destruction of the habitat and destruction of the scenery.It leads to removal of trees and pollution of air and water in areas surrounding the mines.Coal Mine Fires have burned for hundreds of year underground and make living in those areas hazardous.Those burning underground can be difficult to locate and many cannot be extinguished. Fires can cause the ground above to subside, their combustion gases are dangerous to life, and breaking out to the surface can initiate surface fires as well.

4) Displacement of Humans due to Mining Destruction - In West Bengal,India people are being displaced in huge numbers as the hollowing of the earth due to underground coal mining has made those places unsafe as the  Land Caves in without warning.

5) Emission of Harmful Substances like Sulfur Dioxide,Carbon Monoxide,Mercury,Selenium, Arsenic ,Acid Rain - Thermal Plants emit harmful substances such as Mercury and Sulfur Dioxide which cause health hazards among the surrounding population and Acid Rain.While modern equipment has reduced the emission of these harmful substances,it is still very harmful to humans.

DNA Investigations reveal Coal India flouted Environment Ministry guideline

Coal India Limited (CIL) and its subsidiaries have destroyed at least 60,000 hectares of land across these states. Properly reclaimed, this land could have been used to set up these projects.

According to documents in DNA’s possession, the total area covered by open-cast mines as of March 2011 was 35,570.21 hectares, but the area reclaimed was just 14,949.91 hectares. Replies to queries under the Right to Information (RTI) Act revealed that a majority of these mines were closed between 1980 and 2000.

A visit to some of ECL’s abandoned underground mines revealed that the company’s failure to properly fill the mines had resulted in the land sinking at several places. In some cases, officials were found to have sold the sand meant for refilling the mines.

According to the guidelines of the director general of mine safety (DGMS), land excavated for open-cast mines is to be filled with incombustible material after completion of mining operations and restored to the original level within three months. Voids created by excavation in the quarry are to be simultaneously filled with coal extraction.

 

Investing in Coal a Great Idea (Think China,India) – US Coal Stocks,Market Vectors Coal ETF(KOL) Analysis

6 Jul, 2011
Coal

Coal is the biggest source of Energy for Electricity Production in the world and its use is expected to continue to grow to 44% of the Electricity Production by 2030 (IEA).Despite Coal having many dangerous disadvantages,its Advantages of cheapness and abundance have made it the Fossil Fuel of choice.With global reserves estimated to be around 200 years,it does not have the “peak oil” characteristics as well.Though not a Coal Fan,nonetheless Coal stocks are a great investment choice due to the fact of its growing demand which is outstripping supply.China and India are massively growing their electricity,steel and cement production which  requires billions of tons of coal.China consumers almost 45% of the global coal production while Indian demand is growing by leaps and demands as well.Indian Power Utilities are grabbing up Coal Mines in Africa,Australia and Asia to secure feedstock for their gigawatt thermal power plants.Despite its growing importance Coal does not have a lot of choice in terms of investment unlike Fossil Fuels like Oil and Gas.Here is a list of Coal Stocks which one can invest in  and the sole Coal ETF – Market Vectors Coal ETF (KOL).

List of Coal Stocks

US Coal Stocks

Peabody Energy Corporation (BTU) – Market Cap of $18.5 Billon.Peabody Energy Corporation is the largest Coal Company in the United States with operations both in USA and  other countries.The Company has equity interests in a wide variety of Coal Mines and Coal Related Companies.It owns majority interests in 28 coal mining operations located in the United States and Australia.The Company holds approximately nine billion tons of proven and probable coal reserves and more than 500,000 acres of surface property.

