Coal Insights - Feb 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 Design Debal Ray, Ishawer Kumar Sriwastva, Sobhan Jas For suggestions, feedback and queries, please write to coalinsights@mjunction.in

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EDITORIAL Dear Readers, There are two ancient Indian adages which go like this – “a little more of anything is never too bad,” and (at the same time), “too much of anything can never be good”. It is difficult to imagine that the creators of these sayings had the state of Indian policymaking in mind while formulating them so many centuries ago. However, standing at the present juncture, and witnessing the strange ways of governance, one cannot but find them truly representative of the times. Look at the Indian coal industry, for instance. There were too many developments crowding the February calendar. Among them all, the pick of the lot are two “roll-backs”, namely the GCV based price increase and the CEPI based moratorium. The first one has already been implemented; the latter is in the pipeline. If the shift to GCV based pricing had suddenly heated up the coal market in the wintry days of January, it has cooled down with equal ease and alacrity. Coal prices that went up by an average of 12.5 percent came down at the stroke of an order. But take heart, it may rise again, barely a month later. And who knows…! The decision of the second roll-back, ie of CEPI restirctions, was recently made public as the coal ministry released the minutes of the fifth meeting the Group of Ministers (GoM). According to the communiqué, the ministry of environment and forests (MoEF) declared that it is ready to lift CEPI restrictions (on new projects and expansion of existing ones) once the state pollution boards submit plans to mitigate pollution in heavily polluted clusters. From the MoEF declaration, it was clear the pollution in those areas is still way above the permissible limit. If it is so, one is tempted to ask, what did the MoEF achieve by the moratorium? And if it has not achieved its objective, why lift the restrictions?

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It’s where the old adages fit in. You plan a lot, then do something in haste, only to face massive opposition, and then give up showing some lame excuse, waste a lot of time in the process and go back to where you started. So much for contemporary Indian governance!

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One interesting story brought out in this issue is that of why and how the Indian steel mills (ISM) should consider forming a forum to exercise the power of collective bargaining to get better deal from coking coal miners, something that Japanese Still Mills (JSM) have been doing for quite some time now.

Copyright: All rights reserved. No part of Coal Insights can be reproduced or copied in any form or by any means without the prior permission of mjunction services limited. Please inform us if any copyright has been inadvertently infringed. Disclaimer: This document is for information purpose only. Certain information herein has been acquired from various external sources believed to be reliable. While we have taken reasonable care to compile this report, we in no way assume any responsibility for any error or discrepancy in regards to information contained herein. Readers are requested to make appropriate judgment without any prejudice or compulsion.

That apart, developments in the coal sector were more or less along the expected lines. S. Narsing Rao, the incumbent CMD of Singareni Collieries Company Ltd (SCCL), has been tipped by Public Service Enterprises Board (PSEB) to be the next chairman of Coal India Ltd (CIL). The Prime Ministers Office has asked CIL to sign FSAs with power generators. And the Indian coal consumers continue to face scarcity of the dry fuel.

Happy reading, Warm Regards Rakesh Dubey Chief Editor

Contents

06 | Cover Story

Can Indian steel mills benchmark coking coal prices? It is high time the industry realises the benefits of collective barganing.

19 | Interview

BCCL all set to achieve 30-mt production India’s only major coking coal miner achieved 23 mt production till January.

30 | Feature

GCV to boost coal testing biz in India Inspection agencies bullish about 20% growth year-on-year.

51 | Corporate

Narsing Rao tipped to become CIL chairman PSEB has recommended the SCCL chairman for the coveted post.

52 | Corporate

Adani Power hit by high coal import cost The power utility has slipped into the red in the third quarter of FY12.

COAL INSIGHTS 4 February 2012

20 Indian thermal coal imports remain subdued in Feb 22 Spot coking coal prices ease in February 23 CIL confident of FY13, 12th Plan production targets 26 ‘Captive’ woes continue, blocks to miss FY12 target 28 CIL cuts price till March, delinks prices from imports 32 Steam coal import market looking up 33 SCCL Jan coal production up 5.63% m-o-m 34 CIL unions hail NCWA IX, contract workers’ pact by April 36 Coal consumers cry for regulator as Bill hangs fire 37 MoEF to lift CEPI after report of State PCBs 38 Indian plants generate 73,396 MU power in Jan 40 PMO asks CIL to sign FSAs with power generators 42 India’s Dec cement production up 44 Sponge iron makers slash production to tide over crisis 45 Sponge iron Q3 production down 21% y-o-y 47 25 countries in mining show 50 Coal India posts 54 percent jump in Q3 profit 54 Mahagenco coming up with 13,940 MW capacity 56 Jharia coalfields must be evacuated to augment coking coal production 58 Procedure for coal block auction by competitive bidding notified 59 US power sector coal consumption to decline in 2012: EIA 61 India-Australia trade to reach Rs 2,000 billion by 2015 62 Indian Railways Apr-Jan commodity freight revenue up 9.7% 63 CIL toinvest `6,000 cr on rail infrastructure 64 Port traffic down 0.24% y-o-y in April-Jan 66 All India energy generation programme 78 Major ports through which coal arrived in India

