Contents
6 | COVER STORY
16 Thermal coal offers increase in July 20 Coking coal offers fall in July on lower Chinese demand
BCCL to unlock NLW coal gridlock
22 India’s May coal imports increase 14% y-o-y 23 Coal India’s June coal production up 13.16% y-o-y 24 SCCL achieves 3.26% growth in June production (change headline) 26 ‘Proposed NPDC may be better placed to upgrade distribution infra’ 27 India’s cement production up 2% in May y-o-y
The new washeries of this CIL arm will resolve the long-pending issue of non-linked washer coal, says A K Singh, CMD, BCCL.
25 | Feature Breaking boundaries – the Amlohri saga In a break-through, the Amlohri coal project of NCL has excavated 3.5 mt of coal locked in the border between itself and Nigahi.
30 Centre focuses on coal mine efficiency, adopts new extraction methods 40 Traffic handled by major ports up 4% in Q1
25% safeguard duty on solar cells not likely before elections
41 Indian Railways’ Q1 coal handling up 16% y-o-y 42 FY19 power sector coal demand estimated at 656 mt 44 MCL sees marginal drop in UG output in Q1 45 Corporate 47 US coal production estimated to dip 2% in H1 48 Global trade war: Bulk trade to be first casualty? 54 Effective workplace safety monitoring a daunting task in India 58 E-auction 60 Port data
4 Coal Insights, July 2018
28 | Feature
31 | Expert Speak
Proposed move may hike solar tariffs, impact innovation by the domestic manufacturers and lead to decline in solar installations.
Public sector coal companies deviating from core competency At Indian coal mining companies, the core activity of mining and OB removal is being outsourced to the maximum extent possible.
35 | OPINION
‘Sooner or later, exploitation of contract workers will cease’ Exploitation is not only on account of wages but also due to absence of fringe benefits like bonus/ex-gratia gratuity, HRA etc.
Cover Story
Miner to wash low grade coking coal to feed steel mills
BCCL to unlock NLW coal gridlock
6 Coal Insights, July 2018
Cover Story
T
here has been a prolonged debate over the despatch of non-linked washery (NLW) coal, also called low volatile medium coking coal, to the country’s power plants (and not to the steel mills), in the absence of adequate washing capacity. While the steel companies put the onus on Coal India, the latter wanted the mills to join hands for washery ventures. Now, with Bharat Coking Coal Ltd (BCCL) coming up with its new state-of-the-art washeries, the issue may finally be addressed. Besides NLW coal, BCCL also faces severe headwinds due to logistics issues and challenges posed by the slow implementation of the Jharia Action Plan which was taken up to save precious coking coal reserves from the raging fire. The Jharia coalfields are the oldest in the country and difficult to mine since most of the available reserves are blocked under surfaces over which have come up railway tracks, townships and human habitation. Around 6.06 billion tons of coal reserves are blocked, out of which around 1.4 billion tons are prime coking coal. The Coal India subsidiary thus had to strategically re-orient its operations whereby all the shallow depth underground (UG) mines, which are suitable for opencast (OC) mining economically, had to be excavated by using the latest technology. Thus, to meet these challenges, BCCL has taken up a slew of projects which are expected to see completion soon and take the miner back to the growth path, A K Singh, CMD, BCCL, tells Arindam Bandyopadhyay in an exclusive interview. Excerpts:
After achieving 100 percent of its production targets in successive years, Bharat Coking Coal Limited (BCCL) suffered a 12 percent drop in production last year. Also, there was a negative growth in despatches. What went wrong in 2017-18? As you may be aware of, BCCL is the oldest coalfield in the country. All the mines are spread across a radius of 45-50 km. Over the years it has become a business centre of the Jharkhand state. People find it easier to earn their bread and butter here. As a result, population density has been increasing day by day. Most of this population takes shelter near the mines. Obviously, they occupy BCCL land in an unauthorised manner. These unauthorised encroachers are a big hindrance to the expansion of our several major opencast (OC) mines. As you know the Master Plan for dealing with fire and subsidence is under implementation in the Jharia coalfields. The onus for rehabilitation of the un-authorised encroachers is with the Jharia Rehabilitation & Development Authority (JRDA), a state government agency. Presence of encroachers is one of the major issues behind our production drop. However, JRDA has taken up several proactive measures and we hope to get the matter resolved in the near future. Additionally, fire and subsidence problems due to age-old legacy are rampant in the coalfields. We have to dig out the fiery coal, quench it with water and