CONSOL Energy (CNX)  – One of the the biggest Coal Companies in  the US with a Market Cap of around $12 Billion.CONSOL Energy is not a pure play Coal Company rather it has equal interest in Gas and Coal.. The Company produces pipeline coalbed methane (CBM) gas from its coal properties in the Northern and the Central Appalachian basin, and oil and gas from properties in the Appalachian and Illinois Basins.During 2010, it had 13 mining complexes, including two 49% equity affiliates, all located in the United States. The Company had an estimated 4.4 billion tons of proven and probable reserves

Arch Coal ACI – Market Cap of $5.6 Billion .During the year ended December 31, 2009, the Company sold approximately 126.1 million tons of coal and  operated 19 active mines at 11 mining complexes located in the United States.  On October 1, 2009, the Company acquired Rio Tinto’s Jacobs Ranch mine with 345 million tons of coal reserves and integrated it into the Black Thunder mine.

Alpha Natural Resrouces (ANR) Market Cap of $7 Billion,Alpha Natural Resources  is a coal supplier in the United States. It operates 66 mines and 13 coal preparation plants in Northern and Central Appalachia and the Powder River Basin. During 2010, Alpha sold a total of 84.8 million tons of steam and metallurgical coal.

Walter Energy (WLT) - Market Cap of $7.5 Billion  primary business, the mining and exporting of hard coking coal for the steel industry.During 2010, the Underground Mining segment produced 6.7 million tons of metallurgical coal. Underground Mining also extracts methane gas, from the Blue Creek coal seam. Its natural gas business produces approximately 38 million cubic feet of gas daily from over 1,700 wells

Massey Energy (MEE) – Market Cap of $6.9 Billion.Massey Energy Company (Massey), incorporated in 1920, is a coal producer in the United States. At January 31, 2011, the Company operated 84 mines, including 66 underground mines  and 18 surface mines in West Virginia, Kentucky and Virginia. On April 19, 2010, the Company completed the acquisition of Cumberland Resources Corporation and certain affiliated entities (Cumberland). The Cumberland operations include primarily underground coal mines in Southwestern Virginia and Eastern Kentucky. The Company owns a majority interest in Coalsolv, LLC (Coalsolv).

Alliance Resource Partners (ARLP) has a Market Cap of around $3 Billion.It operates primarily to serve  United States utilities and industrial users. It operates nine underground mining complexes in Illinois, Indiana, Kentucky, Maryland, and West Virginia. At December 31, 2009, ARLP  had approximately 647.2 million tons of coal reserves in Illinois, Indiana, Kentucky, Maryland, Pennsylvania and West Virginia and sold 25 million tons of coal.

Patriot Coal Corporation (PCX) has a market cap of $2.25 billion and produces coal in the eastern United States, with operations and coal reserves in Appalachia and the Illinois Basin. It is also a producer of metallurgical coal. The Company’s operations consist of 14 mining complexes which include company operated mines, contractor-operated mines and coal preparation facilities.During the year ended December 31, 2009, the Company sold 32.8 million tons of coal and  controls approximately 1.8 billion tons of probable coal reserves

International Coal Group (ICO) – - Market Cap of $2.2 Billion  is a producer of coal in Northern and Central Appalachia .As of December 31, 2009, the Company operated a total of 11 surface and 11 underground coal mines located in Kentucky, Maryland, Virginia, West Virginia and Illinois.The Company’s mines in Central Appalachia produced 10.1 million tons of coal in 2009, and the mines in Northern Appalachia produced 3.9 million tons of coal in 2009.

Oxford Resource Partners (OXF) has a market cap of around $550 million and produces coal from mines  in Ohio.Company produced 5.8 million tons of coal, including 0.4 million tons produced from the reserves it acquired in western Kentucky from Phoenix Coal and sold 6.3 million tons of coal.OCX controls 91.6 million tons of proven and probable coal reserves

James River (JRCC) – Market Cap of $900 million, James River Coal Company mines coal through six subsidiaries  located in eastern Kentucky and in southern Indiana. As of December 31, 2009, the Company’s six mining complexes included 14 underground mines, 10 surface mines and 10 preparation plants, five of which have integrated rail loadout facilities  As of December 31, 2009, it controlled approximately 271.1 million tons of  coal reserves. and  produced 9.8 million tons of coal

