Contents 15 Thermal coal offers mostly flat in May 16 Seaborne coking coal offers remain volatile in June 17 CIL’s coal production down 11.3% in May 18 India’s April coal imports down 35% y-o-y 19 Coal India Q4 profit down 23% 20 SCCL’s coal production plunges 45% in May 24 Coal Reserve of 7.77 billion tons added in FY20: CMPDI 26 Restarting stranded power plants to spur economies: IEA 29 Power demand declines in May as lockdown continues 31 Electricity (Amendment) Bill won’t weaken state regulators: Power Minister 34 No power capacity addition in April 35 India’s cement production in April plunges to 4 mt 36 May sponge iron production down 55% y-o-y, up m-o-m 37 Methodology for rationalization of linkages/ swapping approved 38 China plans 41 GW coalfired power capacity 40 US coal production seen at 530MMst in 2020 41 Traffic handled by major ports down 22%till May 42 Indian Railways’ coal handling down 32.5% till May 48 NTPC defers `2,000 crore charges on Discoms 50 Ambuja Cement eyes 20% of coal need from Gare Palma by 2021 52 Corporate Update 54 Government Update 56 E auction data
4 Coal Insights, June 2020
6 | COVER STORY
Coal blocks auction: Push for Ease of Doing Mining
21 | Feature
Government goes for commercial mine auction at a challenging time with a promise to overhaul clearance bureaucracy.
Short-term post-Covid energy strategy may raise emissions: BP Post-Covid world needs decisive changes to move to a more sustainable path, says BP in its latest Statistical Review of World Energy.
22 | Feature Falling PLF, rising renewable make retiring old plants viable: report
43 | INTERNATIONAL
Low capacity utilization, ambitious renewable energy targets makes economic sense to retire old coal plants.
Perils of sending high cash coal to distant power plants Former Coal India chairman NC Jha discusses recent amendments to environmental norms by the government
49 | CORPORATE
Coal India eyes mines for MDO route 15 mines with 168 mtpa capacity including 3 underground mines selected
Cover Story
Coal blocks auction Push for ease of doing mining Sumit Maitra
6 Coal Insights, June 2020
Cover Story
W
ith a vision that beaten down economy could be revived by giving a hard push to the mining sector and triggering ripples down the industrial value-chain, the government has now gone for the second phase of the economic stimulus process by kick-starting the first phase of commercial coal mine auctions on June 18 involving auction process of 41 coal blocks for commercial mining to private sector. While several resource rich countries like China, Indonesia and also US, to some extent, focused the power sector in their post-Covid economic stimulus packages, India focused on opening up the mining sector, the start point of the industrial and manufacturing processes. The auctioning is part of the series of announcements made under the Atmanirbhar Bharat initiative with an aim that India is expected to save around `30,000 crore annually on import bill of thermal coal once commercial mining from these mines pick up. “Atmanirbhar Bharat means India doesn’t need to import coal and can use that money to spend on social welfare. Whatever we import now, we would be exporting them. We will take each and every product and service and work holistically to make India self-reliant on every such sector,” the Prime Minister Narendra Modi said during the event. “We are also taking coal sector out of the impact of the lockdown as well. A country which is part of the largest producers of coal with fourth largest coal reserve should be the largest exporter as well,” he added. “For India importing coal is a sin,” coal minister Pralhad Joshi said at the event inaugurated by the Prime Minister where coal ministry officials and industry representatives like FICCI President Sangeetha Reddy, Chairman of Vedanta Group Anil Agarwal and Tata Sons Chairman N. Chandrasekharan highlighted and appreciated the move. Speaking on the occasion, the Prime Minister said the government was focusing on achieving self-reliance, not only in coal
and the energy sector, but in the economy as a whole. “To achieve this, each sector, each product, each service, should be kept in mind and worked holistically, to make India self-reliant in the particular area. A major step taken today will make India self-reliant in the energy sector. This event marks not only the implementation of reforms concerning one coal mining sector but also marks the beginning of lakhs of employment opportunities for the youth. We are not only launching the auction of commercial coal mining today but also freeing the coal sector from decades of lockdown,” Modi said. The Prime Minister also said that the steps taken towards commercial mining will be very helpful to eastern and central India by providing the local population with employment near their homes. He said that the Government has taken a decision to spend `50,000 crore on creating infrastructure for coal extraction and transportation, which will also create employment opportunities. He further said that the government has set a target to gasify around 100 million tons (mt) coal by 2030 and four projects have been identified for this purpose and around `20,000 crore will be invested. All these steps are expected to create employment generation for more than 2.8 lakh people – direct employment to approximately 70,000 people and indirect employment to approximately 2,10,000 people, as per the government. During the day of the launch event in New Delhi, the government floated notice inviting tender for 41 blocks which include 33 blocks under CM(SP) Act and 8 blocks under MMDR Act. The notification for the 11th tranche of
“Atmanirbhar Bharat means India doesn’t need to import coal and can use that money to spend on social welfare. Whatever we import now, we would be exporting them.” Prime Minister Narendra Modi auction under CM(SP) Act and 1st tranche of auction under MMDR Act of identified coal mines/blocks was issued in exercise of the powers conferred by Section 4(1) and 4(2) of the Coal Mines (Special Provisions) Act, 2015 and Section 11A of the Mines and Minerals (Development and Regulation) Act, 1957 and in accordance with the Rule 8(2) of the Coal Mines (Special Provisions) Rules 2014 and the Rule 3(1) of the Coal Blocks Allocation Rules, 2017. The last date for purchase of tender has been fixed at August 14, while the last date for submission of bids on MSTC website is August 18. “These 41 mines upon attainment of peak production capacity of 225 million tons will account for around 15 percent of India’s total coal production in 2025-26. Also, the implementation of a National Coal Index will help India move towards a free market structure for coal,” said Care Ratings.
