Category — Coal & Clean Coal

Tad’s Corner (formerly Alpha Coal) and Kevin’s Corner, are located adjacent to each other in the Galilee basin in Queensland, Australia  with combined thermal coal reserves of an estimated 7.6 billion tons.  Both are part of  Hancock Coal, owned by Gina Rinehart, Australia’s richest person, which started prospecting in the region in the 1970s. Rinehart calls the reserves which have low sulphur and ash content, the “jewel in the crown” of the Galilee Basin.

India’s GVK Group, the Hyderabad-headquartered infrastructure major owned and chaired by G.V.Krishna Reddy  is among the top bidders for the assets which could sell for $1-1.5 billion. The other top bidder is also an Indian company, JSW Steel, a company run by Sajjan Jindal whose mother Savitri Jindal chairs the O.P.Jindal Group and is India’s fifth richest person with a $13.2 billion fortune.

According to Forbes magazine, GVK has been scouting for Australian coal assets for a while. Last year, it was one of the bidders for Australia’s ailing miner Griffin Coal, but lost out to Indian rival Lanco Infratech, controlled by L.Madhusudan Rao.

What this means:

Corporate India, will continue its hunt for resources and assets across Australia, Africa, Latin America, Russia and even the developed economies, being assured of domestic profits and contracts. As in my previous post, public sectors companies such as Coal India Limited and ONGC will also participate in their own way. Along the way these entities will continue to bump against Chinese competitors with similar intentions.

Coal India Limited is getting ready to invest $100 million in return for 15 percent of a a joint venture in Australia. The 85 percent owner of the JV will be the world’s largest private sector coal company, Peabody headquartered in St Louis, Missouri, not far from where I attended business school.

The object of desire is the Wilkie Creek coal mine, in Queensland, Australia, which has an estimated coal reserve of 400 million tonnes. It is located in the Surat Basin of southeast Queensland and produces 2.35 million tonnes of low-sulphur, low-nitrogen thermal coal annually.

Coal India, which had its initial public offering in 2010, touched a 52-week high, with the share shooting up 2.37% in early trade. By the end of day, the stock had jumped 3.25%, in a market that was otherwise subdued. The rally helped Coal India surpass another state-run Indian energy giant, ONGC (Oil & Natural Gas Corporation), in terms of market capitalization.

What this means:

India’s burgeoning energy demands are sending companies, government owned and private, in the search for resources worldwide. Note that Indian companies made investments in shale gas and coal mines in the Eastern USA last year.

GMR Energy  announced the signing of a long-term service agreement with GE Energy for the expansion of the Vemagiri power plant in Andhra Pradesh.

Powered by two GE frame 9FA gas turbine-generators, the plant will produce over 768 MW of additional electricity by 2012. Under a 15-year contractual service agreement, GE will supply parts, services and repairs for the gas turbines. “By teaming up with GE, we are positioning the Vemagiri plant to make a long-term contribution to a modern and efficient energy infrastructure,” GMR Group CEO (Energy) Raaj Kumar said.

An engineer from my undergraduate school IIT Kanpur who also went to the University of Florida has invented  a lantern-cum-stove that lights up a small room while cooking food, an intriguing application of “frugal innovation” for the 600 million rural Indians, many of whom don’t have access to reliable electric power.

The creator, Anil Rajvanshi, who heads the Nimbkar Agricultural Research Institute (Nari) in Phaltan, Satara, India says that the Lanstove runs on kerosene and produces illumination equivalent to that of a 300-watt lightbulb. The flame is lit with the flip of a valve-swittch  and the unit  includes a pressure cooker based on the heat pipe principle. Without smoke (that plagues village huts using firewood) or the smell of kerosene (in cruder devices) ,the  Lanstove provides light and cooks a complete meal for a family of five in about 2 hours. The cooker can be used for cooking rice, lentils and vegetables, which are typical staples in an Indian rural diet.

India’s DNA newspaper reports that the Lanstove runs for six hours on a liter of kerosene. “Our tests confirmed that the carbon dioxide level generated while using Lanstove is very low as compared to that produced by chulhas (traditional wood-fired  stoves).” Village resident Sunita Mohite told the paper,  “While I cooked on Lanstove, children complete their homework. Otherwise they never touched the books after 6 pm.” Rajvanshi’s organization has applied for funds from India’s ministry of science and technology for manufacturing 100 units of Lanstove. “If manufactured on a commercial scale, the device could cost under Rs3,000 ($60) and villagers could pay in installments,” he said.

Major multinationals such as Shell, BP and Philips have also attempted to address these needs in India and elsewhere but no breakthrough device has yet emerged.

Takeaway: There is a huge need for innovation specific to the needs of the Indian population. While commercial success take a lot more than an invention or a working prototype, it is heartening to see engineering talent being applied to the bottom of the pyramid.  Your engineers may already have a core technology or approach that is not relevant in the West but solves a major need in India; or they could readily develop something for the India market.

When I was part of the Presidential Executive Mission to India last November,  General Electric CEO Jeff Immelt and Boeing CEO Jim McNerney flanked Barack Obama in his first public appearances in Mumbai.  Immelt’s  GE Energy unit had just won its largest order  in India to supply  six gas turbines, three steam turbines and generators for a 2,400 megawatt power plants being built by billionaire Anil Ambani’s Reliance Energy in the small town of Samalkota, Andhra Pradesh.

Last month, President Obama was at General Electric’s plant where these turbines are being built. Here is what he had to say

That’s why I traveled to India a few months ago — and Jeff was there with us — where our businesses were able to reach agreement to export $10 billion in goods and services to India.  And that’s going to lead to another 50,000 jobs here in the United States.  (Applause.)  Part of the reason I wanted to come to this plant is because this plant is what that trip was all about.  As part of the deal we struck in India, GE is going sell advanced turbines — the ones you guys make — to generate power at a plant in Samalkot, India — Samalkot, India.  Most of you hadn’t heard of Samalkot — (laughter) — but now you need to know about it, because you’re going to be selling to Samalkot, India.  And that new business halfway around the world is going to help support more than 1,200 manufacturing jobs and more than 400 engineering jobs right here in this community — because of that sale.  (Applause.)

So it’s a perfect example of why promoting exports is so important.  That’s why I’ve set a goal of doubling American exports within five years.  And we’re on track to do it.  We’re already up 18 percent and we’re just going to keep on going, because we’re going to sell more and more stuff all around the world.  (Applause.)   When a company sells products overseas, it leads to hiring on our shores.  The deal in Samalkot means jobs in Schenectady.  That’s how we accelerate growth.

I have maintained that exports from America are crucial to the recovery. Exports to India can go up by 500 percent or more in five years, if governments are supportive. This is good for poor farmers in near Samalkot whose children can’t get light to study at night. It is good for engineers in New York.  Let’s make it happen, friends.