Coal Insights, June 2022 by mjunction services ltd

CONTENTS

8 | COVER STORY

17 Seaborne thermal coal offers show mixed trends in June 18 Seaborne coking coal offers fall in June

Gasifying coal: time to step on the pedal

19 India’s May coal imports up 4.52% y-o-y

A detail analysis of opportunities in and challenges to gasification of coal

20 CIL’s coal production up 30% in May 21 SCCL’s coal production up 11% in May 22 Coal Min prods miners to raise output 24 Coal India to import coal for state Gencos, IPPs 25 Coal Min focusses on quality, reforms in FY23 28 Power Min seeks replacing 58 BU of thermal power by FY26

15 |

INTERVIEW

“We can provide CO2 captured at Angul for free if it is utilised by user plants” Exclusive interview of Dr V R Sharma, Managing Director, JSPL

30 States can benefit from repurposing old power plants: study

36 | FEATURE

32 India’s May sponge iron production up 6% y-o-y 33 No power capacity addition in April

Coal India to set up new CCL washery, renovate BCCL facility

41 Coal handled by major ports up 3% till May

New Rajrappa washery to have 3 mt capacity

42 Indian Railways’ coal handling up 15% till May 43 BHP to retain New South Wales Energy Coal 46 US coal production to rise by 4% in 2022: EIA 47 Coal India eyes 100 mt from UG mines by FY30 49 Adani goes for major push to green hydrogen, clean energy 51 Mahanadi Coalfields goes for green mining 54 Corporate update 57 Government update 60 E-auction data 62 Port Data

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38 | INTERVIEW

“Recent geopolitical issues are proving that energy security remains critical” Interview of Michelle Manook, CEO, World Coal Association

44 | INTERNATIONAL

Replacing coal with renewable energy could pay for itself: IMF Estimated $78 trillion over coming decades to be gained

COVER STORY

GASIFYING COAL: TIME TO STEP ON THE PEDAL Sumit Maitra

8 Coal Insights, June 2022

COVER STORY

oal will continue to be the base fuel source for electricity generation at low cost for several years to come. Yet, the country also needs to prepare and start taking some concrete steps towards energy transition as part of its Net Zero pathway. This means thermal use of coal will decline over the next decade as environmental regulations tighten. While coal mining has been opened up thereby bringing in private participation, it has become evident that foreign investment would stay away from India’s coal sector unless coal is radically transformed into a source of sustainable and environmentfriendly energy. In this backdrop, Government of India prepared a mission document for coal gasification of 100 mt by 2030 since coal gasification is considered as cleaner option compared to burning of coal. Gasification facilitates utilisation of the chemical properties of coal. Sysgas produced from coal can be used to produce gaseous fuels such as hydrogen, substitute natural gas, dimethyl ether (DME), liquid fuels such as methanol, ethanol, synthetic diesel and chemical like methanol derivatives, olefins, propylene, mono-ethylene glycol (MEG), nitrogenous fertilizers including ammonia, DRI, industrial chemicals along with power generation through the Integrated gasification combined cycle route. Despite such obvious benefits, gasification of coal, so far, has remained a non-starter. There is only one commercial scale project at Angul set up by Jindal Steel and Power (JSPL). The other projects are of pilot or demo scale in nature - BHEL’s 6.2MW Pressurised Fluidised Bed Gasifier plant has stayed at the pilot stage since 1997. Naveen Jindal, Chairman, JSPL, has an explanation for this. “In the past 10 years of operating the coal gasification project, we have gone through a lot of difficulties. It’s not a cakewalk. But now we have the confidence,” Jindal said while addressing the National Mineral

“India’s hydrogen demand is likely to increase to 11.7 million tons (mt) by 2030 from 6.7 mt per year now. Refineries and fertiliser plants are the largest consumers of hydrogen now, which is being produced from natural gas. It can be produced through coal in the processes during coal gasification.” V K Tiwari Additional Secretary, Ministry of Coal

Congress held in Bhubaneswar organised by Indian National Committee of World Mining Congress under the aegis of Ministry of Coal. Add to the complexities of adopting the right technology and making the required investments, the availability of coal itself is a major issue currently due to surging power demand.