then transport it to the despatch point. Obviously, our operating efficiency becomes low as compared to mining in a green field. However, in spite of such day-to-day herculean task the team is all set to achieve the assigned targets. On the despatch front, the main reason (for the decline in volume) is the closure of the Dhanbad-Chandrapura (DC) Railway line, which forced us to stop 6 sidings that offered great operational efficiency. Besides, during the year 2017-18, new transport contracts could not materialise on one pretext or the other. However, now we have put in place several long-term transport contracts which shall increase our despatches. What are the production and despatch targets for FY19? How confident are you of achieving the same? The target assigned to us for 2018-19 is 42.4 million tons (mt) of coal production and 44.5 mt of despatches. You may see that the coal production target has been fixed at a level which requires 30 percent growth over the actual production last year. Till June 30, 2018 we have achieved 12.2 percent growth in coal production. Similarly, the despatch target is 34 percent higher than the total despatch achieved last year. The growth achieved in despatches till June 30, 2018 is 16.5 percent. As such my team is confident of achieving
the production and despatch targets for FY19 and even going beyond that. Please give us an overview of the mines at BCCL, their reserves, production volumes per annum and their age. Many of BCCL’s mines have aged. So, to what extent is production being hampered because of this factor? As I said, the Jharia coalfield is the oldest in the country. We inherited the mines which had been in the hands of private owners for whom profit-making had been the sole motive. Due to this, the mines had been developed rather unscientifically. These mines were old mines and after being taken over by the Government of India they were handed over to BCCL for mining. So, the mines of BCCL, no doubt, have aged. But as you know very well, conservation of resources, safety of persons and economy of operations are of prime focus in the business of coal production. Hence, we have strategically re-oriented our operations. All the shallow depth underground (UG) mines, which are suitable for OC mining economically, are being excavated by the deployment of heavy earth-moving machineries (HEMM) with the latest technology available India. Thus, these mines are new and productive as well. Where production is being hampered due to age of mines, I would say, there is no
Coal Insights, July 2018
7
FEATURE
Breaking boundaries – the Amlohri saga In a break-through move, the Amlohri coal project of NCL has excavated 3.5 mt of coal worth `370 crore locked in the boundary between itself and the Nigahi mines.
Exposed coal in inter-mine boundary
Coal Insights Bureau
W
hich coal miner does not want to add to its production volume? In today’s world, latest technology is applied and yet there are times when things do not go as per plan and target. There are factors not within one’s control, like the rains and other natural calamities like flooding etc, sudden strikes by miners etc. But when a miner breaks into an area hitherto regarded as one where even angles feared to tread, then success tastes even sweeter, albeit with a lot of efforts behind it. Boundaries are tricky areas. It is always tough to break through the socalled line of control. However, indeed, in the first-of-its-kind endeavour, the Amlohri coal project of NCL has excavated 3.5 million tons (mt) of coal worth `370 crore locked in the boundary between itself and the Nigahi mines. Coal is not just a precious fuel but is also a much sought-after commodity for the development of the nation. But coal mining is no cakewalk, as we all know. It requires working in harsh conditions. And the
situation becomes all the more challenging when it comes to excavating the material from the coal boundary. A coal boundary is the one between two mines. More often than not, large volumes of coal are locked along the boundary. But why is it so hard to reach the coal
along the boundaries? The most obvious reason, among others, as to why mine boundaries are not minable is the prevalence of infrastructure over the same, like haul roads, power lines, pipelines etc. Also, it is the mine boundaries which determine the area of statutory compliances. Despite the challenges, in a first-ofits-kind endeavour, the Amlohri opencast project of NCL has excavated coal locked in these boundaries. Approximately 18 mt of coal is locked up in an inter-mine boundary between the Amlohri and Nigahi mines. Of this, 13 mt is in the Turra seam and 5 mt in the Purewa seam. To extract this coal, team Amlohri chalked out a multi-faceted plan which included diversion of the road from the Nigahi project dumping. Thanks to the synchronised advancements to create dump space and development of upper benches on both sides with proper gradient for haul roads, the road is now fully operational. The new diverted road has helped expose coal lying below the old road. This has helped maximise coal extraction from the given geological block. In 2016-17, a total of 1.5 mt of blocked coal was recovered. Similarly, in 2017-18, 2 mt of coal has been recovered. The total value of the blocked coal excavated so far is `370 crore. Further, recovery of 14.5 mt is proposed. After successful completion of this pilot project at Amlohri, the same will help in benchmarking inter-mine coal extraction processes in other mines of NCL too. Mining operations
Coal Insights, July 2018
25
EXPERT SPEAK
Public sector coal companies deviating from core competency What is the core competency of a coal mining company?