Cover Story

Can Indian steel mills benchmark coking coal prices?

irst, some quick facts! A newly independent India produced 1 million tons (mt) of steel in 1947. Around 40 years later, in 1991, a newly liberated economy garnered a production capacity of 14 mtpa. Another 20 years on, in 2011, an emerging superpower flaunted a capacity of 78 mtpa. Finally, 10 years from now, by 2021, the steelmaking capacity in a “developed” India would reach around 200 mtpa. That is a long way to development. It may take around 70 years and 199 mtpa of steelmaking capacity for an underdeveloped nation to graduate to a developed economy. But it will also take a quantum jump in power and cement and ‘n’ number of “building” materials that lay the foundation of a developed economy; every sense of the word. And yet, most importantly, it will take abundant natural resources to fuel the

Arindam Bandyopadhyay

growth in them all. As every talk about economy boils down to the stock market, every discussion on steel, in India, boils down to iron ore. Despite being abundant in reserves, this raw material captures the imagination of any project planner, primarily due to government’s flip-flop and ad hoc policies. In comparison, and strangely enough, there is hardly any botheration about coking coal, the other major input required. Much in contrast with iron ore, India is critically short of this natural resource. The proven reserve of prime coking coal is only 4.6 billion tons, miniscule in comparison with its vast proven reserves of non-coking coal (95 billion tons). More importantly, the quality of coking coal available is quite inferior, so much so that sometimes costlier imports prove more economical.

“Let us never negotiate out of fear. But let us never fear to negotiate.” John F. Kennedy

COAL INSIGHTS 6 February 2012

Cover Story Type and category-wise coal resources of India Type of Coal

Proved

Indicated

(in million tons)

Inferred

Total

(A) Coking - Prime Coking - Medium Coking

4614.35

698.71

5313.06

12572.52

12001.32

1880.23

26454.07

- Semi-Coking

482.16

1003.29

221.68

1707.13

Sub-Total Coking

17669.03

13703.32

2101.91

33474.26

(B) Non-Coking

95738.76

12368.44

31488.11

250895.31

593.81

99.34

799.49*

1492.64

114001.60

137471.10

34389.51

285862.21

* Includes 749.92 M.T. of inferred resources established through mapping in North-Eastern region.

As of today, India’s coking coal consumption is around 55 million tons (mt), while 25 mt is the domestic production. As a result, around 30 mt or 55 percent of India’s coking coal requirement is met by imports, 85 percent of which comes from Australia. With the ambitious growth in steelmaking, coking coal demand in the country is set to jump by as much as 22 percent in FY12. By 2020, coking coal import by India’s expanding steel sector is expected to treble from current 30 mt to 90 mt, according to an estimate. This would put another feather in the cap for this now desperate-for-recognition economy. With such growth in imports, India would possibly become the largest importer of coking coal a few years on, surpassing current lead runners China and Japan. Among these two, China (despite importing around 45 to 50 mt of coking coal in 2011) is much more selfsufficient, producing the vast majority (over 500 mt) of the dry fuel from its own mines to feed its giant steel plants. Japan, in contrast, is almost entirely dependent on imports. Between the two, India should find greater resemblance to the island nation of Far East Asia. As they grow their steel output, the Indian steel mills (ISM) would increasingly face the problem of import dependence for coking coal procurement. But whether they will take a lesson from their Japanese counterparts – the well-knit Japanese Steel Mills (JSM) – in

Source: Geological Survey of India

turning their weakness into strength, and dictating terms in international price benchmarking, is a matter to wonder about. Apparently, the India Inc. seldom displays the spirit of unity barring their fight against government policies. This is quite unlike the Chinese or Japanese firms that on numerous occasions have made joint moves in matters of national interest. But in the age of globalisation, such a lacklustre approach from Indian corporates may cost not only national interest, but more importantly, individual bottomlines! The Japanese model

