Displaying items by tag: mine

Burkina Faso: The Ministry of Mines and Quarries has signed a limestone mining deal with Sahelian Mining, a subsidiary of Diamond Cement Burkina. The deal covers mineral rights for the Sahel region, according to the Sidwaya newspaper. The agreement is intended to diversify the country’s mineral production. Diamond Cement Burkina oprates a cement grinding plant at Ouagadougou.

India: The Environment Ministry has approved a US$9.4m opencast limestone mine project by UltraTech Cement in Bhavnagar district, Gujarat. The cement producer has proposed to lease a 632 hectare site with a production capacity of 2.07Mt/yr, according to the Press Trust of India. The mine has total mineral reserves of 63.6Mt with a lifespan of 32 years. Conditions of the approval include relocating 147 families and a group of local farmers.

Limestone from the mine will be used to support a proposed cement plant in Bhavnagar district. It will also be sent to UltraTech’s other plants in the state.

Cuba: The Punta Alegre gypsum mine near Ciego de Ávila supplied over 56,400t of gypsum to the local cement industry in 2017. The mine mainly supplied Cementos Cienfuegos, according to the Invasor newspaper. Despite the disruption caused by Hurricane Irma in mid-2017 the mine beat its annual production target of 50,000t. The unit installed a new mill from Chinese suppliers that increased its production capacity to 100t/hr in 2015.

Small print can cause large consequences. Billion US Dollar consequences. Take the 2015 amendment to India’s Mines and Minerals (Development and Regulation) (MMDR) Act from 1957. Ambiguous wording in the legislation may have held up two prominent cement industry acquisitions in 2015. It also hangs over the recently announced purchase by UltraTech Cement of Jaiprakash Associates’ cement plants.

The MMDR was amended in January 2015. As the Times of India explained in mid-2015, a clause in the amendment said, “The transfer of mineral concessions shall be allowed only for concessions which are granted through auction.” However, it was unclear whether this meant historically allocated mines given via nominations or only newly allocated ones. Given the reliance of clinker plants on reliable mineral reserves this caused havoc. Cue confusion and large legal budgets.

LafargeHolcim’s divestment of two cement plants to Birla Corporation was one casualty. As a condition of the merger between Lafarge and Holcim the Competition Commission of India (CCI) required that the Jojobera and Sonadih cement plants in Eastern India be sold in 2015. Together the plants have a combined cement production capacity of 5.1Mt/yr. However the ambiguity over the 2015 MMDR Act clause on transfer of mining rights held the deal up. By February 2016 Birla Corporation had endured enough. It publicly complained about Lafarge India’s ‘inability’ to complete the deal and threatened legal action. LafargeHolcim retorted by asking the CCI if it could sell all of Lafarge India instead. It received the revised clearance and a new buyer is yet to be announced.

Another victim was UltraTech Cement in a previous attempt to buy Jaiprakash Associates’ cement assets. That time it was down to buy two integrated cement plants in Madhya Pradesh with a combined clinker production capacity of 5.2Mt/yr with associated mineral rights. The deal was agreed in December 2014 and then reported delayed in mid-2015. Finally, on 28 February 2016 the Bombay High Court rejected the deal, citing the MMDR Act as the prime cause.

Luckily for UltraTech Cement the story has a happy ending (so far) as it then announced that it was purchasing the majority of Jaiprakash Associates’ 22.4Mt/yr cement portfolio instead for US$2.4bn. It is hoped that the deal will be finalised by June 2017 but this partly depends on the MMDR Act being amended. Although UltraTech Cement have said they are looking at alternative routes to the deal in case the act isn’t amended.

Poor legal wording kiboshed at least two cement industry deals for over 10Mt/yr production capacity. Roughly, at the price UltraTech Cement is paying for its latest deal, that’s over US$1bn worth of Indian cement assets. Given the hard time the Indian cement industry had in 2015 the question should be asked regarding how much damage the MMDR Act amendment has done. One option for the beleaguered industry is to consolidate and cut its costs. This was massively delayed in 2015.

The proposed 2016 amendment to the MMDR Act reads as follows:

“Provided that where a mining lease has been granted otherwise than through auction and where mineral from such mining lease is being used for captive purpose, such mining lease will be permitted to be transferred subject to compliance with the terms and conditions as prescribed by the Central Government in this behalf.”

Let’s hope it does the trick this time.