Coal Stocks Symbols

1 Arch Coal, Inc. ACI
2 Alpha Natural Resources, Inc. ANR
3 Peabody Energy Corporation BTU
4 CONSOL Energy Inc. CNX
5 Evergreen Energy Inc. EEE
6 Massey Energy Company MEE
7 Natural Resource Partners LP NRP
8 Penn Virginia Resources PVR
9 Walter Energy, Inc. WLT
10 Yanzhou coal mining Co. (ADR) YZC
11 International Coal Group, Inc. ICO
12 Penn Virginia GP Holdings, L.P. PVG
13 Patriot Coal Corporation PCX
14 Cloud Peak Energy Inc. CLD

Market Vectors Coal ETF (KOL) Analysis

Market Vectors KOL ETF provides a good well diversified way to invest in Coal which is seeing a massive upsurge in demand driven by India and China.Note KOL is the only listed Coal ETF with Assets under Management (AUM) of nearly $900 million.It invests mostly in large cap companies and has a global scope.For investors looking for individual stocks here is a list  of US Solar Companies and Stocks and Indian Coal Stocks.China with around 3 Billion Tons of Coal Consumption and India with another 500 million Tons depend on King Coal for majority of their Energy Needs.While China generates 80% of its Electricity from Coal,India generates around 65%.While both countries have Huge Reserves and Production of Coal,their voracious demand is leading to surging imports.These Imports are being sourced from countries like Australia,Canada and USA which are going through Coal Mining Booms.Ports are getting congested as Infrastructure failed to meet the growing coal needs of India and China..The Biggest Advantages of Coal its Abundance and  Cheapness of Coal has made it the Fossil Fuel of Choice for Electricity Companies building power plants in developing countries despite its Drawbacks.This has led to a fight to secure Coal Supplies through vertical integration into buying up of coal mines,building ports and railways to transport Coal.Though India too faces some environmental opposition,massive ultra mega power plants with capacity of 4000 MW are getting built by new Indian private utilities.

KOL ETF

Market Vectors Coal ETF (KOL), which was launched in January 2008.

KOL Composition

KOL  is composed of 40 coal stocks  with the Top 25 Holdings make up 93% of the weight of the ETF.The ETF has  5 holdings with weight greater than 5% and has a well diversified mix of geograhies from USA,China and Indonesia.KOL largely has large cap stocks which make up more than 80% of the market cap with Mid Caps at 17% and Small Caps at a miniscule 3%.

1) Coal Sectors form 100% of the ETF Market Cap – The ETF has 5 sectors of Coal Mining and Produciton,Coal Equipment,Coal Technology,Coal Power Generation and Coal Transportation.Not surprisingly Coal Mining forms 68% of the Market Cap while Coal Mining Equipment forms 16%.This makes sense as KOL is mainly a play on Coal as a Mineral .

2) Top 5 Companies form 40% of the ETF- The Top 5 Constituents of the ETF namely Peabody,Consol Energy,China ShenHua,Joy Global and Bucyrus form 40% of the ETF’s value.2

3) Valuation of the KOL is currently quite high - The P/E and P/B of the ETF at31x ad 4x is quite high and reflects the current bull run in Coal Stocks.It may not be an oppurtune time to invest in this ETF at the present time,however its a good long term buy because Coal compared to Oil is still quite cheap.Beside KOL has given astounding returns in 2009 and 2010 vastly outperforming S&P and the Energy Index

Despite the high valuation,KOL gives a very good dividend yield of around 2%.

4) KOL Cost is cheap– The ETF is charging a total expense of 0.6% of the Weekly Average Assets which is quite cheap.It allows an investor to invest in top quality Global Coal Stocks from different countries at a relatively low cost which makes it an ideal Coal Play.