Coal type-wise distribution of coal blocks Coal type
CM (SP)
MMDR
Total
No.
PRC (Qty)
No.
PRC (Qty)
No.
PRC (Qty)
Non-coking
30
161.55
7
61.00
37
222.55
Coking
2
0.93
–
–
2
0 93
Coking + Non-coking
1
0.60
1
0.65
2
1 25
Total
33
163.08
8
61.65
41
224.73
Coal Insights, June 2020
7
FEATURE
Short-term post-Covid energy strategy may raise emissions: BP report Coal Insights Bureau
A
s the world emerges from the Covid-19 crisis it needs to make decisive changes to move to a more sustainable path. The disruption to our everyday lives caused by the lockdowns has provided a glimpse of a cleaner, lower carbon world. The post-Covid world has the potential to accelerate emerging trends and create opportunities to shift the world onto a more sustainable path. But it also risks slowing progress if the short-term, domestic issues raised by the pandemic are prioritized over long-term, global challenges, such as climate change, said Bernard Looney, Chief executive officer, BP in its latest Statistical Review of World Energy. “It feels like the world is at a pivotal moment: it needs to address these shortterm concerns but in a way that builds back better,” Looney said in the report that takes a comprehensive review of energy sector in 2019. The IEA (International Energy Agency) estimate that global CO2 emissions may fall by as much as 2.6 gigatons in 2020. That has come at considerable cost and as economies restart and our lives return to normal there is a risk that these gains will be lost. But to get to net zero by 2050, the world requires similar-sized reductions in carbon emissions every other year for the next 25 years. This can be achieved only by a radical shift in human behaviours, he said. China, India, Indonesia drove energy consumption growth
Primary energy consumption growth slowed to 1.3 percent last year, less than half the rate of growth in 2018 (2.8 percent). The increase in energy consumption was driven
by renewable and natural gas, which together contributed three quarters of the expansion. All fuels grew at a slower rate than their 10-year averages, apart from nuclear. By country, China was by far the biggest driver of energy, accounting for more than three quarters of net global growth. India and Indonesia were the next largest contributors to growth, while the US and Germany posted the largest declines. The increase in energy consumption was driven by renewables and natural gas, which together contributed three quarters of the expansion. All fuels grew at a slower rate than their 10-year averages, apart from nuclear. “By country, China was by far the biggest driver of energy, accounting for more than three quarters of net global growth. India and Indonesia were the next largest contributors to growth, while the US and Germany posted the largest declines,” it said. But the growth in 2019 was slower than 2018. Coal consumption
Coal consumption declined by 0.6 percent and its share in primary energy fell to its lowest level in 16 years at 27 percent. Increases in coal consumption were driven by the emerging economies, particularly China, Indonesia and Vietnam, with the latter posting a record increase in part related to a sharp drop in hydroelectric power. Growth in India, usually a key driver of coal consumption, was only 0.3 percent – its lowest since 2001. Overall growth was outweighed by sharp fall in OECD demand which fell to its lowest level since 1965. Global coal production rose by 1.5 percent, with China and Indonesia providing the only significant increases.
“It feels like the world is at a pivotal moment: it needs to address shortterm concerns but in a way that builds back better.”
