CONTENTS
6 | COVER STORY
20 BKT eyes 15% topline growth in current fiscal 22 CEAT to add large-sized radial dumper tyres to mining portfolio
The met coal matrix
Since coking coal is scarce, thrust must be on beneficiation, coke rate cut and combined research by coal and steel sectors.
24 Thermal coal offers rise in June 26 Coking coal offers increase in June 28 India’s Apr coal imports down 4% y-o-y 30 Coal India production up 15.70% in May y-o-y 31 SCCL’s May production edges up 1% y-o-y 32 India’s renewable energy reaches new high
16 | SPECIAL FEATURE OTR makers face raw materials roadblock With China’s pollution crackdown, prices of raw materials for tyres are rising, giving OTR makers cause for worry.
33 India’s April cement production up 13.2% y-o-y
37 | FEATURE
34 Sponge iron production down y-o-y, m-o-m
Coal shortage at power plants to be over by 2-3 months: CIL chief
35 India’s power capacity addition in May at 110 MW
Miner despatching 1.4 mt of coal to power sector every day, as per government directives, says CIL chief A K Jha.
41 Coal block auctions: India lost much more than it gained 44 Aging systems impel govt to review workplace safety 47 US coal production estimated to dip 2% in 2018 54 Corporate update 56 Traffic handled by major ports up 2% in Apr-May
40 | FEATURE
CIL’s despatches to non-power sectors may drop in FY19 CIL’s supply to non-power cos may actually decline due to robust demand from power sector.
48 | INTERNATIONAL
57 Indian Railways’ May coal handling up 17% y-o-y
India-Japan endeavours: Changing paradigm in South East Asia
58 E-auction data
Indo-Japanese initiatives like the Asia-Africa Growth Corridor could upset the applecart for China in this region.
60 Port data
4 Coal Insights, June 2018
COVER STORY
The met coal matrix Madhumita Mookerji
A
n industry expert had once said that coking coal in India is always a challenge! India being a developing country, the government’s blueprint to hike crude steel volume to a mammoth 300 million tons (mt) per annum by 2030 dovetails well with its concomitant and pronounced thrust on infrastructure development. As per the National Steel Policy (NSP), 2017, crude steel demand will expand three-fold to touch 230 mt from the present levels by that same deadline. And, even with the demand for steel pegged at that level, India’s per capita finished steel consumption is likely to touch only 158 kg against China’s 437.9 kg seen in 2015! Which means, there is ample scope for increasing steel production, marching ahead into India’s future, secure in the knowledge that consumption of the metal is assured. But, obviously, steel production of such huge proportions needs extensive mobilisation of raw materials, one of which is predominantly coking coal, also known as metallurgical or met coal. And a matter of huge concern is that a smokescreen of several factors is choking the coking coal sector itself in the form of a volatile import market, where factors are entirely out of India’s control, poor domestic availability of the fuel both in terms of quantity and
6 Coal Insights, June 2018
COVER STORY quality, coupled with the diversion of some portions of the limited available resources to the power sector instead of beneficiation of the same for subsequent steel consumption due to lack of value-adding infrastructure in place. These are serious impediments to the growth of the Indian steel industry. In coking coal, as not so much in thermal coal, global dynamics play a huge role. In the global arena, the interplay of the two key actors, Australia and China, decides the supply and price dynamics, putting Indian consumers mostly at the receiving end. China’s coking coal imports more or less match the Indian volume levels. But China plays a major clearing role in the market in the sense that it generally buys all the excess material. And, suppliers are only able to maintain their prices if China buys that excess supply. If China does not mop up the excess, then the prices crash, and if China buys more than its requirement, the prices move up. The bottom line is that it is difficult to analyse China. Most experts are thus wary on predicting the dragon country’s buying patterns. Its coking coal production volume is erratic and the market takes position on the basis of the figures that the Chinese government releases, which increases volatility in prices. And since China is in a position to dictate terms, it buys at its own price, unlike Indian players, who buy at a given price. On the whole, India always watches the coking coal tango between China and Australia from the sidelines. It is commonly said that if China sneezes, India gets a cold! Domestic scenario
If we go back in time, we realise that the country was rather relaxed and liberal in its use of coals in the past. We may recall that in the initial days of coal mining, the best quality thermal coals were available in the Raniganj coalfields and superior grade coking coals in Jharia. Unfortunately, there was indiscriminate use of coals in those days and whatever was mined was used up. As said N C Jha, Advisor, (Coal), Steel Authority of India (SAIL), “Consequently, the best quality coking coal got burnt over the last 100 years or so. And what we are left with today is the inferior varieties of the fuel.” “As such, there is a dearth of coking coal in India. And whatever we have are of high ash content. And that ash is also so intimately
