Coal Insights, April 2023

13 Seaborne thermal coal offers remain volatile in April

14 Seaborne coking coal offers fell in April

15 March coal imports up 5.24% y-o-y

16 CIL’s coal production up 13% at 703 mt in FY23

17 SCCL’s coal production up 3% in FY23

21 CEA to make demand forecasting more granular, dynamic

29 Heatwave to drive power demand in April

31 Power capacity addition at 660 MW in Januar y

32 Sponge iron production up 17% in March FY23

33 Indian Railways’ coal handling up 11.5% till FY23

36 “Need to fill the technology gap to achieve sustainability”: Coal India CMD

38 US coal production to decline by 6% in 2023: EIA

39 Glencore sticks to coal phase-out strategy with a rider

42 Tek Resources to demerge met coal mines, rejects Glencore offer

44 Coal India eyes 610 mt supply to power sector in FY24

46 ECL signs MDO contracts with Gainwell, JMS Mining, Minsol

50 Corporate update

52 Government update

54 E-auction data

56 Port Data

18

FEATURE

Tranche 7 withdraws Tamil Nadu mines to protect environment

Portal for monitoring of commercial blocks in the works.

34

INTERVIEW

“Our reputation is for quality. We don’t work on credit.”

COVER STORY

Slowdown threat weighs on energy prices

|

FEATURE

Steelmakers eye PCI coal as capacity set to rise via BF-BOF route

SAIL looks to broaden PCI coal sourcing. |

48

|

BKT in Bhuj: bigger giant tires in the making

Beyond tires, BKT is venturing into rubber tracks.

Slowdown threat weighs on energy prices

Sumit Maitra

Amild winter, threat of a global economic slowdown along with decoupling of European energy markets from Russian supplies have softened coal prices the world over and would continue to keep it under check in coming months, believe industry leaders and experts.

Warmer weather conditions in Northern Asia and Europe weakened natural gas prices by 40 percent while thermal coal demand softened.

International Monetary Fund’s latest World Economic Outlook forecasts that growth will slow from 3.4 percent last year to 2.8 percent in 2023.

“Risks to the outlook are heavily skewed to the downside, with heightened chances of a hard landing,” IMF said recently.

Combined with mild weather, Europe’s successful energy conservation strategies and construction of new liquefied natural gas (LNG) terminals have led to decline in European natural gas prices to pre-Russian invasion levels, and with renewable energy capacities being scaled up, the post-conflict jump in coal and oil-based energy production has also returned to lower levels.

High coal stocks at European power plants are also depressing the market.

“At around this time last year, there was record low coal stocks at European power plants. Everyone hit the panic button and started buying up coal and within 6-7 months, there was record high level of coal stocks. That also took away some of the steam off the markets,” Freddie Staermose, VP, Generation Fuels & Dry Bulks, Argus Media said during the 16th Indian Coal Markets Conference

Similar trend has been seen in case of gas also. “As we came out of winter, inventories in Europe are at record high levels,” he said.

Indonesian government has significantly cut its benchmark coal prices for April compared to March.

For April, prices of coal with calorific value above 6,000 kcal/kg (HBA), has been set at $265.26 per ton against $283.08/ton in March.

For HBA I, prices have been lower from

$136.70 to $102.53 and for HBA II from $102.26 to $87.81.

In China, while coal imports have risen as summer sets in, its domestic thermal coal prices have started showing signs of stabilizing lately after falling from midMarch.

Newcastle coal futures, the benchmark for the top consuming region of Asia, bottomed below the $200 per ton mark amid increased production and sluggish demand outside China.

Metallurgical coal prices saw a recovery in the March quarter due a combination of strengthening metallurgical markets including the opening up of China, as well as wet weather and a derailment in central Queensland. While PLV HCC settled at $343/t for the period, there has been some easing during the month of March as demand has softened.

As per reports, Glencore and Tohoku Electric Power of Japan has reached a yearlong supply pact starting April 1, 2023 at $199.95/ton FOB Newcastle 6,322 kcal/kg GAR, following prices hovering below $200/ ton at the spot market.