 5) Stowe Coal Index – KOL follows the  The Stowe Coal Index which is a trademark of Stowe Global Indexes LLC and is licensed for use by Van Eck Associates Corporation in connection with Market Vectors Coal ETF (KOL).

Summary

KOL has managed to rectify most of its drawbacks since its inception when it held a large percentage of coal utilities like Huaneng and has become an ideal way to invest in Coal.Given the run up in commodity prices and the sharp surge in Coal prices,KOL valuation has increased quite dramatically rising more than 30% in 2010 after a 150% run up in 2009.This may not be the best time to get in,however the massive takeover fights and high valuation being given to Coal Assets may imply that KOL might not come down in price anytime soon.The growing energy needs of China and India make KOL one of the best ways to play this stock.It is an ideal investment tool for buying into higher Oil Prices as well.

Details of KOL Holdings

Company Ticker Shares Market Value % of net assets
Joy Global Inc JOYG US 754,524 $74,637,514.08 8.36%
China Shenhua Energy Co Ltd 1088 HK 15,729,908 $73,754,597.65 8.27%
Consol Energy Inc CNX US 1,391,943 $73,104,846.36 8.19%
Peabody Energy Corp BTU US 1,064,666 $72,514,401.26 8.13%
Bucyrus International Inc BUCY US 765,138 $69,971,870.10 7.84%
Walter Energy Inc WLT US 328,702 $46,402,861.34 5.20%
Bumi Resources Tbk PT BUMI IJ 112,752,500 $42,134,912.20 4.72%
Massey Energy Co MEE US 629,898 $41,989,000.68 4.71%
Alpha Natural Resources Inc ANR US 734,079 $41,915,910.90 4.70%
Yanzhou Coal Mining Co Ltd 1171 HK 11,027,961 $41,092,030.88 4.60%
Arch Coal Inc ACI US 1,024,996 $35,393,111.88 3.97%
China Coal Energy Co 1898 HK 25,880,095 $35,153,626.34 3.94%
Adaro Energy Tbk PT ADRO IJ 117,347,215 $31,088,715.90 3.48%
Exxaro Resources Ltd EXX SJ 1,110,674 $28,817,320.50 3.23%
Patriot Coal Corp PCX US 595,166 $15,611,204.18 1.75%
Fushan International Energy Group Ltd 639 HK 19,212,067 $14,787,805.75 1.66%
Tambang Batubara Bukit Asam Tbk PT PTBA IJ 5,270,000 $13,596,882.95 1.52%
International Coal Group Inc ICO US 1,146,584 $12,589,492.32 1.41%
MacArthur Coal Ltd MCC AU 950,974 $12,084,011.61 1.35%
Aquila Resources Ltd AQA AU 1,099,055 $11,191,265.96 1.25%
Indo Tambangraya Megah PT ITMG IJ 1,943,052 $11,160,935.36 1.25%
22 Whitehaven Coal Ltd WHC AU 1,432,014 $10,592,590.12 1.19%
23 Coal & Allied Industries Ltd CNA AU 79,797 $10,319,721.99 1.16%
24 Straits Asia Resources Ltd SAR SP 4,027,200 $8,743,562.03 0.98%
25 Cloud Peak Energy Inc CLD US 398,185 $8,660,523.75 0.97%
26 New Hope Corp Ltd NHC AU 1,497,136 $7,882,907.33 0.88%
27 SouthGobi Energy Resources Ltd 1878 HK 510,997 $7,434,747.03 0.83%
28 Hidili Industry International Developmen 1393 HK 6,304,307 $5,860,978.12 0.66%
29 White Energy Co Ltd WEC AU 1,590,286 $5,195,803.01 0.58%
30 Semirara Mining Corp SCC PM 896,152 $4,773,223.54 0.53%
31 Indika Energy Tbk PT INDY IJ 9,155,000 $4,373,953.81 0.49%
32 James River Coal Co JRCC US 181,724 $4,323,213.96 0.48%
33 Gloucester Coal Ltd GCL AU 318,392 $3,660,613.96 0.41%
34 COCKATOO COAL LTD COK AU 5,197,173 $2,832,707.41 0.32%
35 FreightCar America Inc RAIL US 78,058 $2,387,013.64 0.27%
36 Headwaters Inc HW US 395,652 $2,358,085.92 0.26%
37 Nippon Coke & Engineering Co Ltd 3315 JP 957,000 $1,785,432.86 0.20%
38 Net Other Assets / Cash 0 $870,630.06 0.10%
39 PUDA COAL INC PUDA US 127,241 $763,446.00 0.09%
40 Western Coal Corp WTN CN 43,470 $537,340.66 0.06%

