Coal Insights, January 2022

CONTENTS 18 Seaborne thermal coal offers rise in January 19 Seaborne coking coal offers surge in January 20 India’s December coal imports down 41% y-o-y 21 CIL’s coal production up 3% in December 22 SCCL’s coal production down 1% in December 23 Union Budget: Industry bodies seek nil duty on coking coal 24 Coal Ministry defers 3rd tranche block auction on pandemic surge 28 Coal India to provide linkage to NTPC Khargone 33 December sponge iron production down 0.9% y-o-y 34 Coking coal prices to stay firm 36 Power capacity addition in November at 250 MW 37 India’s cement production to increase by 12% in FY22 39 Coal handled by major ports up 22% till December 40 Railways’ coal handling up 24% till December 44 US coal production to rise by 6 percent in 2022: EIA 45 China sets priority to ensure energy supply 47 Coal India sees 18% offtake growth till December 48 Tata Steel plans towards hydrogen-based steelmaking 49 Adani bags 1-mt NTPC coal import tender 51 BHEL coal-to-methanol plant inaugurated 54 Corporate update 56 Government update

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6 | COVER STORY

Charting turbulence: Coal trade in turmoil Energy demand, supply bottlenecks driving up prices, imports.

26 |

FEATURE

Coal Ministry urges 100-days’ plan to ensure coal availability Joshi meets stakeholders to resolve issues.

29 | FEATURE India to mine most coal among global producers in 2022: IEA Production to touch 955 mt by 2024.

50 | CORPORATE

NTPC f loats coal import tenders fearing shortages January tenders target 7.8 mt in 4 months.

52 | CORPORATE

JSW Energy charts new opportunities in RE Eyes hydrogen, hydro pumped and battery storage.

COVER STORY

Charting turbulence Coal trade in turmoil Sumit Moitra

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COVER STORY

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s 2022 dawned, Indonesia, a major coal miner and exporter, shook the world coal trading community by suddenly announcing a ban on exports of coal.

It was a kneejerk reaction, the traders believed, as the country had to grapple – just like India and China earlier – with a sudden spike in electricity demand.

As January comes to a close, that ban, albeit in a limited way is still in effect continuing the jitters among the global coal trading community.

During the course of the month, Indonesia changed its norms gradually relaxing the ban on exports and as per latest reports, 208 coal mines have so far been allowed to resume exports on the condition that they fulfil domestic market obligations.

This adds to the several existing uncertainties impacting the global coal trade - continuing global logistical nightmares, different paths being adopted by countries towards Net Zero which is also impacting

“Imports will go up as we believe Indonesia is completely lifting the ban on exports of coal effective February 1. No doubt there is significant demand backlog from importing countries like India, China, Japan and Korea and others and imports to India will rise immediately.”

Agarwal Coal Corp

how the coal-producing economies are addressing the surge in power demand within that overarching strategy.

These uncertainties are playing out on coal prices already impacted by disruptions to logistics across several coal trading countries.

Disruptive events like the flooding in British Columbia, excessive rains in Queensland, and winter storms hitting the Appalachians have impacted supplies.

Within the country, Coal India has already sounded the alarm bell over the likelihood of a drop in production in the fourth quarter, a period of usually busy mining activities.

As Indonesia lifts its restrictions on exports completely effective February 1, there could be a jump in shipments to countries importing Indonesian coal including India.

While China’s continued ban on Australian coal had rattled global trade, the latest customs data for the December quarter shows that China had cleared shipments of 6.2 million tons (mt) of Australian coking coal and 5.5 mt of thermal coal, which was stranded at various Chinese ports.

That said, rising global uncertainties and demand for domestic demand for power is fueling the need to import coal both to meet current as well as future demand.

Coal import to India may witness a rise in the coming months triggered by the country’s rising power demand and uncertainty over commensurate rise in domestic supplies.

India during April-December of 2021 imported 96.42 mt of non-coking coal, lower than 107.07 mt in the year-ago period.

December coal imports were down 41.5 percent to 23.63 mt.

The amount of electricity generated worldwide from coal surged towards a new annual record in 2021, undermining efforts to reduce greenhouse gas emissions and potentially putting global coal demand on course for an all-time high in 2022.

International Energy Agency, in its latest report on global electricity markets published this month, expects power demand in India to remain above the pre-pandemic level in 2022.

“Over 2022-2024 we expect annual demand growth to remain above pre-

“NTPC has requirement of imported coal… through various Indian discharge ports to mitigate the deficit due to shortage of domestic coal through various domestic sources.”

