Coal Insights, July 2017

Contents

6 | COVER STORY

14 Steam coal offers surge in July 16 Coking coal surges in July on sustained Chinese buying

CIL mulls 4,000 MW UMPP in North Karanpura

20 SCCL’s production edges up 1.6% till June 22 CIL likely to finalise wage agreement by August 15 23 Coal India’s production down 7% in June y-o-y 24 MoEFCC allows pet coke use with riders 24 India’s cement production up 2% in May y-o-y 25 India’s net power capacity addition in June at 170 MW

The miner also plans to set up 1,500 MW of solar capacity across the country, says S N Prasad.

18 | FEATURE

India’s May coal imports down 6% y-o-y Coal imports in May 2017 stood at 18.39 mt, against 19.55 mt imported in May 2016.

27 | INTERNATIONAL

26 Indian power plants’ coal stocks up 6% m-o-m 29 US coal production likely to be up 8% in 2017

Coal rises again?

Altogether, 1,600 coal-based power plants in 62 countries will expand the world’s coalfired capacity by 43 percent.

32 Centre electrifies 2.63 crore BPL households till June, says Goyal 34 Land acquired, compensation paid by MoC down in FY17 36 Centre to focus on 46 Sagarmala projects in FY18 38 Indian Railways’ June coal handling down 3% y-o-y 39 Traffic handled by major ports up 5% in Q1 40 Simulation training need of the hour 46 Corporate update 48 The coal conundrum continues 50 Advertorial 54 E-auction data 56 Port data

4 Coal Insights, July 2017

42 | EXPERT SPEAK

NEP to offer long-term clarity Energy demand is to go up from 2012 to 2047 by 2.7-3.2 times, finds the draft policy report, says V K Arora.

44 | CORPORATE

JSW sees big opportunity in ‘cement-deficit’ Bengal The company has recently flagged off the 2.4-million-tons-per-annum cement plant at Salboni.

Cover Story

CIL mulls 4,000-MW UMPP in North Karanpura

6 Coal Insights, July 2017

Cover Story

C

oal India Limited (CIL), the main provider of coal to the nation and a maharatna PSU, is diversifying into renewable energy and setting up power plants – thermal and solar. While the latter will bring synergy to the very coal it mines, the overall change in its business strategy will help the coal behemoth to move with the global changing energy matrix where the stress is increasingly being put on alternate sources for lighting up our homes, offices and businesses. That apart, CIL is also investing heavily in acquisition of overseas mines, especially coking coal blocks, since the quality required by steel manufacturers is just not available within India.

The key roadblocks at present are some pending environmental clearances and railway logistics, Shyam Nandan Prasad, Director, Marketing, CIL, tells Madhumita Mookerji in a freewheeling interview.

Prasad, is a marketing veteran with 33 years of experience and handson understanding of pitheads, coal stock yards, coal handling plants and the corporate offices of CIL’s arms. He has worked in the coal behemoth’s subsidiaries of Central Coalfields Limited, Western Coalfields Limited and South Eastern Coalfields Limited in various positions, including that of General Manager (S&M), before taking over in his present role in February 2016.

Excerpts:

Please tell us about the major new projects being planned at Coal India, their locations and reserves and by when will these be opened up? How much incremental volumes will these add to CIL’s total production kitty?

We have a lot of plans with regard to greenfield projects in order to reach our target of 1 billion tons by 2020. Around 121 on-going major projects are expected to produce more than 560 million tons (mt) of coal in 2020.

We have identified 65 new projects with an expected capacity of about 300 mt.

We have already formulated project reports for 57 out of which 22 projects of ultimate capacity of more than 180 mt are already approved.

Development of matching railway infrastructure, introduction of stateof-the-art technology in logistics – like operator-independent truck despatch system, satellite surveillance on restoration of reclamation of land – are some of the major initiatives in our long-term expansion plan.

Value-addition and diversification are also part of our long-term strategy.

In which projects are your ECs still pending?

Environmental clearances (ECs) are pending in quite a few projects in the Korba, Ib Valley and Talcher areas. ECs are especially pending in areas where there is concentration of demand, like the areas clustered with pit-head plants.

