Australian Coal Presents Opportunity for India
Written by Sarosh Bana, Executive Editor of Business India, Mumbai
Bana writes on a range of subjects, including Infrastructure, Energy (including Renewable, Nuclear and Conventional Energy), Shipping & Ports, Agriculture, Environment & Wildlife, Defence & Security, Policy, Commodities, and Foreign Affairs & Trade. He is an alumnus of the East West Center, of Hawai’i, with over 30 years of experience as a journalist. He may be contacted at sarosh.bana [at] gmail [dot] com .
Hyderabad-based GVK Power and Infrastructure Ltd (GVK PIL) and Ahmedabad-based Adani Enterprises Ltd (AEL) have each lined up an investment of about $10 billion that will be the highest Indian FDI in Australia to date. Adani’s venture into Australia is, however, on its own, whereas GVK is partnering Australia’s Hancock Prospecting Pty Ltd. Hancock is promoted by its late founder’s daughter, Gina Rinehart, who in May overtook Walmart heiress Christy Walton as the world’s richest woman.
GVK’s projects precede Adani’s by at least 18 months. As in India, environmental clearance is an arduous two-tiered procedure in Australia that must be forthcoming from both the provincial and federal governments. The process may take anywhere from 24 to 36 months. While GVK Hancock Coal has secured the sanction from the Queensland government and now awaits such approval from Canberra, Adani hopes to receive state environmental approval by mid-2013.
It was in August 2010 that the Adani Group had signalled its grand plan for Australia with the $3 billion purchase of Linc Energy’s coal tenements in the Galilee Basin, Australia’s single largest tenement, with a resource of 10.4 billion tonnes of coal.
The deal yielded Linc $500 million in cash and a $2 a tonne royalty for the first 20 years of production. The part open pit and part underground mine will be Australia’s largest and one of the largest in the world. Its output will be tripled to 60 million tonnes by 2019 after production starts in 2014.
AEL, the holding company of the Adani Group, will be investing a further $6.5 billion in Australia over the next three years in the coal mine, the Abbot Point port project, and a 450 km track system that will connect the two. This will also involve doubling the port’s capacity by 2015 from the present 50 million tonnes per annum (mtpa) and tripling coal yield to 60 mtpa by 2019 after production starts in 2014.
The Adanis are also hoping to create new coal export terminals with a combined capacity of up to 180 mtpa at Dudgeon Point, another port nearby.Adani Mining Pty Ltd and Dudgeon Point Project Management Pty Ltd were selected as preferred developers of Dudgeon Point in 2010 following a public expression of interest process. Construction on the $10 billion to $12 billion project is expected to commence in 2013 and will take three years. The project will include six rail loops and train unloading facilities, and offshore wharf facilities for up to eight ship berths.
Adani is among India’s fastest growing business groups with interests ranging from edible oils, ports and domestic gas distribution to coal, shipping, power generation & transmission, and oil & gas exploration. GVK has diversified interests across energy, resources, airports, roads, hospitality and life sciences.
The Adani Group’s 50-year-old promoter, Gautam Adani, is now the seventh richest Indian. Having launched his business as a commodity trading firm in 1988, he is today scaling up his enterprise by acquiring and building up assets and setting monumental targets by way of business strategy. He is confident that these efforts will bring his company closer to achieving its stated goal for 2020 of generating 20,000 MW of power, mining 200 million tonnes of coal, handling 200 million tonnes of cargo, and owning 20 capesize ships.
Adani’s company is already India’s largest importer and supplier of coal, managing 33 million tonnes, which is proposed to be raised to 300 million tonnes by 2020. Its Mundra portin the western state of Gujarat is the largest private sector port in the country. It caters to 17 per cent of India’s coal imports and will have a share of 25 per cent at its peak.
Adani’s 4620 MW plant at Mundra is the world’s largest single-location coal-fired power plant in the private sector. “China, Poland and Taiwan have three thermal power plants exceeding 5000 MW, but they are all state-owned,” mentions Adani. “Even NTPC [National Thermal Power Corporation Limited], India’s largest power producer, has no installed capacity over 4000 MW in a single location.”