NTPC pandemic levels at around 6.5 percent per year,” IEA said in its Electricity Market Report – January 2022.

NTPC floats import tenders State-owned power producer NTPC has already floated a number of tenders in January to import coal of which tenders aggregating import of 7.8 million tons (mt) are still open.

These consignments are expected to arrive within the next 4 months, which will lead to sharp rise in imports in the first quarter of FY23.

According to Adani Enterprises, one of the importers contracted by NTPC, the state-owned power major might go back to its 2015-16 level of imports of around 10 mt a year.

NTPC’s imports touched a high of 16 mt in FY15 before dropping a bit to 9.7 mt during the following year.

Such levels of imports had prompted the government to prod NTPC to go for more domestic sourcing resulting in almost zero imports in 0.3 mt in FY18 and 1 mt in FY19.

“NTPC has requirement of imported coal…through various Indian discharge ports to mitigate the deficit due to shortage of domestic coal through various domestic sources,” one of the bidding document mentions.

Coal Insights, January 2022

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FEATURE

Coal Ministry urges 100days’ plan to ensure coal availability in Q4

Joshi meets Chattisgarh CM to resolve issues

Joshi recently met Chattisgarh Chief Minister Bhupesh Baghel along with Coal India Chairman Pramod Agrawal to resolve land issues to step up coal production. Also reviews coal production with senior officials of Ministry and CIL. In the meeting, the Coal Minister sought an early resolution of various land related issues of South Eastern Coalfield Ltd in Chattisgarh and that production of coal can be further increased from Chattisgarh if such issues are resolved at the earliest.

Joshi also requested the Chief Minister to expedite auction of mineral blocks as per the recent reforms brought about in the mineral sector.

Coal production up 6.74% in December

Coal Minister Pralhad Joshi and Coal India CMD Pramod Agrawal meeting Chief Minister of Chattisgarh, Bhupesh Baghel virtually to resolve land related issues.

Coal Insights Bureau

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oal Minister Pralhad Joshi has asked team Coal India to adhere to the 100-days plan to boost output in order to achieve the annual target.

In a recent series of meeting with Coal India top management and the mining community, Joshi emphasised on prioritising coal supplies to thermal power plants.

“Urged management to motivate ‘coalwarriors’ strive towards achieving annual target,” Joshi tweeted after one such meeting.

The Minister reiterated the importance of enhancing production with safety.

The coal crisis, although managed to a great extent in the power sector, is still being

26 Coal Insights, January 2022

felt in other coal consuming sectors including captive power producers.

Recently, Odisha Assembly of Small and Medium Enterprises (OASME) has complained of erratic coal supplies to captive power plants and sought Chief Minister Naveen Patnaik’s intervention for normalising the situation within the state and sustaining industry operations.

“The shortage, a result of the intermittent coal supplies to captive power plants (CPPs) based industries in Odisha, threatens the viability of industries that form the backbone of the state’s MSMEs, employment providers to lakhs of people of the state,” OASME said in a communication to Odisha Chief Minister Naveen Patnaik.

India’s total coal production increased by 6.74 percent to 74.78 million tons (mt) during December, 2021 as compared to the same period in 2019.

Out of the total production during December, Coal India achieved a growth of 3.79 percent by producing 60.22 mt.

Captive blocks registered a growth of 40.98 percent by producing 8.91 mt of coal during the period.

At the same time, Singareni Collieries Ltd (SCCL) registered a negative growth of 1.12 percent by producing 5.65 mt of coal during December.

Coal dispatch increased by 14.62 percent to 75.05 mt from 65.48 mt during December 2021 as compared to Dec 2019.

Out of the total production during this period, Coal India achieved a growth of 12.70 percent by dispatching 60.67 mt of coal, Singareni Collieries achieved a growth of 2.01 percent by dispatching 5.70 mt of coal and captive blocks registered a growth of 43.23 percent by dispatching 8.68 mt.

The oower utilities dispatch grew by 20.06 percent to 63.32 mt in December 2021 as compared to 52.74 mt in December 2019.

Coal-based power demand increased by 12.7 percent up to November in FY22

FEATURE

India to mine most coal among global producers in 2022: IEA Coal Insights Bureau

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n response to coal supply shortages, large coal-producing countries such as China, India, Indonesia and Russia are expected to boost efforts to expand their output in 2022 leading to global coal supply going up 125 million tons (mt) more in 2024, totalling 8014 mt, International Energy Agency has said in a report and has predicted that the biggest increases would come from India (growth of 163 mt).

