Coal Insights - Apr 2012 by mjunction services ltd

Chief Editor Rakesh Dubey, Tel: +91 91633 48159, Email: rakesh.dubey@mjunction.in Executive Editor Arindam Bandyopadhyay, Tel: +91 91633 48016 Email: arindam.bandyopadhyay@mjunction.in Editorial Board Alok Srivastava, General Manager, MMTC Ltd Amitabh Panda, Group Director (Shipping & Logistics Operations), Tata Steel Group Anirudha Gupta, Director, P&H JoyMining Equipment India Ltd Ashok Jain, Managing Director, Saumya Mining Ltd Deepak Bhattacharyya, Head – coaljunction, mjunction services ltd Ganesan Natarajan, WT Director, President & CEO, Ennore Coke Ltd Lawrence Metzroth, Vice President – Analysis & Strategy, Arch Coal Inc M K Palanivel, President – All India Bulk, Samsara Group P S Bhattacharyya, Managing Director, Haldia Petrochemicals Ltd S N Choubey, Head – Commercial, ABG Cement Ltd Sandeep Kumar, Managing Director, S & T Mining Co Pvt Ltd Suresh Thawani, Managing Director, Tata Sponge Iron Ltd Advertising Soumitra Bose, Tel: +91 92310 00232, Email: soumitra.bose@mjunction.in Sumit Jalan, Tel: +91 91633 48243, Email: sumit.jalan@mjunction.in Subscription Rachita Das, Tel: +91 91633 48045, Email: rachita.das@mjunction.in Toll Free No.: 1800 4192 000 1. Press 8 for publication Email: publication.tbss@mjunction.in Design Debal Ray, Ishawer Kumar Sriwastva, Sobhan Jas For suggestions, feedback and queries, please write to coalinsights@mjunction.in

EDITORIAL Rakesh Dubey Chief Editor

Dear Readers, Finally, the wait is over! S Narsing Rao, IAS, took charge of Coal India Ltd (CIL) on the auspicious day of Akshaya Tritiya, considered a favourable occasion to start a new business. In fact, the first full-time chairman of CIL in more than a year’s time, Rao has brought with him reasons for hope. There is an upbeat mood in the coal fraternity. Only recently, CIL declared a positive growth in production after quite some time. As if that was not enough, the new chairman in his first appearance before the press announced the CEPI restrictions on the majority of coalfields have been withdrawn. Good news indeed! In CIL and the coal fraternity at large, Rao is being touted as the man who delivers! He has done it for Singareni (SCCL), achieving 40 percent growth in production during his term. And he would have ample time, notes former chairman P S Bhattacharyya, to do it at CIL. But a little caution won’t do much harm, will it? And a little guidance from his grand predecessors would surely come handy at tricky moments.

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Incidentally, amid the upbeat mood in CIL, the talks of price revision have taken a backseat. There was no announcement over the revision in GCV based pricing in the last fortnight. There have also been no surprises thrown up by the coal ministry, except for a revision in coal royalty rates which was hanging fire for some time now. This period of lull, however, is likely to be shortlived. Come May and there would be the start of a busy season. Meanwhile, there has been quite a debate over the new fuel supply agreement (FSA). After much dilly dally, CIL has started signing agreements with power companies. The whole episode however showed a lack of faith in own capabilities and in the system. We only hope that with revival of production growth, the symptoms of weakness will ease off. Apart from covering the regular developments, this issue of Coal Insights brings out an insightful report on the state of coal washeries in India. Quite a sorry state this segment is in. It will hardly be an exaggeration to say the future of Indian non-coking coal consumption would depend much on the washing capacity. Apart from production growth, the new incumbent would do well to cast a look into the initiative to set up washeries, which has almost become a non-starter. Happy reading.

Contents

06 | Cover Story

Increasing production to be top priority, says Narsing Rao The new chairman avows production growth, may explore MDO route.

24 | FEATURE

Govt adopts new royalty regime for coal, lignite The ad valorem regime is likely to hit non-power sectors.

Coal royalty rates

8 7 6 5 4 3 2 1 0 US

Brazil

Chile

China

Poland

Queensland

ROYALTY (in %)

35 | Feature

CIL begins to sign FSAs with power companies Power utilities term FSA a ‘farce’, expect no improvement in supply scenario

44 | SPECIAL FEATURE Coal washeries in India

With CIL’s washery projects failing to take off, the coal beneficiation industry faces stagnation.

60 | EXPERT SPEAK

Energy security policy need of the hour The government must take stock of fuel basket and ensure optimal use.

14 Thermal coal import prices subdued in April 16 Coking coal prices firm up in April 20 India’s coal imports down in FY12, may bounce back in FY13 28 New MMDR Act to curb illegal mining, says minister 32 IBM seeks to curb illegal mining, recommends lease termination 33 India’s coal mine safety records better than global average 37 New FSA clause to hamper growth of power sector: DVC 40 Indian power plants exceed March target 42 India’s Feb cement production up 8.9% 43 Sponge iron sector in throes of survival crisis 50 Coal beneficiation: cleaning the dirty fuel 53 Essar Power to triple operating capacity 54 WBMDTC’s first coal block to produce 1 mtpa 55 India’s solar power industry: progress report 56 Vikram Solar eyes 100% y-o-y growth in capacity, topline 58 KSL ‘solarising’ Indian Defence sector 59 Coal Mine Act revision needs deliberations 62 Doubts over CIL’s ability to honour FSAs future 63 Mozambique’s mad rush to spruce up coal infrastructure 65 Zimbabwe needs exploration drive in coal 66 Coal, ore to drive sea cargo growth by 8% till 2015 68 Traffic handling by major ports down 1.7% in FY12 69 Coal handling by major Indian ports moves up in FY12 70 Indian Railways FY12 commodity freight revenue up 10.7% 71 Indian Railways revises freight charges 73 Power sector update 84 E-auction 85 Port data

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COAL INSIGHTS 4 APRIL 2012

Cover Story

Increasing production to be top priority, says Narsing Rao Rakesh Kumar Dubey & Sanjukta Ganguly

COAL INSIGHTS 6 APRIL 2012

Cover Story

. Narsing Rao took over as chairman and managing director (CMD) of Coal India Limited (CIL), the largest coal producing company in the world, with effect from April 24, 2012, filling up a post that was being run by acting chairmen since P.S. Bhattacharyya’s superannuation in February 2011. He succeeded Zohra Chatterji, IAS, Additional Secretary to Government of India, Ministry of Coal, who held additional charge as CMD of CIL since February 1, 2012. Prior to assuming charge of the top post in the state owned Maharatna coal mining monolith, Rao, an IAS officer of the 1986 batch from the Andhra Pradesh cadre, was CMD of the Singareni Collieries Company Limited (SCCL), the Andhra Pradesh based coal mining company since September 2006. As CMD of SCCL, a joint venture between the government of Andhra Pradesh and the Central government, Rao catapulted the company from a production of 36 million tons in 2006 to 53 mt in 2011-12, thereby placing SCCL on a high growth trajectory of 9 to 10 percent from a mere 2 to 3 percent. It was during Rao’s tenure at the helm of SCCL that the company experienced its first ever strike free year in 2007-08 and also experienced substantial productivity gains. A post-graduate in chemistry and economics, Rao also holds a post-graduate higher diploma in forestry. Before joining the IAS, he underwent training in the Forestry and Rural Development sectors. Rao has wide international exposure and his expertise includes consultant to the International Fund for Agriculture Development (IFAD), Rome, Italy and Chief Technical Adviser, United Nations Office of Project Services, Asia & Pacific regions, Asia & Pacific region. He has extensive international experience in poverty alleviation and rural development in South and South East Asia. He has rendered technical advice to the governments of Bangladesh, Nepal, Bhutan, Maldives and Myanmar and has lived and functioned out of cities such as Rome, Yangon, Kuala Lumpur and Bangkok. In his first press conference on the very day he took over as chairman of CIL, Rao made his priorities very clear. He said he will concentrate on augmenting coal production and stepping up the supplies. Excerpts:

What will be your key challenges as the new CMD of Coal India? My first priority will be to increase coal production so that the company can meet the country’s coal demand and emerge as India’s true energy provider. In line with increase in production, I would also aim to increase supplies to consuming sectors, particularly the power sector. Getting faster environmental clearances for the pending projects will also be very high in my priority list. My focus would be not only to get clearances for new projects, but also to ensure that we get clearances while meeting social responsibilities as a responsible PSU.

In addition, being a listed PSU, the responsibility towards shareholders is of paramount importance and a challenge. Getting environmental and forestry clearances are challenges before us as a total of 70 projects are awaiting environmental clearances at both the Central and state levels. We will prioritise this and also focus on those projects which are likely to pass the clearances faster. Another key challenge is infrastructure building, mainly logistics or evacuation infrastructure, connectivity, including railways for the last mile connectivity with sidings. Though these will pay huge dividends once done, they will take time. But once they are, over the next 30 or even 40 years, they will provide huge benefits.

COAL INSIGHTS 8 APRIL 2012

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Cover Story CIL’s production in the past, particularly in 200708, was affected due to delays in procurement of equipment. What do you feel about the issue?

“A key challenge is infrastructure building, mainly logistics or evacuation infrastructure, and connectivity”

Procurement is a major challenge as it is often affected due to procedural or technical hitches. And then one has to start afresh. CIL is a strong and efficient company and even if there are certain issues, we need to work on them in order to find a solution. What measures do you plan to adopt to increase production?

Bhattacharyya’s prescriptions for new CIL chairman

We will possibly explore the mine developer cum operator (MDO) route, which is ideal for difficult mining conditions. But we are also looking at other avenues so that the targeted production figure of 468 million tons for 2012-13 is achieved.

n a brief interaction with Coal Insights, P S Bhattacharyya, former chairman and the main architect of Coal India’s (CIL) immensely successful IPO, shared his thoughts on the list of priorities for the new chairman. The major observations are as follows: ♦♦ The new CIL Chairman has to do something to regain the production growth rate. Besides production, he needs to look at the interest of investors, both government and minority investors. ♦♦ He needs to look at proactively address the social and environmental aspects of mining, actually an effort to get faster clearances. ♦♦ For open forest and low density forest these can be converted into far better forest than they are today if they are diverted to coal industry subject to monitoring by MoEF. Nowhere the forest land is degraded at the beginning as mining is done sequentially. ♦♦ The big mining companies in the world declare that they will have biodiversity and be carbon footprint negative. By this they mean that they will plan their activity in such a manner that as a result of mining the forest cover will not come down, it will go up. Coal India has a good track record of afforestation. The only thing is that it needs to be reinforced and consolidated and benchmarked. I think, Narsing Rao is a great leader. I have a lot of good feelings about him. I have worked with him in NCWA and have seen him in various meetings. Very clear and coming from IAS background and experience of running a coal company for various years successfully. He is the best suited for the job. I am quite sure that he will be able to take everybody on board and get Coal India back on the growth track.

COAL INSIGHTS 10 APRIL 2012

The fuel supply agreements (FSAs) with power plants have become a major issue after the presidential directive. How many FSAs have been signed so far as per the new guidelines? As per the directive, we have to sign FSAs with almost 50 power plants, and the process has begun with eight or 10 of them. It is difficult to disclose the names right now, but most of them are in the public sector. The new FSAs are for all the power plants commissioned between 2009 and 2012. This is under the new coal distribution policy and they are now being converted into FSAs. What is NTPC’s view on new FSA norms as it is the largest consumer of CIL? We are holding some discussions with NTPC and are likely to finalise FSAs with them soon. However, the bigger issue with NTPC is that it has some issues regarding our GCV classification and wants to revert to our old system. So this problem is not only with new FSAs but also with older ones. However, that does not mean that we are going to stop supply to NTPC. Supplies and discussions with NTPC will have to go hand in hand. NTPC also has some issues regarding quality which need to be looked into. Has CIL received any complaint from any consumer on the new FSA clauses? We have not received any complaints so far regarding the penalty issue. How will you describe the role played by independent directors in supporting the company over the FSA issue despite the PMO order, especially

Cover Story at a time when the company did not have a full-time chairman? I do not think full-time chairman was an issue but the issue was the requirement of corporate governance and that half of the board needs to be independent directors. It is an equally important issue that minority shareholders’ interest also had to be protected. However, at this stage I do not have any specific comment on that. After the active role played by independent directors on FSAs, do you expect the clearances to get any easier? There are two types of clearances. One is environmental and the other is forest clearance and the latter is a complicated issue as one has to take a call on whether you want to preserve the forest or the coal. Environmental clearance is not really a major issue. In OECD countries, if they can they achieve a high level of compliance, we can also. The problems are mainly procedural in nature such as public hearing getting delayed or disrupted. Forestry, on the other hand, is a different matter altogether. We are looking at what is delaying the clearance process so that we are able to intervene and improve that process. We will also seek assistance from the coal and power ministries as well as the state governments. A number of forest and environmental clearances are pending at the initial levels also. On an average, environmental clearances take about 2.5 years whereas forest clearances take much longer – about 7.5 years. Most of the power plants are running with critical coal stock these days. What is the reason behind this? Is it the declining production by CIL, or low quantity of coal being evacuated from your mine? The power plants are also consuming imported coal, but it has been found quite often that they are not building their stock of imported coal. Though the power plants are not stocking coal, it is also a fact that overall there is a shortage of coal. Most of the linkages are based on 85 percent PLF. Of course it is good thing if they run at 92, 93, 94 PLF, but then there is a gap arising out of that. But fundamentally there is a shortage of coal in the country and that is the major issue. One is lucky

“Supplies and discussions with NTPC will have to go hand in hand”

that we can still run a power plant at 90+ PLF. Reducing coal stock is scary but still it is a good thing compared to shutting down or reducing generation. There is always a gap between the ideal requirement and the ability to supply and our endeavour is to improve that as much as possible. Whatever we are producing at present is definitely not our peak capacity as there is always scope to improve production and productivity. We are working on that, especially on how to improve the production from opencast mines. CIL had planned to acquire coal assets abroad, but except Mozambique nothing has happened. What is your priority list? We will definitely focus on acquiring coal assets abroad, but our focus will be on less mature markets like Nigeria, Zambia or Tanzania, mainly in African countries, wherever coal is available and valuation is lower compared to developed markets like Australia and South Africa which are matured markets. We will certainly expedite our process of exploration and even the evacuation infrastructure building in Mozambique. CIL had said in January that it will review the impact of shift to GCV based pricing after three months. When do you plan to go for the review? I cannot comment on this right now. The earlier decision to review the impact of GCV mechanism that came into effect from January 1, 2012 after three months, will have to be kept on hold as the company is busy right now with signing of FSAs. The coal minister has recently spoken about progressively reducing e-auction quantities by 201617. What is your view?

“We will focus on less mature markets while scouting for coal assets abroad”

It is not correct to say that we will divert the coal from e-auction or otherwise. But if the consumers are willing to take the coal earmarked for e-auction then we have to consider offering coal from non-railway head locations. We had offered coal earmarked for e-auction in the past to power companies but they did not lift it.

COAL INSIGHTS 12 APRIL 2012

coal market fundamentals

Thermal coal import prices subdued in April

Thermal coal price trend April 2012 115 110 105 100 95

$ per Ton

hermal coal prices remained subdued in the international market in April due to lack of demand from the utilities, according to market participants. Both consumers and traders are not bullish or ready to take position in this market mainly because of financial problems. The power prices remained low, while coal prices were high, with the local currency, the Rupee, hovering around 5152 to the US dollar, acting as a deterrent to imports. Australian thermal coal of heating value of 6,300 kcal GAR is currently being offered at around $101 per ton against $108 per ton quoted at the beginning of April. Offers of South African thermal coal of heating value of 6,000 kcal NAR fell by $4 per ton to $100 per ton in April from March end levels. Offers for Indonesian coal of heating value of 5,900 kcal GAR is hovering around $90 per ton, while that of heating value of 5,000 kcal GAR is at $70 per ton. Traders said deals are struck only if the coal is required on an urgent basis. No one is buying to stock the coal, and small power projects are also buying low grade coal with high ash. Another reason for the lack of buying interest is that players are busy preparing their budget allocation for 2012-13. Indian buyers are quoting prices way below market rates. However, according to analysts, thermal coal prices will remain at relatively high levels over the long term despite aggressive mine expansions to meet the growth in Asian demand, particularly from China and India. Analysts at a recent coal conference felt although there will be “aggressive” thermal coal supply expansions, steam coal prices in the long term will remain at high levels. Cost pressures, infrastructure bottlenecks and a decrease in export coal quality will combine to hold prices at traditionally high levels and China and India will be the top two demand drivers.

90 85 80 75 70 65

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Coal Insights Bureau

South African Coal (6000 Kcal NAR)

Australian Thermal coal (6300 GAR)

Indonesian (5900 Kcal GAR)

Indonesian (5000 Kcal/GAR)

India’s seaborne steam coal demand by 2030 will be 400 million tons (mt) per year from 80 mt in 2011, overtaking Japan, according to analysts. India’s thermal coal demand may be even higher if domestic coal supply is constrained by delays in associated rail and port infrastructure projects. Cost pressures from changing fiscal regimes such as the carbon tax in Australia and the minimum export price regulations in Indonesia will also support high thermal coal prices. Meanwhile, more than one-third of India’s coal-based thermal power plants are running on critically low levels of fuel stocks, according to the latest data released by the Central Electricity Authority (CEA). Figures posted on CEA website showed, 32 of 89 thermal power units across 16 states had “critical” coal stocks of seven days or less. Of these, at least 19 had stocks of four days or less. The normative coal stock requirement for these plants is usually 20-30 days of stock.

Indonesia toying with export tax on thermal coal

ndonesia is still discussing an export tax on thermal coal for this year, as it seeks to boost revenues and investment in the country’s mining industry. “We have not yet decided whether coal will be dropped or not from the plan because we are still in discussions,” said Deddy Saleh, the director general of foreign trade at the trade ministry, told the media. Demand for Indonesia’s coal comes mainly from China and India, which are expected to lift coal imports significantly over the next five years. Output will hit 390 million tons for 2012, industry groups say. The world’s top exporter of refined tin and home to

the second biggest copper mine, is keen on developing its mining industry, create jobs and turn into a producer of higher-value finished goods from an exporter of raw materials. Indonesia had failed previously to impose a coal export tax to secure domestic coal supplies, with the plan dropped after court action by industry. The export tax proposal, which could be 25 percent this year and 50 percent in 2013, is part of a flurry of recent plans supporting a 2009 mining law aimed at increasing state revenue from a sector that contributes about 12 percent of GDP in Southeast Asia’s top economy.

COAL INSIGHTS 14 APRIL 2012

coal market fundamentals

Coking coal prices firm up in April Coal Insights Bureau

Met coke import prices rise in April

Coking coal rice trend in Australia April 2012

Coal Insights Bureau

240

et coke import prices rose in April on some rebound in demand from steel mills and supply constraints of coking coal following the bad weather in Queensland region of Australia. The import prices of met coke were hovering around $371 per ton currently, up from $365 per ton at the beginning of April. LAM coke demand, which is currently at 33 million tons per annum (mtpa) domestically, is expected to shoot up to 58 mtpa in the next five years, as steel makers increase capacity, according to industry estimates.â&#x20AC;&#x201A;

220

200 FOB $ per Ton

rebound as early as July from four straight quarterly declines as China and India seek raw material overseas to fire new steel production. Contract prices that fell to $206 a ton for the quarter ending June 30 may rebound to average $225 a ton this financial year, analysts said. China, the largest steel producer, is leading demand growth forecast at almost 10 percent this year. It started about 10 new blast furnaces in the past six months, lifting output to a record in March. India, the third-biggest steelmaker, is set to boost capacity a third to more than 100 million tons (mt) by March in a five-year $1 trillion plan to build roads, bridges and railway networks. Growth in China slowed more than forecast last quarter to the least in almost three years, prompting economists to predict a rebound as the government loosens policy to counter weak domestic and European demand. Gross domestic

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he seaborne coking coal prices firmed up in April on buying support from steel mills. However, some slackness in transactions was witnessed towards the end of April as coke makers and mills were unable to absorb further rises as operating margins were being compromised. Premium low-vol hard coking coal was assessed at $219 per ton fob Australia, while 64 percent CSR mid vol was stable at $149 per ton fob. The semi soft variety slid to $134 per ton. A hike in the price needs to be compensated in the price of coke and steel, which was not seen. Meanwhile, as mills continued to eye the developments at BMA, sources said stock levels were still sufficient to cover near term requirements. For second-tier coals, reports were heard about Indonesian mid vol and 60 percent CSR HCC quality coal sold to Japanese and Korean mills at around $210 per ton cfr. Sources said tightening Australian hard coking coal supply had turned Japanese and Korean buying interest to Indonesian qualities. According to some reports, steel production levels in China had risen over in the last fortnight and as such a growth in demand could be expected. The low demand from India was attributed to a scarcity of iron ore facing the steel sector. The Indian steel plants are still reeling under a shortage of iron ore and have reduced its coal consumption substantially. In 2010-11, domestic steelmakers imported close to 27 mt of the raw material. However, analysts feel coking coal prices are set to

HCC Peak Down fob Australia ($/Ton)

Premium hard coking coal prices (premium low vol) fob Australia ($/ton)

HCC 64 Mid Vol fob Australia ($/Ton)

Low Vol PCI fob Australia ($/Ton)

Semi soft coking coal rates fob Australia ($/ton)

COAL INSIGHTSâ&#x20AC;&#x201A; 16â&#x20AC;&#x201A; APRIL 2012

coal market fundamentals

ICVL eyeing 10% stake in coking coal asset in Australia

Coal Insights Bureau

nternational Coal Ventures (ICVL), which is all set to buy a coking coal asset in the Australia’s Bowen Basin, is also eyeing a 10 percent stake in a greenfield asset in the region. ICVL is a consortium of SAIL, Coal India, Rashtriya Ispat Nigam and NMDC formed to acquire coal assets abroad. ICVL chairman C.S. Verma had on March 22 said the first acquisition was to happen very soon and all necessary formalities had been completed. He, however, did not disclose any further details. “Our board has approved it. We are taking the necessary approvals from the competent authority and going ahead,” he had said, adding that the deal was likely to be worth over `1,500 crore. ICVL is empowered with the autonomy to acquire assets up to `1,500 crore on its own. Beyond the limit, it has to take approval from higher authorities. SAIL is the lead partner of ICVL.

product expanded 8.1 percent from a year earlier after an 8.9 percent fourth- quarter gain, the National Bureau of Statistics said. Demand for imported coking coal in China may rise 37 percent to 63 mt this year from last year, Australia’s Bureau of Resources and Energy Economics said on March 21. Consumption is projected to increase due to state investment in steel-intensive infrastructure such as highways and rail networks, linking the less-developed provinces in western China to demand centers in the east, it said. Global trade in coking coal may rise 9.6 percent to 297 mt this year, compared with a 0.7 percent drop last year, the Bureau of Resources and Energy Economics said. Meanwhile, India’s coking coal needs may jump 13 mt this financial year as its rising appetite for the alloy drives companies to add capacity worth at least $10 billion in the

Bowen Basin is rich in coal resources and contributes significantly to the overall production of coal in Australia, which meets nearly 40 percent of India’s coking coal imports. With the aim of owning 500 mt of coking coal reserves by 2019-20, ICVL was set up in 2009 at the initiative of the steel ministry, but it is yet to taste success. ICVL’s objectives are acquisition of coal assets and equity participation in operating coal companies for primarily sourcing coking coal on a long-term sustainable basis for the promoter companies. Meanwhile, the company has entered into an agreement with the New Zealand and Indonesia governments to explore joint development of coking coal assets and for undertaking a joint feasibility study for setting up a mineral processing facility or steel plant respectively. It is also exploring investment opportunities in the US, Colombia, Canada, South Africa, Russia and Mozambique. year that started April 1. Indian demand may support coking coal prices as most of the local requirements are met through imports. Last year, India imported 13 percent of the 271 mt of coking coal traded globally. Australia is estimated to have shipped 148 mt of the steelmaking ingredient in the year ended March 31, the Bureau of Resources and Energy Economics said in its report. Coking coal prices touched a record last year after floods disrupted output and shipments from mines in Australia, the world’s biggest exporter of the fuel. Prices have since declined as supplies were restored and demand waned in Japan and in debt- laden Europe. Coking coal prices may range between $220 and $230 a ton this year and may rise higher if a European recovery starts, the report said.