GVK, in turn, has two power plants of a combined 914 MW and further projects totalling 4986 MW under various stages of construction and development across India. Apart from developing and managing two of the busiest airports in the country, in Mumbai and Bangalore, the company has plans to set up two greenfield airports in Indonesia as well. It also has road projects of over 2,200 lane kilometres under construction in India and operates six hotel properties jointly with the Taj group of hotels. GVK Biosciences is Asia’s leading Contract Research Organisation (CRO). Having invested over $3.3 billion in such projects in India, the company has additional projects worth over $6.6 billion in the pipeline.
Talking about his company’s foray into Australia, G.V. Sanjay Reddy, vice chairman of GVK PIL, which is chaired by his father G.V.K. Reddy, says, “Our investment includes an investment in mines which will eventually go beyond 80 mtpa, a 500 kilometre rail link and a 75 mtpa port.” He says GVK’s transaction with Hancock Prospecting has been for acquiring 79 per cent equity each in the Alpha and Alpha West coal projects, located in the Galilee basin, with Hancock retaining the balance 21 per cent shareholding in these two mines. GVK has besides fully acquired the adjacent Kevin’s Corner Coal Project, apart from 100 per cent interest in the rail connection and the port. Reddy reckons the total coal resource from these projects at more than eight billion tonnes.
Under Hancock Prospecting, the Alpha project had been the only exporter of coal from the Galilee Basin, its test pit having exported 100,000 tonnes to utilities in China and South Korea. A test pit yields actual results on quality that would give potential customers the confidence on the coal supplier’s claims. Exports from Alpha have now been suspended and will resume only in the first quarter of calendar 2016.
Reddy maintains that the Alpha mine and the rail project are the only projects to have received EIS (Environmental Impact Statement) approval from Queensland and expects Kevin’s Corner to be cleared by December 2012. “Apart from our Kevin’s Corner project, the only other projects to have submitted applications for EIS are Waratah’s China First project and Bandanna/AMCI’s South Galilee project,” he says. “The Alpha mine and the rail project expect the federal government’s environment approval in the next few weeks and have been assured by Canberra (and this has been acknowledged by the federal Environment minister [Tony Burke]) that they are confident of clearing the project in accordance with GVK’s timelines.”
Kevin’s Corner, which will have a production of 28 mtpa, trails Alpha by about six months, the latter’s coal production estimated to be 32 mtpa. Alpha West, which is at an early stage, could potentially produce between 16 and 24 mtpa. The railway will have an initial capacity of 60 mtpa, scalable to 120 mtpa, and the terminal at the Abbot Port will be commissioned with an initial capacity of 60 mtpa that too will be scalable.
All the coal produced will be exported to Asian utilities, GVK having executed LoIs (Letters of Intent) for 42 mtpa with such Asian countries as India, China, Japan, Korea, Taiwan, Vietnam and the Philippines. The company is currently in the process of converting these LoIs to offtake contracts. “The exact volume of committed offtakes will depend on GVK’s strategy to balance between committed sales and spot sales in the future and the financiers’ requirement from a project finance viewpoint,” asserts Reddy. “GVK expects financial closure for the mines, railway and port in Q2 of 2013 calendar year [by June 2013]; construction will begin soon after and first coal will be in Q1 2016 [by March 2016].”
Asked if GVK and Adani could collaborate on all or part of the railway system between Galilee and Abbot Point, Reddy retorts: “GVK is developing the only private rail project on an exclusive basis and is in advanced stages of selecting a construction contractor for building the railway. GVK’s rail project is open for access to third parties. In fact, GVK had initiated a third party customer process last September and is in advanced discussions with mining companies to transport their coal using GVK’s rail. These parties will pay haulage tariff to GVK for transporting their coal.”
Asserting that GVK is not dependent on any third party for the port either, Reddy says while his company is developing its own captive terminal, T3, at Abbot Point, Adani has bought terminal T1, while terminal T2 is being developed by BHP. He expects the final approval for the port by September.