India would be followed by China (57 mt), Russia (16 mt) and Pakistan (12 mt), while production would diminish in the United States, fall of 44 mt and the European Union where output will drop by 82 mt.

India’s growing appetite for coal is set to add 130 mt to coal demand between 2021 and 2024, the report said.

Miners have ambitious plans

To reduce its import bills and alleviate the coal supply crisis of late 2021, India plans to boost domestic coal production.

“We expect India’s total coal production to rise to 955 mt by 2024, an increase of 163 mt at a CAAGR of over 6 percent. Responsible for this expansion will be India’s three coal mining public sector undertakings – Coal India Ltd (CIL), Singareni Collieries Co Ltd (SCCL) and Neyveli Lignite Co (NLC) – as well as captive blocks for self-consumption and, potentially, new commercial coal blocks auctioned by the government,” IEA said.

CIL, the world’s largest coal mining company, accounts for 80 percent of India’s total coal production in 2020. It operates 345 mines: 151 underground, 172 opencast and 22 mixed.

More than 95 percent of CIL’s coal comes from opencast mines. To support the government’s goal of raising domestic coal production, CIL is aiming for 1 billion tons by fiscal year 2023-24.

To achieve this target, the Ministry of Coal has announced 55 greenfield projects (92 mtpa of production capacity) and 193 brownfield ventures (310 mtpa) to be launched by 2024.

Planned increases in India’s coal mining capacity by public sector undertaking, 2021-2024

“We expect India’s total coal production to rise to 955 mt by 2024, an increase of 163 mt at a CAAGR of over 6%. Responsible for this expansion will be India’s three coal mining public sector undertakings – Coal India Ltd, Singareni Collieries Co Ltd and Neyveli Lignite Co – as well as captive blocks for self-consumption and, potentially, new commercial coal blocks auctioned by the government.”

CIL also plans to open 15 mines – 12 opencast and 3 underground with 168 mt of annual capacity – through mine developers and operators (MDOs).

Five of these mines have been tendered so far, and MDOs have been selected for two of them. Procedures for tendering and contracting the remaining mines are to be completed in 2022.

SCCL is the main coal producer in India’s southern region.

In 2020 it accounted for 7 percent of India’s total coal production and currently operates 20 opencast and 26 underground

Coal Insights, January 2022

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CORPORATE

Adani bags 1-mt NTPC coal import tender

Coal Insights Bureau

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dani Enterprises Ltd has bagged contract from state-owned power producer NTPC Ltd for supply of 1 million tons of imported coal to its various power plants.

“The contract has been awarded by NTPC through a bidding process, started in end of October 2021 followed by reverse bidding,” Adani Enterprises has told stock exchanges. Adani indicated that the order is “a small quantity in overall import coal business of the company”.

The company also informed that it had also participated in the import tender floated

by Damodar Valley Corp Ltd at around the same time though the outcome of the tender is yet to be known.

“NTPC has invited tenders, around same time, on behalf of DVC for procurement of 1.00 MMT imported coal for plants of DVC. The company has submitted its offer against this tender also. However, the Company has no information or communication either from DVC or from NTPC on this tender,” Adani said.

Adani Enterprises also indicated that the company could end the year with a total import of coal of about 50 million tons.

“Incidentally, 1 million tons quantity

is merely 2 percent of the likely volume of import coal trade business of AEL in 202122,” the company added.

Carmichael starts coal exports

Adani’s Australian coal mining project, now under Bravus Mining and Resources, has sent its first shipment of high-quality coal from the Carmichael mine.

On December 29, the company has the cargo has been assembled at the North Queensland Export Terminal (NQXT) in Bowen ready for export as planned.

Bravus CEO David Boshoff said the project had successfully delivered coal for the first coal shipment to NQXT during the testing and commissioning of Bowen Rail Company’s new trains.

The coal will now be loaded and dispatched as per NQXT’s normal operations and subject to the port’s shipping schedule.

“This is a big moment for everyone who has worked so diligently and passionately to build this mine and its world-class supporting civil and commercial infrastructure,” Boshoff said.

“From day one, the objectives of the Carmichael Project were to supply high-quality Queensland coal to nations determined to lift millions of their citizens out of energy poverty, and to create local

“Incidentally, 1 mt quantity is merely 2% of the likely volume of import coal trade business of AEL in 2021-22.”