Japan, the world’s second largest steelmaker after China, produced around 107.6 mt of steel in 2011. This, of course, is way below China’s 695.5 mt of steel production, but the JSM is revered for two reasons – first, the quality of steel produced by the country; and second, the collective bargaining power that sets the benchmark for coking coal prices internationally. As of 2011, Japan’s total coal imports were 175.2 mt, a shed below China’s 182.4 mt. Japanese coal imports dropped by 5.1 percent, in line with the fall in its steel output, in the aftermath of the tsunami strike and nuclear disaster. On the contrary, China witnessed a 10.8 percent rise in coal imports, again keeping with the trend in its steel output. Of the total coal imports by Japan, coking coal accounted for around 74 mt. This, however, was Japan’s coking coal imports by source (December 2011) higher than China’s import of 45 to 50 (in tons) mt, making Japan the largest importer of coking coal in the world. The majority Country TD Dec Dec Nov Nov M/M Yr/Yr YTD* YTD TD (Yr/Yr %) of Japan’s coking coal import is sourced Name Tons $/Tons Tons $/Tons % % Tons $/Ton Tons from Australia. Lately, Indonesia has also started figuring in the country’s China 77,351 171.74 23,973 178.00 222.7 6.8 1,098,188 251.31 82.2 coking coal import basket. Indonesia 1,145,693 136.19 1,444,516 150.04 -20.7 -17.0 14,655,845 133.35 -18.4 The collective influence of JSM Russia 141,643 214.63 204,243 255.27 -30.6 0.7 2,527,126 249.75 10.0 on coking coal price dates back to the Canada 672,571 300.59 429,324 287.53 56.7 -18.4 7,344,661 274.40 -14.2 1980s. Leveraging on Japan’s dominant USA 362,264 319.31 682,146 294.51 -46.9 36.1 5,725,355 268.03 111.9 position in the regional coal market Australia 2,577,034 244.27 3,784,261 263.13 -31.9 -33.5 36,737,577 246.97 -16.5 and the relative importance of coal Total 5,141,958 231.98 6,568,463 242.56 -21.7 -21.6 68,644,785 227.74 -10.5 in Australia’s export basket, the JSM * Japanese fiscal year runs from April to March started exerting influence on coal Source: Japan’s customs department, ministry of finance pricing arrangements. COAL INSIGHTS 8 February 2012

Cover Story According to the Australian Bureau of Agricultural and Resource Economics** (ABARE), from the mid 1980s, “Coking coal prices paid by Japanese steel mills, and broadly followed by Asian steel mills more generally, were based on the Japanese benchmark pricing system. Under this system, coking coals were grouped and priced by coal category, where coal categories included hard, soft and semisoft coking coal. The absolute price of a coal brand within a given coal category was negotiated relative to the benchmark coal with known quality characteristics. After Japanese fiscal year (JFY) 1994, the soft coking coal category was merged into the traditionally lower priced semisoft coking coal category.” In JFY1996, Japan replaced the benchmark pricing system for coking coals with the ‘fair treatment’ pricing system “whereby, it was argued, each coal brand would be valued according to the quality requirements of specific Japanese steel mills. Under this arrangement, however, coal prices and other contract details would remain confidential. The fair treatment system was introduced after substantial coking coal price increases in the JFY1995 negotiations, following several years in which coking coal prices were consistently reduced in real terms.” The 1996 negotiation came at a time when Australia – then the world’s largest coal exporter, an honour now wrested by Indonesia – accounted for around 29 percent of world coal exports, and Japan – the then world’s largest coal importer, replaced by China in 2011 – lifted 26 percent of global coal exports. While ABARE researchers alleged lack of transparency in the coal market and called for export diversification strategy for better price realisation, JSM was focused on extracting maximum advantage from its dominant market position. And it was not restricted to coking coal alone. In March 2009, Japan forced Australian coal producers to take a 44 percent cut in thermal coal contract, in the first major price deal that year. This happened when Rio Tinto and Australia’s biggest thermal coal exporter, Xstrata, settled thermal coal prices at $70 to $72 a ton with Japan’s Chubu Electric. The move, according to some estimates, represented a $5 billion hit to the exporting country’s national export revenues. In fact, thermal coal is Australia’s third largest export earner after coking coal and iron ore. Japan, in this case, took advantage of reports on a slowdown in the Chinese economy. And it was not only with Australia. In the post-earthquake and tsunami period, Japan coal buyers drove hard bargains in China as well, dragging feet to agree on new deals and thus clinching “soft” prices. India’s compulsions What if Indian steel mills choose not to toe the Japanese line? What if they prefer to stay comfortable within their own backyards, and follow benchmark prices set by JSM for all time to come? Well, if nothing else there could be a significant loss of potential benefits, industry sources suggest.