Tohoku Electric traditionally imports coal from Australia, US, Indonesia and Canada.

“In the light of recent dramatic changes in the global energy environment, we are responding to fuel procurement risks associated with Russia’s invasion of Ukraine and striving to lower costs under conditions of historically high energy prices. The movement towards embargoes against Russian fuel in Europe, US, Japan and elsewhere has led to tight fuel supplies and costs. Under these conditions, we are maintaining high level of stocks (coal and LNG) at power stations and continue to diversify procurement sources,” the Japanese company has said.

“The differential between metallurgical and thermal coal price has prompted us to consider resuming spot semi-soft coking coal (SSCC) sales to optimise price realisations,” Whitehaven Coal has told investors.

Price spreads between high-quality thermal coal and both SSCC and lowerquality thermal coal had earlier incentivised Whitehaven to wash more coal and produce high quality thermal coal.

“The combination of high coal inventories and low demand resulted in a decline in high CV thermal coal prices over the March quarter,” said Whitehaven Coal.

“As we came out of winter, coal inventories in Europe are at record high levels. Similar trend has been seen in case of gas also,”

Freddie Staermose, VP, Generation Fuels & Dry Bulks, Argus Media

Tranche 7 withdraws Tamil Nadu mines to protect environment

in 8 districts (Thanjavur, Tiruvarur, Nagappattinam, Pudukottai, Cuddalore, Ariyalur, Karur and Tiruchy) in Tamil Nadu. These blocks called for auction in the Tender released by the Ministry of Coal are in the Protected Agricultural Zone. This law was enacted due to wide scale farmers’ protests in the Delta region of Tamil Nadu after the DMK government in 2011 signed up with Great Eastern Energy Corp for the exploration and later extraction of Coal bed methane from Manargudi. Though the East of Sethiathope, Michaelpatti & Vadaseri blocks were explored for coal reserves in the erstwhile UPA regime, the farmers in the Delta region have unanimously voiced against coal/ coalbed methane extraction from their region as it could affect the quality of groundwater and in turn, could affect agriculture in the Delta region,” a letter written by a political party handed over to Minister Joshi said.

Out of the original list of 106 coal mines, 101 mines were being put up for auction under 17th/ 7th Tranche under CMSP/ MMDR Act and 5 coal mines are being

Coal Insights Bureau

Ministry of Coal is now offering 103 coal blocks for commercial coal mines’ auction following withdrawal of all the 3 mines in Tamil Nadu.

Earlier the ministry had offered 106 coal blocks on March 29 but on April 6, 3 mines of Tamil Nadu – East of Sethiathope, Michaelpatti and Vadaseri – were withdrawn from the list as communicated by Coal Minister Pralhad Joshi following representations from political parties.

“In spirit of cooperative federalism & keeping in mind interest of people of TN, I have directed to exclude them from auction,” Joshi tweeted on April 6.

“In 2020, the state government of Tamil Nadu passed the Tamil Nadu Protected Agricultural Zone Development Act 2020, which bans hydrocarbon extraction

Defence Minister Rajnath Singh and Coal and Mines Minister Pralhad Joshi during the launch of the 7th round of commercial coal mines’ auction.

Steelmakers eye PCI coal as capacity set to rise via BF-BOF

route

in the blast furnace in the pulverized form, a direct one-to-one replacement of the costly coke. We have also successfully blended PCI coal with imported coal by up to 5 percent to get the required property in coke ovens,” Arun Kanti Bagchi, Director (Projects) and Additional Charge of Director (Operation), said at the Indian Coal Market Conference 2023.

With very limited mining resources of steel-making grade coking coals in India, there is huge dependency of nearly 90 percent on imports.

India was the largest importer of both coking coal and low ash metallurgical coke in 2022:

While import of coking coal at 56 mt remained more or less stagnant, import of PCI Coal rose 7 percent year-on-year in 2022 to 13.4 mt shipments of met coke jumped 36 percent to 3.36 mt.

“There is a need to increase coal injection (PCI) and reduce coke rate in BF,” said said S K Haldar, consultant, Rawmet Resources Pvt Ltd at the conference.