Adani Enterprises jobs and economic prosperity in Queensland communities in the process. With the support of the people of regional Queensland we have delivered on that promise,” he added.

The Carmichael project had provided more than 2,600 direct jobs and paid more than $1 billion to regional Queensland contractors and businesses since construction began.

“High-quality Australian coal will have a role to play, alongside renewables, for decades to come as part of an energy mix that delivers reliable and affordable power with reduced emissions intensity,” he said.

“Carmichael shows the value to Queensland of meeting global demand with a product that not only has a lower emissions profile than coal supplied by international competitors, but one that is mined in a highly-regulated environment with the right checks and balances in place.”

Bravus supply contracts touch 10 mt

Bravus has secured orders worth 10 million tons per annum of coal that will be produced at the Carmichael Mine.

The coal will be sold to customers in the Asia-Pacific region at index adjusted pricing, which means all taxes and royalties will be paid here in Australia.

Carmichael coal is high quality 5000 kcal/ kg coal with low sulphur, low trace elements and low ash which will meet the import requirements of key developing markets in the Asia-Pacific region.

Coal Insights, January 2022

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CORPORATE

NTPC floats coal import tenders fearing shortages Coal Insights Bureau

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tate-owned power producer NTPC has floated multiple tenders in January to import coal of which tenders aggregating import of 7.8 million tons (mt) are still open as of January 21.

NTPC, it now appears, is going back to importing significant amount of coal in expectation of “deficit due to shortage of domestic coal through various domestic sources,” as per tender document disclosures.

“To put the things in perspective, till 2015-16 NTPC was procuring imported coal in excess of 10 mt and total imports of coal in state-owned power sector in 2015-16 was around 45 mt,” Adani Enterprises said while disclosing that it has bagged a 1-mt tender to import coal previously floated by NTPC. These tenders floated in January are in addition to tenders already closed and awarded to importers like Adani Enterprises.

The January tenders are for power stations of NTPC spread across the country including

Sipat, Korba, Lara, Unchahar, Tanda, Kudgi, Solapur, Simhadri, Ramagundam, Vindhyachal, Rihand, Singrauli, Gadarwara Khargone, Mouda, Dadri and Nabinagar.

“NTPC Ltd have requirement of imported coal of specifications mentioned herein given at Annexure-B1 on “for destination” basis at NTPC power stations for quantities given at Annexure-B2 through various Indian discharge ports to mitigate the deficit due to shortage of domestic coal through various domestic sources. The timely supply of imported coal as per delivery schedule is the essence of contract. Total quantity of imported coal shall be delivered to stations in 4 months period, as per delivery schedule to be given to the successful bidder

by NTPC. Delivery schedule may be extended further at the sole discretion of NTPC,” one of the tender documents said.

To set up solar projects at airports, own plants

In January, NTPC has also floated tenders to

Technical specifications of imported coal Parameters Total Moisture (ARB) Ash (ADB) Gross Calorific Value (ARB) Sulphur (ADB) Size Fixed Carbon (ADB) Volatile Matter (ADB) HGI IDT under reducing atmosphere Extraneous material

Unit % % Kcal/kg % MM % % – Deg centigrade MT

Specified Range Upto 32% Upto 20% max Not less than 4700 Upto 1.00% max Upto 50 mm However, size of coal less than 2.36 mm shall not be more than 10% of quantity received at power plant 30-50% typical 25-45% 45-60 1100 Minimum Nil

Base parameters for coal under this tender for Price Basis are as under: Total Moisture (ARB) : 25% Ash (ADB) : 15% Sulphur (ADB) : 0.90% Gross Calorific Value (ARB) : 5000 Kcal/Kg Size (less than 2.36mm) not exceeding : 10% of quantity received at power plant

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set up several solar power projects including 3.5MW PV project at four airports and setting up solar trees at its Sipat thermal power plant.

The grid-connected solar PV project at the airport sites would come up in states of Delhi, Madhya Pradesh and Rajasthan under net-metering.

To set up 900MW solar project in Cuba

NTPC has floated tender to set up a 900 MW solar park in Cuba. The company, which is part of the International Solar Alliance (ISA) initiated by India, is the preferred partner for implementation of the projects.

ISA is supporting the government of Cuba for the solar park, which will be spread in 175 locations across all 15 provinces of Cuba. NTPC and the Union Electrica de Cuba (UNE) would work in unison on this project, NTPC said in a release.