Jharia coalfields of BCCL

As of today, all of the major Indian steelmakers – SAIL, JSW, RINL, Tata Steel, JSPL, Essar – procure some part or their entire requirement of coking coal from overseas miners. Only the integrated steel plants – such as SAIL and RINL – get some portion from Bharat Coking Coal Ltd (BCCL), the only major producer of coking coal in India. Tata Steel is a notable exception, having acquired coking coal mines (through joint ventures) in Australia (Bowen Basin in Central Queensland) and Mozambique (Benga Coal Project). The company mostly sources the fuel from its own overseas operations for its steel plants in Europe, Asia and elsewhere. This, however, remains a rarity in the Indian steel vertical. Except for very few players – that includes coke maker Gujarat NRE Coke Ltd – acquisition of coking coal mines have not been on the radar of the Indian corporate entities. Nevertheless, almost all the major Indian steelmakers have embarked on very aggressive expansion plans to increase installed capacity. SAIL has aimed to increase its annual hot metal production capacity from the current 13.8 mt to 24 mt by FY13. Accordingly, the company’s coking coal import could increase from current 13 to 14 mt to 21 mt by the next few years. Similarly, the annual coal consumption of JSW, the country’s largest private sector steelmaker, will reportedly double from current 7.4 mt to 14 mt by next two years. Even if the Indian steel sector fails to achieve the targeted 10 percent production growth annually, coking coal consumption by all the major steel companies would grow immensely by 2020. SAIL has targeted to have a capacity of 60 mt by that year. RINL, another public sector unit, has chalked out an expansion from current 6.3 mtpa to 20 mtpa by 2020. JSW, on its part, has planned 34 mtpa production by then, from 14.3 as of March 2011. Most of this expansion would be undertaken through Blast Furnace/Basic Oxygen Furnace (BOF) route, which require coking coal as primary raw material. Attempts are being made by a few companies to adopt the Corex/Finex technology, whereby thermal coal can be directly used for ore reduction and melting work. But the initial investment

** ‘Australia’s coking coal exports to Japan’ by Anthony Swan, Sally Thorpe and Lindsay Hogan

COAL INSIGHTS 10 February 2012

Cover Story requirement is substantial and there is significant technology barrier in terms of patent rights. As a result, such prolific expansion in India’s steel making capacity cannot but be achieved without a huge surge in coking coal imports. As estimated by Mark Pervan, Head of commodity research at the Australia and New Zealand Banking Group (ANZ), India may triple coking coal imports as early as 2015. He estimates that India’s coking coal imports will go up from current 30 mt to 90 mt by 2015 surpassing Chinese coking coal imports. By comparison, China’s coking coal imports may be at most 70 mt by 2015. “I think India will become a bigger importer than Japan and China, the current leaders in importing coking coal,” Pervan was quoted as saying. While ANZ estimate may seem to be a little on the higher side, another estimate by Merlintrade & Consultancy Ltd put India’s coking coal imports at 90 mt in 2020. Going forward, there will be two factors that may compel the Indian steelmakers to look for changes in their procurement strategies. Firstly, the availability may become a concern, and secondly, the pricing issue may crop up with increased global demand – the second factor essentially being an upshot of the former.

expansion, and Japan’s consumption does not come down dramatically, the share of these three countries may go up further. On the supply side, Australia would continue to dominate the market with export of 255 mt in 2020, with a share of 61 percent, same as in 2010. While new suppliers like Mongolia, which has started feeding the Chinese market, would come up in due course, Australia’s domination would hardly wane. US, on the other hand, is likely to see a drop in exports; this however would not impact the Indian companies which do not receive much of the material from that country. Top met coal seaborne exporters (in mt) Country Australia

Aerial view of Gujarat NRE colliery in New South Wales

2009

2010

2020

134.3

130.0

158.8

255.0

35.3

29.9

47.8

25.0

Canada

25.4

20.1

27.0

50.0

Others

25.6

22.5

30.5

85.0*

220.6

202.5

264.1

415.0

Total

*Including Colombia, Russia, Indonesia, Mongolia, New Zealand and Mozambique

Global supply to tighten Currently, the coking coal market is ooverwhelmingly dominated by mining giants including BHP, Walter Resources, Peabody, Massey, Banpu, Xstrata, Yanzhou, Glencore, Anglo, Arch, Rio, James River. The major supplier countries are Australia, US and Canada. The global trade of coking coal stood at around 250 mt in 2011. The big three importers – China, Japan and India – together accounted for around 155 mt or 62 percent of this market. As estimated by Merlintrade & Consultancy, total seaborne trade would increase to around 415 mt by 2020, of which the top three importers – India, China and Japan – would claim a share of 271 mt or 65 percent. This, however, may be a conservative estimate. If India can achieve its planned

2008

Top seaborne met coal importers (in mt) Country Japan

2008

2009

2010

2020

66.5

52.5

62.6

71.0

China

6.9

37.0

53.0

110.0

India

26.8

37.2

90.0

South Korea

21.9

15.0

18.4

38.0

Brazil

17.9

15.0

18.4

38.0

Others

81.0

51.0

66.3

75.0

221.0

202.0

260.7

415.0

Total

Source: Merlintrade & Consultancy Ltd

In coming years, experts say, the demand boom from China and India would lead to a demand-supply gap in global trade of coking coal. This is particularly feared for premium quality coking coal market, where there will be not enough resource to supply. The share of high quality coking coal, in countries having significant coal deposits, is less than 1 percent of proven reserves. The requirement however is much above that percentage. Also, there would be limited new production from countries like Mozambique, Indonesia and Mongolia, at least until 201516. US may have already reached the stage of decline and is expected to see steady fall in exports, going forward. Canada may emerge as a bigger player, but Australia’s shipping constraints would pose a threat. A major factor leading to tightened supply scenario could be the fast depletion of China’s own reserves. Coking coal