“So far, we have had a great experience working with the federal and state governments in Australia and have no reason to believe that our approvals will be delayed,” remarks Reddy. “We do not see any impact on our scheduled development plans from the approval process.”
With the addition of power capacities in India hamstrung by a chronic shortfall in coal, domestic power producers see hope in Adani’s and GVK’s Australian ventures.
Seo JungJin: Who is EY’s World Entrepreneur of 2021?
Seo JungJin, founder of biopharma firm Celltrion, which most recently developed an antibody treatment for COVID-19, has been named the EY World Entrepreneur of the Year 2021, becoming the first South Korean in the award’s 21-year history.
Regarded as one of the world’s most prestigious business awards program for entrepreneurs, the EY Entrepreneur of the Year celebrates visionary and innovative leaders from across 60 countries who are transforming the world and fostering growth.
JungJin, who is now honoroary chairman of Celltrion Group, was up against a worthy cast of entrepreneurial competitors, taking the crown from among 45 award winners across 38 countries and territories.
Speaking during the virtual event, JungJin described his own interpretation of entrepreneurship as something that brings together “a group of people toward a common vision, embracing challenges as opportunities and committing oneself to contribute to the greater good”.
Why was JungJin crowned King Entrepreneur?
A South Korean native and now 63 years of age, JungJin founded biopharmaceutical firm Celltrion in 2003. In the nearly two decades since its founding, Celltrion has lived up to its goal of advancing health and welfare for all by developing ground-breaking drugs to treat autoimmune disease, various forms of cancer and, most recently, COVID-19.
The company, which JungJin started with just US$45,000 and five of his colleagues, has since growth to more than 2,1000 employees with sales permits in more than 90 countries and revenues exceeding US$1.69bn.
According to the panel, JungJin’s story is a shining example of the power of an unstoppable entrepreneur to change the world with the pandel moved by both his incredible story and his purpose-driven leadership, innovative mindset and entrepreneurial spirit.
Described by the chair of the EY judging panel Rosaleen Blair as “representing everything an unstoppable should be” from taking on the world’s biggest health care challenges to consistently creating long-term value for his company, JungJin’s story is one of incredible tenacity and perseverance that the judging panel felt most represented the entrepreneurial spirit.
“He’s taken breathtaking risks, both personal and professional, to found Celltrion and grow it into one of the world’s leading biopharmaceutical companies,” says Stasia Mitchell, EY Global Entrepreneurship Leader. “His passion for creating affordable, life-saving health care and flair for tackling global problems has led to many treatments that have helped millions of people worldwide and was especially evident this past year through the creation of a COVID-19 antibody treatment.”
How did JungJin get there?
JungJin's entrepreneurial journey started at an early age when he worked as a taxi driver to get himself through Konkuk University in Seoul, South Korea. After studying industrial engineering, he rose through the ranks of Daewoo Motor Co. before losing his job amid the carmaker’s financial troubles following the 1997 Asian economic crisis.
Following this, JungJin started collaborating with colleagues to explore business opportunities in different industries, though none delivered lasting success. The turning point came after he attended a talk hosted by renowned scholars, which inspired him to focus on the biopharmaceutical sector.
And so he founded Celltrion with just US$45,000 of his savings. The launch of Remsima, credited with being the world's first antibody biosimilar, quickly moved Celltrion up the ranks of the country's fairly underdeveloped pharmaceutical sector. Celltrion followed this success with the launch of drugs for breast cancer and lymphoma that today are being used worldwide.
With ambitions to be the world’s first in different areas, Celltrion has pioneered numerous uncharted areas to great success over the past two decades, most recently responding to the global pandemic by successfully developing an antibody treatment for COVID-19 and working to ensure a timely supply of the safe and effective treatment.
“When I first started, my vision was to help patients gain access to safe, effective and affordable medicines and thereby enhance the quality of people’s lives,” explains JungJin. “The success of Celltrion has enabled me to expand on this while finding new ways to fuel my entrepreneurial drive.”