mixed with the coal and the coal matrix that it is difficult to separate it and free the carbon from the coal. So what do we need to do to make it suitable for steel-making or any other metallurgical purpose?” Jha throws up a question. The Jharia coalfields have a sequence of 41 coal mines. Some are consistent while others are not. But there were 18 mines that were very consistent, whose seams were numbered from 1 to 18, with the latter being the top-most and the former being the bottom-most. The seams from 9 and above comprised prime coking coal. Coal in the seams from 8 to below were medium coking coals because they do not meet those standards which are required for making coke for use in the blast furnaces. These need to be blended with some prime coking coal for coke-making. India has around 143 billion tons of proven coal reserves as of April 2017. Of the total proven reserves, only around 13 percent or 18.6 billion tons comprise coking coal. Of the total proven coking coal reserves, only 4.6 billion tons can be considered as prime grade variety. Indian coking coals predominantly fall into the medium category. Coking coals in India are categorised into three types: ♦♦ Prime grade: which can form coke for metallurgical purposes without being blended with other coals; ♦♦ Medium grade: which requires to be blended with prime coking coal for cokemaking; and ♦♦ Semi-coking coal: which are weak in coking properties but can be blended in small ratios with prime coking coal for coke-making. Prime coking coals are available in India only in the upper seams (seams IX and above) of the Jharia coalfields which have been already exploited in the past and the remnants are now available in the surface-
constrained areas like surface fires, rivers, townships, human settlements and road and rail infrastructure. The medium variety is available in various coalfields in Jharkhand (lower seams of the Jharia coalfield, East Bokaro, West Bokaro, Ramgarh, North Karanpura, South Karanpura); West Bengal (Raniganj coalfield); and Madhya Pradesh (Pench, Kanha and Dohagpur). The semi variety is available in limited areas of West Bengal (Raniganj coalfield), Jharkhand (Ramgarh coalfield) and Chhattisgarh (Sonhat coalfield). As per GSI estimates of 2017, the total coking coal resources in India have been pegged at 34.533 billion tons (bt). Though India is fortunate to have the third-largest share of coal resources, the quantity of coking coal is limited. Further, since coal seams in India are of “drift origin”, where the woody material was transported across longer distances, carrying along with it external impurities, such coals tend to contain high levels of inert material or mineral matter, commonly known as “ash content”. These mineral matters are finely disseminated within the coal matrix which makes Indian coals more difficult to wash or beneficiate – for reducing their ash content. Growing demand
The industry expects a 10 percent growth in coking coal imports by the end of the current fiscal and that too at a very conservative estimate. The Indian steel mills like a lot of Australian tier I coking coals, ie, the prime grade. The industry pegs the import growth at 10 percent on the back of the fact that there are no new major projects/additional capacities in coke ovens coming up in the current year. “May be next year we could see some additional capacities but not in this year,” said a source. As per by the NSP, 2017, in order to reach a crude steel production volume of 300 mt per annum by 2030-31, the demand for
Total coking coal resources in India (in bt) Coal type
Measured resources
Indicated resources
Inferred resources
Total resources
4.614
0.698
0
5.313
Medium coking coal
13.5
12.132
1.879
27.513
Semi-coking coal
0.519
0.995
0.193
1.707
Total coking coals
18.634
13.826
2.072
34.533
Prime coking coal
Coal Insights, June 2018
7
SPECIAL FEATURE
OTR makers face raw materials roadblock Coal Insights Bureau
T
he off-the-road or OTR market can be globally segmented into earthmovers (which are mining tyres), industrial construction, port handling and agriculture. The segment also includes tractors which find application in agricultural activities. However, in India, the underground or earthmoving segment within the OTR space has a very large exposure to underground mining or earthmoving. The segment comprises around 14,000 tons at present and
16 Coal Insights, June 2018
is expected to grow by 15-18 percent going forward, say industry sources. The total OTR production volume of OTRs from April to September, 2016-17 was 1.44 lakh units. In the 20115-15 full year, the segment grew 17 percent to 4.98 lakh units against a de-growth of 8 percent seen in 2014-15, when the mining industry was facing several issues in the form of iron ore mining bans in Goa, Odisha and Karnataka. In 2015, with the Supreme Court ordering the de-allocation of all coal mines allotted from 1994-2014, led to an increase
in coal imports with a corresponding lull in domestic mining. However, the sources pin hopes on the impending growth on the coal and zinc mining sectors with the government allowing the start of commercial mining in the future. “The coal mining sector is slated to grow very fast but it all depends on the policies of the government, although a lot of changes have already been initiated,� said a leading industry player, adding that the coal mining sector alone is expected to grow by 15-20 percent, going forward. The zinc market also looks good and sends positive signals to the OTR players since this metal involves intense underground mining. This market is expected to grow by 45-50 percent. However, iron ore mining is likely to pull the brakes on the industry since the steel industry is just emerging from the firm grip of a slowdown.