COAL INSIGHTS 18 APRIL 2012

feature

India’s coal imports down in FY12, may bounce back in FY13 Coal Insights Bureau

otwithstanding the great expectations of overseas mining companies, India’s coal imports in 2011-12 actually showed a decline in terms of volume over the previous year. While the numbers varied from one assessor to another, the downward trend was witnessed all the same. According to India Coal Market Watch (ICMW), India’s coal and coke imports declined 2.12 percent in FY12 over the previous year. Import of all types of coal and coke during the year is provisionally estimated at 117.46 million tons (mt), lower than 120.02 mt (revised) imported in 2010-11. It may be noted that the ICMW data is based on monitoring of vessel positions at 25 major and minor ports of the country. A break-up of the import figure for 2011-12 shows coking coal import of 29.45 mt and steam coal import of 82.96 mt. Metallurgical coke, anthracite coal and petroleum coke together accounted for another 5.05 mt. In 2010-11, coking coal import was estimated at 29.90 mt and steam coal at 84.43 mt. Met coke, anthracite coal and pet coke together made up 5.69 mt. Coal and coke imports (in mt) 2009-10

2010-11 (revised)

2011-12 (provisional)

Steam coal

49.46

84.43

82.96

Coking coal

27.29

29.90

29.45

Anthracite coal

1.74

1.72

1.77

Met coke

2.81

1.81

1.28

Pet coke

2.87

2.16

2.0

Total

84.17

120.02

117.46

Source: ICMW

The yearly import volume in 2011-12 fell far short of the initial projection by the coal ministry of 142 mt. Later on, however, the ministry scaled down the forecast to 114 mt considering the 28 mt of coal stock lying with Coal India Ltd (CIL). COAL INSIGHTS 20 APRIL 2012

Feature Reasons That the country’s coal imports are going to belie expectations was apparent from late 2011 when reports of bulging stock pile-up at Indian ports made headlines. Even before that, imports witnessed a flat growth in the first six months of the fiscal year (April-September 2011). Imports in the first half of FY12 remained almost at the same level as recorded for the corresponding period of FY11. As estimated by ICMW, coal imports, both coking and noncoking, via the major and minor ports stood at 61.40 mt in April-September FY12, compared with 61.06 mt in the same period of FY11. Earlier, however, coal imports had a heady start to the new financial year. Imports of coal and coke products in the first two months of FY12 had increased sharply by 48 percent year-on-year to 20.37 mt versus 13.77 mt imported in the same period last year. Both coking and non-coking coal imports witnessed a jump during the period. June onwards the import growth became subdued, finally resulting in zero growth in the first half and a negative growth in the fiscal year. The preliminary factor that was cited for the decline was heavy monsoon during July-September that reduced demand from user segments such as power, cement and construction. This was added to the already sluggish demand prevailing in steel and sponge iron industries. The inadequacy in transport during the monsoon also led to stockpile of the material at various ports. “There was huge stockpile built up at ports from September (2011) onwards. This prompted stock and trade type of importers to reduce imports,” said an industry source. In fact, the stock at ports was estimated to have surged to around 12 mt at various ports of the country in September 2011. The import trend, however, was expected to change in the later months. But an adverse currency movement and increased domestic supply restricted the possibility. The weakening of the rupee came as a brief shocker for the 5 %

Sources of steam coal

2 4 %

7 1 %

FY11

FY12 4%

21%

24%

71%

75% South Africa

Indonesia

Others

Note: Others include US, Russia, Vietnam & Australia

Indian traders. In the three to four months to December, the exchange rate of US dollar versus Indian rupee widened by nearly 20 percent in favour of the former. This raised fears in the market that some of the leading Indian traders or suppliers of imported coal might default in their payments. Incidentally, a few big Indian names in the coal supply circle had defaulted in payment or in lifting of material in 2008 after the global economic meltdown. According to an estimate by a Kolkata-based trader of steam coal, coking coal and coke, Indian traders and consumers of these commodities lost around `8,000 crore during those three months due to appreciation in US dollar. The impact of the currency movement diminished later, but increased supply from domestic suppliers post-monsoon allowed the consumers to reduce their dependence on imported fuel. Both CIL and Singareni Collieries Company Ltd (SCCL), the two major producers of coal in the country, achieved substantial improvement in production in the fourth quarter of FY12, compared to the rain and strike-marred second and third quarters. For instance, CIL reported production of 144.61 mt in Q4, against 114.63 mt in Q3, a 30 mt increase over three months. Forecast for FY13 For 2012-13, the coal ministry is yet to make any forecasts on supply shortage or coal imports. However, the ministry has given CIL a production target of 464 mt, reasonably higher than the revised target of 440 mt last year. Given the trend in consumption growth (about 8-9 percent), coal demand may reach 710-725 mt in the current fiscal. If CIL can achieve the target, which is unlikely,and SCCL and captive producers together contribute around 100 mt, the increased demand may result in a supply gap of around 150-165 mt in FY13, which will be needed to be met by imports. There, however, will be various other factors that will come into play, industry sources said. For instance, the recent abolition of 5 percent duty on thermal coal imports is likely to result in marginal rise in import volumes, ceteris peribus. Also, the price increase for domestic coal, which is very much in the pipeline, would lead to reduced gap with international coal prices. If the quantum of increase is substantial, it may alter the sourcing plans of power utilities in the country. “If domestic coal prices rise and become at import parity for Indian consumers then probably coastal-based power plants and distant power plants ... will prefer imported coal over domestic coal,” said Prakash Sharma, coal market analyst of Wood Mackenzie, a consultancy firm, on the sidelines of the Coaltrans conference in New Delhi. Taking a long term view, the coal ministry meanwhile pegged imports at 185.5-265.5 mt by FY17. Under business as usual scenario, industry sources said, imports are likely to cross the 200-mt level by the end of the Twelfth Plan period (2016-17).

COAL INSIGHTS 22 APRIL 2012

Feature

Govt adopts new royalty regime for coal, lignite Rakesh Dubey

n a move aimed at inflating the coffers of coal-bearing states, the Cabinet Committee on Economic Affairs (CCEA) recently approved the proposal for adoption of ad valorem regime for charging royalty on coal and lignite. The new rate, which was announced on April 12, 2012, will replace the hybrid formula that is currently in practice. As per the recommendations of the study group, constituted by the ministry of coal for revision of royalty rates, the new ad valorem rate will be 14 percent for coal and 6 percent for lignite, excluding taxes, levies and other charges. Earlier, the royalty was being charged on fixed rate, plus 5 percent of basic pithead price of run-of-mine (ROM) coal. The fixed rate used to vary from a low of `55/ton for F and G grade coal to `180/ton for Steel Grade 1 (coking coal). The royalty was `90 plus 5 percent for C grade coal and `130, plus 5 percent for A and B grade coal. The royalty on lignite was `45, plus 2 percent of basic pithead price of run-of-mine lignite. The proposed royalty revision is not to be extended to the state of West Bengal unless the cesses imposed, are withdrawn. For states other than West Bengal that levy cess or other taxes specific coal bearing lands, the revision of royalty allowed shall be adjusted for the local cesses or such taxes so as to limit overall revenue to the ad valorem royalty yield. The approval of ad valorem regime of royalty for coal by CCEA will lead to increase in the price of higher grade coal,

Coal royalty rates in different countries

7 6 5 4 3 2 1 0 US

Brazil

Chile

China

Poland

Queensland

ROYALTY (in %)

used by industries like sponge iron and cement. On contrary, the prices of lower grade coal that is mainly used by power sector will remain largely unchanged, industry sources said. Bonanza for states The implementation of the above revised rates of royalty on coal and lignite will provide coal and lignite bearing states reasonable share of the income earned by mining, production and selling of these minerals. As per the estimates, the royalty

Old and new coal royalty rates in India Grade

GCV Range (Kcal/kg)

Notified Notified Price Classification price (Power (Non- power as per erstwhile Sector) sector) system

Royalty (Old) for Power Sector (`/tn)

Royalty (New) for Power Sector (`/tn)

Increase in Royalty for Power Sector (`/tn)

Royalty (Old) for Non-Power Sector (`/tn)

Royalty (New) for Non-Power sector (`/tn)

Increase in Royalty for Non-Power Sector (`/tn)

7,000+

6,700-7,000

4,870

4870

A 373.5

682

309

373.5

682

309

6,400-6,700

4,420

4420

351

619

268

351

619

268

6,100-6,400

3,970

3970

5,800-6,100

2,800

2800

328

556

227

328

556

227

270

392

122

270

392

122

5,500-5,800

1,450

1960

163

203

188

275

5,200-5,500

1,270

1720

133.5

178

44.5

156

240.8

4,900-5,200

1,140

1540

4,600-4,900

880

1180

G10

4,300-4,600

780

1050

G11

4,000-4,300

640

850

G12

3,700-4,000

600

810

G13

3,400-3,700

550

740

G14

3,100-3,400

500

680

E F G

127

160

147

216

114

123.2

9.2

129

165

36.2

109

109.2

Nil

122.5

147

24.5

89.6

2.6

98.5

121.8

23.3

(-1)

95.5

113.4

17.9

82.5

(-5.50)

103.4

11.6

(-10)

95.2

6.2

Note: Royalty Rate Earlier was `130 + 5% of price (A & B Grade), `90 + 5% of Price (C Grade), `70 + 5% of Price (for D and E grades), `55 + 5% of price (for F and G Source: Ministry of Coal grade), New Rate is 14% of prices

COAL INSIGHTSâ&#x20AC;&#x201A; 24â&#x20AC;&#x201A; APRIL 2012

Feature

New royalty to hit non-power sectors

Coal Insights Bureau

he approval of ad valorem regime of royalty for coal by the CCEA will lead to increase in price of better grade coal by anywhere between `120 to `300/ton on an average, but the prices of lower grade coal that is mainly used by power sector will remain largely unchanged, according to an analysis by Coal Insights. This means that the power sector, which generally consumes low grade coal, will not have to forego much due to changes in royalty structure and rate, but the nonpower sector consumers, particularly those using high grade coal such as sponge iron and cement sectors, will be severely affected. The average cost of “A” (GCV of over 6200 Kcal/kg) grade or G2 and G3 band as per new grading system based on GCV will go up by `268 to `309/ton. The price of erstwhile “B” (GCV between 5600 Kcal to 6200 Kcal/ kg) grade coal or G4 and G5 as per new system, will go up by around `122 to RS 227/ton. These grades of coal are generally not consumed by the power sector. The current pithead cost of G2 grade coal is `4,870/ton and that of G3 grade is `4,420/ton. The royalty as per existing

revenue earning of major coal producing states viz. Jharkhand, Andhra Pradesh, Madhya Pradesh, Uttar Pradesh, Tamil Nadu, Odisha, Nagaland, Meghalaya, Maharashtra, Chhattisgarh, Assam and Arunachal Pradesh will increase on an average up to 17.31 percent for coal and 14.53 percent for lignite. The major coal producing states will now earn revenues of about `6,980 crore in place of `5,950 crore, being earned at present at existing rates, resulting in increase in combined earning by more than `1,050 crore. A Gazette Notification for amendment to the Second Schedule of the Mines and Minerals (Development and Regulation) Act, 1957 for revision in the rates of royalty on coal and lignite will be issued within a period of one month. Accordingly, all coal and lignite bearing States will start levying royalty on coal and lignite as per new rates from the date of publication of the Gazette Notification. Among the mineral-rich states, Odisha had been quite vocal about a revision of royalty rates for coal in recent past. However, the State was reportedly not satisfied with the quantum of revision. State finance minister Prafulla Chandra Ghadai expressed discontent over the coal royalty hike and termed it as “unsatisfactory”. “The state government will not gain significantly from the coal royalty revision. We would have been benefited if the royalty rate was fixed at 30 per cent. The demands of coal

system on these two grades would have been `373.50 and `351/ton (`130 + 5% basic cost of run-of-mine coal), but the new rates will be `682 and `619/ton respectively. Similarly, the increase in royalty on G4 (GCV between 6100 and 6400 Kcal) and G5 (GCV between 5800 and 6100 Kcal) grades (erstwhile B grade) would be between `122/ ton and `227/ton considering that current r-o-m price is `2,800 and `3,970/ton (`130 + 5% of basic cost of ROM coal). However, the impact of the new royalty regime will be comparatively revenue neutral on lower grades. For example, the actual outgo for consumers on account of royalty will be between `9 to `40/ton for power sector consumers for G9 (4600 to 4900 Kcal/kg) to G6 (5500 to 5800 Kcal) grades. The outgo for non-power sector consumers will be between `36.20/ton to `87/ton for the same grade. However, there will be practically nil additional payment on account of royalty by power sector consumers for coal of grades G14 (3100 to 3400 Kcal) to G10 (4300 to 4600 Kcal), but non-power sector consumers will have to bear a nominal hike ranging between `6/ton and `24/ton.

bearing states have not been considered by the Centre. This is a token hike that will only benefit the coal mining companies. It is unfortunate that the Centre has bowed to the pressure of the mining lobby,” Ghadai said. Right time for a shift The Section 9(3) of the Mines and Minerals (Regulation and Development) Act, 1957 (MMDR, Act, 1957) prevents the Central Government from enhancing the rates of royalty in respect of any minerals including coal more than once during any period of three years. The existing royalty rates had been notified by the government on August 1, 2007, as per the recommendations of a Committee, constituted in 2005 by the Ministry of Coal for revision of royalty on coal and lignite which were based on the then recommendations of Economic Advisory Council (EAC) to the Prime Minister. As the royalty rates on coal and lignite have not been revised since, 2007 the government constituted a study group on February 4, 2010, for the same. Taking into consideration the submissions made by all stakeholders, the interests of the coal producing states, the consumers and the national economy as a whole, the Study Group concluded that this is the right time for switching over to a full-fledged ad valorem regime of royalty on coal and lignite.

COAL INSIGHTS 26 APRIL 2012

Feature

New MMDR Act to curb illegal mining, says minister Coal Insights Bureau

he Union mining ministry is banking on the new Mines and Minerals (Development and Regulation) Bill, 2011 (MMDR Bill) to curb the menace of illegal mining in India, Mines Minister Dinsha Patel said. The draft MMDR Bill provides for preventing illegal mining by a slew of measures, including imposition of fine extending to 10 times the value of mineral mined or three years imprisonment or both. The Bill was introduced in the Lok Sabha on December 12, 2011 and was later referred to the Standing Committee on Coal and Steel. To facilitate effectiveness in curbing illegal mining, the minister said, the Bill provides for debarment for obtaining future concessions and cancellation of mineral concessions held by the convicted person. There is also a provision for registration of person engaged in mining or dealing with minerals to help track ore movement. The Bill calls for increasing the minimum lease size to 10 hectares for major minerals and 5 hectares for minor minerals. This will make it easier to detect and demarcate mining areas across the country, said the minister. The Bill also states that all leases will be made ineligible on violation of lease conditions, he added. The coal ministry (MoC), however, does not seem very hopeful about bringing illegal mining to a halt completely. “Coal companies are selling coal on “FOR” basis at railway sidings and road-side points and the choice of mode of transport as well responsibility for coal transportation is that of the purchaser. Pilferage/theft of coal en-route while being transported by consumers to their destinations is outside the control of the coal company,” Pratik P. Patil, minister of state, MoC, said. While reiterating that law and order is a state subject, the minister said, “Theft / pilferage of coal are carried out

stealthily and clandestinely. As such, it is not possible to specify the exact quantum of coal stolen and losses incurred on account of theft / pilferage and illegal mining of coal.” He, however, said some cases have been filed with the law enforcing agencies against alleged theft of mined material and illegal mining. “First Information Reports (FIR) are lodged by the company / CISF officials whenever cases of theft come to their notice. 346 & 169 FIRs have been lodged during the year 2009-10 and 2010-11 respectively by the subsidiaries of Coal India Ltd,” he added. SC allows partial restart of iron ore mining The Supreme Court on April 20 allowed mining to restart in iron ore mines of more than 50 hectares in Karnataka state after their environmental plans are approved, potentially bringing 4.5 million tons per annum (mtpa) to local steel producers. The move is likely to have little impact on exports, however, which remain stalled as Karnataka failed to implement the Supreme Court order that the export ban may be lifted. India used to export about 100 mt a year of iron ore – half its production – but clampdowns on illegal mining and the federal government’s desire to keep production for domestic steel mills has slashed that figure. Now, the Karnataka state government will decide the amount of iron ore that each mine can produce up to a limit set by the Supreme Court, Dhiraj Kumar, one of the lawyers who represents appellant Mineral Enterprise Ltd, said. This would be in addition to 1 mt that the Supreme Court has allowed state-run NMDC to mine every month. The Federation of Indian Mineral Industries (FIMI) was

COAL INSIGHTS 28 APRIL 2012

Feature Quantity of coal recovered and its approximate value during FY09-FY11 2008-09 Company

ECL

BCCL CCL NCL WCL SECL MCL NECL CIL

State West Bengal Jharkhand Total Jharkhand West Bengal Total Jharkhand Uttar Pradesh/Madhya Pradesh Maharashtra MP Total Madhya Pradesh/Chandigarh Odisha Assam Total

Qty recovered (tons) 4,203.00 2,326.00 6,529.00 1,986.15 64.81 2,050.96 93.00 0.00 0.00 11.00 11.00 0.00 0.00 0.00 8,683.96

2009-10

App. Value (Rs lakh) 42.030 23.260 65.290 34.630 1.290 35.920 0.855 0.000 0.000 0.110 0.110 0.000 0.000 0.000 102.175

Qty recovered (tons) 5,763.00 2,398.00 8,161.00 2,127.18 4.00 2,131.18 30.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 10,322.18

App. Value (Rs lakh) 67.880 28.42 96.300 35.932 0.080 36.012 0.300 0.000 0.000 0.00 0.00 0.000 0.000 0.000 132.612

2010-11 Qty recovered (tons) 5,650.00 1,401.00 7,051.00 1,309.39 10.97 1,320.36 15.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 8,386.36

Appr. Value (Rs lakh) 113.000 26.02 139.020 25.031 0.219 25.250 0.150 0.000 0.000 0.00 0.00 0.00 0.00 0.00 164.420

Source: Ministry of Coal

Measures initiated

hile MoC keeps itself busy putting the blame on the state administration, the coal producing subsidiaries of CIL have taken up a slew of measures to prevent illegal mining in the country. The measures undertaken include the followings. ♦♦ Rat holes created by illegal mining are dozed off and filled up with stone and debris wherever possible. ♦♦ Concrete walls have been erected on the mouth of the abandoned mines to prevent access and illegal activities in these areas. ♦♦ Regular raids/checks being conducted by security personnel and static security pickets including armed guards during the night hours are being deployed at pithead depots. ♦♦ Surprise raids/checks being conducted jointly by security personnel and law and order authorities or the concerned State Government. ♦♦ Fencing is being constructed at the various illegal mining sites along with displaying signboards mentioning “Dangerous and Prohibited Place”.

optimistic the move could herald the resumption of mining throughout the state. In 2011, the Supreme Court banned iron ore mining in Bellary, Chitradurga and Tumkur districts of Karnataka citing environmental violations, and asked a federal government body to carry out an environmental impact assessment. In March 2012, the court set a cap on annual iron ore output of

♦♦ Dumping the over burden is being done on the outcrop zones, which are not required to mined. ♦♦ Collection of intelligence reports about illegal coal depots and illegal movement of coal and informing District authorities of the same for taking preventive action. ♦♦ Installation of check posts at vulnerable points to check transport documents. ♦♦ Training of existing security personnel, refresher training to CISF personnel and basic training of new recruits in security discipline for strengthening the security set up. ♦♦ The coal companies maintain close liaison with the State Government. ♦♦ Committee /task force has been constituted at different level (block level, sub-divisional level, district and state level) at some subsidiaries of CIL to monitor different aspects of illegal mining. ♦♦ In order to check the menace of illegal mining of coal the Central Government has constituted a Committee consisting of Minister of State for Coal and others to look into the various aspects of illegal mining of coal.

