Coal Insights, January 2023

14 Seabor ne thermal coal offers decline in January

15 Seabor ne coking coal offers rise in January

16 India’s December coal impor ts up 32.6% y-o-y

17 CIL’s coal production up 10% in Q3

18 SCCL’s coal production up 9% in Q3

19 Tranche 6 coal block auction postponed to February 22

20 Cabinet approves National Green Hydrogen Mission

25 Coal divest pressure on FIs har ming transition efforts: study

27 Talcher rail link eyes 40K ton more daily coal despatch

29 India’s December sponge iron production up 11.8%

30 No power capacity addition in November

32 Coal handled by major por ts up 29% till December

33 Railways’ coal handling up 13% till December

40 JERA eyes ammonia co-firing in Asian ther mal plants

42 US coal production to decline by 11% in 2023: EIA

46 NLC Ghatampur plant to star t ops in July

48 Coal India to take up 6 new OB -to-sand projects

49 REC lends `15,086 crores to Sarani, Amarkantak thermal projects

51 SJVN to commission Buxar ther mal plant in FY24

52 Coal India-funded Talcher fertilizer plant sticks to production timeline

54 Corporate update

56 Gover nment update

58 E-auction data

60 Port Data

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Energy demand set to double every 10 years.

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FEATURE

Coal power remains competitive: IEA study

Performance of renewables can drop after a decade.

34

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INTERNATIONAL

Aussie sees production disruption abating

La Niña weather cycle is expected to end soon.

INTERVIEW

“Ready for a step-change to take production, performance and safety to the next level.”

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CORPORATE

Coal India eyes lower costs of ops in 2023

Looks for greater operational efficiency.

Powering world’s most populous nation

Sumit Maitra

As per World Population Review’s (WPR) figures for 2022, India has surpassed China as the world’s most populous country. According to WPR, India’s population has touched 141.7 crore as of the end of 2022, more than 141.2 crore Chinese population number as on January 17.

This brings to focus the need to power up the nation to meet the energy demand from an ever-expanding population.

“Power demand in India will continue to rise in a steady manner for the next 30-40 years, doubling every 10 years which would translate into a yearly average growth of 6-7

percent,” says Pramod Agrawal, Chairman, Coal India.

This is in contrast to a much lower growth seen in earlier years, which has now necessitated significant rise in coal supplies.

“The electricity consumption grew by 4 percent in last 5 years and is expected to further increase by 7 percent in next 8 years,” India Energy Exchange (IEA) recently told investors.

Agrawal attributes several reasons for this, most important of which is India’s growing population and low per capita energy consumption.

“India’s population still continues to grow along with accessibility to energy. Earlier, many of India’s villages never had energy connections. Or even if there were electricity connections, availability was poor. Now, even far-flung areas are getting connected,” Agrawal said while addressing the 18th Foundation Day Lecture organised by MGMI.

“Rising population, improvement in electricity accessibility coupled with economic growth would keep driving power demand in the country which will require us to make arrangements to ensure that we meet the demand,” Agrawal said.

Slower addition to renewable energy (RE) would also drive thermal power demand.

“RE capacity was supposed to touch 170 GW by the end of 2022. But there was actual addition of only 120 GW. It is estimated that by 2030, coal’s share of energy pix would come down to 54 percent from 70 percent. However, it would be difficult to say whether it will actually turn out that way,” Agrawal added.

As per government data, India’s RE capacity addition in 2022 was 119.09 GW out of total non-fossil fuel capacity addition of 172.72 GW, the balance coming from large hydro-electric (46.85 GW) and nuclear (6.78 GW).

‘Unprecedented’ rise in power demand

Grid India (POSOCO) has reported to the government that energy demand has increased sharply and is expected to remain at increased level during the first half of FY24.

India’s coal-based power generation grew 15.5 percent to 49,757.10 million units

(MU) during the first half of January 2023 compared to 43,080.78 MU during the first half of January 2022, according to CEA.

On a month-on-month basis, coal-based generation till January 15, 2023 was up by 8 percent as compared to 46,062.85 MU during the same period of December 2022.

During April-January 15, 2022, thermal power generation has risen by 11.6 percent at 896,152.25 MU compared to 803,070.99 MU during the corresponding period of 2021. Between FY23 and FY30, CEA expects electricity demand to grow at a CAGR of 7 percent.

“Although coal supplies has increased during Q4, it is not adequate to meet the unprecedented increase in the demand for electricity,” Power Ministry said.