So, how much of production volume is held up due to the pending ECs? More than 100 mt, over 5 years.

Immediately, that is, in this fiscal, around 40 mt of production volume is held up.

What are your mining equipment procurement plans for the current fiscal?

Our capital expenditure for 2017-18 is `8,500 crore and this will be mainly invested in traditional requirements like procurement of heavy equipment and rehabilitation and resettlement (R&R).

Please give us an update on CIL’s plans to set up thermal and renewable energy power plants?

Since we have evacuation constraints with regard to the coal from our coalfields in Odisha, we have firmed up plans to set up 2 units of 800 MW each super-critical power plants in Mahanadi Coalfields Limited (MCL). Coal linkage granting stage for the thermal power plant has recently been recommended under the Shakti scheme.

Subsequent steps would now be taken.

Linkage will be granted from a nearby mine, that is, a mine close to the proposed plant, in Odisha.

Under Shakti, we can consider going in for a 4,000-MW ultra-mega power project (UMPP) in North Karanpura.

It will be kind of forward integration, where our coal from North Karanpura can go into this plant. This project is at a planning stage.

In renewables, we have plans to set up about 1,500 MW of solar capacity across the country out of which location of 200 MW has already been finalised in Madhya Pradesh for captive power consumption – the power will feed 3 of our coalfields here. The remaining 1,300 MW would happen in different states. We are scouting for distribution companies (discoms) in Rajasthan and Andhra Pradesh.

But what is the rationale behind plans to set up greenfield thermal power plants when

Coal India has a plan to produce 39 million tons (mt) of coking coal in 2017-18, out of which about 6.5 mt would be of the metallurgical variety. We have a plan to install a coking coal washery of 48 mt capacity by 2020. That means, by 2020, all coking coals, both metallurgical and non-linked washery (NLW) varieties, would be subjected to beneficiation.

Coal Insights, July 2017

7

FEATURE

India’s May coal imports down 6% y-o-y

Metallurgical coke imports during the month of May 2017 were at 0.30 mt, against 0.45 mt imported in the same month a year ago. However, petroleum coke imports also decreased at 0.92 mt in May 2017 from 1.28 mt in May 2016.

PCI coal imports were lower at 0.47 mt in May 2017, against 0.48 mt imported in May 2016. Anthracite coal imports, on the other hand, increased to 0.20 mt in May 2017 from 0.09 mt in May 2016.

The imports in May were lower in comparison to the previous month, but in line with the subdued trend witnessed in the preceding months.

According to data available, imports during May 2017 decreased to 3.64 mt as compared to 19.08 mt imported in April 2017.

Sanjoy Bag

I

ndia’s coal and coke imports during May 2017 through 31 major and nonmajor ports are estimated to be down by 5.93 percent compared to May 2016, according to a compilation by Coal Insights, based on monitoring of vessels’ positions and data received from shipping companies and various sources.

Imports during May 2017 stood at 18.39 million tons (mt) as compared to 19.55 mt imported in May 2016.

Of the total imports during May 2017, non-coking coal volumes were at 12.47 mt, lower than 13.94 mt imported in the same month last year. Coking coal imports were recorded at 4.03 mt in May 2017 beating the May 2016 figure of 3.31 mt.

Imports of various types of coal in April-May, 2016 & 2017 (in mt) May 2016

May 2017

April-May 2016

Coking coal

Coal type

3.31

4.03

7.31

7.61

Non-coking coal

13.94

12.47

29.16

26.08

Anthracite coal

0.09

0.20

0.22

0.29

PCI coal

0.48

0.47

0.80

0.75

Met coke

0.45

0.30

0.84

0.61

Pet coke

1.28

0.92

2.89

2.14

Total

19.55

18.39

41.23

37.47

18 Coal Insights, July 2017

April-May 2017

In April-May, 2017, non-coking coal imports were at 26.08 mt which was lower than 28.72 imported in the same period last year. Coking coal imports increased at 7.61 mt in April-May, 2017 against 6.56 mt recorded in April-May, 2016.