25 mt in Bellary, and of 5 mt altogether from Chitradurga and Tumkur districts. The court has only allowed mines with low environmental violations to extract iron ore and the state government can now set limits within these caps. In the second week of April, the top court asked companies in Karnataka to push ahead with land clean-up for rehabilitation of affected people and reclamation.

COAL INSIGHTS 30 APRIL 2012

Feature

IBM seeks to curb illegal mining, recommends lease termination

Coal Insights Bureau

he Indian Bureau of Mines (IBM) has recommended the closure of 21 mines to various state governments for alleged “malpractices” and non-compliance with the provisions of Rule 45 of Mineral Conservation and Development Rules (MCDR), 1988, government sources said. The move resulted from the mining ministry’s efforts to monitor the mining and mineral transactions in the country through the launch of online registration and online reporting systems. The recent allegations of large scale illegal mining of iron ore in some states prompted the ministry to take up the issue, the sources informed. “The on-line registration system,” said a ministry statement, “has already commenced in the IBM and so far 4,898 lease holders (covering 9,390 mines), 2,345 traders, 476 exporters, 1,033 stockists and 1,653 end-users have registered their details.” Further, “IBM has suspended operations in 1,560 mines for non-compliance as per provisions of Rule 45 of MCDR, 1988. Out of these, it has recommended 21 mines to state governments for termination of lease,” it added. Online reporting Although IBM has already commenced online registration of lease holders, the formal launch of the online reporting system was done only recently with the Minister of State (Independent Charge) D.J. Patel launching the first phase of the system. Patel said that initially, the focus will be on submission of monthly returns for iron and manganese ore mines throughout the country and for all other minerals would be covered by September 2012. In future, the system will be linked to the Railways and Ports authorities to check the correctness of the reporting made under the Rule, he added. Both the online registration and online reporting were developed under Rule 45 of MCDR. The primary objective of Rule 45 of MCDR, 1988 for mineral transaction is to facilitate the submission of monthly returns of iron ore. The amended Rule 45 of MCDR, 1988 specifies the penal action against defaulting mine owners and empowers the government to order for suspension of

IBM has suspended operations in 1,560 mines for noncompliance. Out of these, 21 have been recommended for termination of lease.

all mining operations and may revoke the order of suspension after ensuring proper compliance, take action to initiate prosecution and recommend for termination of mining lease. The Rule further specified that in case of defaulters engaged in trading or storage or end use or export of minerals, the state government is empowered to order for suspension of trading license, all transport permits issued, storage license for stocking minerals and permits of end use industry, etc. The reporting system is designed to generate violation letters automatically and issue the same to the defaulters who fail to submit the returns by the stipulated date of 10th of every month. In order to ensure tighter implementation, state governments would be partnered for compliance of traders, stockiest, exporters and end-users. Move to curb malpractices In the present system of mineral administration, the onus of the mineral is with the state governments. The mining ministry has a limited authority except the administration of MCDR through IBM. Over a period of time, it has come to the knowledge of the ministry that malpractices in the mining sector have increased due to poor governance at the state level, leading to a number of cases of illegal mining. The mineral thus produced, came into the mineral market by trading, stocking and procurement by end users or exporting. “This situation has forced the government to take stringent measures for monitoring the mining and mineral transaction in order to control malpractices in this sector,” the ministry statement said. Now that the reporting system has been developed, the ministry would find it convenient to track the sector through the online registration and online reports. IBM will allot and record registration numbers which will be used for all reporting and correspondence connected to mining, trading, stocking, end use or export of mineral. All the state governments will be able to access the system to check the data reported in the returns and can initiate action in case of wrong reporting of data, evasion of royalty, or other malpractices. The online reporting system is linked to the online registration system. Broadly, the reporting system is divided into two parts. Part-I covers the general information in addition to the employment details. Part-II of the monthly reporting system deals with the grade wise production, dispatches, stock and justification for increase/decrease of production and sale price of minerals. Part-II requires the registration number of the consignee and purpose of sale whether for domestic consumption or export and in case of domestic consumption whether it is made for captive consumption/sale/transfer.

COAL INSIGHTS 32 APRIL 2012

Feature

India’s coal mine safety records better than global average

Coal Insights Bureau

etween 1994 and 2011, the number of coal mine workers diagnosed with pneumoconiosis, a non-malignant lung disease caused by the inhalation of mineral dust, stood at 104 in India, as per government data. During the same period, the number of reported cases of carcinoma of lungs was five and of carcinoma of the stomach was eight. Contrast this with the US, where, as per reports, more than 30,000 deaths per year are attributed to diseases related to coal mining, transport and burning. Also, as per available reports, there are a total of nearly 2.7 million dust exposed workers in China’s coal mines. It is estimated that a total of 57,000 coal miners in China suffer from pneumoconiosis, an occupational lung disease caused by inhalation of dust, each year and more than 6,000 people die due to pneumoconiosis. From 1983 to 2008, the range of coal dust concentration was between 198 milligrams per cubic meter to 3,420 milligrams per cubic meter, 49.5 times to 855 times more than the national standard. This caused a large number of workers to suffer from pneumoconiosis each year. By the end of 2007, there were a total of 312,000 cases of pneumoconiosis in China’s coal mine enterprises (not including coal mine enterprises in villages and towns) and the detectable rate of pneumoconiosis reached more than 7 percent, as per available reports. Just the figures go to show that safety measures and safety conditions in Indian mines would be far more superior compared to global standards of safety. Questions on safety measures and preventive steps are routinely raised in the Indian Parliament. Recently, a question was raised regarding the subsidence

Smoke coming out of a mine in Jharkhand

and collapsing of coal mines and surrounding colliery areas in the Asansol-Barakar region of West Bengal. The minister of state for coal, Pratik P Patil, said that in December 1996, the government constituted a high-power committee after 139 locations were identified as unstable in the leasehold area of ECL. Subsequently, the ministry of coal suggested that CMPDIL should study in detail the problems of subsidence and fire in BCCL and ECL. After the study, a master plan was prepared which included rehabilitation packages for affected people and steps for stabilising the subsidence. Coal mine accidents Even as far as coal mine accidents go, India seems to be on a better footing than its global counterparts. According to a data from the ministry of labour, a total of 78 people died in as many as 77 fatal accidents in various coal mines of the country in 2011. The number of deaths in coal mines in 2010 stood at 117 from 97 fatal accidents. In 2009, a total of 93 people had died in 83 fatal accidents in coal mines. There has evidently been a sharp drop from 2010 to 2011. Up to February 29, 2012, as many as 15 people died in as many fatal accidents. Again the numbers seem really optimistic compared to China. According to the Chinese government, 2,632 coal miners (seven miners a day) were killed in 2009, less than half of 6,995 (19.1 a day) who died in 2002, the most dangerous year in record. According to the government, 3,786 miners died in 2007, a marked decrease from previous years but still a lot. A total of 2,163 miners were killed in 1,320 accidents in the first seven months of 2007. Many attribute the decline in the number of deaths to the shutting down of unsafe mines. About nine mine workers were killed a day in 2008. Between 2005 and 2008, 11,155 illegal mines were shut down according to the Chinese government. A total of 2,411 mines were closed down and 12,900 were ordered to suspend operations for safety violations in a single campaign that ended in December 2005. Commenting on India’s mining safety records, industry sources said the government shouldn’t feel complacent and work on the same relentlessly. Although the numbers indicate that perhaps India is better placed with respect to its mine safety conditions than its global counterparts, there is always room for improvement, and the effort should be to make such mishaps as infrequent and as minimal as possible, they said.

COAL INSIGHTS 33 APRIL 2012

Feature Occupational diseases reported from coal mines Year

State

Statewise, yearwise details of accidents in coal mines during 2009-2012

Coal workers’ pneumoconiosis

Carcinoma of lung

Carcinoma of stomach

1994

Jharkhand

1995

Jharkhand

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

State

Andhra Pradesh

Odisha

Arunachal Pradesh

Jharkhand

Assam

West Bengal

Jharkhand

Madhya Pradesh

Odisha

Chhattisgarh

Jharkhand

Chhattisgarh

Gujarat

Jharkhand

Year

No. of Fatal Accident

No. of persons killed

2009

2010

2011

2012

2009

2010

2011

2009

2010

2011

2012

2009

2010

2011

2012

2009

2010

2011

9 2

Madhya Pradesh

Andhra Pradesh

Jharkhand

2012

2009

2010

2011

Madhya Pradesh

Odisha

Andhra Pradesh

Jharkhand

Odisha

2012

2009

Madhya Pradesh

2010

2011

2012

2010

2009

2010

2011

2012

2009

2010

Jharkhand

Odisha

Jharkhand

Andhra Pradesh

Maharashtra

Odisha

Rajasthan

Tamil Nadu

Jharkhand

Madhya Pradesh

Jharkhand

Madhya Pradesh

2011

Andhra Pradesh

2009

2008

Andhra Pradesh

2010

2009

Andhra Pradesh

2011

2012

Odisha

2009

Andhra Pradesh

2010

117

Odisha

2011

Jharkhand

2012

104

2006

2007

2010

2011

Source: DGFASLI

Uttar Pradesh

West Bengal

All India

Note : Data for the years 2010, 2011 & 2012 are provisional. Data for the year 2012 is upto February 29, 2012 Source: Ministry of labour

COAL INSIGHTS 34 APRIL 2012

Feature

CIL begins to sign FSAs with power companies Sanjukta Ganguly

eing enforced by a presidential directive, Coal India Limited (CIL), the world’s single largest coal producer, has initiated the process of signing fuel supply agreements (FSAs) with the power producing companies of India. For signing with electricity generating companies, CIL has issued model FSA documents to all its subsidiaries which is likely to break a three-year hiatus on coal supply and help raise fuel availability for power plants with a combined capacity of about 28,000 MW. Since March 2009, no new FSA has been signed between CIL and power companies as Coal India Limited suffered from a decline in production due to delayed clearances on various mining projects. According to information available with Coal Insights, since then, CIL has been supplying only about half the requirement for new power plants, on the basis of memoranda of understanding (MoU) that are not legally enforceable. “Coal India has sent the finally approved FSA document

to its seven subsidiaries, which will now sign FSAs with power companies,” Union coal secretary Alok Perti said. CIL, from the FSAs, commits itself to supplying at least 80 percent of the stated quantity. CIL had been insisting on signing FSAs at only a 50 percent commitment, but had to give way after the Union government, owning 90 percent of its equity, issued a directive forcing the minimum 80 percent supply clause. “In case we are unable to supply the scheduled quantity, we have the option to supply the remaining quantity through import, to be delivered at the unloading port at cost-plus pricing, including our service charges,” a CIL source said. However, the draft of FSA also mentions that if the quantity offered for imported coal is not accepted by the purchaser, no penalty shall be applicable for the shortfall. The company’s board had set a minor penalty clause of 0.01 percent of the value of shortfall if the company failed to meet the 80 percent commitment mark.

COAL INSIGHTS 35 APRIL 2012

Feature The Presidential decree had directed CIL to abide by the earlier instruction of the Prime Minister’s Office and sign FSAs in 15 days with companies that had set up plants by the end of 2011. “We have done our part; now the onus is upon the power companies. The subsidiaries will forward the draft to power companies and FSAs will be signed as soon as possible,” a CIL official said. The agreements would be for 20 years’ supply. Either party can review the contract with a prior notice of 30 days, after five years from the first delivery date. In fact, CIL is planning to send FSAs to around 50 power units for a quantity of 70 million tons (mt) of coal. However, FSAs with all these 50 units may not be signed, as they have to meet certain criteria such as they need to have long-term PPAs (power purchase agreements) of at least seven years in place. If they fail to meet such criteria, then FSAs might not be signed with them. FSA clauses a ‘farce’ The power utilities have termed the revised Fuel Supply Agreement (FSA) conditions proposed by Coal India Ltd a ‘farce’, stating it will not have any positive impact on supplies of domestic coal to power companies or its prices.

CIL issues 172 LoAs to supply 423.48 mt coal

Coal Insights Bureau

oal India Ltd (CIL) has till now issued a total of 172 Letters of Assurance (LoAs) to power units to supply a total of 423.48 million tons (mt) of coal, but has so far committed to supply only 318.74 mt coal to them through Fuel Supply Agreements (FSA), an official of CIL said. The FSAs have been concluded only with those plants which had started operation till March 2009. FSAs for the balance quantity has not been signed due to various reasons, including inability of power utilities to accept the condition that they will have to take up to 50 percent of total quantity in the form of imported coal on cost plus basis, industry sources claimed. For the plants that have come up after March 2009, CIL had been supplying coal as per memorandum of understanding wherein only 50 percent of the LoA quantity is being supplied, they said. Of the total 172 LoAs issued so far to power units for a total quantity of 423.48 mt, 72.151 mt is the commitment to NTPC against 20 LoAs and 240.68 mt coal per annum is to private sector power plants against 111 LoAs, the official added.

“We need at least 85 percent of assured supply of domestic coal for recovering the fixed cost of generation at present tariff. But new FDA uploaded on website of CIL on April 20 states that they will guarantee only 80 percent of the normative requirement of coal,” a senior official of a leading eastern India based power generation company said. “Out of this 80 percent, there may be a component of imported coal. If you refuse to accept imported coal, then you will get only domestic share of the FSA. Moreover, the condition for getting imported coal is very stringent, even more than at what companies like MMTC, MSTC or PEC supplies or at which companies like NTPC imports coal,” the official said. The official further pointed out that the revised FSA prescribes that in case of CIL’s failure to supply 80 percent coal, there will be a penalty of only 0.01 percent and even this low penalty will be applicable after three years and that too after giving six months’ notice to CIL. “In all this, 0.01 percent penalty is not sufficient,” he added. The official pointed out that with the use of imported coal, the cost of power generation goes up by 30-40 paise per unit and in some cases it goes up by Re 1 per unit. “This one rupee gets multiplied because of transmission and distribution losses. The challenge is to make power affordable and this increase in generation cost because of imported coal input has to be controlled as the health of distribution companies in the country is not at all good,” the official said. “Today the cost of electricity is around `2.60 to `2.70 per unit, whereas the actual cost of generation is much higher. Generators are producing just to keep their units running. On the other hand, the financial health of distribution companies has forced them not to purchase power,” the official said.

COAL INSIGHTS 36 APRIL 2012

fEATURE

New FSA clause to hamper growth of power sector: DVC

Coal Insights Bureau

he chairman of Damodar Valley Corporation (DVC) Rabindra Nath Sen on April 23 said the revised Fuel Supply Agreement (FSA) conditions proposed by Coal India Ltd (CIL) is a “farce” and claimed that it will hamper the growth of the power sector in the country as coal supplies for new plants will come down endangering the viability of projects. “We need at least 85 percent of assured supply of domestic coal for recovering the fixed cost of generation at present tariff. But new FSA uploaded on website of CIL on April 21 states that they will guarantee only 80 percent of the normative requirement of coal,” Sen said while addressing an interactive session on “Economy, Efficiency and Competition in Power Distribution” organised by MCC Chamber of Commerce in Kolkata. “Out of this 80 percent, there may be a component of imported coal. If you refuse to accept imported coal, then you will get only domestic portion of the FSA. Moreover, the condition for getting imported coal is very stringent, even more than at what companies like MMTC, MSTC or PEC supplies or at which companies like NTPC imports coal,” he said. Sen further pointed out that the revised FSA prescribes

that in case of CIL’s failure to supply 80 percent coal, there will be a penalty of only 0.01 percent and even this low penalty will be applicable after three years and that too after giving six months’ notice to CIL. “In all this, 0.01 percent penalty is not sufficient,” he added. “What we will do with this 0.01 percent penalty? Does it give any advantage to power generators? Is it going to be applicable to all the consumers? Are we going to tell our consumers in various sectors that we cannot provide power because we do not have fuel? And in case we do that, the growth of the country will be affected,” Sen said. Sen pointed out that with the use of imported coal, the cost of power generation goes up by 30-40 paise per unit and in some cases it goes up by `1 per unit. “This one rupee gets multiplied because of transmission and distribution losses. The challenge is to make power affordable and this increase in generation cost because of imported coal input has to be controlled as health of distribution companies in the country is not at all good,” he said. “Today the cost of electricity is around `2.60 to `2.70

COAL INSIGHTS 37 APRIL 2012

fEATURE Hydro projects

CEA chairman Pramod Deo (second from left) with DVC chairman Rabindra Nath Sen (fourth from left)

per unit whereas actual cost of generation is much higher. Generators are producing just to keep their units running. On the other hand, the financial health of distribution companies has forced them not to purchase power,” the official said. Distribution According to Sen, it is a matter of great concern that the financial health of distribution companies is falling every day. “Today the overall (debt) burden on (distribution companies) is more than `2 lakh crore and even that is increasing,” he said. He pointed out that a lot of transformer burning cases are being reported these days because of overloading and this is happening because of miscalculation in demand and supply position, particularly in rural areas. Sen said a lot of connections were provided in rural areas (villages and Mauzaas) under Rajiv Gandhi Gram Vidyut Yojana (RGGVY), but it appears that the estimates made for demand from such areas was on the lower side. “While estimate of demand from below poverty line (BPL) people were considered, the demand from above poverty line (APL) was not considered even though both sections of people live in the same area,” he felt. “As a result when power supply is made to BPL, it also goes to people of APL, resulting in overloading,” Sen said. Tariff Sen said apart from the distribution system, there is also a need to take a serious look at revision in tariffs. “The current tariff is still not sufficient to address the total cost of generation. Not only this, the tariff has to cover the technical and commercial losses portion as well,” he said. Sen pointed that government of India has taken a large number of initiatives through Accelerated Power Development and Reform Programme (APDRP) to structure T&D losses and tariff and address them but the actual reforms are yet to be achieved. According to the Sen, even the generation side in the country is facing problems similar to what is being faced by other industries, like land acquisition, law and order situation and water. “With projects getting delayed because of these problems, the generation cost is going up. In fact, delays also result in cost escalations of the projects themselves,” Sen said.

Sen said besides thermal power projects, the other renewable resources such as hydro are also facing problems. The Uttarkashi project of NTPC had to be abandoned after investing `4,000 crore because of activism and nearly 20 other hydro projects are facing similar issues. No one knows the fate of these projects – whether they will see the light of the day or be abandoned at different stages. “Whether or not some of them may be abandoned, there is big anxiety, which makes it very difficult for us to understand,” the chairman said. Fuel shortage Sen said along with the problems mentioned earlier, the other problem that is haunting all the generators is availability of fuel. Before going for capacity addition, every developer – whether government or private – were assured of fuel linkages – both short term and long term. However, owing to the coal

No plan for imported coal tender in 2012-13: DVC

he chairman of the Damodar Valley Corporation (DVC), Rabindra Nath Sen, has said that the company has no plans, as of now, to float any tender for imported coal in 2012-13 even as the company has been given a target to import 3.73 mt coal during the year. “We had in late 2011 placed an order with MMTC Ltd to procure 3.73 million tons (mt) imported coal. We have started getting the material and deliveries will continue till entire this year as well as in next financial,” Sen told Coal Insights in Kolkata. DVC has been given a target by Central Electricity Authority (CEA) to import 3.0 mt coal in 2012-13. The company had been given a target by to procure 1.73 mt of imported coal in 2011-12 as well as in 2010-11. While in 2010-11, it imported around 0.66 mt coal, there was no import in 2011-12, according to data of CEA available with Coal Insights. DVC had floated a tender for 3.73 mt coal import in June-July 2011 and had finally placed the order sometime in November 2011, but had not received a single ton till March 2012, as per CEA data. Asked about company’s total coal requirement for its various plants, Sen said, “This is very difficult to say. Right now everything is fluid as FSAs are yet to be signed with Coal India Ltd. The picture will be clearer once the FSA process begins.” On DVC’s power generation capacity addition plans for the Twelfth Plan, the chairman said, “We plan to add around 2200 MW of generation capacity in the Twelfth Plan.”

COAL INSIGHTS 38 APRIL 2012

fEATURE

Re-allotment of de-allocated blocks begins, claims DVC

he chairman of Damodar Valley Corporation (DVC), Rabindra Nath Sen, on April 23 claimed that the Ministry of Coal has started the process of re-allocation of the two coal blocks that were deallocated during the past few years. “The coal ministry has started the process of reallocation of blocks. We are already working on some of the blocks allotted to us earlier,” Sen told Coal Insights. Asked how long it will take to start mining from the blocks, Sen said, “Generally it takes five years to develop a block, but we are trying to do it fast and start the mining in three years.” The Ministry of Coal had de-allocated Kasta (East) and Saharpur-Jamarpan blocks of DVC due to slow progress on development of blocks. The Kasta East block, which was allotted to the company in March 2005, was de-allocted in May 2009. Sharpur-Jamarpan blocks was allotted to the company in July 2007, but de-allocated in June 2011.

availability crisis, none of the LoAs are getting honoured, especially for the plants that have come up after 2009, he said. “In the case of gas also, lots of things are happening starting from drying up of KG6 basin gas to higher cost of imported gas. So, fuel availability has become a big issue,” Sen added. The thermal power plants had been earlier assured that 85 percent of coal will be made available through linkages, which is the minimum requirement for recovering the fixed cost and other cost at current rates of tariff, he said. “Now for the whole sector, the challenge is to make power affordable for consumers, and for that it is important to ensure that input costs are controlled,” he said. So the generators are selling power just to keep their units running so that they do not have to go through the fluctuation of the load. So they are somehow trying to keep the unit floating by selling it at a very low price, Sen said. Some of the state distribution companies are purchasing power only at peak hours because under pressure from their respective state governments, they have a responsibility to ensure that their domestic consumers get some comfort during these hours. Priorities Sen feels that the first important thing is to ensure fuel for generation and then ensure that transmission and distribution losses or theft are reduced. For that, huge investments are required in order to help the country become one of the leaders in the world by 2020.

