Coal India bets on domestic growth to meet demand

Updated 26 December 2012
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Coal India bets on domestic growth to meet demand

NEW DELHI: Coal India Ltd. said it prefers to pursue a production increase at home over securing coal assets overseas as it seeks to meet rising demand from India’s power plants.
“Our unrelenting focus should be on domestic production,” Coal India Chairman S. Narsing Rao said in an interview.
“Just because we have some money, (we) shouldn’t really be focusing on something else (overseas acquisition). I simply have no time to even think about that.”
The state-run miner, which supplies about 80 percent of India’s coal, has been under immense pressure from its industrial customers and the government to increase output quickly after stagnation in the past two years has left many power plants running below capacity.
Coal India is on course to meet its annual output target of 470 million tons in the year to March 2013 and 487 million tons in 2013/14, Rao said. “(The) number is sacrosanct.”
Rao, who took over as chairman of the world’s biggest coal miner nine months ago, outlined a strategy that includes producing more from existing mines, opening new “mega” mines, improving operational efficiency and deploying smart underground mining technologies.
India took 15 years to achieve an incremental production of 180 million tons, Rao said.
“Now the next 180 (million tons) has to come in five years, so you can see the magnitude of the challenge.”
Opening new mines has been difficult for Coal India due to slow environmental clearances and politically sensitive land acquisition.
The company will invest in setting up a logistics facility at each existing mine to transport more coal and deploy bigger and more efficient equipment, Rao said.
When it comes to securing overseas coal assets, the miner is risk-averse, he said. “The public-sector DNA is very conservative.”
Over the next six months, Coal India will identify coal assets in Africa and persuade the Indian government to negotiate deals to secure energy resources there, Rao said.
A negotiated deal by the government would bring in a safety net, given the resource nationalism in many countries, and the asset could also be procured cheap as it would not be competitively bid, Rao said.
Mature mining markets such as Australia and the US, which have little scope for government-led deals, would be off Coal India’s radar.
The company will also aim to acquire more than just a minority stake in overseas assets, he said. “If somebody is interpreting that (minority stake) also as securing energy, I’m afraid that is a totally disastrous definition of energy security.”


Malaysia reviews China infrastructure plans

Malaysia’s former PM Najib Razak (AFP)
Updated 18 June 2018
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Malaysia reviews China infrastructure plans

  • Malaysia's scandal-mired former PM Najib Razak signed a string of deals for Beijing-funded projects, including a major rail link and a deep-sea port.
  • New Prime Minister Mahathir Mohamad has announced a planned high-speed rail link between Kuala Lumpur and neighboring Singapore will not go ahead as he seeks to reduce the country’s huge national debt.

KUALA LUMPUR: Malaysia has been a loyal partner in China’s globe-spanning infrastructure drive, but its new government is to review Beijing-backed projects, threatening key links in the much-vaunted initiative.

Kuala Lumpur’s previous regime, led by scandal-mired Najib Razak, had warm ties with China, and signed a string of deals for Beijing-funded projects, including a major rail link and a deep-sea port.

But the long-ruling coalition was unexpectedly voted out last month by an electorate alienated by allegations of corruption and rising living costs.

Critics have said that many agreements lacked transparency, fueling suspicions they were struck in exchange for help to pay off debts from the financial scandal which ultimately helped bring down Najib’s regime.

The new government, led by political heavyweight Mahathir Mohammed, has pledged to review Chinese deals seen as dubious, calling into question Malaysia’s status as one of Beijing’s most cooperative partners in its infrastructure push.

China launched its initiative to revive ancient Silk Road trading routes with a global network of ports, roads and railways — dubbed “One Belt, One Road” —  in 2013.

Malaysia and Beijing ally Cambodia were seen as bright spots in Southeast Asia, with projects in other countries often facing problems, from land acquisition to drawn-out negotiations with governments.

“Malaysia under Najib moved quickly to approve and implement projects,” Murray Hiebert, a senior associate from think-tank the Center for Strategic and International Studies, told AFP.

Chinese foreign direct investment into Malaysia stood at just 0.8 percent of total net FDI inflows in 2008, but that figure had risen to 14.4 percent by 2016, according to a study from Singapore’s ISEAS-Yusof Ishak Institute.

However, Hiebert said it was “widely assumed” that Malaysia was striking quick deals with China in the hope of getting help to cover debts from sovereign wealth fund 1MDB.

Najib and his associates were accused of stealing huge sums of public money from the investment vehicle in a massive fraud. Public disgust at the allegations — denied by Najib and 1MDB — helped topple his government.

Malaysia’s first change of government in six decades has left Najib facing a potential jail term.

New Prime Minister Mahathir Mohamad has announced a planned high-speed rail link between Kuala Lumpur and neighboring Singapore will not go ahead as he seeks to reduce the country’s huge national debt.

The project was in its early stages and had not yet received any Chinese funding as part of “One Belt, One Road.” But Chinese companies were favorites to build part of the line, which would have constituted a link in a high-speed route from China’s Yunnan province to trading hub Singapore, along which Chinese goods could have been transported for export.

Work has already started in Malaysia on another line seen as part of that route, with Chinese funding — the $14-billion East Coast Rail Link, running from close to the Thai border to a port near Kuala Lumpur.

Mahathir has said that agreement is now being renegotiated.

Other Chinese-funded initiatives include a deep-sea port in Malacca, near important shipping routes, and an enormous industrial park.

It is not clear yet which projects will be amended but experts believe axing some will be positive.

Alex Holmes, Asia economist for Capital Economics, backed canceling some initiatives, citing “Malaysia’s weak fiscal position and that some of the projects are of dubious economic value.”

The Chinese foreign ministry did not respond to request for comment.

Decoder

What is the "One Belt, One Road" initiative?

The “One Belt, One Road” initiative, started in 2013, has come to define the economic agenda of President Xi Jinping. It aims to revive ancient Silk Road trading routes with a network of ports, roads and railways.