Bernard Looney, Chief Executive Officer, BP
The largest declines came from the US and Germany. Electricity
Electricity generation grew by only 1.3 percent – around half its 10-year average. China accounted for more than 90 percent of net global growth. Renewables provided the largest increment to power generation, followed by natural gas while coal generation fell. The share of renewables in power generation increased from 9.3 to 10.4 percent, surpassing nuclear for the first time. Coal’s share of generation fell 1.5 percentage points to 36.4 percent – the lowest since 1985. Energy consumption
World primary energy consumption rose to 583.90 Exajoules (EJ). India’s consumption rose 2.3 percent to 34.06 EJ. The growth was lower than 5.2 percent in 2018. In absolute terms, India’s energy consumption was only behind that of China (141.70 EJ) and US (94.65 EJ). “Growth in energy markets slowed in 2019 in line with weaker economic growth and a partial unwinding of some of the one-off factors that boosted energy demand in 2018. This slowdown was particularly evident in the US, Russia and India, each of which exhibited unusually strong growth in 2018,” BP said.
Coal Insights, June 2020
21
FEATURE
Falling PLF, rising renewable make retiring old plants viable: report Coal Insights Bureau
I
ndia’s coal power fleet delivered just over half its maximum generation output in fiscal FY20, touching a historical low and marking a 21-percentage point decline in a decade from 78 percent in 2010. Low capacity utilization of coal plants and the ambitious targets for renewable capacity may make it economic to retire coal plants built before 2000, a report by BloombergNEF has suggested. “Projects owned by the federal government were used far more than those owned by private IPPs or state governments. This is because federal plants typically have
lower fuel costs as they are located closed to the coal mines,” the report said. A key factor behind this over capacity is the government’s over estimation of the growth in national power demand as seen from the downward revision made in 2018. This, the report claimed, led to overestimation in new coal capacity with 96GW of coal plants added to the grid over 2011-16 alone. At the same time, renewable capacity grew, with the introduction of the 2022 targets and its falling costs. Renewables have priority dispatch and the newer installations have lower levelized costs of energy, helping them secure a larger share of growth than coal.
The coal power fleet is increasingly underutilized and challenged by renewables
The growth of renewables has started eating into coal’s share of generation
22 Coal Insights, June 2020
By retiring older plants, the emission intensity of the grid would improve as plants built in the 2010s are using higher efficiency super-critical technology. Case for retiring old plants
In 2020, the finance ministry announced that the government would advise utilities operating old and high-emission thermal power plants to close them. However, no list of power plants or timeline were provided. The low capacity factors of coal plants and the ambitious targets for renewable capacity may make it economic to retire coal plants built before 2000. These plants would have already recouped most or all of their fixed investments. These represents nearly one-fourth of the current installed capacity. By retiring older plants, the emission intensity of the grid would improve as plants built in the 2010s are using higher efficiency super-critical technology. At the beginning of 2020, there were 36GW of coal plants under construction, of which 90 percent were built by the government-owned companies. “If all or most of this capacity comes online, the coal fleet capacity factor will fall further. This will put additional pressure on coal plants, even those built after 2000 to close down.
Annual renewables additions surpassed coal, driven by the private sector
FEATURE
Coal Reserve of 7.77 billion tons added in FY20: CMPDI Marks highest ever resource estimated in a year Coal Insights Bureau
A
bout 7.77 billion tons (bt) of coal resources were added during 20192020 to the proved category through detailed exploration covering an area of about 292 sq km, which is the highest ever coal resources estimated by Central Mine Planning and Design Institute in a year since inception. In addition to this, about 9.75 bt of new resources were estimated through promotional (regional) exploration covering
an area of about 140 sq km, Coal India’s exploration arm said in its recently issued yearly highlights. CMPDI has carried out 12.94 lakh metre of drilling under detailed exploration against target of 14 lakh metre and 1.16 lakh metre of drilling under promotional exploration against the target of 1.53 lakh metre during FY20.