Metallurgical coke imports during AprilMay, 2017 were at 0.61 mt, down against April-May, 2016’s import figure of 0.86 mt while petroleum coke imports remained flat at 2.14 mt in April-May, 2017 against 2.14 mt in April-May, 2016.

PCI coal imports were at 0.75 mt in April-May, 2017, lower against 0.83 mt imported in April-May, 2016. For AprilMay, 2017, anthracite coal imports were recorded at 0.29 mt against 0.25 mt in AprilMay, 2016.

Total coal and coke imports during March-May, 2017 stood at 54.97 mt, down 6.56 percent compared to 58.83 mt imported in March-May, 2016.

During March-May, 2017 coking coal imports stood at 10.81 mt. Non-coking coal imports were at 38.35 mt. Met coke and pet coke imports for March-May, 2017 were at 0.80 mt and 3.26 mt respectively.

On the other hand, anthracite and PCI coal imports were recorded at 0.46 mt and 1.28 mt during March-May, 2017.

INTERNATIONAL

Coal rises again?

Kingshuk Banerjee

I

t was a truly historic day for global seaborne coal trade. In mid-July this year, a vessel carrying 70,000 tons of metallurgical coal (met coal) began its voyage to Australia’s Port Kembla from the Mozambique port of Nacala.

Actually, the voyage of Mozambique coal to the largest seaborne exporter of met coal in the world was an eye-catching event.

Australia exported 172 million tons (mt) of met coal in 2016, ie, 66 percent of the seaborne volume, out of the estimated global seaborne met coal market of 259 mt in 2016.

As per global observers, this coal voyage signifies the very fact that despite world-wide criticism, not only days of coal would be far from over but also symptoms of its bouncing back would be getting clearer globally.

Moreover, one recent report predicted that coal would continue to rule in the global arena at least till 2050.

Northward data

Recent report said that 1,600 coal plants are planned or under construction in 62 countries.

The new plants would expand the world’s coal-fired power capacity by 43 percent.

Though the critics would argue that these new coal plants would make it virtually impossible to meet the goals set in the Paris climate accord, which aims to keep the increase in global temperatures from pre-industrial levels below 3.6 degrees Fahrenheit.

While the world at large was elated with the tidings that China had halted plans for more than 100 new coal-fired power plants in 2017, as per new data, China’s energy companies would make up nearly half of the new coal generation expected to go online in the next decade.

As per statistics, Beijing would be building or planning to build 1,171 new coal plants at home and around the world, some in countries that today would burn little or

no coal. Many of the plants in China, by capacity, are roughly a fifth of the new coal power stations in other countries.

Apart from China, India (446), Turkey (93), The Philippines (60), Japan (45), European Union (27), South Korea (26) and South Africa (24) too would be in the fray. In fact, global coal power is trending in the other direction. The percentage of global electricity generated by coal power has increased from 38 percent to 41 percent since the turn of the century.

As per data, during 2006 to 2017, around 958,662 megawatt (MW) of coal-fired power stations were built, out of which India and China constituted 818,052 MW. If one would flip through recent data, the picture of the march of coal-fired power units would be clearer. In 2006, global coal-fired power was merely 89,926 MW. In other words, in the last 12 years, coal-fired power generation catapulted nearly 10 times. Does it really signal its decline?

Coal Insights, July 2017

27

CORPORATE

JSW sees big opportunity in ‘cement-deficit’ Bengal Madhumita Mookerji

J

SW Cement sees huge opportunities in West Bengal mainly for 2 reasons, Parth Jindal, Managing Director, JSW Cement and scion of the JSW Group, said, one of which is that the state is “cement-deficit and two, because Salboni (where the company’s cement plant is located) is strategically located close to the key ports of Haldia and Paradip.

What would be good news to the state government in West Bengal is that, at last, things are moving at Salboni, located about 150 km away from Kolkata, where JSW Steel was to set up a 10 million tons steel plant but which ran into rough weather. The group is now firming up plans to expand its cement business in Salboni, as well as set up a paints unit, possibly a steel finishing line, and a solar farm and undertake cash crop farming, all on around 1,500 acres and turn the balance 2,800 acres it does not need into an industrial park.