J V Dattatreyulu What is core competency?
The answer is obvious: mining coal and if opencast mines also are involved then removal of overburden or waste rock. But what is happening in Indian coal mining companies, especially the public sector companies Coal India and Singareni Collieries Company Limited is a total deviation from such definitions. In both the companies, the core activities of mining coal and removal of overburden are outsourced to a maximum extent. The proportion of departmental OB removal vis-à-vis outsourcing given in the following table proves the point. As shown, the proportion of outsourcing of OB to that of the departmental OB is more than double. In other words, out of the total OB removal, contractor OB accounts for two-third of the quantity. It is for obvious reasons; departmental OB removal is about three times expensive than the outsourced one mainly on account of high wages and low productivity and abysmal capacity utilisation of the equipment. The total absence of ‘fear of god’, that is unbridled job security and heavy influence of trade unions, are the main contributory factors. Trade unions call all the shots and many of them are involved directly
Core competency is a company’s unique characteristic or capability that provides a competitive advantage in the marketplace, delivers value to customers, and contributes to continued organisational growth. Core competencies differentiate an organisation from its competition – they create a company’s competitive advantage in the marketplace. Typically, a core competency refers to a company’s set of skills or experience in some activity, rather than physical or financial assets. According to management consulting firm Bain & Company, the litmus test for a core competency is that it is hard for competitors to copy or develop. For example, the core competency of a technology company could be the design of high-speed microprocessors or efficient internet search algorithms, both of which are difficult to replicate. Businesses can develop core competencies by identifying key internal strengths and investing in the capabilities valued by their customers.
or indirectly in the coal transport contracts, aka coal mafia. Outsourcing is cheaper due to the meagre wages paid to the contractor workmen coupled with longer working hours and least amount of facilities like Medicare, housing and other welfare-related expenditure. A departmental opencast workers enjoys more than 4 to 5 times the wages of the contractor workmen in addition to the attendant perks and facilities like free housing and electricity, free medical treatment in company and empanelled hospitals, annual bonus, increments, leave with pay and leave travel concession to travel to hometown and anywhere in India. On retiring from service he gets gratuity and pension and leave encashment. Contractor workers do not get any of the above perks but his productivity is three times more than the departmental workmen. Typically, the contractor machines clock more than 7,000 hours a year while the departmental equipment hardly crosses 5,000 hours per annum though God has given 24 hours a day for both contractor and departmental workmen. In spite of having bigger machines, spares and maintenance support from the equipment suppliers, the departmental Heavy Earth Moving Machinery (HEMMs) are poorly maintained and due to lack of advance planning and purchase procedures, there is considerable downtime resulting in high owning and operating cost. The Indian public sector coal companies adopt CMPDIL norms for monitoring the performance of HEMMs which are pathetically lower than the achievement of OB contractors employing similar machines and comparison with the international standards puts us to shame. Though the equipment of Indian public sector companies
Proportion of departmental OB removal vis-à-vis outsourcing Parameter/year OB departmental (Mcum)
2015-16
2014-15
2013-14
2012-13
2011-12
2010-11
2009-10
2008-09
2007-08
64.96
63.97
64.33
60.82
70.69
64.78
52.87
49.01
