South Africa's Richards Bay Coal Terminal, the world's biggest coal-export facility, expects a 30- fold surge in sales to India this year, increasing prices for European power producers competing for supplies.
The terminal shipped 7.3 million metric tons to India in the first 10 months, compared with 300,000 tons for the whole of last year, Donovan Raj, the terminal's shipping coordinator, said in an interview Nov. 22. That may rise by another 2 million tons before the end of the year, he said. Richards Bay coal prices have gained 86 percent this year.
Benchmark prices for thermal coal, used in power plants, have reached a record in Australia, South Africa and Europe in the last three weeks. Costs have risen because of shipping and rail bottlenecks as Asian customers compete for supplies with European utilities. Indian coal demand will exceed supply for the next five years, Tata Power Co. said last month.
India is the golden child at the moment, Raj said, speaking from the terminal on South Africa's northeast coast, the biggest single source of coal for European power plants.
Indian Power Minister Sushil Kumar Shinde said Aug. 24 the nation planned to add 78,755 megawatts of capacity in the five- year development plan ending in 2012. That would add 60 percent to the current level, much of it though coal-fired plants.
India in the medium term is going to be a massive importer, said Gerard McCloskey, chairman of U.K.-based consultant McCloskey Group Ltd. Its imports will rise to 100 million tons a year by 2015, from 33 million tons now, he said.
Shipping Potential
Richards Bay's shipping potential will expand to 91 million tons a year by the first half of 2009, from 72 million tons now, said Kuseni Dlamini, the terminal's chief executive officer.
That is a market the world is looking at, Dlamini said. Richards Bay, which has about 3.5 million tons of coal stockpiled at the moment, is owned by mining companies including BHP Billiton Ltd. and Anglo American Plc.
Coal exported from Richards Bay rose to $95.10 a ton, the highest since at least August 2000, in the week ending Nov. 23 according to McCloskey Group. Coal from Newcastle, Australia, rose to a record $88.63 in the week ended Nov. 23.
The jump in prices is encouraging European utilities to buy supplies from the U.S. The power producers are paying more for the shipping than for the coal, London shipbroker Galbraith's Ltd. said this month. Peabody Energy Corp., Consol Energy Inc. and Arch Coal Inc., the three biggest U.S. coal companies, forecast the largest increase in exports in 20 years.
Additional demand is also coming from Japan and South Korea. The nations each bought 300,000 tons of coal through the port this year, compared with none last year.
`Good Returns'
The interest from Asia is helping to sustain prices McCloskey said. It's guaranteeing good returns for anyone involved in the South African coal industry.
BHP is the biggest exporter of coal from South Africa, followed by Anglo and Xstrata Plc.
More than a quarter of western Europe's thermal coal is shipped from Richards Bay, which reported total shipments of 66.5 million tons last year. Exports through October this year were 53.8 million tons, little changed from a year earlier.
November's volumes should total about 5.6 million tons, from 6.48 million tons a year earlier, Raj said.
Derailments of trains run by Transnet Freight Rail, the state rail operator formerly known as Spoornet that delivers coal to the port, and bad weather have hampered shipments, Dlamini said.
Turnover times for ships at the port have been slowed by equipment shortages at the government's National Port Authority.
Helicopter Service
A helicopter used to transfer pilots to ships was replaced in September this year after crashing in 2005, Raj said. In the interim pilots have been transferred by boat, a process that can take four to six hours, instead of the 90 minutes to 2 hours by helicopter, Raj said. The helicopter service is no longer operating at night.
While Richards Bay is the world's biggest coal-export terminal, Australia's Newcastle port ships more of the fuel from two terminals. South Africa is the world's third-biggest thermal coal exporter after Australia and Indonesia.
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Monday, November 26, 2007
South African Coal Sales to India Jump, Europe Hurt
Thursday, November 22, 2007
India's Rupee Falls in Longest Losing Streak Since August 2006
India's rupee fell for a fifth day, extending its losing streak to the longest since August 2006, on concern a slide in local stocks will spur investors to take money out of the country.
The currency declined the most in a month after data from the capital markets regulator showed funds based overseas increased sales of local equities this month. The rupee also weakened on concern a rally in oil prices will lift import costs, widening the trade deficit.
The rupee's trend is now closely linked to movements in the stock market, said Paresh Nayar, chief foreign exchange dealer at the Development Credit Bank Ltd. in Mumbai. The rupee has been a bit weak this week as stocks fell and flows turned negative.