COAL INSIGHTS 39 APRIL 2012

fEATURE

Indian power plants exceed March target Sanjukta Ganguly

ower generation by Indian power plants in March 2012 stood at 77,103.42 MU against a target of 74,050.53 MU for the month, according to provisional data made available by the Central Electricity Authority (CEA). The generation in March 2012 was, however, lower as compared to 75,536.06 MU generated during the corresponding month of the previous year. The target set for March 2011 was 74,148.39 MU, the data revealed. The electricity generation in February 2012 stood at 70,988.48MU against a target of 68,542.65 MU for the month, whereas electricity generation in January 2012 73,396 MU against a target of 73,377.66 MU for the month. Of the total generation in March 2012, the thermal sector accounted for 65788.92 MU, while 2842.71 MU was generated by the nuclear sector. The hydro sector contributed 8387.62 MU. Bhutan imports accounted for the remaining 84.17MU. The target for generation in thermal sector for the month was 63984.00, while that for the nuclear and hydro sectors was 2126.00 and 7856.53 MU, respectively. The target for Bhutan import stood at 84.00MU. In March 2011, the achieved figures of power generation by the various power sectors stood at 63248.73 MU for thermal, 2952.08 MU for nuclear and 9273.33 for the hydro sector. The remaining 61.92 was contributed by Bhutan imports during the month. Capacity addition The power utilities in India added 4,957 MW of generation capacity in March 2012, according to provisional data released by the Central Electricity Authority (CEA). The capacity addition in March 2011 was 1,700 MW, the data revealed. The capacity addition in February 2012 stood at 972 MW against a target of 1,382 MW. In January 2012, the capacity addition stood at 895 MW against a target of 2,245 MW. In March 2012, the capacity added in the thermal sector stood at 4,815 MW while capacity addition in the hydro and nuclear sectors stood at 142 MW and nil, respectively. The

Categorywise energy generation in March 2012 (in %) 0%

85% Thermal

90 80 70 60 50 40 30 20 10 0 Central

State Sector Program

Source: Central Electricity Authority

Pvt. Utl . Sector Achi vement

Al l Indi a

Nuclear

Hydro

Bhutan Import

Source: Central Electricity Authority

capacity addition target stood at nil for thermal sector and nuclear sector while the target for hydro sector stood at 100 MW, the CEA data revealed. In March 2011, the capacity added in the thermal sector stood at 1,500 MW against a target of 1,385 MW. The capacities added in hydro and nuclear sectors stood at 200 MW and nil, respectively while the targets for hydro and nuclear sectors stood at 292 MW and 1000MW, respectively. According to the CEA data, during the month of March 2012, 1600 MW was added in the central sector against a target of 100 MW. The capacity addition in the state sector and private sector stood at 1542 MW and 1815 MW while the targets for both these sectors stood at nil for the month. During March 2012, in a single month a total of 13 plants were put to operation, out of which four were in the central sector, four in the state sector and the remaining five in the private sector. On the other hand, during 2011-12, 4,770 MW was added in the central sector against a target of 5,285 MW. The capacity addition in the state sector and private sector stood at 3,474 MW and 11,445.50 MW while the targets for these sectors stood at 4,296 MW and 8,135 MW for the fiscal, respectively.

All India PLF factor – March 2012 (in %) 100

11%

Power generation up 8% in FY12 The total power generation by the Indian power utilities during 2011-12 stood at 76,436.62 MU, higher by 8.05 percent as compared to 811,104.12 MU generated during 2010-11, according to provisional data made available by the Central Electricity Authority (CEA). Also, the total capacity addition during 2011-12 was up 61.9 percent to 19,689.50 MW, compared to 12,160.50 MW added in 2010-11. However, according to the provisional data, the capacity addition during the Eleventh Five Year Plan fell short of the initial target of 78,700 MW and stood at 62,374 MW.

COAL INSIGHTS 40 APRIL 2012

fEATURE Critical coal stock Inadequate coal supplies by domestic coal companies and lower imports by power utilities have led to critical coal stock position at a number of Indian power plants. According to data available with Coal Insights, a total of 30 plants of the total 95 in the country were faced with critical coal stock position of less than seven days as on March 29. The data further shows that out of the 30 plants facing ‘critical coal stock’ position, 25 were facing ‘super critical’ coal stock position of less than four days. On March 15, out of the 41 plants facing critical coal stock position of less than seven days, 20 were facing ‘super critical’ coal stock position of less than four days. Plants in Uttar Pradesh, Jharkhand and West Bengal were the worst sufferers. Plant load factor The Plant Load Factor (PLF), a measure of the output of a power plant compared to the maximum output it could produce, for the country for the month of March 2012 stood at 77.80 percent against the planned 69.85 percent. The PLF was 78.47 percent and 75.83 percent for February 2012 and January 2012, respectively. The PLF of power plants of central sector run companies such as NTPC and DVC in March 2012 stood at 87.95 percent compared with 74.17 percent achieved in March 2012. The plants in the private sector recorded a PLF of 79.19 percent against the planned 79.60 percent. The worst performer was OPGC, which

recorded a PLF of 59.54 percent against a target of 92.81 percent. GMDCL which recorded a PLF of 46.86 percent against a target of 75.27 percent continued to be a poor performer. Power supply position In the month of March 2012, the country’s peak power demand was estimated at 83,247 MU, but actual availability was only 74,793 MU, reflecting a shortfall of 8,454 MU or 10.2 percent. Earlier, in the month of February 2012, the country’s peak power demand was estimated at 78,067 MU, but actual availability was only 69,430 MU, reflecting a shortfall of 8,637 MU or 11.1 percent. An interesting observation is that despite overall peak shortage of power in the country in March 2012, Chandigarh, Himachal Pradesh, Dadra and Nagar Haveli, Lakshadweep, Andaman & Nicobar islands and Sikkim did not have any peak power shortages, according to data made available by CEA. Tamil Nadu, however, faced the highest shortfall among all states during peak period with a total shortfall of 1972 MU. Andhra Pradesh recorded the second highest shortfall during the month under review. The state recorded total shortfall of 1,413 MU in March 2012, against 605 MU in February 2012. Maharashtra continued to be a poor performer recording a shortfall of 1,311 MU against 2,199 MU in February 2012. Uttar Pradesh (792 MU versus 854 MU in February) also faced major peak period shortfall during the month.

COAL INSIGHTS 41 APRIL 2012

fEATURE

India’s Feb cement production up 8.9%

Coal Insights Bureau

ement production in the country in the month of February 2012 rose compared to the same month last year as infrastructure investments continued to be made. However, compared to January 2012, the production slipped, albeit marginally. Production scenario India’s cement production by large plants, except ACC and Ambuja Cement, in February 2012 moved up 8.87 percent to 16.21 million tons (mt) compared to 14.89 mt in the corresponding month of 2011, according to information made available to Coal Insights by a member of the Cement Manufacturers’ Association (CMA). However, the production dropped only marginally as compared with 16.45 mt of production in the previous month of January 2012. The production by ACC and Ambuja in February 2012 was 2.14 mt and 1.99 mt, respectively, and if their production is taken into account, the total cement production of the country would be 20.34 mt. With this, the total production (except ACC and Ambuja) during the first 11 months (April-February) of 2011-12 stood at 161.19 mt, up 6.01 percent from 152.05 mt during the same period of 2010-11. Production capacity

India’s total cement producing capacity (installed capacity of the member companies of Cement Manufacturers’ Association) stood at 244.05 mt during April-February 2012, the CMA member informed Coal Insights. According to him, the production capacity at the end of February 2012 was up by 5.05 percent as compared to a total installed capacity of 232.31 mt as on the same month last year. During the month of February 2012, a total capacity of 1 mt was added by Jaypee Cements at its plant in Himachal Pradesh, the member added. As per the information, India’s clinker production by large plants, except ACC and Ambuja Cement, in February 2012, stood at 11.84 mt, up 5.43 percent over 11.23 mt produced in the corresponding month of the previous year. Clinker production in January 2012 stood at 12.35 mt. Clinker production of India during the first 11 months (April-February) of 2011-12 stood at 123.13 mt, up marginally by 2.29 percent from 120.37 mt during the corresponding period of 2010-11. Cement despatches India’s cement despatches by large plants, except ACC and Ambuja Cement, in February 2012 stood at 16.28 mt, up 9.78 percent as compared to 14.83 mt in the corresponding month of 2011, the data showed. The despatches in January 2012 stood at 16.25 mt.

The despatches (except ACC and Ambuja) during the first 11 months (April-February) of 2011-12 stood at 160.23 mt, up from 151.01 mt during the corresponding period of 2010-11. Exports India’s cement export, except by ACC and Ambuja Cement, in February 2012 stood at 0.10 mt, down 9.09 percent from 0.11 mt during the corresponding month of 2011, according to information made available to Coal Insights. The export during the first 11 months (April-February) of 2011-12 stood at 1.48 mt, up 6.47 percent compared with 1.39 mt exported during the same period of 2010-11. Meanwhile, export of clinker in February 2012 fell by 46.43 percent to 0.15 mt from 0.28 mt in February 2011. The export during the first eleven months of 2011-12 stood at 1.67 mt, down 32.93 percent from 2.49 mt during the corresponding period of 2010-11. Production by majors UltraTech Cement Ltd, an Aditya Birla Group company, reported February cement production of 3.47 mt, down 8.2 percent compared with 3.78 mt produced in January. The company’s production in February was, however, 4.96 percent higher compared with 3.29 mt produced during the same month of 2011. The cement production during the first eleven months (April-February) of 2011-12 stood at 35.73 mt against 34.68 mt produced during the same period of 2010-11. UltraTech’s cement despatches or sales in February stood at 3.52 mt, down 5.38 percent compared with 3.72 mt despatched in January. The despatches in February were, however, 5.67 percent higher compared with 3.32 mt despatched in February 2011. The cement despatches during the first eleven months (April-February) of 2011-12 stood at 35.74 mt, up 3.2 percent compared with 34.63 mt despatched during the corresponding period of 2010-11. ACC Ltd’s cement production dropped by 10.84 percent to 2.14 mt in February 2012 compared with 2.25 mt in January. However, the production in February was up 8.63 percent as compared with 1.97 mt produced in February 2011, the company said in a release. The company’s despatches or sales in February dropped by 3.59 percent and stood at 2.15 mt as compared to 2.23 mt in January. Cement despatches of ACC cement stood at 2 mt in February 2011. Ambuja Cement Ltd’s February production stood at 1.99 mt, up 4.19 percent as compared to 1.91 mt produced in January 2012. Production during February 2011 stood at 1.79 mt. The company had sold 2 mt of cement during February 2012 while during corresponding month of last year the company’s cement despatch stood at 1.77 mt, Ambuja Cements said in a statement.

COAL INSIGHTS 42 APRIL 2012

fEATURE

Sponge iron sector in throes of survival crisis Coal Insights Bureau

he sponge iron industry continues to face the twin challenges of raw material availability and prices. In addition, absence of proper government directives on mining is adding to the woes of the DRI manufacturers to a large extent. The problems of the industry are getting worse with time. Besides the scantily available raw material iron ore, another essential raw material coal required for the direct reduced iron (DRI) industry is becoming increasingly difficult to obtain as the quantity of this dry fuel supplied by Coal India Limited (CIL) is far from adequate. Obtaining the fuel via e-auctions is also becoming increasingly difficult and less feasible for the small DRI makers as they are not ready to invest a huge sum to stock large amounts of coal. Low availability of iron ore has pushed up prices and that is also a pain point for the industry. “Although the iron ore availability scenario in the Raipur and Raigarh based DRI plants is marginally better as these plants can get their supplies from NMDC Limited, but in West Bengal, the situation is poor,” said a West Bengal based sponge iron maker. “We procure most of the sponge iron from mines based in Odisha but a number of mines in that state are currently lying in non-operational state and no active step is being taken to bring them into operations,” he complained. Moderate demand After facing slumping demand for the last few months, demand has slightly improved of late as almost the entire material that is being produced is being sold out. “However, it is to be remembered that almost all the DRI manufacturers have slashed their production to a large extent and is operating at only 35-40 percent of their total installed capacity. Hence, production having gone down to such large extent, demand has been slightly pushed up although much improvement in demand conditions is not much expected as of now,” said S Bhattacharjee, Secretary of West Bengal Sponge Iron Manufacturers’ Association (WBSIMA) in a candid conversation with Steel Insights. Industry scenario The sponge iron industry in West Bengal which was reeling under great pressure for the last few months being faced with acute dearth of raw materials and slumping demand is not seeing much ray of hope for the coming few months either,

Smoke coming out of sponge iron plant

Bhattacharjee commented. Throughout the country, the situation is dull for the sponge iron industry but particularly in West Bengal, the industry is operating at only 35-40 percent of the total installed capacity, he added. “Availability of raw materials is worsening with iron ore availability becoming poorer with each passing day and particularly for those companies who do not have captive mines, situation is even worse” he further added. According to a Raipur based sponge iron manufacturer, the current market of sponge iron is in deep distress in the current times. Dearth of new projects alongside skyrocketing input costs are dampening the sponge iron industry. Moreover, ban on iron ore mining by the Karnataka government leading to massive fall in iron ore production has become the biggest evil of the DRI industry of India at present. Government intervention is the acute need of the hour but no such step is being initiated. With the world’s single largest coal producing company Coal India Limited (CIL) rolling back their hiked prices to some an extent, the DRI manufacturers throughout the country are eagerly waiting for the Government to take certain decisions to ease the supply of raw materials to the sector in absence of which the sector is likely to face many more dark days in the coming months as well.

COAL INSIGHTS 43 APRIL 2012

Special Feature

Coal washeries in India A big failure and a multi-billion opportunity Arindam Bandyopadhyay

f there is one thing about Indian thermal coal that global traders and miners rave about, it is its low quality and high ash content, ranging from 30 to 60 percent. And then, if there is one thing that the world never talks of, it is India’s low washing capability, only 25 to 30 percent of domestic production. “Understandably so,” said an industry insider, “as the benefits of beneficiation are all very well known, if not to the Indian industry, to the overseas miners who compulsorily prepare the material before despatching to the Indian shores.” Washing of coal, in short, not only helps to maximise the recovery of clean coal, but allows for higher mine mechanisation, thus improving production. It also helps to utilise mines having inferior grade coal and boost overall production, thus resulting in less dependence on imports. The current situation in India’s coal sector scenario, said a former advisor of the coal ministry, reminds a post-War advisory from the World Bank, which stated that India need not pursue coal mining because the world has enough resource of oil and gas. “Nobody could imagine in 1940-50s that we can produce

power from 45 percent ash coal. But today, NTPC plants are running very efficiently with unburnt carbon in their plants at less than 0.5 percent level….It’s the (washing) technology that has made it possible. It is therefore a little strange why the industry is not embracing it, even if it comes at a price,” said another industry veteran, a former head of India’s premier fuel research institute. The moot point, according to the experts, is that the coal ministry and the domestic coal producers (read Coal India Ltd or CIL) have palpably ignored the aspect of coal beneficiation at a time when it was needed the most. Instead, the country went whole hog for import which was not as much in the interest of the nation as it was for the overseas suppliers. Now, with time running out, the domestic coal sector – which includes the entire chain of producers, intermediaries and consumers – should take a plunge on a war footing. The benefits would be worth the investments, and much beyond. A glaring gap The coal beneficiation technology in India was initially adopted for washing coking coal for steelmaking. Over the years, the

COAL INSIGHTS 44 APRIL 2012

Special Feature Coal washery of CESC at Sarsethali, Asansol

industry’s requirements changed and the need for washing coal shifted to the thermal power sector, now undergoing a prolific growth in generation capacity. As of 2011, India has 53 coal washeries. These include both coking and non-coking coal washeries. Together, these washeries have washing capacity of around 150 million tons (mt)*. However, since some of the washeries are either old

*As of March 2010

enough or not using appropriate technology, the effective washed coal production is less than the rated capacity. As per an industry estimate, the thermal power sector currently has total coal requirement of around 480 to 500 mt, of which around 400 mt comes from domestic sources and the remaining 85 mt from imports. Of the domestic supply, nearly 75 percent is of E, F and G grades which require quality upgradation through suitable cost effective coal preparation technology and process. This implies that around 300 mt of domestic coal supplied to the power plants needs beneficiation. Against this, “the current beneficiation capacity of India’s washeries, numbering about 53, is only around 150 mt,” said Amitabha Banerjee, vice president, Lurgi India. This leaves a current shortfall in washing capacity of 170 mt. However, as stated above, the actual volume of coal washed is less than the rated capacity of 150 mt. Discounting for this non-operational capacity, the total shortfall stands at over 150 mt.

Source: Office of Coal Controller, Ministry of Coal, Energy Statistics 2011

* See annexure on Pg 72

Installed capacities of washeries operating in India* Washery operators CIL

Non-coking coal Nos.

Capacity

Coking coal Nos.

Capacity

Total Nos.

Capacity

21.22

19.68

40.9

Non-CIL

75.10

10.01

85.11

Total

96.32

29.69

126.01

COAL INSIGHTS 45 APRIL 2012

Special Feature Requirement of additional washing capacity as per XIth Plan projection Non-coking coal washing

XIth Plan projection (in mtpa)

Total non-coking coal production

650

Less superior grade coal (A-D)

143

Less low grade linked to pit-head TPPs

160

Less captive mining coal production

104

Remaining coal (to be washed)

243

Less total washing capacity available

89.8

Remaining low Grade coal to be washed

153.2

Source: MBE Coal & Mineral Technology India Pvt. Ltd.

According to industry sources, this gap between washing capacity and requirement would go up further in the Twelfth Plan period. Along with industry’s requirements, the Ministry of Environment & Forests (MoEF) has also mandated the use of beneficiated coal of ash less than 34 percent in all power stations located more than 1,000 km away from coal source. Moreover, there is no distance criterion for power stations located in urban and environmentally sensitive locations. Even this distance criterion is likely to be brought down to 500 km in near future, MoEF sources said. Considering the MoEF directives and growth in thermal power generation, requirement for washed coal is expected to increase substantially in coming years. An estimate shows the gap between washed coal production and requirement would increase to more than 270 mt by 2025. Disorderly growth The current shortfall in washing capacity can be traced back to the early development of the coal washery industry in India which lacked any systematic approach. According to industry veterans, earlier, in India, only the met/coking coal was being washed. All washeries were set up for this purpose. This washed met coal was blended with imported coal and fed into blast furnace for steelmaking. “This was a requirement from the steel industry as our coking coal is not of the top quality. Prime coking coal is available only in BCCL. Jharia mine has good quality coking coal. In CCL, there is only medium grade coking coal,” the sources said. The earliest washeries in India belonged to Hindustan Steel Limited (HSL), which was set up in 1954 and later made way to the formation of SAIL. The Dudga (Jharkhand) and Bhojudih (West Bengal) washeries, which now belong to CIL, earlier belonged to HSL. Meanwhile, Tata on its own set up some washeries. The company’s first washery was set up at Jamadoba (Jharkhand), followed by Bhelatand (Jharkhand), and West Bokaro (Jharkhand). IISCO, on its part, set up coking coal washery at Chasnala mine in Jharkhand. Durgapur Steel Plant (DSP) set up Durgapur washery. “These prime/medium coking coal washeries, 15 to 16

Why washing – benefits to power plants Area of influence

Effects

Reduction in transportation costs

Depends on distance and ash reduction (e.g. 1,000 km. distance and ash reduction from 41% to 30% saves 7.5% costs

Reduction in CO2 emissions due to reduced fuel consumption for transportation

Depends on distance and ash reduction (e.g. 1,000 km. distance and ash reduction from 41% to 30% results in 15% reduction in CO2 for same delivered heat value

Decrease in auxiliary power of power plants

10% decrease for every 10% reduction in feed coal ash

Decrease in auxiliary fuel

50% reduction when using washed coal (present avg. 4ml/kWh) having 10% reduction in ash

Improvement in thermal efficiency

3% improvement for every 10% reduction in feed coal ash

Improvement in plant load factor

10% improvement for every 10% reduction in feed coal ash

Reduction in O&M cost

2% decrease for every 10% reduction in feed coal ash

Reduced land & water requirements for ash disposal

12% reduction in land as well as water requirement when using 31% ash instead of 40% ash

Reduction in CO2 emissions

Reduction in range of 2-3% when using washed coal

Source: MBE Coal & Mineral Technology India Pvt. Ltd.

in number, were however not maintained properly and the product quality was not as per expectation. SAIL, the main user, opted to go for import. Also, the steel plants felt running washeries didn’t come into the core competence/activities,” they said. Subsequently, these washeries were handed over to the Bharat Coking Coal Ltd (BCCL). CIL converted these coking coal washeries into non-coking coal washeries. This helped CIL to increase price realisation from the power sector. The washeries matched TPS requirements, as non-coking coal washing quality requirement is lower. In 2000, in view of India’s commitment to the Kyoto Protocol, MoEF issued a notification, stating that all thermal power stations located 1,000 km away from the mine must use washed coal. The plants located in urban or environmentally sensitive areas, however, were asked to use washed coal irrespective of their distance from the mines. Also, the washed coal to be used by the TPPs was stipulated to have less than 34 percent ash content. At around the same time, there was a Supreme Court verdict corroborating the stance taken by MoEF. This further mounted pressure on the power sector which was in a fix. “Because of this new notification, state electricity boards, NTPC etc were all compelled to use washed coal. But there was hardly any washery meant for non-coking coal in the country. CIL had only converted some of the coking coal washeries for use of non-coking coal,” the sources said. “In this situation, there emerged a group of small operators who put up some coal washeries which practically did not have any proper washing technology. And they started supplying washed coal to the plants. If there was cross-verification, they