Steps to procure 1,500MW from imported coal-based plants

Power Ministry has decided to procure 1,500 MW from imported coal-based (ICB) power plants during April-May 2023 period, being

seen as the ‘crunch period’ as during that time availability of power in the day ahead market (DAM) is expected to be less than the demand.

NTPC Vidyut Vyapar Nigam Ltd, a wholly-owned subsidiary of NTPC Ltd has been nominated as the nodal agency to facilitate the procurement of 1500 MW.

“This would ensure sufficient supply in the Day Ahead Market, which in turn is expected to have moderating effect on clearing price,” the Power Ministry said on January 23.

The seller of power, to be selected through a bidding process, shall be entitled to receive variable charges towards energy scheduled in the power exchange through at the rate of `5.34/kWh which shall be indexed for the price of imported coal, ocean freight charges and $ exchange rate.

Power Ministry sees coal supply shortfall

As per Power Ministry estimates based on

“India’s population still continues to grow along with accessibility to energy. Earlier, many of India’s villages never had energy connections. Or even if there were electricity connections, availability was poor. Now, even far-flung areas are getting connected,” Pramod Agrawal, Chairman, Coal India

India’s total energy consumption (BU)

Coal power remains competitive: IEA study

Coal Insights Bureau

Coal continues to be an economical source of energy although measures adopted to reduce emissions would drive up costs, says a report by International Energy Agency (IEA).

The capital cost of solar PV currently ranges from $600 per kilowatt to $1,000/ kW depending on the region, and up to $1,800/kW including battery storage. By comparison, the cost of a conventional coalfired power plant varies between $600/kW and $2,100/kW depending on the efficiency of the plant and fuel gas treatment as well as the region, IEA says in a report titled Energy Technology Perspectives 2023 adding that equipping plants with Carbon Capture and Utilisation can push the cost up to between $1,800/kW and $6,600/kW.

The cost of a conventional natural gas reformer plant sits at $780 per kW of hydrogen output ($1 470 per kW of hydrogen output if equipped with CCUS), while the capital cost for an installed electrolyser ranges from $1,400 per kilowatt electrical (kWe) to USE 1,770/kWe ($2 150-2,720 per kW of hydrogen output).

“Capital cost is an important cost component for hydrogen production cost, especially in the case of electrolysers. Natural gas prices affect the economics of producing hydrogen from natural gas reforming, with or without CCUS, making the electrolysis a cheaper production route when gas prices are high,” the report says.

Clean energy tech market to touch $650 billion by 2030

Global market for key mass-manufactured clean energy technologies will be worth around $650 billion a year by 2030 – more than three times today’s level – if countries worldwide fully implement their announced energy and climate pledges, says IEA.

Aggregate investment in oil, gas and coal supply amounted to just above $800 billion in 2022, down from over $1 trillion in 2015.

Capital spending by oil and gas companies4 on clean energy technologies has risen in recent years, expected to reach just over 5 percent of their total upstream investment in 2022, up from 0.5 percent in 2015.

“The IEA highlighted almost two years ago that a new global energy economy was emerging rapidly. Today, it has become a

central pillar of economic strategy and every country needs to identify how it can benefit from the opportunities and navigate the challenges. We’re talking about new clean energy technology markets worth hundreds of billions of dollars as well as millions of new jobs,” said IEA Executive Director Fatih Birol.

“The encouraging news is the global project pipeline for clean energy technology manufacturing is large and growing. If everything announced as of today gets built, the investment flowing into manufacturing clean energy technologies would provide two-thirds of what is needed in a pathway to net zero emissions. The current momentum is moving us closer to meeting our international energy and climate goals – and there is almost certainly more to come.”

“At the same time, the world would benefit from more diversified clean technology supply chains,” Dr Birol added.

Challenges to clean technology growth

♦ Geographical concentration: The

Global total primary energy supply scenario

Operational performance of renewables such as solar PV and wind can drop after a decade, with most having a lifetime of around 25-years. In contrast, coal-and gasfired power plants can operate for 30 to 40 years or more, though intermittent large-scale refurbishment may be needed.

Coal divest pressure on FIs harming transition efforts: study

Coal Insights Bureau

Financial Institutions FIs are being placed under increased pressure to divest or withdraw finance from high-emitting assets, which can impede their involvement with coal power assets outright, even where financial support is explicitly linked to managed phaseout, says a new study by RMI’s Center for Climate-Aligned Finance. There is also uncertainty on what a responsible role for FIs looks like in these transactions that can accelerate just, equitable, and climate-aligned coal plant retirements while also securing risk-adjusted returns.