“In the past 10 years of operating the coal gasification project, we have gone through a lot of difficulties. It’s not a cakewalk. But now we have the confidence.” Naveen Jindal Chairman, JSPL

“For us, the only way to utilise highash Indian thermal coal in steelmaking was to gasify it. We want to encourage coal gasification. Unfortunately, today there is a severe shortage of coal. We understand the government’s strategy to ensure enough electricity,” Jindal said. “The Coal Ministry has taken a lot of initiatives to encourage coal gasification, the biggest step being the incentive of paying only 50 percent premium,” he added. Coal gasification is also the route to make hydrogen a key source of clean fuel for mass adoption in the future. “India’s hydrogen demand is likely to increase to 11.7 million tons (mt) by 2030

from 6.7 mt per year now. Refineries and fertiliser plants are the largest consumers of hydrogen now, which is being produced from natural gas. It can be produced through coal in the processes during coal gasification,” V K Tiwari, Additional Secretary, Ministry of Coal, said at the event. Overall, coal gasification would help put coal on the path to sustainability. “Gasification will help bridge to green technologies by making coal more sustainable and CO2 capture ready. It will reduce reliance on imported chemicals and energy, monetise coal reserves and attract foreign investment in India,” said Shibaditya Sen, Director of Business Development at Air Products said. Available technologies

There are several technologies available for coal gasification - Fixed Bed, Fluidised bed and Entrained Flow. According to the Coal to Hydrogen Roadmap document of the Coal Ministry, among the three types of the gasifier, the Entrained flow gasifier is a matured technology but yet to be tested for high ash coal. Fixed Bed gasification technology is also a developed one but restricted up to the coal of 35 percent ash. Fluidised Bed gasifier seems to be suitable for high ash coal but not widely commercialised at this stage, the document says. y Fixed Bed technology JSPL has adopted the Fixed Bed technology of Lurgi, which according to Dr V R Sharma, MD of JSPL, is well demonstrated, mature, proven and suitable for high-ash content Indian coal.

Coal Insights, June 2022

COVER STORY

“We can provide CO2 captured at Angul for free if it is utilised by user plants”

indal Steel and Power Ltd, which has been operating world’s first syngas-based plant to reduce iron in its steelmaking operations, has been a cheerleader for adoption of coal gasification in the country. JSPL’s facility including the DRI plant at Angul in Odisha is being showcased by the Indian government as part of its push to aggressively promote coal gasification as one of the processes to make coal a sustainable and environmentfriendly fuel. As part of this initiative, JSPL hosted Coal Insights to visit the facility up close as part of a delegation organised by the Coal Ministry. During the event, Sumit Maitra caught up with Dr V R Sharma, Managing Director, JSPL who shared plans for promotion of a gasification ecosystem including setting up of a carbon park.

- for our Angul as well as Raigarh capacities. So, we expect that once the mines start operating, it would be good for us. But, as of today, we are facing a shortage of coal. For this, we seek the support of the government of India to facilitate faster opening up of the mines. The government has come up with some incentives to promote coal gasification in the country. Do you see benefits in such measures? The government has provided incentive in the form of a concession of 50 percent in revenue share for coal gasification. We appreciate the incentive, which, we believe, will encourage more players into the coal gasification sector.

There was a time when the coal gasification plant had to shut down for want of coal. What is the current situation? Are you comfortable with the availability of coal to run your Angul facility continuously?

JSPL has been promoting the concept of integrated gasification combined cycle (IGCC) power plants. What are the benefits of going for such projects?

That phase is over. An important development is that we have won some coal mines - one in Chattisgarh and three in Odisha

We waste lots of money and energy transporting coal away from the pithead. IGCC power plant at the pithead can save a lot of cost

Coal Insights, June 2022

FEATURE

Power Min seeks replacing 58 BU of thermal power by FY26

Coal Insights Bureau

ower Ministry, in a communication of the heads of power PSUs, Discoms and state secretaries has outlined the trajectory of replacing up to 58,000 Million Units (MU) of coal-fired energy with 30 GW of Renewable Energy by FY26 to reduce consumption of coal and achieve 500 GW of non-fossil fuel-based energy by 2030. The process to reduce thermal generation by 58,000 MU involves cutting down on generation of 81 thermal power station. As per the list accompanying the communication, of these 81 power stations, 30 are in the Central sector, 32 belonging to states while 19 are owned by the private sector.

