Coal Insights December 2014

Contents 6 Steam coal prices ease slightly in December 6 China to slash coal export tariffs 8 Coking coal prices firm up in December 14 India’s coal production up 8.9% till October 16 SCCL seeks new blocks, eyes overseas acquisitions 20 Govt to bear 60% of project cost under DDUGJY 24 India’s generation capacity addition drops 39.45% m-o-m in Nov 27 India’s cement output falls 6.04% in Oct m-o-m 42 Stamping advantages in nonconventional non-recovery ovens 46 Dust needs controlling technology 49 Will the 1-billion tons target be achievable?

53 ThyssenKrupp aims to use technology as level in India 55 Ampcontrol wires up for India 60 US power sector coal use to grow 1.2% in 2014 64 India a key market for ABMEC 65 Railways’ Nov coal handling up 8.83% m-o-m 66 Thermal coal handling by major ports at 55.82 mt in Apr-Nov 67 E-auction data 68 Port data

4 Coal Insights, December 2014

10 | Feature Padding the bill

The coal import scam has been a trend for some time now, but few were bothered as consumers bore the brunt.

29 | Special Feature

McKinsey’s pills for India’s mining sector ills The Indian mining sector may contribute $50-$80 billion by 2025 to India’s GDP, says the consultant.

34 | Cover story

CIL unions brace for survival games The six-day strike at Coal India will be an acid test for the government as much as for the trade unions.

40 | Interview

Hyundai Construction to focus on excavators market The Korean giant sees growth opportunities in a slack market, puts thrust on mining segment.

61 | International

World’s largest coking coal mine offers India double bonanza Canada’s Dehua welcomes Indian equity in the project, offers off-take arrangement for coal and ore.

Feature

Padding the bill Another scam is in the making. This time, it is pegged at `29,000 crore.

According to the buzz in the industry, inflated bills for coal imported from Indonesia have been a trend for quite some time. However, few have been bothered so far because the additional cost burden in the form of higher electricity tariffs were being passed on to consumers.

Coal Insights Bureau

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urmurs of inflating prices of imported coal by some power generation companies in order to prepare a case for higher power tariffs were being heard for some time but now it appears to be official as the Directorate of Revenue Intelligence (DRI) has found the allegation to be true.

An industry source, who had been sounding about this to Coal Insights for almost a year now, said, “This has been going

10 Coal Insights, December 2014

on for the last two-and-a-half years. The day a private sector power plant was started at a location in western Uttar Pradesh, over invoicing has been taking place.”

Another source said, “I do not think all power plants would have been involved in this practice. According to my understanding, it is only those plants which had passthrough mechanism in their electricity tariff agreements might be involved as practically there was no benefit in inflating coal cost to plants which had signed agreements to sell power at a fixed rate.”

However, Coal Insights learnt that most of the power plants had power purchase agreements (PPAs) with distribution companies in which the tariff was based on fuel price.

Asked if only private sector power plants were involved in this, the source explained that, according to him, there are two types of irregularities or scams involved.

“One is related to the state electricity boards and companies like NTPC or government power plants, and the second is the private sector plants,” the source said.

Cover Story

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ust when everyone thought that Coal India’s disinvestment is going to be a trouble-free affair this time, the trade unions upped the ante, declaring a six-day strike (January 6-10 and January 13) and threatened to go on indefinite work stoppage, if required. At stake, the unions alleged, are the well-being of the workers, competitiveness of India Inc and the nation’s economic interests.

While it may reflect a pretty aggressive and confident demeanour, a reality check points to the waning support base of the unions due to the increasing contribution of contract workers to Coal India’s production kitty, among others. Also, the recent fissure among the different union bodies (over the last strike call on November 24) shows the trade union movement in poor light. And their vacillating stance in a number of issues portrays their increasing vulnerability. In such a scenario, the aggressive strike call could be seen as a last-ditch effort to survive; ni más ni menos...

State of the union CIL unions brace for survival games Arindam Bandyopadhyay

32 Coal Insights, December 2014

CORPORATE

ThyssenKrupp aims to use technology as lever in India

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hyssenKrupp Industries India (TKII) provides turnkey solutions to customers, not only in the critical area of opencast mining and bulk material handling but also to power, sugar and cement plants.

TKII has been contributing to India’s core sectors of mining, power and ports for more than 50 years. The company is now ready to add two new solutions to its already full portfolio that ranges from the bucket-wheel excavators, spreaders, tipper cars to crushing plants etc. and is also keen to explore the coal handling space in India, where it sees huge opportunities. It is important to bring down the cost of production of coal at the consumer’s premises and this can be done through technology, stresses N Sivasubramanian, Managing Director, ThyssenKrupp Industries India Pvt Ltd in a free-wheeling interview to Madhumita Mookerji of Coal Insights.

Excerpts:

manufacturers will target India in a big way.

How has the engineering-procurementconstruction (EPC) industry fared in a market that has been overall sluggish?

How did ThyssenKrupp cope in a falling market?

The EPC industry, in the last two years, did show signs of recession. The market, overall, shrunk by more than 25 percent.

The potential existed but decisions have been held back because of the delays in environmental clearances and issues related to land acquisitions. Thus, many projects got delayed. Since we are dependent on the projects business, we did see a dip in the market.

Internationally, it is a depressed mining market so all mining equipment

ThyssenKrupp is a diversified player and has a presence in mining and material handling, power, cement, sugar, oil and gas and petrochemicals, infrastructure etc.

Fortunately, we have been able to recover quite early. Because we are diversified, we have been able to compensate for the de-growth. We utilised this period to look around for opportunities in other countries.

And through the India operations of ThyssenKrupp we picked up a few good orders internationally.

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We bagged some orders in South East Asia. Now we have a good presence in Malaysia where we are doing two large projects. One is for a 1,000 mega-watt power plant where we are doing the complete coal handling plant here.

We are also executing a urea handling plant in Malaysia as well.

We also have some presence in small power plants with our CFBC boilers in Indonesia and the Philippines. Thus, the shortfall in India was compensated for by orders from overseas.

How much does mining and material handling contribute to the India operations?

Mining and material handling is one of

Tear along the dotted line

70 Coal Insights, December 2014 Tear along the dotted line