Power and fuel constraints hit cement production

BL quoted manufacturers as saying that power supply and coal availability problems have hit cement production capacities and supply, which has helped keep prices stable. Though installed capacity has increased, consumption has matched the growth, contrary to expectations.

According to a leading manufacturer in the South, the power shortage in Tamil Nadu and Andhra Pradesh has impacted production from large and small mills. Particularly, mini cement plants, which do not have captive power facilities have been the worst affected. Industry estimates that at least about 3 million tonne of production has been lost due to the power shortage in recent months. Large mills that expected to have additional production capacity are yet to get power supply.

According to industry estimates, between April 2008 and January 2009, cement production capacity increased to about 16 million tonne a month from 14.8 million tonne. Cement consumption appears to have grown by about 8.2% during this period to match production growth. This has contributed to prices staying stable at about INR 225 a bag in Andhra Pradesh and INR 265 to INR 270 in Tamil Nadu and Kerala.

An official said cement consumption in South and Central zones is growing at about 10% and 10.5% while in the North the growth touched about 9% since January against 4.1% earlier. March is also doing well.

Mr S Sreekanth Reddy director of Sagar Cements said manufacturers are facing a power shortage of at least 25% grid power in Andhra Pradesh. Production is lost on 2 days of a week or one week in a month. There is no scope for improvement in supply at least up to the monsoons.

Mr Reddy said rural India is primarily contributing to the cement demand. The market difficulties of large real estate players had not impacted the industry because they account for less than 15% of the consumption.

According to Mr T Venkatesan CEO of Dalmia Cements, the industry is using costly imported coal for power and fuel which account for about 60% of the cement production cost. Due to domestic coal availability constraints, manufacturers had tied up in advance for imported coal at high costs ranging around USD 100 tonne to USD 150 tonne and they are yet to get the benefit of the drop in coal prices which ranges around USD 80 to USD 90 now. Though there is a growth in consumption, the demand scene is not great.

Mr Venkatesan said consumption growth in Tamil Nadu is down to about 7% to 8% now against 14% to 15% last year. The demand is poor in Bangalore. The pick up in the North could possibly be due to the absence of supplies from Pakistan. But the growth trend has helped to stabilize prices even in the backdrop of the general slowdown.




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2009 Uranium Conference Highlights

By Melissa Pistilli-Exclusive to Uranium Investing News

Paydirt magazine, an internationally-circulating mining publication, hosted its fourth-annual Uranium Conference in Adelaide, South Australia. The two-day program included nuclear industry leaders, exploration and ining representatives, and government officials coming together to discuss the uranium and nuclear energy industries.

Some of the topics at the 2009 conference included reports on BHP Billiton’s Olympic Dam mine, the current financial crisis’ impact on the uranium mining sector, and Botswana’s uranium mining future.

Olympic Dam Delay

The global financial crisis is hurting even industry leaders like BHP Billiton. Analysts are anticipating forced delays to BHP’s planned expansion of the Olympic Dam mine in South Australia, which hosts the world’s largest known uranium deposit.

Speaking at the conference, BGF Equities director Warwick Grigor said BHP would be better off using their cash to make acquisitions than expanding projects. “We really don’t know where the end of the tunnel is in terms of this economic crisis and it would be very brave of BHP to be throwing a lot of money at that when they can buy so many other bargain-basement assets around and extend their power that way,” said Grigor.

BHP had originally planned to have the first stage of the five-phase expansion into production by 2013, but Grigor predicts a delay of at least two years or more.

The Uranium Industry’s “Walking Dead”

Mr. Grigor also warned conference attendees that the financial crisis has spawned a shake-down in the uranium mining industry and many of the sector’s companies are already “walking dead.” These “zombie companies”, as Grigor calls them, are those miners with meritless properties and/or are cash-strapped; the companies created merely to jump on the uranium bandwagon when the spot price was riding high.

It seems the global credit crunch is working to separate the weak from the fold. “Some companies will merge and some companies will be taken over, but in many cases it won’t even be worth paying the corporate advisory and legal fees to complete mergers,” added Grigor.

Botswana to Become a “Second Namibia”

Recently, Mining Weekly suggested the African nation of Botswana may soon become “a second Namibia,” which is well-known for its uranium mining industry and resources. Recently, about 138 prospecting licenses for the exploration of uranium were issued by the Botswana government. Exploration activity is taking place “across the length and breadth of Botswana,” said Minerals Minister Ponatshego Kedikilwe.

Australian-based A-Cap Resources [ASX: ACB] is one uranium miner seeking success in Botswana and is on target to put Botswana’s first uranium mine into production. The company is currently exploring and developing the Letlhakane mine. At the Paydirt 2009 Conference on Tuesday, A-Cap Managing Director, Dr. Andrew Tunks said the company has enough confidence in Letlhakane’s known and existing potential to move operations toward feasibility studies this year.

“Our view is to initiate much of the required feasibility study workload during calendar 2009. Although we have a current inferred resource of 100-million pounds, we believe Letlhakane has an exploration target in excess of 200-million pounds of uranium oxide (U3O8),” said Tunks. The results of a scoping study conducted on the property were released in October of last year and confirmed a resource of 280-million tonnes at 158 parts per million U3O8 for 44,500 tonnes of contained concentrate. The estimated cash costs for the mine at Letlhakane is $33 per pound with a proposed production rate of 20,000 tonnes per day.

A-Cap plans to ask the Botswana government for a mining license by early 2010 and hopes to bring the Letlhakane mine into production by 2011. On Wednesday, shares of A-Cap on the ASX were trading at .15 cents, down from a 52-week high of .88 cents.




(http://www.uraniuminvestingnews.com)