SAIL looks to broaden PCI coal sourcing

Steel Authority of India Ltd (SAIL), the largest Indian steel producer, in a bid to broaden its supplier base, has floated Expression of Interest (EOI) from overseas PCI coal producers and suppliers of PCI coal

Coal Insights Bureau

Absence of quality coking coal from domestic sources and limited sources of coking coal in the international market have put the focus of steelmakers on Pulverized Coal Infection (PCI) in blast furnace as more and more capacity addition in steelmaking is happening through the BFBOF route.

Higher grade thermal coal pulverized and charged into blast furnace reduces consumption of coking coal in a corresponding manner.

“PCI is important from steelmakers’ perspective as the coal can be used directly

Starting its journey 5 year ago in an humble way from the ceramic cluster of Gujarat’s Morbi, MP Corporation has now emerged as one of the largest importers of Indonesian coal, the most preferred source of coal for domestic users in India.

Its founder Matang Patel is the proverbial ‘dropout’ who made big.

Patel, who always excelled in studies, left his pursuit for a PhD degree to begin his journey as an entrepreneur when the opportunities in coal imports struck him.

Today, MP Corp is now catering to the needs of more than 1,200 customers, importing shipments from Indonesia to 5 major ports – Navalakhi, Kandla, Bhavnagar, Tuna and Mundra Port.

Coal Insights’ Sumit Maitra traveled to Rajkot to meet Matang Patel, Chairman and Director of MP Corp to know his journey and his rise and about his future plans.

“Our reputation is for quality. We don’t work on credit.”

ECL signs MDO contracts with Gainwell, JMS Mining, Minsol

subsidiary of CIL to successfully award 7 MDO tenders (1 OC, 2 UG and 4 on revenue sharing basis) within a short span of six months. The ceremony was attended by AP Panda, CMD, ECL, Ahuti Swain Director (Personal) and others.

During FY23, ECL recorded a growth of 8 percent compared to the previous year by producing more than 35 mt of coal.

The achievement also contributed to the Kunustodia region of ECL which produced 8.48 lakh tons of coal with 5.9 percent growth.

Implementation of Highwall mining in Nimcha, Narayankudi

The first highwall project of ECL at Nimcha Colliery, Satgram Area, Paschim Bardhaman, West Bengal, has been commissioned.

Coal Insights Bureau

Eastern Coalfields Ltd has awarded its biggest ever and the first full-fledged UG Mine Developer & Operator (MDO) tenders.

The Coal India subsidiary has signed fullfledged MDO tenders for Under Ground mines of Parasea-Belbaid of Kunustoria area, Tilaboni of Bankola area, along with one MDO tender on revenue-sharing basis for Moira UG Mine of Bankola area.

“The above three MDO tenders will augment the production capacity of ECL to the tune of about 5 million tons per annum (mtpa) for the next 25 years,” ECL has said.

Parasea-Belbaid UG MDO tender has been awarded to Gainwell Commosales Pvt

Ltd for a total coal quantity of 35.62 million tons (mt) having peak capacity of 2.07 mtpa over a contract period of 25 years.

The contract value is `9,230.13 crore.

Tilaboni UG MDO tender has been bagged by JMS Mining Pvt Ltd for a total quantity of 38.59 mt (peak capacity of 1.86 mtpa) over a contract period of 25 years with a contract value of `9,184.65 crore.

Moira UG MDO tender on revenue sharing basis has been awarded to Minsol Ltd for a contract period of 25 years and a total coal quantity of 15.25 mt at offered revenue share of 7 percent to ECL.

The above three MDO tenders will augment the production capacity of ECL to the tune of about 5 mtpa for the next 25 years.

With this, ECL becomes the first

“This project will assist ECL in producing 0.5 mt of coal per year,” Coal India said.

As per declaration of ECL, the Nimcha highwall mining project would be producing G5 grade of coal.

This technology provides an economical way to extract coal reserves locked up in the highwall, the company said.

