Displaying items by tag: Mining
India: India's upper house of Parliament has approved changes to the country's mining law to make it easier to sell mining rights, a move that could spur acquisitions in the cement and mining sectors.
Lawmakers approved the Mines and Minerals (Development and Regulation) (Amendment) Bill, allowing the transfer of mining rights by companies that received them through a government allocation. The bill was cleared by the lower house of Parliament in March 2016 and now needs to be signed off by the President to become law.
In the past, mining rights had either been distributed to companies through government auctions or through individual allocations, a method that raised questions about arbitrariness in decision-making.
In 2015 the government implemented a new law that made it mandatory to auction mining rights. It also permitted the transfer of mining rights previously won through auction, but was silent on whether rights received through a government allocation for captive uses could be sold.
The latest rule provides clarity and could help speed up proposed merger deals such as UltraTech Cement’s planned takeover of Jaypee Group's cement plants and LafargeHolcim's plan to sell two cement units to Birla Corp.
Indian cabinet supports amendment to mining law
10 March 2016India: The cabinet has cleared an amendment in a mining law to permit the transfer of captive mines granted on discretion. Major deals between cement companies including UltraTech, Reliance Cements and Lafarge have been affected because the Mines and Minerals (Development and Regulation) (MMDR) Amendment Act, 2015 restricts the transfer of mining leases to auctioned mines only. The amendment will now need approval by the Indian parliament to become law.
In January 2016, the government proposed the amendment to "spur merger and acquisitions in the mining sector and help in checking the stressed and non-performing assets of banks by allowing them to liquidate assets where a firm or its captive mining lease is mortgaged.”
UltraTech to restructure Jaiprakash Associates deal if mining law amendment not approved
07 March 2016India: UltraTech will create a separate corporate structure for the cement assets of Jaiprakash Associates it has agreed to buy if a key mining law is not amended by June 2016. An amendment to the Mines & Minerals (Development & Regulation) (MMDR) Act in 2015 suggested that the transfer of mining rights could only be passed by auction, leading to delays in several mergers and acquisitions in the cement industry.
"We have considered both scenarios. If the amendment goes through, it is a clear asset purchase. If not, there are structures we have in mind, with which we will be able to do the deal," said Atul Daga, chief financial officer of UltraTech to the Hindustan Times. He added that the deal is not entirely linked to the mining amendment. "The agreement is for specific assets. It's more about how you structure it. I do not want to comment on the structure until the closure of the definitive agreement."
If the MMDR Act amendment is not approved, Jaiprakash Associates will need to create a separate entity out of the assets being sold to UltraTech, for the deal to proceed. However, it will refinance Jaiprakash's borrowings at lower rates if the MMRDA amendments get approved.
UltraTech announced in late February 2016 that it was purchasing the majority of Jaiprakash Associates’ 22.4Mt/yr cement portfolio instead for US$2.4bn.
UltraTech deal with Jaypee delayed by mine transfer legislation
01 September 2015India: UltraTech Cement is seeking clarification from the Indian government over the transfer of limestone reserves as part of its deal to buy two integrated cement plants in Madhya Pradesh from Jaypee Group, according to HT Media. A clause in the Mines and Minerals (Development and Regulation) Act 2015 barring the transfer of mines that were not allotted through auctions is delaying mergers and acquisitions (M&As) in the mining sector.
According to a clause in the new Act, transfer of the mining licence is allowed only for mines that have been auctioned. Most of the operational limestone mines in India were allotted and not auctioned. The Act allows for these reserves to be auctioned in the future. However, legal experts are divided on whether this clause will apply retrospectively.
UltraTech agreed to buy Jaiprakash Associates' cement plant with a clinker capacity of 2.1Mt/yr and a cement grinding capacity of 2.6Mt/yr at Bela in Madhya Pradesh in December 2014. It then agreed to buy a second plant at Sidhi with a clinker capacity of 3.1Mt/yr and a cement grinding capacity of 2.3Mt/yr. The deal included access to the limestone reserves in Madhya Pradesh.
The new legislation is also expected to affect Lafarge's sale of its east Indian assets to Birla Corp.
HeidelbergCement to develop Volga limestone deposit
04 August 2015Russia: HeidelbergCement has won the right to develop a 37.5km2 plot at the Novo-Shikhanskaya area in Volga. According to the Geolnerud Central Research Institute, the limestone resources for the cement industry in the area amount to 168Mt. The contract costs Euro14,284 with an initial payment of Euro11,644. The license in valid for 25 years.