While private FIs have signaled positive intent to contribute to the energy transition through climate commitments and sustainable finance targets, these same commitments can pose challenges for FIs seeking to finance the decarbonisation of high-emitting assets.

High-emitting assets like coal power plants must retire early to accomplish the goals of the Paris Climate Agreement. Operating the world’s current fleet of coal plants until the end of their economic lifespans would almost singlehandedly exhaust the world’s dwindling carbon budget.

Despite renewable energy alternatives being significantly more economically competitive than new or existing coal assets, asset owners are often shielded from competitive pressures and incentivized to continue operating coal plants. Solving this problem will require significant contributions from both public and private finance.

“The pace of phasing out coal assets around the world must significantly accelerate, and continued financing and support from financial institutions (FIs) committed to net zero can accelerate just and equitable outcomes. Yet, although FIs have stepped up with climate commitments and sustainable finance targets, many have become hesitant to finance high-emitting assets even when that financing could contribute to decarbonisation through early retirement,” the study says. In trying to explain the reasons behind this, RMI points out 2 of the main challenges include:

♦ Reputational issues: The first challenge stems from stakeholder pressure for FIs to divest or withdraw finance from high-emitting assets to meet their financed emissions targets and comply with policies designed restrict such exposure.

♦ Lack of understanding of the financial risks and returns: The second challenge stems from managed phaseout being a new field, with few examples available to demonstrate how different financing mechanisms can be used by private FIs to support climate-aligned outcomes while upholding their fiduciary duty.

Overcoming these barriers can help FIs pursue managed phaseout as a means of supporting the Net Zero transition and real-economy emissions reductions. “Pressure to withdraw coal power financing is high, but a blanket financial exodus by climate-conscious FIs risks undermining the financial feasibility of transitioning away from coal globally,” the report says.

Instead, financing provided for the managed phaseout of coal power assets with a robust managed phaseout plan in place must be differentiated from other coal asset financing, the paper suggests.

Withdrawing financing risks financially marginalising companies that have credible phaseout intentions, which may delay coal power asset retirement and ultimately undermine efforts to transition the global power sector in line with 1.5°C pathways in a stable and equitable way.

Financing mechanisms to accelerate managed coal power phaseout

Source: RMI, 2023

A handful of completed transactions show that managed phaseout is already financially feasible in both developed and developing countries and for both older and newer coal plants. These transactions rely on some combination of three financing mechanisms designed to adjust risks and returns for affected stakeholders in a way that enables coal plants to run for fewer years:

Helen Gibson, General Manager, India (Underground Soft Rock) at Komatsu Mining has taken over the role of leading the JOY brand of underground soft rock mining equipment in May 2022 to take an active role in the country’s rapidly evolving coal mining sector. A graduate of Camborne School of Mines, Helen has been closely associated with the country’s underground mining sector since 2018 as Komatsu Mining’s Strategic Alliance Manager for India. Sumit Maitra caught up during her visit to IMME 2022 exhibition and asked her about the opportunities that she sees in the country mining sector as it opens up to new investments and technologies and climate consciousness.

You took over as the General Manager in May 2022. But you have been in charge of strategic alliances for the Indian market for several years. How has been your experience of the Indian market so far compared to your overseas experience?

I first came to India in 2016 but have been coming regularly since 2018, and prior to that I was spending a lot of time with customers in the UK, Norway, Poland and Russia. The mining conditions might differ but the customer needs around safety, performance and lowest cost per tonne are common. Each customer is looking for a way to improve or enhance their operation in some way.

I would add one difference to the Indian market in that we are having relatively fewer people with experience in underground

“The industry is ready for a step-change to take production, performance and safety to the next level.”

Aussie sees production disruption abating

Yancoal

Though ocean temperatures have warmed in recent weeks, atmospheric indicators are largely unchanged and remain at La Niña levels. La Niña typically increases the chance of above average rainfall for northern and eastern Australia during summer.

Australian thermal and coking coal miners have reported disruptions in production mainly due to inclement weather conditions.

“In Queensland, coal production was again impacted by heavy rainfall. As foreshadowed, we are seeing the impact of inflation across our global supply chains and continue to focus on productivity and controllable costs,” BHP Chief Executive Officer, Mike Henry, said.