♦♦
♦♦
♦♦
Key highlights of CMPDI’s exploration work
♦♦ 2D seismic survey was carried out, by Vibroseis imported from SERCEL
Inventory of geological resources of Indian coal as on 1st April 2019
♦♦
(Resource in million /tons)
Proved
Indicated
Inferred
Total
% share
Prime Coking
Coal Type
4667.75
645.31
0.00
5313.06
1.63
Medium Coking
14875.55
11245.13
1862.86
27983.54
8.57
519.44
994.87
193.21
1707.52
0.52
Semi Coking Sub-Total of Coking
20062.74
12885.31
2056.07
35004.12
10.72
Non-Coking
134957.86
127494.05
27415.95
289867.86
88.78
Tertiary Coal
593 .81
121.17
908.67
1623.65
0.50
Grand Total
155614.41
140500.53
30380.69
326495.63
100.00
47.66
43.03
9 31
100.00
Proved
Indicated
Inferred
Total
% share
0 - 300
113760.86
65203.40
9222.10
188186.36
57.64
300 - 600
23454.68
60307.93
15204.02
98966.63
30.31
0 - 600 (for Jharia only)
8398.96
5.58
0.00
8404.54
2.57
0 - 600 (Non coking)
5657.14
444.86
0.00
6102.00
1 87
600 - 1200
4342.77
14538.76
5954.57
24836.10
7.61
155614.41
140500.53
30380.69
326495.63
100.00
% share
♦♦ ♦♦ ♦♦
(Resource in million /tons)
Depth Range (m)
Total
(Resource in million /tons)
Inventory as on
Proved
Indicilted
Inferred
Total
1st April 2019
155614.41
140500.53
30380.69
326495.63
1st April 2018
148787.43
139164.14
31068.76
319020.33
6826 98
1336.39
-688.07
7475.30
Difference
24 Coal Insights, June 2020
♦♦
♦♦
OF France, in 3 blocks of North of Piparwar Phase-II (North Karanpura CF), Jharkhand, Northern part of North of Arkhapal (Talcher CF), Odisha & Nigwani Bakeli-A (Sohagpur CF), MP and this work is under progress in 2 coal blocks About 2.17 lakh meter of Geophysical logging were carried out departmentally for complimenting non-coring drilling. Exploratory drilling in 128 blocks/mines under Detailed Exploration and 17 blocks by CMPDI A Report “Exploration Status of Coal Bearing Area as on April 2019 was prepared and submitted covering potential coal bearing area of 19,400 sq km Hydrogeological studies of 21 mines were taken up for preparation of ‘Groundwater Clearance Application’.Integrated Hydrogeological study on Amb River for analysing the impact of coal mining on the base flow at Makardhokra-I Expn. OC Mine of WCL was completed 32 project reports were prepared with capacity addition of about 178 million tons per year. 52 Environment Management Plans (including 31 Form-I) were prepared `39.27 crore of fund was disbursed for R&D and S&T projects during FY20. Land Reclamation Monitoring of 87 projects comprising of 52 opencast projects producing more than 5 mcm (Coal+OB) category and 27 opencast projects and 08 clusters producing less than 5 mcm (Coal+OB) category of different subsidiaries of CIL have been completed. Land use/cover mapping of core and buffer zone based on satellite data of 31 OCP/UG mines were done during 2019-20. Further, Land Use Cover Map for the leasehold area of 15 UG projects of SECL was also completed for environment compliance. A CIL funded Project of ‘Preparation of updated topographical maps in major Indian coalfields using remote sensing techniques by Survey of India was completed.
Expert Speak
Perils of sending high cash coal to distant power plants
Nirmal Chandra Jha
R
ecentl y, Ministry of Environment, Forest and Climate Change has amended the Environmental (Protection) Rules, with the provision of doing away with the restriction of supply and use of over 34 percent ash non-coking coal at the power plants located beyond 500 km away from the mines. This issue is a cause of concern not only for the non-government environmentalists but also for Coal India which has already set up non-coking coal washeries as per the earlier mandate of the Environment (Protection) Rules, 1986. Having been in the coal industry for more than 40 years and an advocate of introducing washing of high ash non-coking coal, I thought to bring to the notice of the readers the events that have led to the current situation.
Background of first restrictions on use of >34% ash coal
With the introduction of Environment (Protection) Act, 1986 and the rules framed there under subsequently, the need for taking measure to control pollution of air, water and land gathered importance for sustainable development. Several notifications were issued from time to time and one such relating to usage of high ash non-coking coal in the power plants or other industries was framed as sub-rule 8 of Rule 3 of the Environmental (Protection) Rules in September 1997. In the background of this Rule was the results of the studies conducted with usage of washed non-coking coal in some of the power plants, namely Dahanu of BSES and also one of NTPC. The results had indicated that there was ample improvement in the efficiency of the boilers and other parameters of power generation amounting to increased production of power.