Parth was in Kolkata recently to flag off the company’s 2.4-million-tons-per-annum cement plant at Salboni.

Elaborating, he said, Bengal is roughly a 20-million tons (mt) annualised market and the supply volumes from all the facilities and grinding capacities combined in the state, would add up to around 11 mt. Which means that about 9 mt of cement are coming into Bengal from places like Chhattisgarh, Bihar, Odisha etc.

“Bengal is a cement-deficit state and that is why it is a big opportunity for us to come here and also because of the strategic location of Salboni, which is very close to Kolkata and to both the ports of Haldia and Paradip.

Thus, the strategy of entering Bengal made a lot of sense. In cement, there are 2 costs that

44 Coal Insights, July 2017

are very vital – one is logistics, and the other is power. And in both these aspects, Bengal is quite competitive,” Jindal junior said.

In slag, JSW Cement has a long-term agreement with Tata Steel and this will come in from Jamshedpur while the clinker will be imported from either Japan or Vietnam via ports and then transported to Salboni, it is learnt.

Jindal junior also feels that JSW Cement has a distinct advantage over other cement companies because it is part of the JSW Group and JSW Steel being the largest steel producer, its byproduct of slag, which cement companies use, gives it a big advantage.

Today, JSW sells slag to cement companies like Gujarat Ambuja, ACC etc.

In the south and west, slag cement is not very well accepted as there are no steel companies in these two regions. Because of that, the price that cement companies are paying to the JSW Group is very low.

That’s why, Parth said, the group decided to go into cement in 2009. “And now, since JSW Steel has expanded its capacity, it gives us an opportunity to get more slag and increase our cement capacity,” he said.

Parth further said that in the south and west, JSW’s cement was priced lower than its competitors because of the lack of acceptance of slag cement in both regions. However, he said, since there is good demand for slag cement in the east, the company will be pricing it at par with its competitors.

JSW Cement, which recently bought 50 percent in Rourkela-based Shiva Cement,

also plans to upgrade an existing kiln at the newly-acquired facility as well build a brand new grinding facility at its plant in Jajpur, Odisha. Shiva currently owns a small 0.12 mt kiln which will be upgraded, Parth said.

Both will be of 1.2 mt capacity.

Parth said JSW Cement’s biggest advantage in the south and west was because of its 3 products – Portland slag cement (PSC), concrete (premium) and ground granulated glass furnace slag (GGFS). These cater to the RMC (ready-mix concrete) manufacturers.

JSW Cement’s capacity utilisation is hovering around 55-60 percent – where PSC and concrete are concerned. But if GGFS is added, then the capacity utilisation is around 80 percent. The company also sells small quantities of ordinary portland cement (OPC), mostly to southern and institutional clients. The eastern market is 55 percent slag, 40 percent fly ash and 5 percent OPC, Jindal said.

Cheaper-than-grid solar power in Salboni

When it comes to power, right now thermal power plants are not proving to be viable unless and until these are located at the pithead. Thus, JSW is exploring solar in a big way and is in discussions with a couple of large solar EPC companies who are interested in doing a joint venture, Parth revealed.

The EPC player would set up a 200250-MW solar farm in Salboni. For the 2.4 mt grinding facility, JSW Cement has a requirement of 18 MW of power. When the proposed doubling of capacity happens, then the power requirement would go up to 36 MW while the paints unit would need another 8-10 MW. So, between cement and paint, there would be a requirement of close to 45 MW. “The plant load factor (PLF) in solar today hovers at 20-25 percent. So, in order

Bengal is roughly a 20-million tons (mt) annualised market and the supply volumes from all the facilities and grinding capacities combined in the state would add up to around 11 mt. Which means that about 9 mt of cement are coming into Bengal from places like Chhattisgarh, Bihar, Odisha etc.

58 Coal Insights, July 2017

Tear along the dotted line

Tear along the dotted line