COAL INSIGHTS 46 APRIL 2012

Special Feature could have been caught. But that was not the case. Everybody was happy that we were using washed coal,” the sources said. It was not until CIL felt a pressing need to set up big washeries with proper technology that the situation seemed to change for the better. CIL projects a non-starter It was during the tenure of past chairman Partha S. Bhattacharyya, that CIL felt the need to come up with its own big washeries for non-coking coal beneficiation. The coal miner decided to build 20 new washeries with operating capacity of 111 mt. In the first phase, the company floated a tender for 11 washeries to be set up on BOM (build-operate-maintain) basis. Earlier, long ago, CIL had tried to set up a few washeries on BOO (build-own-operate) basis and had also awarded contracts for two washeries to Robertson Shepherds, and two others to Madhukar. But that scheme did not work. Taking a cue from past experience, CIL now came up with the idea that the company would invest the money, while the project would be built, operated and maintained by the EPC contractor. However, this time around, some independent board members raised an issue relating to the perceived risk over the tender clauses. “They raised questions at the time of awarding the contract, on their own conditions laid down in CIL tender, the main tender itself. As a result of this, at least two projects – Basundhara (for which a letter was issued to the Emami Group) and Jagannath – got scrapped,” industry sources said. Some of CIL’s proposed washery projects Name of washery

Company

Capacity (mtpa)

Chitra

ECL

2.5

Sonepur Bazari

ECL

Patherdih

BCCL

2.5

Bhojudih

BCCL

Dahibari

BCCL

1.6

Ashok

CCL

Karo

CCL

2.5

Konar

CCL

3.5

Purnadih (Piparwar)

CCL

3.5

Baroud

SECL

Kusmunda

SECL

Basundhara

MCL

Hingula

MCL

Jagannath

MCL

Ib Valley

MCL

Wardha

WCL

Total

5 96.1

Bhattacharyya suggests change in washery tender

Coal Insights Bureau

he former chairman of Coal India Ltd (CIL), P.S. Bhattacharyya, has suggested changes in the tender clause that has proved a stumbling block for CIL’s new washery projects. Bhattacharyya, during whose tenure the initial tenders were floated for 11 washeries, was concerned at the developments and said a little modification in the clause could offer an amicable solution. The clause, which was inserted in the tender for Basundhara and Jagannath washery projects (each of 10 million tons capacity) of Mahanadi Coalfields Ltd (MCL) stated that a vendor awarded a contract for building a washery would need to give bank guarantee equal to the entire cost of the project. The justification, as furnished by the MCL board, behind this clause was that it would help offer a protective shield for CIL in the event of nonachievement of promised yield and/or withdrawal of the contractor before completion of the project. While agreeing to the need for a protection requirement, Bhattacharyya elaborated that the projects are awarded on the basis of project cost (long range marginal cost) and yield. Now, if the L1, whose capital cost is higher than L2, fails to achieve the higher yield, then CIL would lose the additional cost. As a protection, the board inserted the clause of bank guarantee and re-tendered for these projects; but this change did not find favour with the potential bidders, many of which abstained from placing their bids. Commenting on the issue, Bhattacharyya said that instead of seeking a bank guarantee for the entire capital cost, the company could ask for a bank guarantee equal to the difference between the costs furnished by L1 and L2. This amount could be encashed in the event of L1’s yield not exceeding the yield promised by L2. “I don’t’ expect the yield of L1 to be lesser than L2….if it happens so then you are unfortunate. Any procurement is a procurement risk, but you need to cover yourself for the extra capital that you are shelling out….Had it been only on the capital cost, then the other company should have been L1, but instead of that this fellow has become L1 because of higher yield projection. So at least for the difference in the capital cost, where such a situation arises, you may seek a bank guarantee,” said Bhattacharyya. “You just need to add a line in NIT and nothing more than that….By not taking these simple decisions, the company is getting deprived of washed coal and everybody knows how important washed coal is for the country,” he signed off.

Source: CIL

COAL INSIGHTS 47 APRIL 2012

Special Feature “The contracts for these projects (both under Mahanadi Coalfields Ltd or MCL) were awarded on the basis of cost and yield. The problem occurred when some members of the board (of MCL) raised questions as to what could be done if the yield is not achieved, or the project is abandoned midway, or if the project cost is not recovered. Such objection to the tender clause, despite the award of the contract to the lowest bidder, put the projects in limbo.” In a bid to safeguard CIL’s interest, the board members cancelled the tenders, inserted a new clause and floated fresh tenders. The new clause made it mandatory for the lowest bidder to furnish a bank guarantee equal to the amount of the project cost. As it stands now, according to the sources, the fresh tenders have not attracted bids from reputed players. “Which entrepreneur, who has to do a number of projects, will give so much bank guarantee for each of them? Now, these works should be done through EPC contractors – those who do big projects. But these reputed players will not go. Technology providers from overseas will not come. Who will block so much money?” said an industry source. As a result, the projects are getting delayed beyond the planned deadline. “Not only that, the contracts which were awarded before the Basundhara issue came up – namely Madhuban, Dugda, Patherdih and Ashok – are not witnessing any progress in work….No work is being done, not even at the drawing board level.” Madhuban was awarded to HEC and Shank Process of China, while Dugda went to Gupta Coal, and Pathardih and Ashok went to Monet Ispat. The first three – Madhuban, Dugda and Pathardih – were in BCCL area, while Ashok was to be in Central Coalfields Ltd (CCL) command area. “Among these, for the first one HEC was chosen. It’s a PSU; so it won’t give bank guarantee. Instead, it has given corporate guarantee. There was no problem. For the other three, there is something going on inside. These days, after 2G, 3G scams, everybody is afraid (though the decision has been made beforehand) what if these decisions are questioned and the same issue is raised later on? The boards have given approval. But what if the same question comes up before the board in future? Therefore, parties involved are not taking any action.” Meanwhile, the private players who were coming up with their own washeries, have stopped taking the plunge after CIL’s announcement over the setting up of big washeries. “Apart from this, there were the go, no-go areas, MoEF problems, land acquisition – these are all there very much. Also, there is a peculiar case with rejects of washeries. The MoEF is saying what will you do with the rejects? These may catch fire, so you better set up a power plant first. This implies, you have to tag with a power plant too; only then your project will be sanctioned and get MoEF clearance….These are the reasons why the washeries are not picking up here. I think, till when a proper policy is framed, nothing significant will be done,” the sources said.

Washed coal production in India, US and China Country India US China

No. of washeries

Total coal produced (2008)

Total coal washed (2008)

% of coal washed

490

134

27.35

265

1,007

986

97.92

2,000

2,764

1,800

65.12

Source: Insights Research

Globally uncompetitive If projecting the gap in supply of washed coal does not suffice, a comparison with other major coal producing countries would show how far India is lagging in the field of coal beneficiation. As per data available for US and Chinese markets, these two countries have more than 265 and 2,000 washeries, respectively, compared to India’s 53. This however is an old figure. According to the more recent data, the number of washeries in China has exceeded 2,500. Also, the technological supremacy ensures more efficient operation of washeries in the US, where the ash content in coal is brought down to 7-8 percent compared to India’s 34 percent. “There is a qualitative difference in the whole process of mining in countries like US, Australia and South Africa. By mining production, they mean production of washed coal. In contrast, in India, raw coal production is considered to be the final output. This outlook needs to change,” said a senior technology consultant. Once the practice is inculcated, there would be a qualitative change in the coal supply change, he hoped. Inherent impediments In India, the major roadblock is the lack of initiative and awareness about the benefits of washed coal. While the mining companies are concerned with production stagnation, little thought is given over increasing the washing capacity. A major deterrent also comes in the form of the notion of higher cost attached to washing. Both the producers and consumers seem to agree on this aspect. However, while estimating the additional costs of washing, the coal fraternity grossly misses out on the cost savings in terms of environmental benefits, transportation costs, reduced ash disposal, among others. Moreover, not many people consider that domestic coal, even after beneficiation, still enjoys a 30 percent cost advantage over imported coal. On the environmental front, while the MoEF issues directives to the power sector over the mandatory use of washed coal, industry sources allege, these are not strictly monitored. This helps some small washery operators with doubtful technological capability to carry on with their malpractices. Lastly, the lack of a comprehensive policy and coordination between various stake-holders – CIL, coal ministry, planners – has made it difficult for the industry to come up with a systematic growth of this important ancillary segment.

COAL INSIGHTS 48 APRIL 2012

Special Feature there is significant cost difference between a CIL run washery and another whose operation has been outsourced. Although the first phase washery expansion turned out to be a nonstarter, the coal miner is determined to carry on with the programme to achieve total washing capacity exceeding 250 mt. CIL has also earmarked an investment of `2,500-3,000 crore for the setting up of 20 new washeries. Once these are successfully executed, there are further plans to add another 20 units later on. All these present a multibillion dollar opportunity for Indian private sector as well as foreign technology providers and EPC contractors. Besides, the washing standards in India are not as stringent as elsewhere. Indian non-coking coal has to be washed to grade E with below 34 percent ash. This is much more lenient if compared to countries like the US and Australia. As for the land acquisition and related problems, the industry offers an easy solution of setting up integrated washeries with coal handling plants. All said and done, noted an industry veteran, there is a huge opportunity out there. “In India,” said Banerjee, “the cake is big!”

Possible routes of washing for integrated washeries to coal handling plant

Source: mbe

A multi-billion opportunity There is always two sides of a coin, as the cliché goes. The poor state of the washery segment in India also has a brighter side. It offers a huge, multi-billion dollar opportunity for the private sector which might be waiting for the right time to take a plunge. Due to the high operating costs and manpower constraints, CIL for some time now, has planned to outsource washery operations to private operators. According to a former top executive,

COAL INSIGHTS 49 APRIL 2012

Technology

Coal beneficiation: Cleaning the dirty fuel Coal Insights Bureau

lean coal, the green brigade says, is a misnomer. While this may be partially true, the fact remains that cleaning of this dirty fuel, through beneficiation, can potentially save the global environment from substantial release of greenhouse gases. With the growing demand for coal (mainly for thermal power generation) and the lack of alternatives, coal beneficiation is expected to become the mainstay of coal consumption in coming years. But beneficiation is not only about the environment. It is also about increasing the efficiency of thermal power plants and in turn reduction in demand for the dry fuel, especially in emerging economies of India and China. In India, a great percentage of the power station coal mined has been burned so far without preparation or separation of refuse, because the preparation costs are too high or combustible substance is lost in the preparation process. Considering, however, the lower wear in the boiler houses and the increased volume of transportation in the case of prior separation of refuse from the power station coal, a preparation, at least of the lump and medium sized fraction was found profitable. Besides, for meeting the norms set by the Pollution Control Board (PCB), the beneficiation has become unavoidable. An overview India has huge coal reserves but of inferior quality with high presence of near gravity material (NGM) and with emphasis on mechanised mining the quality has been deteriorating consistently. The need of the hour, say experts, is to wash the coal by adopting the right technology that gives maximum yield. Out of India’s coal reserve of 285 billion tons, the proven reserve is around 114 billion tons as of March 2011. Non coking coal constitutes 83 percent of total reserves. The non coking coal available in India are generally of high ash (40 to 50 percent or more), less matured having difficult washing characteristics with a high percentage of NGM present. There are broadly two proven technologies for coal washing used world over, namely jigs and heavy media separators. However, depending on the type of coal being washed, various forms of these methods are deployed. These include Lump Washing, Coarse Coal Washing, Fine Coal Washing and Dry Beneficiation.

size coal with top size from 400 mm to bottom feed size of 30 mm by using only one technologically improved machine and some standard auxiliary equipment. In fact the idea was to solve the problem of preparing non coking coal, as far as possible dry. Such plants are operating at Bina (4.5 mtpa) and Kargali (2.7 mtpa) to separate refuse and produces clean coal having the desired ash level of less than 34 percent. Advantages: Due to low water and power consumption, low expenditure for necessary auxiliary equipment, this process stands any time much economical compared with other proven technologies of large refuse separation and is the ideal process, in case people think of a pit head installation. Limitations: Whenever the characteristics of the raw coal does not allow, to achieve the required product quality with the ROMJIG by only washing the lump size coal, the grain size of beneficiation has to be reduced. Reasons can be the grain size distribution, when the amount of material below 30 mm is more and the ash content of the fine material is too high. COARSE COAL WASHING For thermal coal cleaning, most washeries are treating the coarse coal fraction (100/75 – 13/6 mm) in jigs or heavy media separators (Bath or Drum) and mixing the unwashed Operating results of washeries treating lump size coal BINA DESHALING PLANT – 4.5 mtpa Raw Coal Screen Analysis

Products of the Plant

Grain Size

Weight %

Ash %

Product

Weight %

Ash %

250 – 30 mm

68.78

42.13

Deshaled Coal

49.76

31.34

30 – 0 mm

31.22

38.08

Unwashed Coal

31.22

38.08

250 – 0 mm

100.00

40.87

Saleable Product

80.98

33.94

Refuse

19.02

70.37

KARGALI WASHERY – 2.0 mtpa Raw Coal Screen Analysis Grain Size

Weight %

Products of the Plant

Ash %

Product

Weight %

Ash %

39.27

28.94

350 – 50 mm

56.85

44.47

Deshaled Coal

Thermal coal washeries – Technology in use in India

50 – 0 mm

43.15

38.80

Unwashed Coal

43.15

38.80

LUMP WASHING

350 – 0 mm

100.00

42.02

Saleable Product

82.42

34.10

Refuse

17.58

79.15

The development of the ROMJIG opened the possibility to use a very simple process for the beneficiation of the lump COAL INSIGHTS 50 APRIL 2012

Technology fraction to achieve the overall desired ash level of less than34 percent. In some cases top washing size is reduced to 50 mm depending on the grain size distribution. Under pulsated Batac® jigs are widely in use. Korba washery is a dedicated thermal coal wash plant using Heavy Media Cyclone washers and in fact that paved the way for installation of Cyclone washers for washing non coking coal in India as feed to some power, sponge iron & cement kilns. The single largest thermal coal washing plant operating at Piparwar (6.5 mtpa) has under pulsated Batac® jigs. The Calcutta Electric Supply Corporation became the first power generating company to have its captive washery (1.8 mtpa) set up at Sarasthali using under pulsated Batac® jig. Some private owned washeries are also operating with Barrel washers. Advantages: The Batac jig is so flexible that the bottom washing size can be reduced even to 3 mm, without a modification of the flow sheet. The only problem is the dry screening at the lower sizes, which can be solved by using the right screening system. Equally good operating results are achieved with the Heavy Media Separator without reducing the lower size and for which it needs to be ensured that the medium recovery circuit is properly designed and medium of required quantity & correct quality, which is scarce is made available. Limitations: In good coal reserves – preferably in opencast mining – a relatively big amount of good quality raw coal is dumped, i.e. wasted, due to the selective mining method. This is the material close to the border between coal seam and shale band, which contains up to 50 percent of saleable coal. Further whenever the characteristics of the raw coal does not allow, to achieve the required product quality with only washing the coarse coal, the grain size of beneficiation has to be reduced. Reasons can be the liberation in the course of crushing, grain size distribution, presence of amount of material less than 13 / 6 mm is more and the ash content of the fine material is too high.

Operating results of washeries treating coarse Coal PIPARWAR PLANT – 6.0 mtpa Raw Coal Screen Analysis Grain Size

Weight %

Ash %

75 – 13 mm

73.55

39.3

13 – 0 mm

26.45

75 – 0 mm

100.00

Products of the Plant Product

Weight %

Ash

Deshaled Coal

61.35

32.7

35.2

Unwashed Coal

26.45

35.2

37.97

Saleable Product

87.80

33.45

Refuse

12.20

70.5

CESC – SARSETHALI PLANT – 1.8 mtpa Raw Coal Screen Analysis

Products of the Plant

Grain Size

Weight %

Ash %

Product

Weight

% Ash

75 – 6 mm

84.22

45.86

6 – 0 mm

15.78

39.10

Washed Coal ( 75 – 0 mm)

60.83

32.15

Refuse

39.17

64.42

75 – 0 mm

100.00

44.79

Saleable Product

60.83

32.15

World over plants are being installed to process especially such type of interface material. The heart of such plants is the

heavy media cyclone or under pulsation Jigs and degree of beneficiation is again defined by the raw coal characteristics and the product requirements. Though, washing of the smaller size fraction is not predominant for coal fed to thermal plants as desired ash level of less than 34 percent in the overall washed product is achieved by Coarse Coal washing but for feeding to sponge iron & cement kilns, non coking coal of smaller size fraction are washed in Batac Jigs & Heavy Media Cyclone washeries. There are two plants coming up for non coking coal having 2 stage washing with double stage Heavy Media Cyclone washers in one plant at Hirmi and combination of Batac jig & Heavy Media Cyclone in the other plant at Awarpur. In fact fine coal washing is being done in all coking coal washeries with either Batac Jig or Heavy Media process.

Standard-Flowsheet Heavy Medium for power station coal

Standard-Flowsheet Jigging process for power station coal

FINE COAL WASHING

COAL INSIGHTS 51 APRIL 2012

Technology Factors to be considered in selection of process for producing thermal coal with ash < 34%

Factors

Heavy Media Process

Jigging Process

Raw Coal Characteristics

Y

Washed Coal Quality Required

Y

Is Partial or full Washing Required

Y

Reject Utilization

Y

Operation & Maintenance Cost Medium of Washing Availability of Magnetite of Desired Quality & Quantity

DRY BENEFICIATION Dry beneficiation may be a suitable technological option especially for certain type of raw coal especially where they are not inter-banded and has a relative less presence of NGM (near gravity material). Under Asia Pacific Partnership programme, Dry beneficiation of coal has been identified as a flagship project for India as a beneficiary country. Coal India Limited (CIL) R&D Programme has taken up a demonstration project to support this Dry Beneficiation project for demonstration of Allair Jig. This may open a new era for coal washing. The air jig’s limitation is that separation efficiency is low when compared to wet technologies, target ash in clean coal is difficult to obtain if it is to be the plant’s final product since cross migration is on the higher side but on the plus side, air jigs do not need water and cost of beneficiation is much lower when compared to the wet process. Considering the levels of efficiency, air jigs can at best be a transient phase, till may be better dry beneficiation technologies get established. A matter of choice Both HM and jigging are the proven processes accepted on worldwide basis. In India both HM and Batac Jigs have proven record in beneficiating ‘difficult to wash Indian coal’, both non-coking and coking. Selection between the HM and jigging process depends on several factors inter-alia the following: ♦♦ raw coal characteristics

Y – Low Magnetite & Water

Air & Water

Required to be checked

N.A.

Extraction of increased reject quantity due to Raw Coal or Product Ash Variation

Y - High

Plant Availability

Y – High

Range of Separation Densities Efficiency & Yield

< 1.85 g/cm3

<1.4 - > 2.1 g/cm3

Y - High

Feed Rate per Line

Capital Investment

set up new non coking coal washeries through its different subsidiaries, active participation of private entrepreneurs are required to fill the wide gap between demand and availability of washed coal. Time is appropriate for setting up large scale washeries with the state of the art technology suitable for meeting the industry specific quality requirement at least cost. However, while setting up the washeries is important, also important is the choice of technology. The entrepreneurs while setting up a unit must give due consideration to the specific requirements of the end use projects involved, so as to extract maximum benefits.

