JSW Group has signed a $2 billion (Rs 8,160 crore), 10-year deal with Japan’s third biggest shipping firm by sales, Kawasaki Kisen Kaisha Ltd (or K Line), for transporting coal that will be used to fire the company’s steel and power plants, an arrangement that will ensure that the company is not affected by an increase in freight rates. As per the deal, K Line will deploy 10 dry bulk carriers to ship coking and thermal coal from mines owned by the OP Jindal group in Indonesia and Mozambique, as well as coal from mines in Australia and China.
The contract with K Line will start later in 2008 with two panamax ships. Five capesize ships and three more post-panamax ships will be deployed from 2011-12. By 2015, when all the ships enter service, JSW will be importing about 12 million tonnes of coal. JSW had earlier concluded ship charter contracts with K Line for three vesselsa panamax starting 2008 and two post-panamaxes starting 2009. Thus, the total volume of coal K Line will transport for JSW by 2015 is expected to be around 15 million tonnes per annum, which will be more than 40% of the total volume of coal to be imported by the two companies JSW Steel and JSW Energy. JSW Energy is the power generation outfit which plans to expand to 15,000MW by 2015 (including coal thermal and hydropower plants).
For JSW, the deal is beneficial as it will insulate the company from any escalation in freight rates. Dry bulk shipping rates have been rising mainly due to demands for shipping raw materials into China and India.
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JP Morgan said on Sunday that they've bought Bear Stearns for $240 million. This is a tenth of its value. 85 years of independence was finished for Bear. It had grown to the fifth largest securities firm at Wall Street. Shareholders of Bear will get cash worth $2. This was valued at $30 just three days ago on March 14th. The highest this share had ever seen was $159. The embarassment was total after Bear's clients pulled $17 billion from it last week and that could've forced Bear into winding up. Bear Strearns had 14,000 employees. Their profits in 2006 were $1.2 billion, yet JP Morgan are paying less than one fourth the value of Bear Stearns' 1.2 million square feet 45 storied office building in Manhatten, New York valued at $1000 a sq.ft which makes it worth about $1.2 billion !At the peak last year, their share was at $159, one month ago at $80, at $60 on Thursday and $30 at close on Friday.
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Reliance Power, has struck a deal to buy out a coalmine in Indonesia located in South Sumatra. The valuation of the coalmine, based on its reserves, is estimated to be around Rs 20,000 crore. The company is expected to announce its acquisition in a day or two.
This coalmine has resources of 2 billion tonnes and is spread over 100,000 acres. It will be the prime source of fuel for Reliance’s power project in Krishnapatnam in Andhra Pradesh. It is estimated that the Krishnapatnam ultra mega power project would require about 14 to 15 million tonnes of coal every year. Reliance Power is understood to have acquired the coalmine for about Rs 1,000 crore. It has acquired 100% interest in this coalmine. However, Reliance officials declined to comment on the development at present stage. This coalmine could be compared to one of the largest coalmines in India. The Gevera coalmine in Chhattisgarh has reserves of 1.2 billion tonnes and is producing around 35 million tonnes annually. Given that the acquired mine has resources of 2 billion tonnes, it is expected that the production from this mine should be more than the largest mine in India.
Although, the coal from this mine would be brought in for the Krishnapatnam project, it would also fuel other coal based power projects of the company. The acquisition is significant as it India is competing with energy hungry countries like China to acquire stakes in oil and coal blocks and secure energy security. Indonesia presents an attractive market for Indian companies due to its proximity to country's shores. Besides, Indonesian better in quality than Indian coal having less of ash content and higher calorific value.
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