Source – http://www.vaneck.com/funds/KOL.aspx

 

Indian Coal Stocks

1) Coal India Limited (CIL)- The State Owned Giant Coal Producer dwarfs the other companies through its sheer size,scale,cost and reach.The company has fared poorly in the current year after its IPO as its production growth has almost come to Zero.However its sells coal at such a low cost,that it could easily raise prices of coal in select categories to meet its financial goals.One of the safest investments in the stock market.It posseses high level of cash,low valuation compared to global peers and has a huge room to raise coal prices in the future.

2) Neyveli Lignite Corporation is a PSU like NTPC and is also involved in lignite mining company in India. The company is mainly based out of the southern state of Tamil Nadu and mines some 24 million ton of lignite per year with an installed capacity of 2490 MW

3) Singareni Collieries Company Limited (SCCL) is a PSU  jointly owned by Andhra Pradesh and the Federal Governm .The company is involved in mining coal  in the GodavariValley region, with reserves of around 8 Billion Tons with production of around 50 million tons a year.Note listed currently still one of the major coal companies in India.

Fly Ash Water Pollution lead to NTPC Thermal Power Plant Shutdown in Talcher,Orissa

4 Jul, 2011
Coal,Energy

Fly Ash Pollution of nearby water bodies had forced the Orissa State Pollution Control Board (OSPCB) to issue a notice to the massive 3000 MW NTPC Talcher Thermal Power Plant.While the notice asked for immediate shutdown of 4 units of 500 MW,NTPC has only closed down 1 unit citing that closing more units will lead to massive power disruptions in nearby states.The action comes following NTPC bad fly ash management system which has led to two past incidences of water pollution.There was a  danger that the massive amounts of fly ash being generated would lead to breakdown of the storage dykes and lead to more pollution.

India depends heavily on coal for almost 70% of its electricity needs and it will continue to increase as Indian power producers build massive coal power plants due to the cheapness of coal.The Disadvantages of Coal have been suppressed as Coal is looked upon as the only solution to India’s massive growing energy needs.However Coal is already creating problems as the Environment Ministry has prevented coal mining in forest ares leading to shortages of coal.Power Company Buying of Foreign Coal Mines is hitting a hurdle with those countries putting levies and minimum prices on coal.Besides global coal prices have increased manifold making it difficult for electricity companies to import coal as China too hogs up coal to fuel its massive economy.India may need to reconsider its Coal Powered Economy due to the growing environmental problems associated with Coal.Note in developed countries building of new thermal power plants has almost stopped due to strong opposition from green groups.

NTPC shuts down 500-mw unit on Orissa pollution board order

NTPC has shut down one of its four 500-mw thermal power generation units at Kanhia in response to a closure notice by Orissa State Pollution Control Board (OSPCB) following the power major’s faulty fly ash management plan.n July, 2010 and on June 3, 2011, there were breaches in the dykes and ash slurry oozed out of the pond.In the first incident it entered Nandira river, a tributory of Brahmani, and contaminated it, while in the other incident the breach was limited to NTPC’s own area and did not cause any damage to public health.