References – 1. Analysis of the processes being widely used for cleaning of thermal coal in India - Gurudas Mustafi, Director & Chief Operating Officer, McNally Humboldt Wedag Minerals India Ltd., Kolkata, India

♦♦ washed coal quality required ♦♦ use of reject coal ♦♦ operating & maintenance cost ♦♦ availability of required quality & quantity of magnetite A solution All concerned including end users are aware of the benefits derived from using beneficiated non coking coal. Along with CIL, which has embarked upon a very ambitious plan to

2. “Coal Washing in India – Challenges Ahead’ by Mr. A.N. Sahay, Director (Technical), Central Mine Planning & Design Institute (CMPDI) & Mr. P.K. Barnawal, Superintending Engineer (Electrical & Mechanical), CMPDI, in Coal preparation Society Of India (CPSI) journal of September 2009 issue 3. “Problems Associated with Setting of New Washeries” by Mr. H.L. Sapru, Vice President (Coal), Monnet Daniels Coal Washeries Pvt. Ltd., India in Coal preparation Society Of India (CPSI) journal of September 2009 issue 4. Washed Coal Statistics - Bina De-shaling Plant, Northern Coalfields, Limited, Sarasthali Coal Washery, Calcutta Electric Supply Corporation Limited, Piparwar Coal Washery, Central Coalfields Limited

COAL INSIGHTS 52 APRIL 2012

CORPORATE

Essar Power to triple operating capacity

Coal Insights Bureau

ssar Power, a leading private utility, is all set to nearly triple its installed generation capacity to 4,510 MW by June 2012 with the commissioning of three new projects in the next few months. The company is building a project at Salaya in Jamnagar district of Gujarat with an investment of $1.1 billion. It will have the capacity to produce 1,200 MW of power. The first unit of 600 MW of this project called Salaya 1 has commenced commercial operation. Salaya I is one of the three power projects due to be commissioned in 2012, the others being the 1,200 MW Mahan I project and the 510 MW Vadinar P2 project. Together, these three projects will add 2,910 MW to the existing capacity of 1,600 MW and take Essar Power's total installed capacity to 4,510 MW. “It is a matter of great satisfaction that many of our power projects are progressing well in terms of completion and operation. This bears testimony to Essar Power's capability to bring to fruition the projects we have undertaken,” said director, Essar Power, K.V.B. Reddy. “Completion of these projects will add to the revenues and profitability of the company,” Reddy said. The first unit of its 600 MW capacity at Salaya I plant (Gujarat) has commenced commercial operation whereas the second of the two 600 MW units has been synchronised with the State transmission grid and is expected to start commercial production in May 2012. Essar sources coal from Indonesian suppliers under a long term coal supply agreement. Commenting on fuel supply, Reddy said, “We are comfortable with international coal prices and confident to achieve nominal margins expected at the time of signing of PPA. We are also planning to start mining at our coal block in Indonesia over the next nine to 12 months.” The preliminary work has started at the company's

Indonesian coal block, which has estimated coal reserves of about 17 million tons (mt). Essar Power is one of India's leading private power producers with a 14-year operating track record. The company's power business currently has four operational power plants in India and one operational plant in Algoma, Canada, with a total installed generation capacity of 1,600 MW. Essar Power has two gas-based plants, of 500-MW and 515MW capacities in Bhander and Hazira respectively, a 500-MW co-generation plant in Vadinar (all in Gujarat, India) and an 85-MW plant in Algoma (Ontario, Canada). Overall, the company aims to expand its current generation capacity of 1,600 MW to 11,470 MW by 2014. Essar Power has recently moved seven power projects in to the construction phase, taking the total installed capacity under construction to 9,870 MW. Low cost power producer By using the latest technology and equipment, Essar Power can generate and supply power at very competitive price points. In addition, its operational costs are reduced because of the plants' access to dedicated raw material sources. Essar owns coal mines in Indonesia and Mozambique, which gives Essar Power access to an estimated resource base of 100 mt of high-quality coal. The power plants employ a high level of automation, which translates to India's lowest manpower-tomegawatt ratio. Having executed all of its power plants, Essar Power has built expertise ranging from project conception to commissioning, including engineering, procurement and construction. The plant operation and maintenance standards are comparable to the world's best. This is demonstrated through a high plant availability of over 96 percent and a plant load factor of over 85 percent. Renewable energy projects

Essar Power’s expansion projects

Essar Power is exploring opportunities for new projects based on thermal, wind and hydro energy. It is also committed to reducing emissions from its plants and earning carbon credits. The 500-MW combined cycle power plant at Hazira is eligible for Certified Emission Reductions (CERs) under the Kyoto Protocol's Clean Development Mechanism (CDM). The company is also setting up a wind energy plant at Bhuj, Gujarat, with technology from REpower Systems AG, one of the leading turbine producers in the German wind energy sector. As the first private company with a licence to enter the transmission and power trading segments, the company is a fully integrated, end-to-end player in the power sector. It also has the capability to execute power projects for other companies. COAL INSIGHTS 53 APRIL 2012

CORPORATE

WBMDTC’s first coal block to produce 1 mtpa Coal Insights Bureau

est Bengal Mineral Development and Trading Corporation (WBMDTC), the first state agency to start production from captive coal blocks, has formally inaugurated its Trans Damodar Coal Mining Project at Barjore in Bankura district of West Bengal. The project, inaugurated by state chief minister Mamata Banerjee on April 13, holds around 103.15 million tons (mt) of reserves and is expected to produce around 1 mt of coal per annum. The Trans Damodar Sector Coal Block is one of the six coal blocks allocated by the Ministry of Coal (MoC) under the State Dispensation Route to the WBMDTC, a Government of West Bengal Undertaking established in the year 1973. The Trans Damodar Sector Coal Block, which has both opencast and underground portions, was made available to WBMDTC in 2005. The coal exploited from the block will be sold to the coal using industries based in West Bengal through e-auction mechanism and 12.5 percent of the coal will be sold exclusively to the coal using enterprises in micro and small sectors. Initially, the annual production of coal from the opencast portion of the Trans Damodar Sector coal block is targeted at 1.0 mtpa. This may increase to 1.25 mtpa in future. The mining activities are presently spread over 282 acres. “Coal extracted from Trans Damodar sector will be utilised for the benefit of the state and the construction of 330 acres of coal storage is also on the anvil,” Banerjee said at the inauguration. The state government is expected to earn revenue of approximately `56 crore annually in the form of cess and royalty from the production of coal from the opencast portion of Trans Damodar Sector Coal Block. The other five blocks – Jagannathpur A, Jagannathpur B, Ichhapur, Kulti and Sitarampur – allotted to WBMDTC are expected to go into production in the beginning of 2015, an official of the company said, adding, “On coming into production, these coal blocks will be able to generate substantial employment as well as huge revenue to the state government.”

Bengal Energy’s gas power plant commissioned Coal Insights Bureau

engal Energy Ltd, a leading manufacturer of met coke, on April 16 commissioned a 40 MW captive power plant based on waste heat gas of coke oven battery in West Bengal. The commissioning was done by Techno Electric & Engineering Company Ltd (TEECL), a leading EPC contractor in the power sector based out of Kolkata. TEECL was responsible for design, engineering, procurement, supply, installation of various equipment and materials for setting up and commissioning of the plant. The contract, valued at `155 crore, was executed within a period of 24 months. WBMDTC is at present doing mining of blackstone, rock phosphate and quartz in Panchami-Chanda, Beldih and Mirmi blocks respectively. The Panchami-Chanda block is in Birbhum district, while the latter two are in Purulia district of West Bengal. The official said that WBMDTC will soon work in new blackstone mining areas at Palsara in Purulia district and Panchami-Hatgacha in Birbhum district. The official of WBMDTC said that the company will be making profit for the first time during the current financial year (2012-2013), after incurring losses for the last 38 years. WBMDTC Ltd is also expected to liquidate its cumulative loss and repay the entire state government loan, with accrued interest, by 2015-16.

Captive blocks allocated to WBMDTC Date of Allotment

Sl.No.of the block allocated

Indiviudal (I) Jointly (J)

Block allocated

Coal fields

State

Private (P) / Govt. (G)

End -Use

Captive Dispensation=cd, Govt. Disp.=gd, Ultra Mega Power Proj. (UMPP)

State of End Use Pland (EUP)

Geological Reserves Mt

14.01.2005

Trans Damodar

Damodar Raniganj

West Bengal

Commercial

West Bengal

103.15

02.08.2006

115

Ichhapur

Raniganj

West Bengal

Commercial

West Bengal

335

02.08.2006

116

Kulti

West Bengal

Commercial

West Bengal

210

25.07.2007

146

Jaganathpur A

Raniganj

West Bengal

Commercial

West Bengal

273

25.07.2007

147

Jaganathpur B

Raniganj

West Bengal

Commercial

West Bengal

176

27.12.2007

174

Sitarampur

Raniganj

West Bengal

Commercial

West Bengal

210

Source: MoC

COAL INSIGHTS 54 APRIL 2012

in focus

India’s solar power industry: progress report Coal Insights Bureau

fter initial scepticism and a prolonged gestation period, India’s solar power industry is finally coming of age. The sector witnessed a 20-fold rise in installed capacity in 2011 and the Solar Power Mission of the government has aimed at an installed capacity of 20,000 MW by 2020. The potential, however, is far greater! Projects planned for the Thar desert area can actually meet the country’s overall power demand, many times over. The good news is that the cost of photovoltaic (PV) panels is falling while the cost of grid power (coal-based thermal) is on the rise. Standing at this juncture, the India Inc. is showing interest in solar energy like never before. A large number of private entities, led by corporate giants like Tata and Reliance, have stepped in. With the improving commercials and immense growth potential, the solar power in India is likely to become the game changer in the energy matrix over the coming decades. In this endeavour, the National Solar Mission is a major initiative taken by the government to promote ecologically sustainable growth while addressing India’s energy security challenges. Solar is currently high on absolute costs compared to other sources of power such as coal. The objective of the Solar Mission is to create conditions, through rapid scale-up of capacity and technological innovation to drive down costs towards grid parity. The Mission anticipates achieving grid parity by 2022 and parity with coal-based thermal power by 2030, but recognises that this cost trajectory will depend upon the scale of global deployment and technology development and transfer. The cost projections vary – from 22 percent for every doubling of capacity to a reduction of only 60 percent with global deployment increasing 16 times the current level. The Mission recognises that there are a number of off-grid solar applications particularly for meeting rural energy needs, which are already cost-effective and provides for their rapid expansion. Scalability India is endowed with vast solar energy potential. About 5,000 trillion kWh per year energy is incident over India’s land area with most parts receiving 4-7 kWh per sq. m per day. Hence both technology routes for conversion of solar radiation into heat and electricity, namely, solar thermal and solar photovoltaics, can effectively be harnessed providing huge scalability for solar in India. Solar also provides the ability to generate power on a distributed basis and enables rapid capacity addition with short lead times. Off-grid decentralised and low-temperature applications will be advantageous from a rural electrification perspective and meeting other energy needs for power and heating and cooling in both rural and urban areas.

Security of source From an energy security perspective, solar is the most secure of all sources, since it is abundantly available. Theoretically, a small fraction of the total incident solar energy (if captured effectively) can meet the entire country’s power requirements. While, today, domestic coal based power generation is the cheapest electricity source, future scenarios suggest that this could well change. Already, faced with crippling electricity shortages, price of electricity traded internally, touched `7 per unit for base loads and around `8.50 per unit during peak periods. The situation will also change, as the country moves towards imported coal to meet its energy demand. The price of power will have to factor in the availability of coal in international markets and the cost of developing import infrastructure. It is also evident that as the cost of environmental degradation is factored into the mining of coal, as it must, the price of this raw material will increase. In the situation of energy shortages, the country is increasing the use of dieselbased electricity, which is both expensive – costs are as high as `15 per unit – and polluting. It is in this situation the solar imperative is both urgent and feasible to enable the country to meet long-term energy needs. Targets The Mission targets to create an enabling policy framework for the deployment of 20,000 MW of solar power by 2022. ♦♦ To ramp up capacity of grid-connected solar power generation to 1,000 MW within three years – by 2013; an additional 3,000 MW by 2017 through the mandatory use of the renewable purchase obligation by utilities backed with a preferential tariff. This capacity can be more than doubled – reaching 10,000 MW installed power by 2017 or more, based on the enhanced and enabled international finance and technology transfer. The ambitious target for 2022 of 20,000 MW or more, will be dependent on the ‘learning’ of the first two phases, which if successful, could lead to conditions of grid-competitive solar power. The transition could be appropriately up scaled, based on availability of international finance and technology. ♦♦ To create favourable conditions for solar manufacturing capability, particularly solar thermal for indigenous production and market leadership. ♦♦ To promote programmes for off grid applications, reaching 1,000 MW by 2017 and 2,000 MW by 2022. ♦♦ To achieve 15 million sq. meters solar thermal collector area by 2017 and 20 million by 2022. ♦♦ To deploy 20 million solar lighting systems for rural areas by 2022.

COAL INSIGHTS 55 APRIL 2012

in focus

Vikram Solar eyes 100% y-o-y growth in capacity, topline Coal Insights Bureau

or a company that entered the solar power business as late as in 2009, Vikram Solar has been a fast learner and a remarkable achiever. A 100 percent production growth, 90 percent export percentage, and `260 crore turnover in the third year of operations (FY12) would say a lot about its rapid progress. But it’s only the beginning, said Gyanesh Chaudhary, Director, Vikram Solar, as the future holds prospects twice as much. “We are in the third phase of expansion. The current cell manufacturing capacity is 60 MW and by May-June 2012, this capacity will be 120 MW. Also, the topline will be `500 crore in FY13, compared to `260 crore in FY12,” Chaudhary said. Along with cell manufacturing, the company is also engaged in engineering, procurement and construction (EPC) of solar cells. Here too, Vikram Solar expects over 100 percent growth in order book in FY13. All the credit of this high growth, according to Chaudhary, goes to the immense potential of the market and untapped opportunities. “As such the Indian solar power industry is poised to grow at a compound annual growth rate (CAGR) of 100 percent, compared to around 45 percent globally. The installed capacity in India was only 600 MW in December 2011. From now on, we expect 1,000 MW capacity addition every year,” said Chaudhary. The scarce availability of coal, dropping prices of solar PV modules and improving technology would ensure unabated growth of solar power in the country, he said, adding the company would leverage on its engineering background to ride this wave. From engineering to solar EPC Over the last four decades, the Kolkata-based Vikram Group

of Industries has been into equipment engineering, tea processing machines, polyester textiles production, cotton spinning and real estate, among others. Lately, the group was looking for further diversification when the idea of solar power struck the management. “We started off in 2008, although commercial production started not before 2009. We were into hard-core engineering. We wanted to go into allied segments. So we looked at renewables. Among renewables, solar seemed appropriate as there is visibility of growth,” reasoned Chaudhary. With background in engineering, solar power seemed to fit the bill. “We did a lot of research,” he said, having been to countries across the world to get the know-how. “Solar basically comes under IT and ITeS. The hardware is changing fast and it’s the same for solar power.” The incubation phase was helped by government policies and schemes that promote this renewable energy source. The company took benefit of these schemes to acquire projects and get a foothold in the new sector. Ongoing expansion The company started with a plant at Falta in West Bengal. Other than PV modules, the product portfolio included solar lantern, solar home lighting and solar street lighting. From this plant, Vikram Solar catered to both the domestic and a dozen overseas markets. The export markets included Indonesia, Sri Lanka, US, Germany, Japan, Iran, Kenya, South Africa and UK. Soon after, the company started providing customised solution for solar power plants. For such EPC contracts, Vikram Solar joined hands with a Spanish firm Proener and formed a 51:49 joint venture Vikram-Proener Projects to bid for large solar power plants in the country and overseas. In 2011, total EPC contract was for 32 MW out of various sites. In 2012, the company is expecting to get order for 120 MW. Meanwhile, exports constituted a major part of revenue for the company. The slowdown in Europe and US had an impact on exports, but it helped the company in two ways – in shifting focus to new markets in Africa (Kenya, Uganda, South Africa) and Australia and in better positioning its European subsidiary Vikram Solar GmBH in that market. Vikram Solar GmBH installs power plants, roof top, etc. “Currently, the plants in Europe are closing down, since conversion costs as well as labour cost are very high. This helped us to gain a foothold. Currently,

COAL INSIGHTS 56 APRIL 2012

in focus

Vikram Solar IPO by 2013

Coal Insights Bureau

ikram Solar Ltd, a leading solar power firm, is planning to float its initial public offering (IPO) by the end of 2013. According to company sources, the proceeds from the issue would help the company fund its ambitious expansion plan. The company has already charted out a `1,700 crore investment over the next five years. The expansion projects would include both enhancement of current plant capacity at Falta and setting up of a new plant in western India. The company had reportedly planned to hit the capital market earlier but the plan was deferred for the time being.

Tata Power solar unit achieves milestone Coal Insights Bureau

ata Power, India’s leading integrated power utility, crossed 11,000 MWh of generation from its solar power plant at Gujarat. With its commissioning and declaration of commercial operation on January 25, 2012, the plant has performed ahead of expectations, as per company officials. The 25 MW Mithapur plant is an important constituent of the Gujarat government’s dedication ceremony for solar generation of 600 MW in the state. Tata Power’s milestone also coincides with the Gujarat Government’s dedicating Asia’s first and largest ‘Multideveloper, Multi facility and Multi beneficiary’ solar park at Charanka village in Patan on April 19, 2012. It was inaugurated by chief minister Narendra Modi, and Tata Power’s solar power plant was felicitated in the ceremony.

we are well positioned in this market,” Chaudhary said. Back home, the company is now gearing up for the thirdphase expansion. It has earmarked an investment of around `80 crore for the current year. The company has reportedly charted out `1,700 crore investment plans in solar power business till 2017. The investments plans include setting up of a wafer plant, cell and module manufacturing over the next five years. “For phase IV expansion, we are looking at a new site in SEZ in western India,” said Chaudhary. Challenges and prospects Amid steady growth, there are a few areas of concern that keep the management worried. A major problem is the dumping of low cost PV modules in India by China. “The Chinese modules are low cost and low quality products. Also, the import of thin film technology, a cheaper but less dependable alternative technology, is affecting the Indian PV module manufacturers,” Chaudhary said. The company along with other manufacturers has approached the government on the issue. Other than this Chinese threat, the market potential is substantial. “The best part of solar is that it is free and abundant and can be taken to any point.” For smaller applications, the company is working through its channel partners. “They are already doing such projects. These applications are very standard and there is no R&D required there,” he said. Although there is no longer a goal set for the solar power biz, the company expects it would add substantial revenue to the group’s topline a few years down the line. “During the last financial year, the business contributed around 20 percent to the top line of our group and it is expected to increase by 5 percent,” Chaudhary signed off.

Commenting on the milestone, Anil Sardana, managing director, Tata Power, said, “It gives us great pride to put up our biggest solar project in the state of Gujarat which continues to be a pioneer and leader in solar power generation across India. We are delighted to have commissioned this plant as per schedule and are thankful to the support provided by various authorities. Crossing 11,000 MWh of generation units is an important milestone for our Mithapur solar plant and demonstrates the efficiency and the state-of-the-art technology used at the plant.” The company has signed a power purchase agreement for the project with Gujarat Urja Vikas Nigam. This plant is one of the largest of its kind in the country and is now feeding power into the grid. Tata Power’s Mithapur solar power plant uses the modular, proven, and widely deployed crystalline silicon photovoltaic technology to maximise power generation. The total investment in the plant stood at `360 crore. The other renewable energy presence of Tata Power in Gujarat includes wind farms of 50 MW capacity.

COAL INSIGHTS 57 APRIL 2012

in focus

KSL ‘solarising’ Indian Defence sector

Coal Insights Bureau

t a time when most solar power companies are running after industrial and municipal projects, Kirti Solar Ltd (KSL) has chosen to tap the more sophisticated yet unconventional market, namely the defence and police establishments. KSL is engaged in design, consultancy, integration, supply, installation, commissioning & maintenance of Solar Power Generating Systems (SPGS) for both off-grid and grid-connected systems. The company, a part of the Kolkata-based Pekon Group of companies, has taken up a number of projects to serve the remote posts of various law keeping forces. “The Indian defence/police sector has various establishments in remote areas and border outposts of the country. Most of these places are without any reliable source of grid power. The use of solar energy is very suitable for these areas,” company sources said. KSL is approved under the quality standards of DGS & D and MNRE for such projects. With its capabilities to innovate and deliver quality products and solutions, Kirti Solar covers the entire spectrum in the defence sector. “Our pursuit towards corporate excellence continues with a futuristic roadmap that includes solar power products and solutions that would make the Indian defence and the country proud, and command recognition globally,” the sources said. Recently, in DEF EXPO’12 Kirti Solar unveils its future scenario for defense sector. Strategically positioned The company is strategically well positioned to deliver the right solutions enabling the supply of the products directly to government departments like BSF, police, and Railways. Kirti Solar has one of the largest sales/installation networks in India backed by an experienced team of design and integration experts. It also has a network of over 150 authorised dealers and distributors across Bihar, Uttar Pradesh,

KSL participating in DEF Expo, New Delhi

KSL’s service offerings for Defence Powering communication systems and signaling Solar hot water systems for canteens Water pumping systems Solar lighting in campus

Solarisation of border outposts and street lighing

Jharkhand, West Bengal, Assam, Manipur, Orissa, Mizoram, Chhattisgarh, Rajasthan, Jammu & Kashmir, Meghalaya, Tripura, among others. Kirti Solar and its distributor network offer superior customer service before and after the sales and installation. The company specialises in solarisation of border outposts/ check posts, barrack areas/campus, police stations, canteen, Officers' Accommodation/Guest Houses, warehouses. For instance, the company covers the North Eastern region of India for solarising the BSF Outposts. Kirti Solar ensures to manufacture and supply standard quality solar products like Solar Street Light, Solar Tower, Solar Water Pump and Solar Water Heater to the defence sector. The company’s esteemed clients include a number of Defence officials, government and public sector undertakings, who are seemingly content with the company’s services. Kirti Solar has streamlined its business on the basis of its core competencies in the field of solar technologies. However, due to the nature of its projects, the company has to be extra cautious about maintaining secrecy while dealing with intellectual properties. “KSL adheres to norms that give absolute priority in handling matters of confidentiality with its clients and partners. Issues of national and strategic importance are never compromised and so our clients feel safe and protected by associating with Kirti Solar,” said a spokesperson of the company.

COAL INSIGHTS 58 APRIL 2012

expert speak

Coal Mine Act revision needs deliberations

J.N. Singh

herever there is mining, there has to be safety laws. And with time and a change in circumstances, these safety laws will have to undergo changes. In India too, over the years, rules and laws related to mining safety have undergone changes. There was a time when death arising out of physical injury was considered to be God’s will. Only after such a concept underwent a radical change, were unsafe conditions considered largely responsible for any injury. H.W Heinrich in a book titled “Industrial Accident Prevention” propounded the theory that “Unsafe acts of people cause for more accidents than unsafe conditions do.” It is supported by an understanding that unsafe conditions are created by the unsafe acts of the people in the industry, especially an industry such as mining. It was way back in 1897, that 52 persons were killed in a shaft accident in the Kolar gold field and 47 people were killed in a mine fire in the Khost coalfield in Baluchistan (now in Pakistan). These disasters prompted the then people at the helm to frame a statute on safety in mines in India. And that finally resulted in the Indian Mines Act which was enacted in 1901. The Act, inter alia, empowered the government to frame rules for regulating work in mines. General rules were framed in 1904. The owner, agent and manager were to frame special rules for the control and guidance of the persons working in the mines. With time, the need arose for a new statute by repealing the Act, 1901. A new Act in the name of “The Indian Mines Act, 1923” came into being. It may be of interest to note that the eligible age for employment in underground mine was raised from 12 to 13 years by this Act, and the employment of women in underground mines was not prohibited. However, the Act, 1923 empowered the government to frame rules on their employment. The rules stipulated that no person below the age of 18, except apprentices, could work either in underground or on opencast mines. Women were also prohibited to work in underground mines. A weekly day of rest was also made mandatory. However, the safety laws related to mine operations were formulated only under the Coal Mines Regulations, 1926. These Regulations stipulated a number of restrictions and limitations on the method of working, preparation of mine plans and much more, and were amended and modified on six occasions between 1927 and 1941. The Act, 1923 was also amended on eight occasions before the Mines Act, 1952 came into force. After independence, there was a spurt of enactment of many labour laws on the safety and welfare of mine workers. One of the most important legislations in free India was enacted in the name of “The Mines Act, 1952”, which was an Act “to amend and consolidate the laws relating to the regulation of labour and

safety in mines”. The Act 1952 is the basic statute under which many Rules and Regulations were framed, and which itself also underwent amendments on five occasions. Thereafter by far the most important statute relating to safety of mine and mine workers were detailed under the “Coal Mines Regulations, 1957” and for non-coal mines under the “Metalliferous Mines Regulations, 1961”. Both these Regulations have also been amended on a number of occasions. Some of them were mandatory and a few simply suggestive. Many amendments were based on the recommendations of the conferences on safety in mines. Lessons were also taken from the “ILO Code of Practice” adopted in 1985 and 2006 and a few recommendations before that as well. However, such amendments were not adequate and a need was felt to repeal the Regulations and put together a completely fresh set of regulations for coal mines. Deliberations began along these lines in 2006. Based on the proposals of the Directorate General of Mine Safety (DGMS), certain modifications were suggested by Coal India Ltd, a few other mining companies and other experts. The Ministry of Labour and Employment published a notification in the Gazette of India on October 20, 2011, in compliance with the provisions under Section 59 of the Mines Act, 1952 requiring a minimum of three months’ notice for seeking comments from anybody likely to be affected by the amendment of the Regulations. Before the amendment becomes a statute, it requires a nod from the committee constituted by the government of India under Subsection (1) of Section 12. This is a very good opportunity and must be taken advantage of. I feel there are certain provisions in the proposal which are not justified. For example, the proposal to conduct a separate examination for issuance of competency certificates is restricted to opencast mines only. This is just to bring “coal” and “metaliferous mines” at par without taking into account the inherent hazards associated even with opencast coal mines. Another serious concern is the deterioration in the quality of mine managers, mainly because of the relaxation of norms required to qualify as mine managers. A Manager’s Certificate of Competency has become very easy to obtain. Before 1971, both for Second Class and First Class competency certificates, they were required to appear in a five-paper written examination as well as oral examinations coupled with a practical examination of surveying. After 1971, they were required to clear only one paper and that too only for First Class competency. This has resulted in serious deterioration in quality of mine managers in general. Now if the proposal for grant of Manager’s Certificate restricted to Opencast Mines only is accepted it will really create a further dent in quality. J.N. Singh is a mining engineer from the Indian School of Mines, Dhanbad and holder of First Class Manager’s Certificate of Competency. He was a director in subsidiaries of CIL. He is an Advisor, Consultant and Advocate.