“NTPC, under ISA Program-6, shall be supporting UNE and MINEM in this selection process, signing of project agreements and overseeing project implementation till commissioning,” the release said.

Emerges as top biomass user in thermal power plants

NTPC has emerged as a leader in biomass users having co-fired approximately 58,000 tons of biomass, while tendering a total of 10.7 mt over short-term and long-term basis, the power ministry has said.

“Under the National Mission on Use of Biomass in Thermal Power Plants, advertisement, awareness campaign and training activities are actively being pursued.

Hoardings in public places and advertisement in popular newspapers in the northern states of Haryana, Punjab and Uttar Pradesh have already started. More advertisement campaigns are planned in 2022 especially in the months leading up to the paddy harvesting season,” the ministry said.

“The biomass co-fired in the National Capital Region stands at 21,000 tons and tenders floated in the region are about 5.50 mt. Contracts have already been awarded for more than 11 lakh tons of biomass pellets,” the release added.‑

CORPORATE

JSW Energy charts new opportunities in renewable energy Coal Insights Bureau

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s part of its strategy to generate more than 80 percent of its power from Renewable Energy (RE) sources by 2030 to turn Net Zero by that time, JSW Energy has identified areas like green hydrogen, hydro pumped storage and battery energy storage, the company has disclosed to investors.

JSW Energy has set a vision of becoming a 10 GW company by 2025 and 20 GW company by 2030, with all the incremental capacity additions coming predominantly from RE sources.

This will raise its renewables portfolio from 30 percent as on March 2021, to 68 percent of its total energy portfolio by 2025, and to about 84 percent by 2030.

Green hydrogen pilot project

For its green hydrogen project the scoping work is nearing completion for pilot plant, the company said. In July 2021, JSW Future Energy entered into a framework

agreement with Australia’s Fortescue Future Industries for potential projects relating to the production of green hydrogen.

As per the agreement, the parties will assess the potential of green hydrogen for green steel making, hydrogen mobility, green ammonia and other mutually agreed industrial applications in India.

Pumped hydro projects in Rajasthan, Maharashtra

The company has signed Letter of Intent with the state government of Rajasthan for a 1 GW Hydro Pumped storage project.

Earlier, a MoU was signed in September 2021 for 1.5 GW Bhavali Pumped Storage Project between the industries department of government of Maharashtra and JSW Neo Energy Ltd. “The project, conceived as an off-stream closed loop project of installed capacity 1500 MW / 11017 MWH pumped storage component with 7.34 hours storage capacity for peak power shall be located near to Jamunde village located in Nashik district

Renewables-led growth to 20 GW by 2030

and Kalbhonde village in Shahpur Taluk of Thane district in Maharastra,” a note by the project appraisal committee of the environment ministry said.

JSW Energy sees significant opportunity and viability in hydro pumped water storage projects.

“I see more potential on hydro pump storage as compared to the battery storage solution because of the shelf life and also the environment friendly nature and third is cost competitiveness, so once hydro pump storage project build, the life is 100 years, whereas the battery storage system life is only 6 to 7 years,” Prashant Jani, joint MD of JSW Energy had earlier told analysts.

Re-organisation of green energy biz

To facilitate growth and unlock value for the shareholders, the renewable energy business will be housed under JSW Neo Energy Ltd, a wholly-owned subsidiary of the company, while the thermal business will continue to be housed within JSW Energy.

The following steps are being undertaken to effectuate the re-organisation: 1. Transferred 100 percent of the equity shares held by JSW Future Energy Ltd in JSW Renew Energy (Kar) Ltd and JSW Renewable Energy (Dolvi) Ltd, to JSW Neo Energy 2. Merger of JSW Future Energy Ltd with JSW Neo Energy Ltd under a scheme of amalgamation to be approved by NCLT, wherein all the assets and liabilities of JSW Future Energy will be transferred to JSW Neo Energy 3. Transfer of 100 percent of the equity shares held by JSW Hydro Energy in JSW Energy (Kutehr) Ltd to JSW Neo Energy 4. Following the third step, transfer of 100 percent of the equity shares held in JSW Hydro Energy Ltd to JSW Neo Energy JSW Energy Q3 net swells two-fold

JSW Energy recorded a two-fold rise in its consolidated net profit at `324 crore during October-December quarter (Q3) of FY22, led by higher revenues, according to a company release.

The company’s net sales during Q3 FY22

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