As per my memory these tests had been done at three different power plants at different time frames. These tests indicated definite improvement in the plant efficiency, efficiency of auxiliary services and production of power, reducing its cost of production with the usage of washed thermal coal. Apart from this study, there was an issue of increased cost of transportation of the inert material (ash) in the case of unwashed coal being transported to far away plants leading to increased cost of power production. Thus, both from the point of view of economics and the environmental improvement, the notification was issued by the then Ministry of Environment and Forest in 1997, restricting the use of >34% ash noncoking coal in plants located >1000km away from the pit head or located in an urban area or an ecologically sensitive area or a critically polluted industrial area, irrespective of its distance from the pit-head, calculated on average annual basis. This Rule fixed the responsibility on the user of coal and not on the producer or supplier of coal. Impact on the coal sector subsequent to notification of 1997
Subsequent to promulgation of this Rule, a lot of development in the field of setting up of non-coking coal washeries took place in the country. A large number of private investors set up such washeries to beneficiate non-coking coal linked to the consumers. Coal Indiaâ&#x20AC;&#x2122;s subsidiaries BCCL and CCL, primarily washing coking coal also converted some of their washeries to wash non-coking coal and continued supplying the middling of coking coal washeries to power plants to help power plants to achieve their goal of <34% ash on annualized basis. Coal India also adopted the strategy of setting up non-coking coal washeries and a plan was prepared to set up 20 coal washeries, including a few for washing coking coal in 2007 and actions started on some of them. The pace of setting up such washeries at Coal India subsidiaries remained very poor due to various factors including some road blocks at the Ministry of Environment and Forest.
Coal Insights, June 2020
43
Corporate
Coal India eyes 15 new mines for MDO route Coal Insights Bureau
C
oal India has decided to engage Mine Developer cum Operators (MDOs) to increase production and reduce import dependency by the economy. For this Coal India has identified 15 greenfield projects to be developed through the MDO route of which 12 are open cast and 3 are underground, a release by Western Coalfields said. The 15 mines companied have a total targeted capacity of around 168 million tons per annum (mtpa). Of this, the OC mines have a targeted capacity of 162 mtpa while UG projects would contribute close to 6 mtpa. The contract period for the MDOs would be for 25 years or life of mine whichever is less. “CIL will engage MDOs of international repute, having state-of-the-art-technology through open global tenders, who shall excavate, extract and deliver coal to the coal companies of CIL as per the approved mining plan. CIL’s board recently has given its nod in regard to standard bid document and request for bids for the engagement of MDOs,” the release said. CIL is trying to complete all processes so that all projects become operational and start yielding the output to contribute in 1 billion tons by 2023-24,” it said. Apart from Mahanadi Coalfields, South Eastern Coalfields and will form major segments for the MDO mode with targeted capacities of 65.5 mtpa, 52.4 mtpa and 45 mtpa, respectively. Eastern Coalfields and will have projects with targeted capacities of 3 mtpa and 2 mtpa, respectively. Notice Inviting Tender for two projects - Siarmal OC of MCL (50 mtpa) and Kotre-
Basantpur Pachmo of CCL (5 mtpa) having aggregate targeted capacity of 45 mtpa were floated 2019-20. The NIT for 5 Projects for a targeted capacity of 68 mtpa will be floated in the ongoing fiscal while for the balance 8 projects NIT will be floated in FY- 22, the release said. MDOs will facilitate R&R issues, land acquisitions, green clearances and coordination with state and central pollution boards. Since contracts to them are on longterm basis, allied infrastructure will also be developed. MCL to invest `60,000 crore in Odisha
Mahanadi Coalfields has targeted to raise its coal production to 300 mt with investment in
the acquisition of land for three new MDO projects. Mahanadi Coalfields has laid out an investment of about `60,000 crore in Odisha, with `31,000 crore to be spent for mining and social infrastructure development by FY24. Apart from Siarmal, for which NIT was floated earlier, Subhadra (25 mtpa) and Balbhadra North (10 mtpa) in Talcher coalfields, as well as the expansion of existing projects would be taken up. To increase the capacity building for the new and expansion of existing projects, the company would invest in procurement of heavy earthmoving machinery, besides setting-up of 1,600 MW (2 x 800) supercritical thermal power plant with a planned investment of `11,363 crore in the Sundergarh . The investment in strengthening coal evacuation infrastructure, like doubling of 53-km-long Jharsuguda-Sardega railway line with a flyover at Jharsuguda railway station and construction of 12 Rapid Loading Systems (RLS), aims at supplementing the increased coal production, it said. With the help of the Odisha government,
Coal Insights, June 2020
49
58 Coal Insights, June 2020
Tear along the dotted line
Tear along the dotted line