FEATURE
Coal shortage at power plants to be over by 2-3 months: CIL chief Coal Insights Bureau
T
he ongoing shortage of coal at thermal power plants (TPPs) in the country is expected to be over within the next 2-3 months, Coal Indid Ltd. (CIL) Chairman-cum-managing director A K Jha said recently. “I think the coal shortage at TPPs will be over within the next 2-3 months,” Jha told reporters at the CIL headquarters in Kolkata. He said that the miner was despatching an average of 1.4 million tons (mt) of coal to the power sector every day, as per the directives of the government. Asked on how the crisis will be resolved, he said that hydel power plants are presently producing 24 percent less power compared to the same period last year. But with the onset of the monsoon, hydel generation in the country is expected to go up and power demand is going to come down. Moreover, the new railway line opened recently in the command area of Mahanadi Coalfields Ltd (MCL) will help to increase despatches to the power plants located in and around the area. He further said that the total target for despatches to the power sector is 525 mt in 2018-19 and CIL is confident of meeting it. According to Central Electricity Authority (CEA) data, around 22 power plants are presently facing critical/supercritical coal stocks levels.
30% import substitution for coastal TPPs
CIL is holding talks with coast-based thermal power plants in India, aiming to achieve at least 30 percent import substitution for thermal coal being imported by these plants , the top CIL official said. “We are holding one-on-one discussion with all the coastal power plants. It is understood that 30 percent import substitution can be done without much changes in the design of these plants,” he said.
The coastal power plants imported around 56 mt tons of coal in 2017-18, according to CEA data. Pointing out that thermal coal prices have remained firm in the international markets (in all major exporting countries) in the last few months, he said, “We are offering coal to power plants at more than 40 percent discount versus imported coal prices. So, if the power sector can substitute costlier coal imports with cheaper domestic coal, it will benefit both the power plants and the country.”
Coal Insights, June 2018
37
INTERNATIONAL
India-Japan endeavours: Changing paradigm in South East Asia Kingshuk Banerjee
“W
hoever controls the Indian Ocean dominates Asia. This ocean is the key to the seven seas in the 21st century, the destiny of the world will be decided in these waters.” US Rear Admiral Alfred Thayer Mahan Waters of the South China Sea and
48 Coal Insights, June 2018
Indian Ocean seem to be getting increasingly choppy for Beijing. To counter China’s Belt and Road Initiative (BRI), India has already taken a stride in developing ports in Chabahar on the southern Iranian coast and Sittwe in western Myanmar. Now Tokyo has joined the bandwagon to make a joint endeavour in the port sector in the Indian Ocean and
Bay of Bengal rim countries. The two Asian giants, as media reports suggests, would develop ports in Thailand, Bangladesh and Sri Lanka. International observers have viewed this latest move as another step of the new QUAD countries (Australia, India, Japan and the US) towards consolidation in order to counter Beijing’s attempted hegemony in the Indian Ocean Region (IOR) and its increasingly belligerent attitude in the South China Sea Region (SCSR). Moreover, discontent against this Chinese hegemony has started surfacing in South East Asia, long considered to be virtual playground of Beijing. The recent interview of the newly-elected Malaysian Prime Minister, Mahathir Mohammad, has made it amply clear that days of free run of Beijing in South East Asia is about to end. A raging anti-China mood in Vietnam
62 Coal Insights, June 2018
Tear along the dotted line
Tear along the dotted line