Governer claims limestone storage endangers health
14 July 2015Mozambiqiue: According to Mozambique News Agency, the governor of Sofala, Helena Taipo, has ordered the limestone storage facility in Muanza be moved on environmental and health grounds.
Taipo took this measure after a message presented by local residents at a rally she addressed in Muanza, which complained at the way the limestone is currently stored. The residents said that the health problems allegedly caused by limestone dust are not new. Local people have long complained against the practice of Cimpor's Cimentos de Mocambique of storing large quantities of limestone next to Mwanza station, where it awaits transport by train to the cement plant in the nearby town of Dondo.
Taipo said that she did not really need to hear the complaint, since she could see the problem with her own eyes. "I have seen the houses covered with white dust," said Taipo. "Even here at the rally I've seen the dust, which shows that the situation is serious. We have to think seriously about the preservation of the environment. Cimpor must change the place where it keeps the limestone to somewhere else, because currently it is a danger to public health."
Participants at the rally called for the road from Dondo to Cheringoma, which passes through Muanza, to be paved. They also wanted the electricity grid to be further expanded. Taipo guaranteed that paving the road is one of the actions envisaged in the government's five year programme for 2015 - 2019.
India: According to Cogencis MoneyWire, the Madras High Court has dismissed ACC's writ petition against a demand notice regarding a 50% royalty due over a mining lease for limestone removal from government-owned lands.
The royalty demand was for US$1.17m for 1988 - 1998. ACC was granted the lease to mine limestone from 140,000m2 of land at Madukkarai Village in Tamil Nadu and was subsequently granted another mining lease. According to local media, initially a lessee has to pay royalty at the rate of 50%, after which it was obligatory on the part of every leaseholder to pay 100% royalty.
India: According to the United News of India, ACC has suspended limestone mining operations at its Chaibasa plant in Jharkhand because of regulatory issues. ''The limestone mining operations at the Chaibasa plant have been suspended on account of the requirement of further clearances from the government of Jharkhand,'' said ACC in a statement.
The company is in discussion with the concerned authorities and expects that limestone mining operations would resume shortly. Cement grinding continues with the transfer of clinker from sister cement plants and the purchase of clinker. ACC said that the impact of the closure of the mining operations at Chaibasa is not expected to be material.
ACC resumes limestone mining operations at Bargarh
18 June 2015India: ACC resumed limestone mining operations at Bargarh, Odisha, after about nine months, on 17 June 2015.
ACC stopped mining at Bargarh in October 2014 following a government notice to suspend operations at the plant. The company stopped clinker production at its Chaibasa, Jharkhand, and Bargarh plants, but continued to operate the grinding units associated with these. "The impact of the closure was not material since cement grinding continued with the transfer of clinker from sister works and clinker purchases," said ACC.
State governments were issued orders to stop mining, following a Supreme Court judgement in the matter of Goa Foundation versus Union of India and Others and in Common Cause versus Union of India on the deemed renewal of mining leases and a subsequent amendment to The Mineral Concession Rules 1960.
ACC resumed limestone mining operations following terms of the Mines and Minerals (Development and Regulation) Ordinance 2015.
Commercial coal mining to be allowed
16 March 2015India: In the first major step towards opening the coal mining sector, India's government will start allocating coal blocks to state governments for commercial mining. The move, which is expected to be undertaken in April 2015, will put an end to the 41-year-old monopoly over the commercial sale of coal.
The coal ministry will allot non-operational mines to state governments for commercial coal mining for end use in the iron, steel, cement and allied sectors. This will bring business and revenue to coal-rich states, which have so far only received royalties from private companies mining coal for captive use.
"Non-operational mines will be allotted to state governments to extract coal for commercial usage and market sale. States could then sell this coal to the utilities under their umbrella or any private company for various end uses, as specified in the ordinance," said a senior official. This is pursuant to an enabling provision on commercial mining and sale of coal in the coal ordinance (special provisions), 2014. The coal ministry will also issue guidelines for the appointment of mining development operators (MDOs) by states.
The coal ordinance has inserted section 3A in the Coal Mines Nationalisation Act to enable joint ventures by central and state governments and their companies and any other company, for mining operations in India 'in any form, either for own consumption, sale or for any other purpose,' in accordance with a licence granted by the state government concerned.