Indian Private Power Companies Cry for a Bailout,Want Socialization of Their Losses

4 Jul, 2011
Coal,Energy

Indian Electricity Companies are crying for a bailout from the government after coal prices surged last year amidst shortages of coal.Note before the Lehman crisis,Indian private power producers were riding a boom equivalent to a mini tech bubble trading at crazy valuations.The reason was that the Indian government had opened the Electricity sector to the private players resulting in them winning contracts for 42 GW most of which were thermal power plants.At that time coal prices were quite low and there was no threat of shortages with India’s government owned Coal India providing secure long term contracts at cheap.The future looked great for companies like Reliance Power which came out with the biggest IPO in the Indian stock market history.Private companies were busy planning on setting up supercritical mega power plants of 4 GW capacity.

But now the dreams are gone with coal prices shooting up and the power producer acquisitions of foreign mines in Indonesia,Australia turning sour.Production of Coal has actually reduced with the Environment Ministry preventing mining in Forest Area and countries putting in minimum sales prices and levies.The companies don’t have price escalation built into the long term power purchase contracts.They are crying for a bailout saying that most of the new power projects would default and the newly built thermal power plants don’t have enough  coal.These companies should be penalized heavily as they should bear the burden of bad business decisions.Privatization of profits and socialization of losses should be prevented.Power Producers in India are quite powerful though and have frequently put down local protest with administration help resulting in even deaths by firing.

Why are Coal Prices going up

China is going to double its imports of Coal to 200 million tons while India too is expected to reach 100 million tons if not more.This has led to a massive increase in the price of coal even as major producers of coal like Bayan Resources,Bhakti Energi ramp up production in Indonesia.India is already suffering major shortages of coal with only 40 GW of the projected 80 GW of new thermal capacity having coal linkages.There are already reports that newly commissioned thermal power plants in India don’t have access to Coal.

Investing in Coal good idea despite its Green Disadvantages

Despite Coal having many dangerous disadvantages,its Advantages of cheapness and abundance have made it the Fossil Fuel of choice..China consumes almost 45% of the global coal production while Indian demand is growing by leaps and demands as well.Indian Power Utilities are grabbing up Coal Mines in Africa,Australia and Asia to secure feedstock for their gigawatt thermal power plants.Coal as an investment is almost a no brainer with its demand surging and with little alternatives.Here is a list of Coal Companies in India which form a great investment option.Though strange for a Green Investment Blog to recommend Investing in  Coal , the Dirtiest form of Energy,the fact remains that Coal is going to be the hottest investment in the next decade though Media remains focused on Oil and Gas.

India’s Biggest IPO Turns Bust

The most hoopla surrounded the February 11 listing of India’s Reliance Power Ltd., the biggest in India ever. Shares of the company — a power production and distribution subsidiary of the Anil Ambani-controlled Anil Dhirubhai Ambani Group, one of India’s largest conglomerates — were oversubscribed 73 times.

But on Monday, launch day, India Inc.’s plans were dashed. The price of Reliance Power stock plummeted on its first day of trading, taking the Bombay Stock Exchange’s Sensex index with it. Investors who had snapped up the pre-market shares for Rs 450 ($11.25) on talk that it would likely double on its opening day, lost an estimated $121 million as the stock headed south, closing at Rs 372.50 ($9.55) — 17% below its cost price.

Power producers seek protection from fuel shocks

Power generating companies have expressed their inability to honour contracts bagged under tariff-based competitive bidding unless they are insulated from increase in fuel prices .

The companies have asked the government to set up an expert panel to evolve mechanisms for revisiting the existing contracts. Over the past five years, power projects with 42,065 mw capacity of have been awarded through over 30 contracts. The association, a body representing 13 companies like Tata Power, Reliance Power , Adani Power , Lanco Infratech and Essar Power, told government that signals of plants defaulting obligations are being seen due to fuel and environmental issues.