COAL INSIGHTS 59 APRIL 2012

Expert Speak

Energy security policy need of the hour

Anil Sardana

nergy powers the growth of a nation and has been universally recognised as one of the most important inputs for economic growth and GDP. To maintain this growth, it is imperative that energy is readily available and is affordable. The growth of an economy hinges on the availability of cost effective and environmentally benign energy sources, and the level of economic development has been observed to be reliant on the energy demand. Sources of power must necessarily be reliable without being vulnerable to long- or short-term disruptions. Interruption of energy supplies can cause major financial losses and create havoc in economic centres, as well as potential damage to the health and well-being of the population. Energy and GDP growth A few years back, “Dr. Kirit Parikh Committee” of the Planning Commission had highlighted projections of the energy requirements based on GDP growth rates of 7 percent and 8 percent at constant and falling energy elasticity. Energy elasticity, which is with reference to the GDP, is the percentage change in energy consumption for 1 percent change in GDP. Currently, this elasticity is 0.80. The Committee considers lower elasticity of 0.75 to be attained by the decade beginning 2011-12 and 0.67 from the decade beginning 2021-22. India is well-endowed with both exhaustible and

renewable energy resources. Coal, oil, and natural gas are the three primary commercial energy sources. Historically, coal has been the largest source of energy. However, India’s primary energy mix has been changing over a period of time. But resource augmentation and growth in energy supply has not kept pace with increasing demand and, therefore, India continues to face serious energy shortages. Until renewable energy sources in one form or more becomes capable of providing 365 days x 24 hours continuous predictive power, irrespective of input similar to conventional power plants running on coal, nuclear, hydro etc., grid parity has little intrinsic value and can at best address grid power requirement for the time of day when either wind or solar energy can deliver associated output. Due to shortages and the inability of renewable energy resources to provide continuous power like oil and coal, there has been an increased reliance on imports to meet the energy demand and more imported sources will be needed in the years ahead. The absence of new gas finds and declining production from Krishna-Godavari-D6 field is pushing the needs for enhanced gas imports. Petroleum ministry data suggests LNG imports in 2012-13 is expected to be at 69 million standard cubic metres per day, well over twice the quantity last year. From there on, the imports will increase over two and half times, to 184 mscmd, in 2016-17, with total gas availability estimated at 197 mscmd and 394 mscmd, respectively. This will increase the LNG share in five years from 37 percent to 46 percent. Coal has been the mainstay of power production in India and will continue to have a lion’s share and thus, will have an important role to play in meeting the demand for a secure energy supply. Historically, coal prices have been lower and more stable than oil and gas prices, and coal has also been easily available for power producers across the country. However, things are no longer the same. Power developers

Source: Credit Suisse

According to the Ministry of Coal, the gap in demand and domestic supply of coal has increased from about 50 million tons (mt) in 2007-08 to 83 mt in 2010-11. The projected coal demand in the terminal year 2016-17 of the Twelfth Plan is about 980 mt and the envisaged production to meet the projected demand is 795 mt leaving a gap of 185 mt. This demand includes 682 mt for power utilities. This domestic demand and supply gap is continuously widening with rising imports and its impact on the prices. High import levels are likely to destabilise the financial structure of the coal dependent sectors by exposing them to volatile international prices. Also, the availability of coal will be a critical constraint on the development of coal-based power plants in the Twelfth COAL INSIGHTS 60 APRIL 2012

Expert Speak Plan when the projected gap between demand and supply is likely to go up by 200 mt. With the shortage of coal, generation in different power plants is getting affected. As many as 18 power plants in the country are faced with critical level of coal shortage. Power utilities have reported a generation loss of 8.7 billion units in 2011-12 (up to February 2012) due to shortage of coal. As many as 11 plants of NTPC lost 7.8 billion units because of shortage of coal during the current fiscal. Other utilities that lost on generation of electricity included ones in Madhya Pradesh, Maharashtra and Andhra Pradesh. There is a need for the government to fully liberalise the coal business and for Coal India Limited to step up domestic production, as well as acquire coal mining companies abroad, if necessary. While there are unexplored coal blocks that companies can apply for captive mining, the challenges are huge and can deter companies from applying for captive mining. There is a lack of assessment of India's natural resources – a number of areas remain unexplored and the mineral resources in these areas are yet to be assessed. A TERI Policy Brief on Coal concludes that India may have coal reserves in plenty but in reality, the coal that can be extracted is only a small fraction of our total coal inventories without taking into account areas where coal mining may not be permitted. The current economic mining practices are generally limited to a depth of 300 m, and about 40 percent of the reserves of the country are beyond this depth. Coal production from underground mines has either stagnated or has declined, despite significant investments. Also, a large part of India’s coal reserves may not be extractable with current mining technologies. Further, the distribution of minerals in the areas known is uneven and varies drastically from one region to another. There are delays in approval of investments in the mining sector that are dovetailed with infrastructure impediments. There is also the often contentious issue of large scale displacement of tribal population, resistance of locals and environment issues that need to be taken into account. To import or not Considering the burgeoning gap seen in domestic coal supplies, public and private sector entities have embarked upon imported coal as a means to bridge the deficit. Some Indian entities have taken upon themselves the task of purchasing, developing and operating coal mines in international geographies. While this is expected to secure coal supplies, it has thrown open associated challenges and exposure to non-familiar geographies. For example, the key international sources of coal supply to India are Indonesia and Australia. Indonesia poses significant political and legal risks in the form of changing regulatory framework for coal to be sold not below the government’s declared prices, while the carbon tax in Australia of 30 percent has made coal exports unviable. Similarly, coal evacuation from mines in South Africa is constrained by their limited railway capacity and the

capacity at ports, making it difficult for any additional coal cargos to evacuate reliably. However, of all these countries, Indian companies can buy mines and rights to off-take coal. In recent years, Germany, UK and Poland have downgraded their coal reserves numbers, with overall world reserves of coal having reduced from 10,000 billion tons to 4,200 billion tons over 25 years. The ability to import large quantities of coal to India is therefore getting increasingly restricted. This is being mitigated to some extent by the acquisition of coal mines abroad. Nonetheless, coal security needs to be given the same importance as oil security, as the sources of imported coal, are limited to just three or four countries, unlike oil. Also, a large import by China is tightening supplies and prices. It is also seen that countries such as China, Japan, Korea and several others use bilateral government to government relationships to get access to coal, oil and gas resources, thus facilitating their own private sector companies to thereafter hold licenses and have the resource exploited. Such diplomatic advocacy has not yielded any results in reference to Indian acquisition of resources in countries with reserves. The way ahead Coal is essential for meeting more than half of India’s commercial energy requirement. Today, coal production is in deficit and imports have been increasing each successive year. Similarly, gas supplies from domestic sources are dwindling and gap would have to be met from imported LNG, albeit expensive. Since power is a concurrent subject, most of the states and associated regulatory commissions wish to avoid sourcing electricity based on imported fuels. However, avoidance is a temporary reprieve and cannot be sustained for long. The government of India should therefore evolve an Energy Security Policy, conveying use of portfolios, basket of fuels and must issue guidelines as to how regulators must ensure that at each state level they build the tariff using bulk sourcing of power based on prudent mix of portfolio of fuels comprising of both imported as well as domestic. This is akin to CERC using guideline of percentage share of bulk sourcing from renewable sources of generation. There should be rationalisation of existing coal linkages to optimise distances of rail movement, free up rake placements and enable liquidation of idle stock at coal pit-heads. The pending Fuel Supply Agreements need to be resolved for long term coal linkages. For these, institutional mechanisms need to be strengthened to facilitate fast track clearances for coal mining projects through a single window inter-ministerial body. The government also needs to take measures to develop a conducive and enabling policy framework by introducing an independent coal regulator to oversee mine planning and development, adherence to investment plans and a production schedule to build a road map for commercial mining. Anil Sardana is the managing director of Tata Power

COAL INSIGHTS 61 APRIL 2012

social buzz

Doubts over CIL’s ability to honour FSAs future Coal Insights Bureau

Coal Insights has recently started a group on LinkedIn called India Coal Market Watch (ICMW). The readers are welcome to join the group and participate in daily conversations and surveys conducted by ICMW on the online forum. Coal Insights may, at its discretion, publish the result of such surveys and discussions for the benefit of a larger audience.

ith Coal India Limited (CIL), the world’s single largest coal producing company initiating the process of signing fuel supply agreements (FSAs) with power companies, ICMW had put up questions before its members whether they think CIL will be able to meet the commitments as per PMO’s directives or not. To this, almost 80 percent of the members responded negatively saying they do not feel the commitments will be fulfilled, while the remaining 20 percent gave their response in favour of the coal miner. Coal key to energy security Since there is no alternative to developing more domestic coal mines, despite the difficulties involved as imports are not sustainable, members of ICMW have left their comments on the issue. J.P Panda, Managing Director of Priya Mining Consultancy and Services Limited said, “The Government should understand that we are in a very critical time. Indeed the total success of our economy is dependent on domestic coal production.” Therefore, fast tracking of clearances by MoEF is the call of the day. “Nearly 200 coal projects are not in production stage for the simple reason of non-clearance by MoEF. Delays should not be condoned. Those who delay should be called traitors. If India has to spend a few lakh crores in importing coal when we have our coal reserves, what should the delay in granting clearances be called other than treason? Dr Manmohan Singh should review every week the progress of clearances by MoEF,” he said. MoC seeks opinion on reallocation The other issue that drew the attention of the members of the online forum was the Coal Ministry’s (MoC) initiative to seek opinion of Law Ministry on a proposal to reallocate the cancelled mines to companies, including NTPC. The development comes in the wake of coal ministry recently

announcing the return of six coal blocks to companies -NTPC, Damodar Valley Corporation (DVC) and Tenughat Vidyut Nigam Ltd (TVNL). More coal imports likely The forum members were of the opinion that the recent duty cut on thermal coal import would lead to increased inflow of the material into the country in 2012-13. Seeking to address the coal shortage affecting the power and steel sectors, Indian government has recently announced a slew of measures for enhancing its availability in the Budget, a development welcomed by CIL. The MoC is of the view that development would lead to an increase in import of fossil fuel to the country. While presenting the Budget for 2012-13, Finance Minister Pranab Mukherjee said “I propose to ease the situation by providing full exemption from basic customs duty and a concessional CVD (Countervailing Duty) of 1 percent to steam coal for a period of two years till March 31, 2014.” The MoC had pitched for the reduction in the duty and had even written to the Finance ministry on the same prior to the budget announcement. CIL earnings from e-auction CIL has earned an additional amount of Rs 4,929.29 crore during the period April 2011 and February 2012. CIL is earning some profits by sale of coal through e-auction as the e-auction price is always more than the notified price. The average minimum and maximum e-auction price during April 2011 to February 2012 of the subsidiary companies of CIL was Rs 2,611.26 per ton and Rs 2,933.90 per ton respectively. The average notified price during the above period was Rs 1,647.38 per ton. Commenting on this, Ajay K Singh, Chairman of Paramarsh group, said that coal has been mishandled through subjective policies in the name of “nationalisation and now denationalization”.

COAL INSIGHTS 62 APRIL 2012

International

Mozambique’s mad rush to spruce up coal infrastructure Coal Insights Bureau

ozambique’s rapidly growing coal sector offers investors a promising future, with production from various projects expected to reach markets in coming years. But concerns remain about getting the product to market, as infrastructure renovation lags behind, with most exploration companies running to get the infrastructure ready for export. The infrastructure projects, according to a recent study by Renaissance Capital, will be mostly undertaken by the private sector, and mostly associated with the exploitation of valuable natural resource coal which Mozambique is well endowed with. Transport infrastructure is primarily developed transversally, west–east, connecting mining and agricultural clusters in Mozambique and in neighboring countries to exit ports. There are four clear railroad corridors, viz. Maputo to Gauteng in South Africa (also connecting with Zimbabwe and Swaziland through the railways branches); Machipanda line connecting Beira to Zimbabwe; Beira to Tete (Moatize); and Nacala to Malawi line. Expansion from the coal basins in the Tete province and Zambesi area with special focus on coking coal will only be possible with developed of logistics and infrastructure especially

the port infrastructure and $200 million Sena railway line refurbishment. There have also been calls to the Mozambique government to upgrade road infrastructure between the coalfields and the Maputo port’s Matola Coal Terminal. Mozambique is scrambling to finish a much-delayed rebuilding of the 600-kilometre Sena railway line that connects coal-rich Moatize to the Indian Ocean port city of Beira. The coal terminal at the port is also unfinished. Even when ready, the 570 km Sena line will only be able to handle 6 million tons (mt) of coal a year – 4 mt allocated to Vale and 2 mt to Riversdale – caps that are less than half the companies’ respective export goals. Most of the exploration in Mozambique is done in the northern areas of Tete, which will result in the development of the Beira and Nacala ports the country’s only deep-water port and a gateway to Indian Ocean ports. Vale is investing in another railway line from Tete to the northern port of Nacala, for Mozambique’s land-locked southern African neighbours. The 900 km Nacala corridor through Malawi to the deep water port of Nacala requires 200 km of new rail from Moatize to Blantyre and upgradation of existing rail line from Blantyre to Nacala is urgently required. Existing capacity is 1 mt per year with option to upgrade it to 40 mtpa. Again, Ncondezi Coal Co. Ltd., a coal exploration company developing assets in Mozambique, has signed an agreement with Anglo-Australian miner Rio Tinto PLC to explore new rail and port infrastructure projects, part of its plan to start exporting coal from the region by 2015. Another option is the use of barges to transport down the Zambezi and trans-ship using floating cranes at the mouth of river Chinde. This option was under investigation by Riversdale and has potential capacity of more than 20 mtpa although practically this appears optimistic and certainly unproven. Matola coal terminal currently takes smaller vessels and has lower coal loading rate making vessel freight per ton more expensive. However over the past eight years $225 mn have been invested in the Maputo port and the Matola coal terminal, with cargo handling going up to 12.6 mt last year. Further investments would see volumes double in the coming years. Infrastructural challenges But Mozambique still faces critical infrastructure challenges and the transport sector is the starkest among them. While some of the transport corridors are mostly functional in providing regional connectivity and connecting mining and key production centers to ports, Mozambique’s connectivity among urban and economic clusters is quite limited, lacking linkages that connect

COAL INSIGHTS 63 APRIL 2012

INTERNATIONAL parallel corridors to each other. With the exception of the recently finalized north-south National Road N1, the country has no (or very limited) connection among the west-east corridors, and developing full connectivity would require sustained and enormous investments over decades, with the likely participation of the private sector and nontraditional financiers. Additionally, rural population accessibility to domestic (and eventually international) markets is an enormous challenge, and lags behind what is observed in the region. Finally, maintaining the rapidly expanding road and rail network is an enormous hurdle to overcome, institutionally and financially, as the size of the network seems to overshadow the capacity of the country to provide funds for its maintenance. Around two-thirds of total infrastructure spending is investment. Transport absorbs the largest share of that spending and water, information and communication technology (ICT) and power represents similar level of spending. The public sector (through taxes and user fees) and official development assistance are the largest source of investment, followed distantly by private funds. The areas around Beira, Zambezi Valley, Nacala, and Limpopo—all covered by the railroad corridors—see their economic potential powered by complementarities with the economies of landlocked neighbors (Zimbabwe, Zambia, and Malawi) whose closest and natural ports are Beira, Maputo, and to a lesser extent Nacala. Over the past years, Mozambique has made a big effort to capitalise on these geographic advantages, integrating different transport modes within the country and with neighboring countries. The central and south railway lines depart from the Beira and Maputo ports, respectively, and connect with a network of primary and secondary roads that extend to Malawi, Zimbabwe, and South Africa. And the recent construction of a new terminal building in the Maputo Airport expended its passenger and cargo capacity. Aligning resource availability and funding options for road maintenance with the extension of the network and the existing traffic along with Improving rural connectivity and the quality of rural roads is a big challenge faced in the country’s infrastructural development. This apart other challenges include meeting increasing demand due to growing trade with neighboring countries and significant increase in domestic coal production, systematically maintaining the existing infrastructure, recovering the Machipanda line, taking care of the enormous rehabilitation backlog and completing

the Moatize-Nacala corridor, which is now missing 200 km. Guaranteeing that Beira port works at its fullest capacity along with Implementing a routine dredging practice is a major hurdle faced while developing port infrastructure. Developing the Nacala port in a competitive fashion to be able not only to handle the increased mineral production but also to attract traffic now going to neighboring countries is another challenge. Power infrastructure Further, increasing access to energy and improving the financial sustainability of the sector and taking advantage of the opportunities that power trade offers to the country are bother factors that should be taken care of. Despite the comparative robustness of its grid, Mozambican access to electricity is very low. Given the very low electrification rate, Mozambique has much to benefit from expanding transmission and distribution beyond main economic centres to better reach other pockets, in particular in the northern part of the country. Another challenge faced by Mozambique’s power sector is the financial health of EDM which is undermined by tariffs that don’t allow for cost recovery. At 7.5 cents per kilowatt-hour (kWh), Mozambique has some of the lowest power tariffs in Africa. Tariffs allow for recovery of routine expenses but impose an implicit subsidy to capital. Thus, tariffs are capturing only about 80 percent of historic costs, and the power sector today is living on myopic tariffs that free-ride on the investments of the past without making provision for the investments of the future. Coal mining requires large amounts of water. Hence, as for water resources, the country’s enormous potential has been only partially tapped. The main challenge is how to handle the wide range of conflicting water uses within an environmentally conscious framework. Management of national water resources should be done so as to increase the yield from existing and planned dams to augment water supply. Extending the storage and flood infrastructure to diminish the impacts of hydrological variability and increasing the efficiency of water utilities seem to a major challenge. Mozambique needs to invest in its water-resources infrastructure. In the southern part of the country, further development of the Incomati and Umbeluzi basins is required to face the increasing water demand from the greater Maputo area. In order to move ahead with important investments in water storage, Mozambique also needs to make further progress with integrated river basin planning and investment

For Classified Advertisements contact Sumit Jalan, +91 91633 48243 or sumit.jalan@mjunction.in

COAL INSIGHTS 64 APRIL 2012

INTERNATIONAL

Zimbabwe needs exploration drive in coal Coal Insights Bureau

oal mining in Zimbabwe has to be driven by major exploration efforts followed by exports. In fact, though the country is endowed with world class coal deposits and has one of the largest deposits in Africa, the deposits are under explored. Therefore, investing companies need to put in exploration efforts first and may subsequently export the material to major coal consuming nations. Export opportunities are available in the off-shore markets especially in India and China. As per a presentation by the managing director of Hwange Colliery Company Ltd (HCCL), F. Moyo, Zimbabwe is well endowed with world class coal deposits of thermal, industrial and coking coal and the government is taking measures to bring about improvement in the coal sector. Coal mining in the country is de-regulated as opposed to the past when coal mining licences were only issued to a few companies. Currently coal producing companies include Hwange Colliery, Makomo Resources and WK in the North, with Simbi Steelmakers (at Sangwe) and Firmo (at Tuli) in the South. Moyo points out that activity is focused on the northern coalfields which are more accessible and better known, where over 20 licences have been recently issued. However, contrary to some reports, none of the above companies, except Hwange Colliery, have bankable reserves yet. The Hwange coal deposit supplies approximately 80 to 85 percent of the Zimbabwean market with most of it coming from the Hwange Colliery Operations. In spite of a lot of advantages, Zimbabwe lags behind in the aspects of cost of production and transport which are not at a competitive advantage compared to its global counterparts. This situation has to change if Zimbabwean coal is to be competitively placed in the international market, he observes.

bearing areas yet to be explored which are currently lying as a dormant potential. This will lead to higher exports. To date only the Hwange Coal deposit is explored to sufficient level for resource quantification although exploration work there has only commenced recently. The rest of the deposits are known to reconnaissance level only. On the global front coking coal shortages globally are hampering steel production with global demand for coking coal projected to expand rapidly in the period 2010-2030 as a result of rapid industrialisation in BRICS countries. This would call for increase in demand for Zimbabwean coking coal. Zimbabwean coking coal has a cumulative ash maximum of 15 percent and cumulative volatile minimum content of 23.5 percent. The swelling index ranges from 1.5 to 8.0 (based on the standard ash and volatile cut-offs) while the reactive macerals range of 40 percent to 60 percent according to location and height above footwall.