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According to the ministry, replacing thermal power will save significant amount of coal, help reduce carbon emissions while achieving the targeted 500 GW of RE. “The replacement of thermal power will save a good amount of coal annually consumed in the country leading to reduced emission and greening of the environment. Substitution of thermal power with RE will also alleviate the concerns of coal crisis and enable the country in meeting the maximum demand benefitting the consumers. The implementation of the scheme will conserve 34.7 million tons (mt) of coal and reduce carbon emission by 60.2 mt,” the communication said. The renewable power needed to substitute the thermal power will be calculated at a capacity utilisation factor of 22 percent.

All central public sector undertakings (CPSUs), state, and power generation utilities should take appropriate action to meet the trajectory as per the target, i.e., 20 percent in FY24, 35 percent in FY25 and 45 percent in FY26, the communication dated May 26 said. According to the notification, even though the station-wise targets have been worked out, a thermal power station can substitute a larger quantity of renewable power beyond the set target. The targets fixed for the generating stations are the lowest targets that can be met. Hydropower generating stations can also bundle renewable power. Generating stations that have installed or procured a higher capacity of power for the

FEATURE

Coal India to set up new CCL washery, renovate BCCL facility

Coal Insights Bureau

oal India has decided to set up a new coking coal washery of capacity 3 million tons per annum (mtpa) on Build-Own-Operate (BOO) concept at Rajrappa within Central Coalfields Ltd and renovate the existing Madhuban coking coal washery of 2.5 mtpa capacity at Bharat Coking Coal’s Dhanbad district on Renovate-Operate-Maintain (ROM) model. Separate tenders have been floated by Coal India arm CMPDIL recently for these two projects. Rajrappa coking coal washery

Construction of the washery has to be

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completed in 36 months (including trialrun and commissioning) from the date of signing of agreement or handing over the site while the winning bidder has to operate and maintain it for 18 years. “CCL intends to set up a coking coal washery with raw coal linkage from Rajrappa OC on BOO concept. The assured raw coal throughput of the washery will be 3 mtpa on ‘as received basis’ (ARB). The expected monthly average ash content of raw coal is around 25.1 percent on air dried basis (ADB) and likely to vary within the range of 24.8 to 35.0 percent on ADB. The range of moisture varies from 0.86 percent to 4.89 percent,” the tender said. The washery will be designed to produce

CIL will set up a new coking coal washery of 3 mtpa on Build-OwnOperate (BOO) concept at Rajrappa within Central Coalfields Ltd and renovate the existing Madhuban coking coal washery of 2.5 mtpa capacity at Bharat Coking Coal’s Dhanbad on RenovateOperate-Maintain (ROM) model. three products viz. washed/ clean coal, washed coal (power) & rejects. The plant should be capable of efficient performance with additional raw coal feed to an extent of above 20 percent over the throughput capacity, commensurate with the fluctuation in mine production in different seasons, the tender said. Thus, the plant shall have the provision for handling raw coal equivalent to daily throughput capacity (i.e. 9000 tons) + 20 percent of daily throughput capacity. Washed/ clean coal Washed/clean coal with monthly average target ash content of 18 percent (ADB) and total average moisture content not exceeding 9.0 percent (day-to-day basis) should be produced. However, depending on need, ash percentage of washed/clean coal can be reduced further.

INTERVIEW

“Recent geopolitical issues are proving that energy security remains critical”

ichelle Manook, Chief Executive Officer, World Coal Association took up the role in July 2019 to lead the organisation at a critical juncture when coal is being made to reinvent itself as the key source of energy fueling a sustainable future. With over 25 years’ experience in the energy and mining industry covering Australia and emerging markets in managing corporate affairs, investor relations and business strategy within the oil and gas, metals and infrastructure industries, Manook joined the WCA from Orica, a global leader in mining services, where she was Head of Strategy, Government and Communications for Europe, Asia and Africa. With global markets reopening and normalising at a vigorous space post the pandemic, Manook is now busy fostering international collaboration and promoting pathways that drive just transition and improvement in global emissions. She spoke to Arindam Bandopadhyay of Coal Insights over a range of issues impacting coal in the transition phase.