About 80% of these plants were likely to default on account of shortfall in domestic coal availability, environmental issues involved in captive coal blocks and changes in regulations in coal exporting countries, it said.

Energy Hunger drives India Oil Giant Reliance to join the Coal Buying Spree

31 May, 2011
Coal,Energy

India and China are largely dependent on Coal for fueling a majority of their energy needs despite the evident disadvantages of coal.China derives almost 80% of its electricity from coal while India uses Coal for 50% of its Energy Needs.Most of the new power plants being built in India have plans to use thermal power which means that the coal demand is going to skyrocket even as these 2 Asian giants are already suffering from coal shortages.India’s Coal Production is falling short as the Environment Ministry makes it tough for the coal miners to dig up virgin forest areas even as private Indian power companies keep on building gargantuan thermal power plants of  more than  4,000 MW capacity.Most Indian companies are now racing to acquire coal mines abroad joining the Chinese companies.Seeing the massive potential in coal,international resource giants such as Rio Tinto and others are trying to access coal assets as well.

Now India’s  largest company,the oil and gas giant Reliance is too throwing its hat in the ring.While other Indian private producers have already acquired coal mines abroad,Reliance has not been too aggressive except for acquiring shale gas assets in North America.Note the competition for the Australian Coal Producer Premier mines has increased with Lanco too joining the fray.Note Lanco had earlier bought coal miner Griffin Coal mines for A$750 million.Other major Indian business conglomerates Aditya Birla Group, JSW Steel and Jindal Steel & Power have been shortlisted bidders for another Australian coal explorer Bandanna Energy in a potential billion-dollar-plus sale.Note the Adani Group had recently bought a port to supplement its coal mine acquisition.

Coal Prices Increasing Globally

Coal Prices have started to increase in the international market along with other commodities like wheat,sugar,corn,gold,copper etc.But unlike other commodities,Coal has a disproportionate effect on Energy Prices.Note Coal is the principal supplier of top energy consumers like China,USA,India,Germany etc.The cheap price and abundance of coal has made it the fossil fuel of choice for generating electricity.The Technology for mining,processing and using coal to generate energy is well developed and cheap.Coal Prices have increased dramatically in China which is being forced to import millions of tons of coal despite having huge reserves.This is putting pressure on electricity rates which are one of the cheapest in the world.High Coal Prices are also making Thermal Plants in the UK to switch to Wood Pellets as Fuel which are considered more environment friendly.Note Coal generated electricity is cheap because the external effects on environment,health,pollution are not taken into account

Indian Companies competing with each other to Buy Global Coal Assets

The energy hunger is driving every major Indian business group to actively look for energy assets abroad as India’s billion plus population grows increasingly prosperous.While India has large coal reserves,state owned CIL has been unable to raise production due to convoluted price mechanism and policy.This has forced Indian power companies to look elsewhere to provide coal for their thermal plants.Australian,Indonesian,African Coal Mines Selling like Hot Cakes amongst Power Hungry Indian,Chinese Companies.40 GW of the 80 GW thermal power plants don’t have Coal Linkages and new power plants are already running at 40% utilization due to unavailability of coal.Coal Shortages have already driving electricity price increases in India and China with the Indian government even contemplating pooling the price of coal to even out the electricity costs for consumers.Investing in Coal remains a great idea despite the sharp run up in the prices of coal stocks.

Reliance Industries joins race for Australia’s Premier Coal; stock up

India’s largest company by market value, Reliance Industries, has submitted an expression of interest to buy Australia’s Premier Coal, a division of ASX-listed Wesfarmers Group, at least two people said on condition of anonymity because the talks are confidential.Reliance Industries is likely to initiate due diligence on the assets of Premier Coal according to one of the people quoted above and may submit a final bid at the end of June if it is satisfied with the results of the due diligence exercise.Premier Coal has proven coal reserves of 129 million tonnes and currently produces 4 million tonnes of coal.

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