“Highwall mining is a mining method for attaining additional coal recovery after the economic strip limit is reached in surface mining. Highwall mining equipment is remotely deployed in openings beneath the final highwall, and workers do not need to go inside the working face,” Coal India said.

ECL aims to produce 51 mt of coal in FY24, a sharp increase from 35 mt in the previous financial year.

The 3 Mine Developer & Operator tenders will augment the production capacity of ECL to the tune of about 5 million tons per annum for the next 25 years.

Dipankar Banerjee, CEO, Mining Business, Gainwell Commosales Pvt Ltd and AP Panda, CMD, ECL after signing the agreement.

BKT in Bhuj: bigger giant tires in the making

port operations, industrial, agricultural, or even military usage and we are working towards that aim by filling up all the gaps in our offerings,” Poddar said. Tires for heavy electric vehicles like battery-operated tractors for farm applications are also being planned in close association with the OEMs.

“We are in discussion with batteryoperated tractor manufacturers to develop tires suited for such vehicles. While the dimension of the tractor tire, say of the 16.9x28 size variety, would remain the same, the making of the tire would be different. We have given them curtain solutions and discussions are on,” Ashok Chhajer, Sr. General Manager, OE Sales, BKT said.

Beyond tires, BKT is venturing into making rubber tracks that find applications in agriculture and mining and are also expanding the tire mold facility and getting into specialty carbon black.

“Tracks are a big and upcoming area and we are the first manufacturer in India to make such products,” Poddar said.

Balkrishna Industries Ltd. (BKT), is an Indian multinational group and a global player in the Off-Highway tire market. Its Bhuj plant was set up as a greenfield project amid the arid region of Gujarat, and recently completed a major capacity expansion and modernisation project. The company makes 3,200 different tire variants used in farms, construction, mines, and even for ports, and are exported to more than 160 countries worldwide.

BKT caught the eye of the mining sector in December 2020 and unveiled a giant 57inch tire from its Bhuj plant, the largest tire ever produced in India.

A bigger giant in the making BKT is now busy creating an even larger tire meant for the growing mining sector within and outside the country. “So far, we have gone up to 57 inches and we plan to go up to 60 inches. The monster tire EARTHMAX SR 468 (OTR 57), is meant to carry a huge load of 240 tons. Dump trucks with this tire are now running successfully in some

of the highly challenging mining conditions across the world. In the middle of next year, we would be releasing the 60-inch variant of the EARTHMAX for trials followed by commercial productions once they are successfully tested,” Rajiv Poddar, Joint Managing Director, BKT said.

The all-steel radial tire EARTHMAX SR 468 has a special tread design and a compound created to limit the heat generated and the capability to resist cuts in rough underfoot conditions. With its wide range of OTR tires, BKT is now eyeing the growing market of private-sector mining companies, particularly those who have won coal mines during the ongoing commercial block auctions.

“We are ready with our range of tires, distribution is in place while service providers are close to the mining regions. And as the mines are getting privatised, we are reaching out to the new private owners of the mines and explaining to them the features of our offerings and why they should buy from us rather than importing,” Poddar said during an interaction with media representatives in Bhuj.

“Our vision is to become a one-stopshop for all OTR tire needs, be it in mining,

BKT in November 2022 unveiled the prototype rubber track AGRIFORCE BKT71 for the farming sector.

According to a BKT official, the company is currently going through validation of the rubber tracks for agri and other industry uses and has designated an area within the Bhuj facility to set up a commercial-scale manufacturing facility for it.

In farms, rubber tracks are preferred over OTR tires in some cases as the tracks, being a continuous band of treads, allow even distribution of weight which makes tracks better suited to maintain soil quality.

A new mold-making facility is also coming up at Bhuj. “We are expanding our mold capacity. Currently, it is at Dombivli in Mumbai and we are setting up such capacity at Bhuj as well. The land has already been designated, machines are expected and the project will be done shortly” Rajiv Poddar said.

BKT initiated a backward integration program for the production of Carbon Black (a main ingredient in tire making) in 2017, which has proved to be a boon and has augmented the supply of critical raw materials in the present circumstances. Besides, the company’s carbon black product is utilized

Coal Insights Bureau