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To go by WCA’s catchphrase, the world still needs coal! But for how long? It would be foolhardy to try and predict the gestation life of coal but it is obvious that coal has an ongoing role to play in the energy transition and economic and social development. The best example of coal’s sustainable role is the fact that it still remains essential to the electricity supply in more than 80 countries. and continues to generate 35 percent of global electricity. Very practically, coal also provides the building block to economic progress and modernisation through the manufacture of steel, cement and aluminum – with few, if any, near-term alternatives. Coal’s sustainability will really be decided based on its ability to be an important part of a diverse due mix

INTERNATIONAL

Replacing coal with renewable energy could pay for itself: IMF Coal Insights Bureau

he world may gain an estimated $78 trillion over coming decades by making the energy transition, International Monetary Fund (IMF) has said in a report. “International negotiators can’t agree on how to phase out coal, in part because of opposition to carbon taxes, and now even countries that had been able to abandon the fuel are reversing that progress as the war in Ukraine raises energy prices. The most common concern about scrapping coal is that replacing it with renewable energy would be too expensive, but we show in new research that the economic benefits would far outweigh the costs,” the report by Tobias Adrian, Patrick Bolton and Alissa M. Kleinnijenhuis says. The researchers analysed the ‘great carbon arbitrage’, in a recent working paper that calculates the cost of replacing coal with renewables, as well as the social benefits of this important transition. “The benefits from

ending coal use come from avoiding damage from climate change and harm to people’s health. Our estimate is that by doing so the world would yield a net gain of nearly $78 trillion through the end of this century,” the IMF report says. That’s around four-fifths of global gross domestic product now, and would be equivalent to about 1.2 percent of annual global economic output during the period. To determine both the size of the avoided emissions, as well as any potential losses from their prevention, the research uses a detailed dataset compiled by asset resolution on companies’ historical and projected global coal production based on the aggregation of production at the plant level. The cost estimate for adopting renewable sources includes capital spending for new energy generation capacity equal to what’s lost with coal, plus compensation to coal companies for lost earnings when they are shut down. The cost estimate does not include

Carbon arbitrage Present value of benefits of phasing out coal (in trillion dollars) Present value of costs of phasing out coal (in trillion dollars) Opportunity costs Investment costs Carbon arbitrage (in trillion dollars) Carbon arbitrage relative to world GDP (% )* Carbon arbitrage (in dollars) per ton of coal production Carbon arbitrage (in dollars) per tCO2 Total coal production prevented (giga tons) Total emissions prevented (GtCO2) Further temperature increase – on top of 1.1 °C already observed – prevented**

106.9 29.03 0.05 28.98 77.89 1.2 125 55 623.62 1425.55 2.14

* The world GDP in 2020 is 84.705 trillion US Dollars according to the World Bank. ** The best estimate of Matthews et al. (2009) for the temperature increase per trillion tons of carbon emitted is 1.5 °C. The 5th to 95th percentiles estimates are 1.0 °C and 2.1 °C per trillion tons of carbon emitted, associated with a further temperature increase prevented of 1.43 °C and 2.99 °C, respectively.

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“The most common concern about scrapping coal is that replacing it with renewable energy would be too expensive, but we show in new research that the economic benefits would far outweigh the costs.” IMF compensation for affected workers, but this is likely to be small relative to the overall net gains from the transition. Additional compensation to make the switch to renewables feasible could be offered as long as the social benefits of phasing out coal exceed the more comprehensive set of costs. Carbon price

The researchers calculate the value of doing so by estimating the reduction in emissions from phasing out coal, and by applying a carbon price to those discharges. This in turn lets them estimate the economic gain from the transition. The difference between the value of the social benefits versus costs of replacement and compensation for missed coal revenues forms our baseline estimate of world’s net gain from finally ending our reliance on the fuel. While their conservative estimate comes with an unavoidable uncertainty, given the decades-long timeframe, the enormous social benefits from what could be thought of as an inexpensive insurance policy are clear: paying a premium offers coverage for significant potential damages, the report says. “So sizeable are the potential gains that world leaders should pursue a global

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