Coal Insights Bureau

The prospect for better weather conditions should allow Australian coal miners to deliver improved output in 2023 as the peak of the La Niña weather pattern appears to have passed, and operations can continue with a structured recovery process, believe the miners.

“Water storage levels remain at elevated levels across the mines in NSW, so the recovery plans are not without risk, but the production losses caused by heavy rain events in 4Q and earlier in 2022, ideally, will not recur. Labour shortages remain an issue for the sector, and Yancoal has implemented initiatives to mitigate this factor,” Australian coal miner Yancoal has said.

In the coming months, Yancoal will prioritise rebuilding inventory levels in

advance of coal mining in order to facilitate increased saleable coal production in later periods. This inventory rebuild refers to overburden, drill and blast, exposed coal and ROM coal stockpiles.

“These activities were often curtailed during the La Niña cycles to maintain output during a period of record coal prices. Overburden removal needs to be prioritised to return the mines to optimal mining efficiency. It will likely take several consecutive quarters of uninterrupted mining to return the mines to previous production levels and optimum unit cost profiles,” the company said.

As per a recent update by Australian Meteorology department, La Niña continues in the tropical Pacific, but has weakened from its peak in spring 2022.

Energy coal from New South Wales grew 9 percent to 2.9 percent over September quarter.

Met coal production at 7 million tons during the December quarter was up 4 percent over September quarter.

Met coal production was higher due to improved strip ratios and the planned longwall move at Broadmeadow in the prior period, partially offset by continued significant wet weather.

Thermal coal production grew at a significangtly higher rate of 9 percent at 2.9 mt compared during the December quarter over September quarter due to improved operating conditions, including less significant wet weather impacts and reduced labour shortages in the December 2022 quarter, partially offset by planned wash plant maintenance completed in November 2022.

“The prospects for 2023 are more favourable as the La Niña weather cycle is expected to end.”

Coal India eyes lower costs of ops in 2023

Coal Insights Bureau

Coal India is aiming for “economy of operations” and “operational efficiency” to ensure that electricity is available at “just price” to the people of India.

“With 80 percent of our supplies directed towards coal-fired plants and three-quarters of country’s power generation being coalbased, our goal should be to make electricity available at just price to the citizen of the country. This spells out the need for greater operational efficiency and economy of operations,” Pramod Agrawal said in his letter to the employees of the company.

“Our role is to supply assured energy at affordable costs. There is sizeable scope for energy expansion in the country for next few decades where we have a greater responsibility shoulder. We have skilled people, decades of core competence, technological wherewithal and a sense of purpose to do so. Let our historic pledge be meeting the country’s energy demand, customer friendliness, environmental responsibility, doctrine of zero-accident potential and high degree of energy efficient mechanization,” Agrawal added.

The Chairman asked employees to aim for loftier heights in the last quarter of the financial year and make FY23 momentous by shattering the annual targets as well.

“And not rest there. Once we achieve 700 million tons (mt) production target, that should be a benchmark base for further growth,” he added in his letter.

All three performance metrics –production of 479 mt, supply of 508 mt, and Over Burden Removal of 1,155 MCuM till December outperformed their corresponding progressive targets, Agrawal pointed out.

“We stand at the cusp of a historic performance in production, off-take and OBR,” CMD said.

The impressive scope of the targets they were able to surpass is what makes this milestone unique. But much more work must still be done, the message stated.

Due to the Covid-19 pandemic, CIL will produce a billion tons of coal by 2025-2026 as opposed to the initial plan of 2023-2024.

The coal ministry previously predicted that CIL would produce 700 mt of coal for the current fiscal year, with an additional 200 mt of production coming from other sources.

Ketki turns first UG mine to be developed by MDO

On January 10, Ketki Under Ground mine, belonging to South Eastern Coalfields Ltd, became the first operational UG mine to be developed via the MDO mode, SECL said recently.

An Memorandum of Understanding was signed and project awarded to SMS Ltd

Pramod Agrawal, Chairman, CIL during a meeting to set the agenda for 2023 with other top management officials including Executive Directors, General Managers and Head of Departments of CIL and its subsidiaries at CIL headquarter in Kolkata.

“With 80 percent of our supplies directed towards coal-fired plants and threequarters of country’s power generation being coal-based, our goal should be to make electricity available at just price to the citizen of the country. This spells out the need for greater operational efficiency and economy of operations,” Pramod Agrawal, Chairman, Coal India