COAL INSIGHTS 12 February 2012

Cover Story reserves comprise about 20 percent of the country’s total coal reserves, but in terms of production, its share is higher than that. According to industry reports, the thick coal seams in Shanxi coal mine is already showing significant thinning. If the country decides to conserve its own resources for future, there would be massive pressure on the global market. This could be a likely scenario; given that the country’s coking coal import has increased eight-fold in a gap of two years (2008-10). The tightening of supply would intensify competition among the mining companies for tapping new sources. The recent fierce competition among mining giants for long term rights of Mongolia’s Tolgoi coal mine is a case in point. The aggressive bidding for properties coupled with growing supply gap would invariably lead to pricing pressure for this vital raw material.

Forecasts on coking coal prices vary consirdably among market analysts ($/ton)

Pricing implications Coking coal prices have shown a significant uptrend over the last seven years with periodic jerks caused by natural disasters of global economic crises. From the level of $130 per ton fob in 2005, coking coal prices have increased to around $230 per ton fob as of now. In between, there was a slight downtrend in 2006 followed by a sharp increase in 2008 and then again in 2011. The latest of these spikes was caused by the Queensland floods. The consequent production loss had demonstrated how much such unforeseen supply disruptions can impact prices in the international market. In a matter of a few months, coking coal contract prices had shot up to $320-325 per ton fob Australia in early 2011 from the level of $230 per ton fob. Mid-term projections for coking coal prices vary widely, starting from a firming up of prices to $350 per ton fob to a slide to below $200 per ton fob level by 2015. There however is little doubt over an upward movement in the long term. As for the Indian buyers, average imported coking coal price has shown a 42 percent increase over the last decade. However, the periodic spike during 2008 showed a much greater impact as prices increased to as much as $460 per ton cif India in August 2008 from the level of $150 per ton cif a year ago. While prices receded to $180 per ton cif in December

Source: Merlintrade & Consultancy

2008, there has been a steady increase ever since, barring the modest corrections in early 2011. In the international price contracts, a recent major development has been the shift by Australian miners to quarterly contract with JSM from annual contracts. Currently, Australia has finalised the price of $235 per ton for the current quarter. Going forward, industry sources said, pricing of coking coal might get changed to monthly basis from the present quarterly system. “The shift from annual contract to quarterly contract has already made prices more volatile in nature. Further shift to monthly contract will increase the volatility factor even more,” an industry analyst said. The tightening of supply and increased price volatility of coking coal in the international market would in turn impact the production cost of steelmakers. Given other factors, steel product prices show remarkable overlapping with movements in hard coking coal prices. Depending on the prevailing steel demand scenario, this movement in coking coal prices would affect their margins in varied degrees.

Average coking coal price ($/ton) Hard coking coal price

500

460

450 400

360

PRICE IN US$

350 300

265

250

230 200

180

190

180

150

140

245

255

180

150

100 50 0 2001

2005

2006

2007

Aug-08

Dec-08

2009

Jan-10

Nov-10

Jan-11

Jun-11

Jan-12

YEAR CIF INDIA

Source: Ennore Coke

Source: resource-net.com

COAL INSIGHTS 14 February 2012

Cover Story Spot hot rolled coil (band) price vs hard coking coal settlement prices

Source: Merlintrade & Consultancy

Challenges for coke makers The expected tightening in coking coal market would also affect another intermediary segment of the Indian steelmaking vertical, namely the Indian coke makers. Currently, coke plants in India have installed capacity close to 30 mt. Integrated steel plants have their coke making capacities, estimated at 19 mt. Secondary steel producers have captive installed capacity of 4 mt, while merchant cokeries have the remaining installed capacity of 7.2 mt. As for merchant cookeries, the average capacity is around 30,000 tons per annum or below. Of the total capacity of 7.2 mt, around 5.2 mt comes through small/tiny coke plants. The majority of Indian coke plants are spread in clusters around Orissa, Dhanbad and Gujarat. The coke making segment faces numerous challenges. Although current installed capacities are 7.2 mt, output from these plants is always around 2-2.5 mt, said Ganesan Natarajan, Whole Time Director and President, Ennore Coke Ltd. “Coking coal is the key challenge because of the size and inventory,” he said. Any spike in coking coal price invariably

Benefits of a conglomerate Keeping in view the emerging scenario in the global coking coal market – the likely tightening of supply, upward pressure on prices, unavailability of too many blocks to target acquisition, and above all the unavoidable expansion in steel output – the idea of joining forces to exert market influence is not a bad idea, industry sources said. However, the doubt remains if the Indian companies can put up a show of solidarity to extract the benefits of joining forces. As of today, none of the major steelmakers seems to be forthcoming about such a united approach. While the country’s coking coal imports may not be very substantial today, such a conglomeration will be a great tool for negotiation, going forward. A bilateral negotiation with Australia may bring significant cost advantage for the Indian steel industry in the not so distant future, say 2020, when the former would have nearly 20 percent share of global imports and over 35 percent share of Australian exports. Coke vs coking coal ($/ton)