The rupee declined 0.4 percent to 39.535 per dollar as of the 5 p.m. close in Mumbai, according to data compiled by Bloomberg. That is the biggest decline since Oct. 22.
The local currency is Asia's second-best performer this year, gaining 12.1 percent. It may rise to 39.25 by year-end and 39 by the end of March 2008, according to the median estimate in a Bloomberg News survey.
The Bombay Stock Exchange's Sensitive Index today declined 0.4 percent to the lowest in almost a month, after falling the most since Oct. 18 yesterday. The MSCI Asia Pacific Index slid 0.6 percent.
Overseas funds sold $951.9 million more Indian shares than they bought this month, after making net purchases of $5.1 billion in October and $4 billion in September, according to the Securities & Exchange Board of India.
Selling Rupees
The Reserve Bank of India has been selling rupees for dollars to stem a rally in the local currency that threatened exports. The dollar purchases boosted its foreign-exchange reserves to a record $270.2 billion on Nov. 9. The central bank bought a record $11.9 billion of foreign currency in September, its 11th straight month of purchases, it said on Nov. 13.
We do intervene in the market, but we would like the exchange rate to be market-determined, central bank Deputy Governor Rakesh Mohan said today in New Delhi.
Growth in merchandise exports slowed to an average 14.4 percent in the eight months to August from 22.4 percent a year ago, government data show.
The rupee also weakened as oil importers bought dollars, Development Credit's Nayar said. The South Asian nation depends on imports to meet as much as three-quarters of its energy needs.
Demand for dollars to pay for imports from refiners such as Indian Oil Corp. may have increased as oil rose to a record high this week. India's state-run refiners need to be protected from rising oil prices, Montek Singh Ahluwalia, deputy chairman of India's Planning Commission, said today in New Delhi.
Crude oil rose as high as $99.29 a barrel in New York yesterday as a weakening dollar boosted demand for commodities. Oil has rallied 50 percent in the past six months, according to data compiled by Bloomberg.
India's trade shortfall averaged $6.2 billion a month in the fiscal year started in April, from $4.3 billion in the year- earlier period, according to government data.
Saturday, November 3, 2007
Govt mulls scheme to make lay-offs easier
Suggests retrenchment insurance scheme financed by employers.
In a significant move towards labour law reform, negotiations have been reopened on the hire and fire policy with the government offering a unique scheme of insurance coverage for retrenched workers to overcome objections from trade unions.
Difficulties in retrenchment have long been a sticking point with employers and are widely regarded as a hindrance to more foreign investment in the country.
To make the amendment acceptable to the trade unions, which have steadfastly refused to accept any relaxation of the hire and fire rules under the Industrial Disputes Act, Labour Minister Oscar Fernandes has suggested a new formula to industry.
The industrial unit will make an advance calculation of the size of the work force required to be retrenched every year.
Compensation per head, instead of being disbursed individually, will be handed over to the government as an accumulated amount. The corpus will serve as the premium for an insurance scheme that will guarantee a better package for retrenched workers.
To work out the details of this scheme, the labour ministry plans to set up a tripartite committee with government, employers and trade union representatives.
Employers have agreed to provide compensation amounting to 45 days’ wages per year of service to the workers which is industry’s best offer so far. Under the Industrial Disputes Act, 15 days’ wages per year of service is to be given to every retrenched worker.
The second National Commission on Labour in 2002 had recommended 30 days’ wages per year of service.
The government would like the employers to provide 60 days’ wages but is realistic. Said Fernandes: Labour wants something in hand when it leaves. Employers are willing to spend only up to a limit. This insurance will try to find a match between the two ends.
However, trade unions are strongly opposed to the scheme. There can be no question of raising the limit of workers in loss-making units, says Tapan Sen, national secretary of the Centre for Indian Trade Unions (CITU).
We welcome the government move to discuss better retrenchment packages. But it can't be a barter deal for amendments inthe Industrial Disputes Act, he added.
Clubbing the insurance scheme and the amendment of the Industrial Disputes Act will be disastrous for workers. Moreover, we need to see what the scheme can really deliver, said Gurudas Dasgupta, general secretary of the All India Trade Union Congress (AITUC).
Trade unions have steadfastly refused to countenance any changes to the Industrial Disputes Act for easier closure of loss-making units.