42.87
Outsourcing (Mcum)
245.80
198.85
104.44
115.02
139.05
152.18
194.18
135.63
97.82
Total (Mcum)
310.76
262.82
168.77
175.84
209.74
216.96
247.05
184.64
140.71
Opencast coal (MT)
49.7
42.30
39.90
41.60
41.50
39.70
38.40
32.40
27.90
Strip ratio (cum/T)
6.2:1
6.2:1
4.2:1
4.2:1
5,05:1
5.5:1
6.4:1
5.7:1
5.0:1
Ratio Dept OB: outsourcing
1:3.8
1:3.1
1:1.62
1:1.9
1:1.9
1:2.3
1:3.7
1:2.8
1:2.3
Source: Annual reports of Singareni Collieries Company Limited. www.scclmines.com
Coal Insights, July 2018
31
OPINION
Wage movement in coal industry
‘Sooner or later, exploitation of contract workers will cease’
grievances. The International Labour Organisation (ILO), in 1919, emphasised on the dignity of labour. In India, the Textile Labour Association was formed in 1920. Representations of 64 trade unions with a membership of 140,854 established the All India Trade Union Congress (AITUC) in then Bombay under the leadership of Lala Lajpat Rai. It had the support of national leaders like C R Das, Sardar Patel, Motilal Nehru, Jawaharlal Nehru, Gulzarilal Nanda and many more. Soon after, the Indian Colliery Employees Association was formed in the latter half of 1920. It had 107 affiliated unions and held a national session every year. In 1930 the Tata Collieries Labour Association was formed with Subhash Chandra Bose at its helm. A summary of the formation of various committees, courts of inquiry, tribunals, enactment of laws etc may be of some interest for the readers. Enactment of the 4 statutes, which were epochal events (a) The Workmen’s Compensation Act, 1923 (b) The Trade Union Act, 1926 (c) The Trade Disputes Act, 1929 (d) The Payment of Wages Act, 1936
J N Singh
W
ho thought a few tons of coal dug up in September 1774 would ultimately lead to running the entire railways, generating power, producing iron and steel, cement and what not for the prosperity of India? Likewise, who knew that the least paid coal mine workers would be receiving the best pay-packet amongst all industrial workers? But all that happened with the passage of time. The wage as “compensation against work and time” does not cover the entire ambit of wage. “Sociologists” and “psychologists”
have viewed the term differently. The relative status of the employees, in a given society, has relation with wages. Moreover, satisfaction of the employee’s aspiration, to a great extent, rests on the quantum of wages. Without analysing the history of wages in detail, as it would cover not only thousands of pages but many volumes, a brief may be necessary. Though delayed, ultimately trade unions came to play a significant role in amelioration of pay and perks of coal mine workers. The year 1918 was an important one for the Indian trade union movement. The leadership of trade unionism passed from the hands of social workmen into the hands of politicians. The Swaraj Movement launched by Mahatma Gandhi identified the gulf between the employer and employees and brought about a mass awakening among the workers, demanding redressal of various
Recognition as bona fide labour organization: In 1937, with the formation of the Indian National Congress ministries in different provinces, the mine owners recognised the three workers associations, namely the Indian Colliery Labour Union, The Tata Collieries Labour Association (headed by Subhash Chandra Bose) and the Indian Miners Association. Despande’s report on Condition of Labour in Coalfields, submitted in 1944, stressed on formulating a positive policy for wages and welfare. The Indian Coalfields Committee submitted its report in 1946 stressing on the importance of securing fair wages for the colliery workers. An inquiry committee was constituted in December 1946 to recommend the quantum of reasonable wages. Before the committee could meet even once, the condition in the coalfields deteriorated to the extent that the Government of India was compelled to constitute a board of conciliation.
Coal Insights, July 2018
35
62 Coal Insights, July 2018
Tear along the dotted line
Tear along the dotted line