Integrated steel plants with captive coke making plant (mt) RINL 2.50

leads to an upward momentum in coke prices. For instance, during August 2008, when coking coal prices touched $460 per ton cif, coke prices had shot up to $750 per ton from $350 per ton a year ago. In line with the increase in coking coal prices from $180 per ton cif India to $255 per ton cif India over the last 10 years (2011 to January, 2012), coke prices have jumped to from $ 300 per ton $440 per ton. Along with price increases, the availability is also becoming a concern. Deficit of met coke in expected to rise to 28 mt in 2015 from 12 mt in 2009-10, Natarajan said. “The Indian steel industry is currently facing huge challenge to meet their coke requirements. Most of the integrated steel plants are already increasing the coke making capacities, but not equivalent to the steel capacity increase. Additionally, Chinese export of coke is not happening from 2009,” he said. Also, the logistics constraints pose a major concern for the segment. Needless to mention, the challenges would become only steeper if corrective measures are not taken at the earliest.

800

750

700

Bokaro 2.50

600 520

500

460

470 420

400 300

350

320

350

360

300

Durgapur 1.30

260 180

200

440

430

190 195 140

150

180

245

265

255

205

100

TATA Steel 3.00

IISCO 0.60 Bokaro

Durgapur

Source: Ennore Coke

Bhilai 2.60

Rourkela 1.20 Bhilai

Rourkela

IISCO

TATA Steel

2001 2005 2006 2007 Aug- Dec- 2009 Jan Feb Nov- Jan- Apr- Jan08 08 2010 2010 10 11 11 12

YEAR COKE PRICE

RINL

Source: Ennore Coke

COAL INSIGHTS 16 February 2012

C.COAL PRICE

Cover Story Industry sources, however, point out that benchmarking prices may not be a feasible proposition, but a combined approach would definitely deliver goods. “A cartel or conglomerate cannot dictate price because benchmark prices will remain fixed. What it can do is only dictate better terms and conditions for procurement of coking coal from leading miners. For example, today benchmark contract price for January-March quarter is $235 per ton, but people on the sidelines are signing deals at $210 or $215 or $200 and here this cartel can play a crucial role in negotiating attractive prices,” said Natarajan. Contrary to popular conjecture, industry sources said, it is not only small buyers, but also the big players who will benefit from this conglomerate approach. Sometimes it happens so that a buyer with good connections can negotiate at lower price and those not having not good connections are forced to buy at slightly higher price. “If the conglomerate is formed, that thing will not happen and whether the buyer is big or small, having good contacts or not, will get the same price. Today SAIL or Tata Steel or MMTC, whoever, they are not getting at cheaper price as they are getting at benchmark prices,” they said. But that is not all. A conglomerate would not only fetch price advantages, but may also help negotiate a better term. “For instance,” said Natarajan, “today the contract price is $235 per ton and it is falling. Now what will happen is I have taken exposure at $235 and the price fell to $210 or $205. This $30 is not ordinary change because that will have impact of around $50 a ton in coke making….Now here the conglomerate will play a critical role by negotiating to defer the deliveries.” Right now only big buyers have this advantage of deferring deliveries if they have contracted at a higher price and then the spot prices have fallen. If there is a conglomerate, everyone will get the benefit of same terms and conditions. Such collective negotiation would not only help coking coal procurement, but that of thermal coal as well, from Australia. This is so because after 2013, Indonesian coal prices may go up, as the government is planning to restrict export of cheaper grade of coal and fix a benchmark price for its exports. In such circumstances, Australia will become an automatic choice for thermal coal procurement. “Not only coal, today people are talking about importing iron ore as well from Australia. Not only this, companies like NMDC have already acquired iron ore mines in Australia and there have been many cases of Indian companies acquiring coal mines in that country,” the sources said. Most of the iron ore mines in Australia have low grades of iron ore, but they do high amount of concentrates after washing in the range of 68-70% Fe. Overall, the volume of imports from Australia, including iron ore and thermal coal, will be a little too voluminous. The benefits, therefore, of a combined approach would be huge, and the potential losses equally significant, they said. Only if the India Inc. wakes up to the threat and the opportunity! COAL INSIGHTS 18 February 2012

INTERVIEW

BCCL all set to achieve 30-mt production Arindam Bandyopadhyay Bharat Coking Coal Limited (BCCL), a subsidiary of Coal India Ltd with its headquarters in Dhanbad, is operating coking coal mines in Jharia and Raniganj Coalfields. The company, which was taken over by the government in October 1971, is the major producer of prime coking coal (raw and washed) in India. In an exclusiveinterview to Coal Insights, CMD of BCCL, T.K. Lahiry, said the company is targeting a production of 30.2 million tons (mt) in 201112. With the existing capacity of 2 mtpa, BCCL will also soon be in a position to supply 12 mtpa of washed coal to the steel plants.