In 1978, in the teeth of opposition from the unions, the government amended the law to enable units employing up to 100 people to close without taking permission from the government. The earlier limit was 25.
The Union Budget 2001-02 proposed increasing this limit to 1,000 workers. However, this was never implemented as both the union and the state governments are allowed to legislate on labour issues.
Trade unions feel that if the threshold limit for easy closure and retrenchment is extended to more workers, 80 per cent of establishments in India will become vulnerable.
India slips in competitive index
India has slipped six notches to 48 over last year in a global ranking of competitiveness spread across 131 countries. It has lost ground due to lack of macroeconomic stability and proper infrastructure facilities, the World Economic Forum (WEF) said in its survey.
Some consolation can be derived from the fact that India is ahead of Russia (rank 58) and Brazil (72), but behind China (34) in the WEF’s Global Competitiveness Index 2007-08, released here today.
The United States topped the list as the world’s most competitive economy. India has also been ranked third in terms of domestic market size.
One reason for India’s rank dipping from 42 last year was due to nine new countries being included in the survey this year, taking the total number to 131.
The quality of the business environment in India has improved tangibly in recent years, with increased efficiency of the goods, labour and financial markets, and greater innovation and sophistication of company operations.
However, a number of weaknesses persist which need to be addressed especially in the area of infrastructure, said Fiona Paua, head (strategic insight teams), WEF.
India has also received positive remarks for the state of its business clusters and the availability of local suppliers, as well as its reliance on professional management rather than friends and relatives.
Though the WEF lauded India’s quality of management schools (ranked eighth globally) and the availability of top-quality scientists and engineers (ranked fourth), it also highlighted the country’s poor performance on various social indicators infant mortality (106), life expectancy (104) and malaria incidence (101).
Enrolment rates in the educational system remain low, with primary education also receiving poor marks for quality, the WEF said.
The report also said that a high government deficit was dragging the country down in the competitive ranking. A lack of macroeconomic stability is a competitive weakness, with a government deficit that places the country 125th and inflation in excess of 6 per cent at a time when inflation has been much reduced around the world, it added.
Indian 'slave' children found making low-cost clothes destined for Gap
Child workers, some as young as 10, have been found working in a textile factory in conditions close to slavery to produce clothes that appear destined for Gap Kids, one of the most successful arms of the high street giant.
Speaking to The Observer, the children described long hours of unwaged work, as well as threats and beatings.
Gap said it was unaware that clothing intended for the Christmas market had been improperly subcontracted to a sweatshop using child labour. It announced it had withdrawn the garments involved while it investigated breaches of the ethical code imposed by it three years ago.
The discovery of the children working in filthy conditions in the Shahpur Jat area of Delhi has renewed concerns about the outsourcing by large retail chains of their garment production to India, recognised by the United Nations as the world's capital for child labour.
According to one estimate, more than 20 per cent of India's economy is dependent on children, the equivalent of 55 million youngsters under 14.
The Observer discovered the children in a filthy sweatshop working on piles of beaded children's blouses marked with serial numbers that Gap admitted corresponded with its own inventory. The company has pledged to convene a meeting of its Indian suppliers as well as withdrawing tens of thousands of the embroidered girl's blouses from the market, before they reach the stores. The hand-stitched tops, which would have been sold for about £20, were destined for shelves in America and Europe in the next seven days in time to be sold to Christmas shoppers.
With endorsements from celebrities including Madonna, Lenny Kravitz and Sex and the City star Sarah Jessica Parker, Gap has become one of the most successful and iconic brands in fashion. Last year the firm embarked on a huge poster and TV campaign surrounding Product Red, a charitable trust for Africa founded by the U2 lead singer Bono.
Despite its charitable activities, Gap has been criticised for outsourcing large contracts to the developing world. In 2004, when it launched its social audit, it admitted that forced labour, child labour, wages below the minimum wage, physical punishment and coercion were among abuses it had found at some factories producing garments for it. It added that it had terminated contracts with 136 suppliers as a consequence.
In the past year Gap has severed contracts with a further 23 suppliers for workplace abuses.
Gap said in a statement from its headquarters in San Francisco: 'We firmly believe that under no circumstances is it acceptable for children to produce or work on garments. These allegations are deeply upsetting and we take this situation very seriously. All of our suppliers and their subcontractors are required to guarantee that they will not use child labour to produce garments. In this situation, it's clear one of our vendors violated this agreement and a full investigation is under way.