Opportunities galore

Adequate infrastructure

Some of the major advantages of the Zimbabwean coal industry is easy low cost mining of comparative good quality coal with potential for CBM. The mines are centrally and strategically located in Southern African Region to reach all neighbouring countries. Also, there is availability of sound human skill base and high literacy rate in the work force and although labour laws in the country are biased towards labour, the workforce is generally peaceful. Other opportunities which may drive forward Zimbabwe’s potential for coal production and export is the country’s recovering economy along with its booming mining sector and exploration activity. The larger volume of Zimbabwean coal is under utilised and of good quality (thermal coal has ash up to 25 percent and CV of 24 to 26 Mj/kg). Investors targeting several coal

Export out of Zimbabwe

Zimbabwe has a reasonable all-weather road network and the Hwange deposit has a wide tarred road running through it. Again, energy sector in the region is growing. The Hwange coal deposit is connected to the primary power transmission system. The existing power grid has interconnectors to Mozambique, Zambia, Botswana and South Africa while work on the Katima Mulilo (Botswana-Namibia) line is in progress. Investors targeting the Power Generation Sector need to move their product through the National Power Grid. Water availability is also not a problem with the coalfields located in two major drainage systems – the Zambezi and Save- Limpopo. There is, however, need for improvement, specially with respect to road, rail, and power-lines links into the future mines to ensure efficiencies of operations.

COAL INSIGHTS 65 APRIL 2012

logistics

Coal, ore to drive sea cargo growth by 8% till 2015 Coal Insights Bureau

ea cargo has seen a dramatic growth in the last 15 years and is forecast to grow by almost 8.1 percent between 2011 and 2015. Demand for sea cargo is at an all-time high and is still growing due to increased contributions from the BRICKTIM (BRIC nations plus Korea, Turkey, Indonesia and Mexico) nations. Commodity-wise, the major drivers of sea cargo in recent years have been coal and iron ore, said a recent study by Maritime Research & Consultancy. Among the BRICKTIM nations, China and India have been the major players in this segment. China has been the gamechanger on the seaborne coal market and India is following closely. Quoting ICMW, the study said India may contribute an additional 100 million tons (mt) by 2015 and 250 mt more by 2030. Most of the increase in sea cargo happened and is expected to grow in the near future due to improvement in sea cargo in Asia. Europe, which was

Seaborne steam coal export

Source: Maritime Research & Consulting Ltd

COAL INSIGHTSâ&#x20AC;&#x201A; 66â&#x20AC;&#x201A; APRIL 2012

Logistics by 2020. This would be followed by Australia whose seaborne steam coal exports may rise to above 200 mt by then.

Seaborne import of steam coal

Ageing cargo fleet

a major contributor to sea cargo, saw its contribution to the sector dip in 2009 and is expected to remain stable at the current levels in the years to come. Japan too is likely to see a flat growth. Sea cargo growth from America and Thailand may show some improvement while that from South Korea is expected to grow rapidly by 2015. Growth in coal cargo Coal and iron ore have changed the face of the dry bulk market dramatically and with their demand continuing to grow, further improvement in the sector is expected to set in. These products alone attribute majorly to the increase in the dry bulk sector. Seaborne steam coal export which is currently around 700 mt, is expected to surge to almost 1 billion tons by 2020. As stated above, India and China would be the major contributors to this growth in coal trade. Australia, Indonesia and South Africa would continue to be the major exporters of the commodity, while Russia and Colombia would see steady growth over the years. Seaborne steam coal exports out of Indonesia has increased to above 300 mt and is forecast to skyrocket to above 400 mt Dry bulk time charter rates US$/day

Source: Maritime Research & Consulting Ltd

A lot of ships in the dry bulk fleet have grown older and this number would only rise if the general cargo ships are added to the list. Currently, more than 6,000 ships are estimated to be more than 30 years old. “However, the dwt-capacity tells another story; close to 300M dwt is younger than five years,” the report said. Also, the current order book for dry bulk vessels contains 2,392 ships of 195M dwt. Out of this, almost 55 percent is to be built in China, followed by Japan and South Korea. The construction costs for many of the ships on the market were very high and are expected to rise further in the coming years. Thus deliveries of new ship capacity may continue to be extreme. This is leading to a drastic fall in the bulker or order book for sea cargo by fleet ratio. The ratio is expected to fall further in the coming years and may come down below 20 percent. Removal of bulkers was aggressive in 2011. However, since the fleet is young and fewer ships are left to get scrapped. Hence removals are likely to drop in the coming years. However, this is forecast to result in tremendous growth of the bulk fleet until 2015, particularly this year. Despite increases in fleet, the seaborne volumes versus fleet capacity may not be such a sad story. A number of factors may be responsible for bridging the gap between the two. Notable among them may be congestion in most ports. Secondly longer sailings to countries like Brazil from the rest of the world and improving internal trade in China may all contribute to the same. Seaborne bulk transport is likely to rise to 8.9 percent per annum by 2015 while bulker fleet may see a growth of 8.1 percent per annum in the coming three years. They are currently varying between 3.5 and 4 percent per annum. As the years progress, the shipbuilding order book may actually shrink. Also, Shipbuilding prices may come under pressure. This has made shipbuilders hungry for more order books. Capacity cost for a new built vessel has also been lowered. All of this might result in demand supply gap in 2012 and beyond. Further to all this ship bunker fuel cost will lead transport cost fluctuations. Oil and oil products are parked on a high level and are expected to remain stable post 2012. This is largely due to rise in demand for oil which will most likely bring about an improvement in growth of global sea cargo. Again, ores and scrap apart from coal would be a major contributor to dry sea borne cargo which is likely to increase by 2015. Sea freight rates have been depressed especially dry bulk time charter rates. However, these are likely to rise in the near future. This is a major factor affecting global sea cargo growth and is expected to bring about growth in sea cargo in the near future.

COAL INSIGHTS 67 APRIL 2012

Logistics

Traffic handling by major ports down 1.7% in FY12 Coal Insights Bureau

he 12 major Indian ports have handled 560.15 million tons (mt) of traffic during 2011-12, 1.73 percent lower than 570.03 mt recorded during 2010-11. According to the data released by the Indian Ports Association (IPA), the country’s major ports handled a total of 27.9 mt of coking coal in 2011-12, down 4.05 percent compared with 29.08 mt handled in 2010-11. However, the movement of thermal coal through the major ports was up 16.47 percent to 50.83 mt during 2011-12 (AprilTraffic handled at major ports (*) Tentative

(in '000 tons) APRIL TO MARCH

% VARIATION

TRAFFIC

AGAINST PREV.

PORTS 1 KOLKATA Kolkata Dock System Haldia Dock Complex TOTAL: KOLKATA PARADIP VISAKHAPATNAM ENNORE CHENNAI TUTICORIN COCHIN NEW MANGALORE MORMUGAO MUMBAI JNPT KANDLA TOTAL:

2012*

2011

YEAR TRAFFIC

12233 31012 43245 54254 67420 14956 55707 28105 20091 32941 39001 56186 65746 82501 560153

12540 35005 47545 56030 68041 11009 61460 25727 17873 31550 50022 54586 64309 81880 570032

-2.45 -11.41 -9.04 -3.17 -0.91 35.85 -9.36 9.24 12.41 4.41 -22.03 2.93 2.23 0.76 -1.73

March), compared to 43.65 mt achieved in 2010-11. Movement of iron ore through the major ports showed a significant drop of 30.39 percent in 2011-12 due to restrictions imposed on mining and a hike in export duty on iron ore. The major ports together handled 60.6 mt of iron ore in 2011-12 compared to 87.06 mt handled in 2010-11. Mormugao port handled the highest volume of 29.37 mt of iron ore in 2011-12. This volume, however, was about 11.26 mt less or 27.71 percent lower than the iron ore traffic moved through the port in 2010-11. Movement of container traffic both in terms of tonnage and TEUs showed an increase in 2011-12. The major ports handled 120.22 mt of tonnage and 7.77 million TEUs in 2011-12 compared to 114.11 mt of tonnage and 7.54 mt of TEU in 2010-11. Among the major ports, Paradip port had the distinction of handling the highest volume of thermal coal of around 16.41 mt in 2011-12. Visakhapatnam port handled the highest quantity of 6.78 mt of coking coal during the period. Movement of coking coal through Paradip, Kolkata, Chennai and Mormugao ports declined during the period when compared to the corresponding period last year. Seven major ports showed positive growth in traffic handling during the April-March period of the current fiscal, while the remaining five showed negative growth on a year-on-year basis. In terms of growth, Ennore port topped the list with a record 35.85 percent increase in cargo throughput. Kandla port’s growth was lowest at about 0.76 percent during the period. In terms of traffic volume, Kandla port clinched the top rank with a cargo volume of 82.5 mt recorded for the period. The Mormugao port registered the highest decline of 22.03 percent in traffic handling during the period due to fall in iron ore export.

COAL INSIGHTS 68 APRIL 2012

Logistics

Coal handling by major Indian ports moves up in FY12 Sanjukta Ganguly

oal handling by 16 leading ports of the country moved up significantly in 2011-12 and stood at 99,955,701 tons, recording a sharp rise of 10.06 percent as compared to 90,820,495 tons of coal handled during the previous financial year (2010-11), according to a compilation by Coal Insights. Coal handling during 2009-10 stood even lower at 87,211,281 tons, the data shows. During 2011-12, the highest amount of coal was handled by Paradip port at 21,819,992 tons, showing a sharp rise of 17.76 percent as compared to 18,529,558 tons handled in 2010-11. Coal handling at the port during 2009-10 stood at 16,158,000 tons. Ennore port handled the second highest quantity of 13,110,561 tons of coal, which was higher as compared to 9,368,178 tons handled in 2010-11 and 9,278,813 tons in 2009-10. Out of the 16, the lowest amount of coal was handled at Cochin port during 2011-12. Cochin port handled only 16,000 tons for 2011-12, compared to 24,000 tons recorded in the previous fiscal year (2010-11). This increase in coal handling at various Indian ports is caused by the steady rise in demand for the fossil fuel in the country and lack of adequate supply from domestic sources. This has prompted higher imports of coal by India mainly from countries like South Africa, Indonesia, Australia and others. This figure is likely to go up further in the current fiscal (2012-13), market sources informed Coal Insights.

Coal handling in March (in tons) Port New Mangalore Cochin

Mar-12

Mar-11

612,464

217,873

50,165

95,677

Paradip

1,829,014

1,597,585

Tuticorin

711,000

531,000

Ennore

1,198,615

1,080,949

Kandla

368,433

278,802

Chennai

769,000

Mumbai

498,565

396,000

Vaizag

679,000

1,201,000

Haldia

531,569

904,252

Magdalla

681,000

691,000

Dahej

349,815

126,219

Okha

109,460

110,460

Mormugao

759,000

817,000

8,378,100

8,816,817

Porbandar

Gangavaram

Total Source: IPA

Coal handled during FY10-FY12 (in tons) Port New Mangalore Cochin Porbandar Paradip Tuticorin Ennore Kandla Gangavaram Chennai Mumbai Vaizag Haldia Magdalla Dahej Okha Mormugao Total

2009-10 2,809,639 148,000 285,374 16,158,000 5,502,876 9,278,813 3,224,247 11,786,691 4,367,000 3,745,000 11,722,000 9,314,111 2,721,160 861,816 545,554 4,741,000 87,211,281

2010-11 3,192,253 24,000 3,953,92 18,529,558 5,672,400 9,368,178 3,492,110 6,352,000 7,785,000 3,868,798 11,464,000 8,846,787 4,126,077 877,780 636,162 6,190,000 90,820,495

Source: IPA

COAL INSIGHTSâ&#x20AC;&#x201A; 69â&#x20AC;&#x201A; APRIL 2012

2011-12 4,026,274 16,000 385,292 21,819,992 8,512,137 13,110,561 4,225,227 5,426,000 3,191,000 4,320,602 9,969,000 10,460,349 4,114,504 2,651,610 778,153 6,949,000 99,955,701

Logistics

Indian Railways FY12 commodity freight revenue up 10.7% Coal Insights Bureau

ndian Railways’ revenue earnings from commodity freight moved up by 10.69 percent to `68,965.44 crore during 2011-12 from `62,299.81 crore earned during 2010-11, according to information available with Coal Insights. The commodity-wise freight traffic volume during the year increased by 5.24 percent to 969.78 million tons (mt) as compared to 921.51 mt reported for the previous year. In March 2012, the Railways’ revenue earnings stood at `7,749.94 crore while the freight traffic volume stood at 93.85 mt. The Railways earned `3,359.66 crore from transportation of 44.77 mt of coal in March 2012, 34.09 percent higher than `2,505.58 crore earned from transportation of 40.22 mt of coal in February 2012. Earlier, the company had earned `2377.11 crore from transportation of 40.58 mt of coal in March 2011. The Railways’ earnings from transportation of iron ore for exports, steel plants and other domestic uses rose to `599.79 (9.65 mt) in March 2012 from `418.72 crore (8.11 mt) in February 2012. In March 2011, Indian railways had earned `1,005.7 crore from transportation of 11.08 mt of iron ore. Earnings from transportation of cement stood at `808.01 crore (10.59 mt) in March 2012, down from `587.4 crore (9.29 mt) earned during the previous month. The earning figure stood at `654.86 crore (10.57 mt) during the corresponding month of the previous year. Earnings from transportation of foodgrains stood at `579.06 crore from transportation of 4.35 mt of foodgrains in March 2012. The figure stood at `451.06 crore (4.26 mt) in February 2012 and `410.07 (4.23 mt) in March 2011. Revenues earned from transportation of fertilizers in March 2012 was 398.74 crore (4 mt), higher than `382.84 crore (4.74 mt) reported for February 2012 and `202.56 crore (2.74 mt) earned during March 2011. Commodity

Quantity (in mt) March’11

Earning (in `crore)

March’12

March’11

March’12

Coal i) for steel plants

4.06

4.24

171.04

255.02

ii) for washeries

0.14

0.12

1.49

2.17

27.09

29.6

1636.6

2305.46

iii) for thermal power houses

iv) for public use v) Total Raw material for steel plants except iron ore

9.29

10.81

567.98

797.01

40.58

44.77

2377.11

3359.66

1.23

1.61

95.48

146.77

Pig iron and finished steel i) from steel plants

2.37

2.58

288.59

420.19

ii) from other points

0.83

0.85

67.42

79.41

3.2

3.43

356.01

499.6

2.14

0.12

561.5

29.39

iii) Total Iron ore i) for export ii) for steel plants

4.18

5.57

137.62

261.12

iii) for other domestic users

4.76

3.96

306.58

309.28

iv) Total

11.08

9.65

1005.7

599.79

Cement

10.57

10.59

654.86

808.01

Foodgrains

4.23

4.35

410.07

579.06

Fertilizers

2.74

202.56

398.74

Mineral Oil (POL)

3.75

3.66

324.86

406.24

Container Service i) Domestic containers

0.92

80.86

95.23

ii) EXIM containers

2.33

2.62

207.17

226.8

iii) Total

3.25

3.62

288.03

322.03

Balance other goods

8.21

8.17

511.76

630.04

88.84

93.85

6226.44

7749.94

Total revenue earning traffic

Source: Maritime Research & Consulting Ltd and ICMW

COAL INSIGHTS 70 APRIL 2012

Logistics

Indian Railways revises freight charges Coal Insights Bureau

ndian Railways has revised its freight charges with effect from March 6, 2012, according to information available with Coal Insights. Freight charges of coal, coke and cement which fall under base class 150 have been increased as compared to the rates which were effective since December 12, 2010. However, Indian Railways has decreased the number of distance based bands as compared to the previous system. The following chart contains the current effective freight rates (w.e.f March 6, 2012) vis-à-vis the earlier rates (w.e.f December 12, 2010) of coal, coke and cement: Effective from 06.03.2012

Effective from 27.12.2010

Class 150 (including all kinds of coal, coke & cement) Distance (In km)

Freight Charges (Rs/ton)

1-100

150.2

125.1

101-125

177.2

134.70-144.20

126-150

206

153.50-171.60

151-175

230.9

180.50-197.90

176-200

258

206.40-215

201-225

283.2

223.80-232.70

226-250

310.4

241.20-258.60

251-275

337.4

267.9-286.20

276-300

364.5

295.10-303.80

301-325

389.7

312.50-321

326-350

416.1

329.7-346.80

351-375

442.2

355.70-364.50

376-400

469.2

373.40-391.10

401-425

495.9

400.10-409.20

426-450

523.1

418.10-435.90

451-475

549.3

444-80-462.60

476-500

576.8

471.60-480.60

501-550

631.2

489.90-526.10

551-600

685.1

535.10-570.90

601-650

738.6

579.90-615.50

651-700

791.9

624.30-659.90

701-750

845.3

668.70-704.40

751-800

898.2

713.30-748.50

801-850

951

770.60-792.50

851-900

1003.4

814.40-836.10

901-950

1055.9

858-879.90

951-1000

1108.1

901.70-923.40

1001-1100

1214.3

945.50-1011.90

1101-1200

1320.2

1034.10-1100.10

1201-1300

1425.8

1122.20-1188.20

1301-1400

1530.9

1210.10-1275.80

1401-1500

1635.9

1297.70-1363.20

1501-1750

1871.4

1383.20-1559.60

1751-2000

2052.6

1578.30-1710.50

2001-2500

2331.8

1722.60-1943.10

2501-3000

2625.6

1955.70-2188.10

3001-3500

2902.7

2199.90-2418.90

*A few price bands contain nearest approximate values as exact values are not currently available.

COAL INSIGHTS 71 APRIL 2012

ANNEXURE Installed capacity of coal washeries in India as on 31.03.2009 and 31.03.2010 Sl. No.

Washery & Operator

State of location

Capacity (mtpa) 31.03.2009

31.03.2010

Coking Coal 1

Dudga II, CIL

Jharkhand

Bhojudih, CIL

West Bengal

1.7

Patherdih, CIL

Jharkhand

1.6

Moonidih, CIL

Jharkhand

1.6

Sudamdih, CIL

Jharkhand

1.6

Mahuda, CIL

Jharkhand

0.63

7 Kathara, CIL

Jharkhand

Swang, CIL

Jharkhand

0.75

Rajrappa, CIL

Jharkhand

Kedia, CIL

Jharkhand

2.6

Nandan, CIL

Madhya Pradesh

1.2

19.68

(A) CIL 12

Durgapur, SAIL

West Bengal

1.5

DCOP, DPL

West Bengal

1.35

Chasnala, IISCO

Jharkhand

2.04

1.5

Jamadoba, TISCO

Jharkhand

0.9

West Bokaro II, TISCO

Jharkhand

1.8

West Bokaro III, TISCO

Jharkhand

2.1

Bhelatand

Jharkhand

0.86

(B) PSU & Pvt

10.55

10.01

Total (A+B)

30.23

29.69

Non-Coking Coal 1

Dudga I, CIL

Jharkhand

2.5

Madhuban, CIL

Jharkhand

2.5

Gidi, CIL

Jharkhand

2.5

Piparwar, CIL

Jharkhand

6.5

Kargali, CIL

Jharkhand

2.72

Bina, CIL

Uttar Pradesh

4.5

21.22

(A) CIL 7

Dipka, Aryan Coal Beneficiation Pvt Ltd

Chhattisgarh

Gevra

Chhattisgarh

Panderpauni

Maharashtra

Chakabuwa, Aryan Energy Pvt Ltd.

Chhattisgarh

Indaram Aryan Coal 11 Beneficiation Pvt Ltd 12

Talcher Aryan Energy Pvt Ltd

Andhra Pradesh Orissa

0.6

Sl. No.

Washery & Operator

State of location

Capacity (mtpa) 31.03.2009

31.03.2010

Wani, Kartikay Coal Washeries Pvt Ltd

Maharashtra

2.5

Korba ST-CLICoal Wsheries Ltd

Chhattisgarh

5.2

1.1

Ramagundam , Gupta Coalfield & Washeries Ltd

Andhra Pradesh

2.4

Sasti, Gupta Coalfield & Washeries Ltd

Maharashtra

2.4

Wani, Gupta Coalfield & Washeries Ltd

Maharashtra

1.92

Umrer, Gupta Coalfield & Washeries Ltd

Maharashtra

0.75

Bhandara, Gupta Coalfield & Washeries Ltd

Maharashtra

0.75

Gondegaon, Gupta Coalfield & Washeries Ltd

Maharashtra

2.4

Majri, Gupta Coalfield & Washeries Ltd

Maharashtra

2.4

Bilaspur, Gupta Coalfield & Washeries Ltd

Chhattisgarh

3.5

Ghugus, Gupta Coalfield & Washeries Ltd

Maharashtra

2.4

Talcher, Global Coal Mining Pvt Ltd

Orissa

2.5

IB Valley, Global Coal Mining Pvt Ltd

Orissa

1.5

3.25

Ramagundam , Global Coal Mining Pvt Ltd

Andhra Pradesh

Wani, Bhatia International Limited

Maharashtra

Ghugus, Bhatia International Limited

Maharashtra

Jharsuguda, Bhatia International Limited

Orissa

1.5

Tamnar, Jindal Steel & Power Limited

Chhattisgarh

Wani, Indo Unique Flame Ltd

Maharashtra

2.4

Nagpur, Indo Unique Flame Ltd

Maharashtra

0.6

Punwat, Indo Unique Flame Ltd

Maharashtra

2.4

BLA Industries

Madhya Pradesh

0.33

(B) Private

80.45

75.1

Total (A+B)

101.67

96.32

131.9

126.01

Gross Total (Coking + Non-Coking)

Source: Office of Coal Controller, Ministry of Coal

COAL INSIGHTS 72 APRIL 2012

Power sector update List of critical thermal power stations having critical coal stock of less than 7 days (as on 31-03-2012) NORTHERN 1

Badarpur

Due to less receipt of coal from CCL during the month of March, 2012

Rajghat

Coal supply regulated by thermal power station

Mahatma Gandhi