Excerpts: What is the current production scenario in BCCL? What is your yearly target for FY12? Do you find it achievable? The production target for the current fiscal (2011-12) is 30.2 million tons (mt). We think it is achievable. We have already produced 23.23 mt till January 2012. The balance target, although difficult, is achievable. BCCL is an important source for coking coal in the country. What are your views and outlook on the coking coal market in India? There has always been a demand-supply gap in coking coal in India. With the finalisation of tenders for construction of new coking coal washeries at BCCL, the raw coking coal production can further be enhanced. Raw coking coal production will increase manifold on execution of Master Plan in the next 10 years. With the commissioning of new washeries, washed coking coal production will also increase manifold, thereby reducing the demand-supply gap. We hope that dependence on import of coking coal by the Indian steel sector will reduce making them more viable. Do you have any plan to introduce new coking coal projects in the future? Yes, we do have a number of projects at the planning stage. The future coking coal projects will mainly be from the implementation projects of Master Plan and new MDO concept based underground (UG) projects like Madhuband, Moonidih, Kapuria, among others. What plans do you have to increase the supply of washed coking coal? What steps have been taken by BCCL to set up new washeries? Out of 20 washeries to be set up in Coal India Ltd (CIL), BCCL

has been entrusted to set up 6 washeries of 18.6 million tons per annum (mtpa) capacity. Out of these six, tenders for two, namely Madhuband and Patherdih, has been finalised. EMP clearance has been obtained. The construction is expected to be completed within oneand-a-half years. The tender for the third one, Dugdha, is in the final stage. With the addition of new washeries, around 20 mt of raw coking coal will be required as input and the expected quantity of washed coking coal will be around 10 mt. With the existing capacity of 2 mtpa, BCCL will be in a position to supply 12 mtpa to the steel plants. Additionally, BCCL has tied up with different integrated steel plants (ISPs) for raw coking coal supply on year to year MoU basis. This will further enhance the availability of washed coking coal and reduce the uncertainty of steel sector as far as import of coking coal is concerned. Your MoUs with Indian steelmakers on coking coal prices ended in March 2011. Has there been any revision in prices thereafter? Do you have any plan to command international parity price for supplies to steel makers, going forward? Memoradum of undesratnding (MoU) on year to year basis has been concluded. As for commanding international parity price for domestic coal, at this stage we can only say that we are moving towards that direction. You were planning to introduce Rapid Loading System to speed up despatches. What is the status of the plan? The work order for 5 mtpa Rapid Loading System at Mahespur has been issued. As per work order, the job is to be completed in three years, but we are trying to expedite things. We intend to finish the work within the a period of two years.

COAL INSIGHTS 19 February 2012

coal market fundamentals

Indian thermal coal imports remain subdued in Feb Coal Insights Bureau

he Indian thermal coal market remained subdued despite a pick-up in enquiries and a couple of deals that took place in February, according to market participants. Both consumers and traders are not bullish or ready to take a position in this market mainly because of financial problems. The power prices are too low while coal prices are still too high, with the local currency, the Rupee hovering around 4950 to the US dollar. Some sources said recent enquiries were not translating into deals. Australian thermal coal of heating value of 6,300 kcal GAR is currently being offered at around $116 per ton against $119 per ton quoted at the beginning of February. Offers of South African thermal coal of heating value of 6,000 kcal NAR firmed up by $3 per ton to $107 per ton. Offers for Indonesian coal of heating value of 5,900 kcal GAR is hovering around $93 per ton, while that of heating value of 5,000 kcal GAR is at $73 per ton. There were reports that an Indian trader bought a March Richards Bay cargo at $105 per ton. However, according to sources such deals are rare “and they don’t reflect the real market picture.” Binani Cement and Jaypee Cement are understood to have made enquiries for South African coal in the last few days while Ambuja Cement has been reported to have booked a South African cargo, but the quantity and price was not revealed.

Traders said deals are done 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 players are busy closing their financial year which ends March 31 and preparing their budget allocation for 2012-13. Coal stocks at various ports are estimated in the range of about 8 to 8.5 million tons (mt). Indian buyers are quoting prices way below market rates, citing bids of around $100 per ton fob for prompt Richards Bay cargoes against offers of around $105 per ton. South African market firm Meanwhile, the South African physical thermal coal market firmed slightly with producers covering short positions and Indian buying interest said to be buoying prompt March levels in particular. However, there did not seem to be much reason for the continued strength in Richards Bay fob prices, as these levels remain too expensive for Chinese buyers. Meanwhile, bids in China are seen at $112 per ton cfr for Colombian material and Richards Bay would have to come down to at least $99 per ton to become attractive. Sources said Chinese coal stocks were healthy with domestic prices more favourable.

Thermal coal prices Jan 2012 ($/ton) South African Coal (6000 Kcal NAR)

Australian Thermal coal (6300 GAR)

Indonesian (5900 Kcal GAR)

Indonesian (5000 Kcal/GAR)

Freight from SA to West Coast

From Indonesian to West Coast

From SA to East Coast

From Indonesia to East Coast

1-Feb

104.65

119.25

98.5

77.5

17.3

11.8

16.5

3-Feb

105.9

121

99.25

17.3

11.8

16.5

6-Feb

105.65

121.5

101

16.75

9.35

16.5

8.9

9-Feb

104

115.7

99.8

77.4

16.75

9.35

16.5

8.9

10-Feb

103.6

116.35

98.8

76.7

17.5

9.9

9.4

13-Feb

103.9

116.15

97.6

76.2

17.5

9.9

9.4

14-Feb

103.8

116.2

95.7

74.7

17.5

9.9

9.4

15-Feb

104.75

116.2

94.7

73.9

17.5

9.9

9.4

16-Feb

105.1

117

94.35

73.9

17.5

9.9

9.4

20-Feb

107.3

116.2

18.9

10.7

10.2

Date

COAL INSIGHTS 20 February 2012

coal market fundamentals The dollar had weakened against the Indian Rupee recently, making dollar-denominated coal cheaper for Indian buyers, which would explain increased buying interest. In the meantime, the dry bulk freight rates have continued to drift lower, with Colombian and Russian shipments looking favorable into the Pacific area and “altering coal trade dynamics.” The freight rates are expected to fall further with a surge in new vessel deliveries, which will be positive for demand, as lower rates encourage coal imports. In the European-delivered CIF ARA market, no deals were heard, although bid and offer indications firmed by around 50 cents. Trading sources noted that there remained an oversupply of Colombian and US coal in the market. A research note said that stockpiles at European ports remain high, with utilities still unwilling to purchase coal from ports and move it to plants despite the cold winter across Europe. It added that a continuation of the cold weather could boost spot demand, but the colder weather seems to have been factored into prices already, with the recent cold spell having little effect in bolstering levels. Indonesian prices ease On the other hand Indonesian thermal coal prices continued their recent descent as traders cited slack demand from China and India, despite a small step up in recent enquiries. China’s demand is still there but they still have enough stockpiles.

The trader said that the rainy season in Kalimantan had only affected production partially, and amid low demand, the effect on prices had been minimal. Coal India offtake commitments In the meantime, Indian state-run producer Coal India Ltd. said it wants firm off-take commitments from power companies in place before it starts importing coal to cover government proposed long-term fuel supply contracts. Last week Coal India said it had been asked by the Prime Minister’s Office to enter into the contracts with private power generators to help resolve a growing coal supply deficit in the country. Last year, CIL had to shelve a 6-mt imported coal tender after it failed to obtain firm commitments from utilities. CIL, which meets about 80 percent of the country’s coal requirement, has been falling short of targets due to factors such as environmental hurdles and land acquisitions. As a result, it signs fuel supply agreements for only 50 percent of the required quantity. The Prime Minister’s Office, after meeting heads of power companies last month, directed CIL to import coal if it is not able to meet the demand of the private sector estimated at around 50,000 MW of power capacity in the next three to four years. CIL aims to produce 464 mt in 2012-13. It has scaled down its production target for the current 2011-12 fiscal year to 440 mt.

COAL INSIGHTS 21 February 2012

coal market fundamentals

Spot coking coal prices ease in February Coal Insights Bureau

pot hard coking coal prices eased with lack of buy side interest in most part of February although there was some interest seen towards the end of the month. Towards the end of the month the indicative bids and offers pointed to stable pricing. Premium Low Vol prices slid to $215 per ton fob Australia against $217 per ton at the beginning of February. HCC 64 Mid Vol also fell by $8 per ton to $189 per ton fob in one month’s time. The semi soft variety slid by $4 per ton to $139 per ton in one month’s time. Though no new transactions were heard, premium HCC prices appeared to be somewhat supported by buy-side interest from large Chinese mills at $225-230 per ton cfr China. Purchasing managers at Chinese mills seemed happy to buy seaborne coking coal now, as there was no expectation of domestic prices dropping sharply. No new firm offers were heard from Australia, but recent numbers being asked were firmly above spot prices, as producers said supply was tight due to ongoing strikes at BHP Billiton-Mitsubishi Alliance’s Queensland mines. Activity was limited, with most traders and end-users waiting for a clear outcome to next quarter’s contract prices before acting on spot. Most sources agreed that spot demand was generally weak, with most international steel mills happy to rely on contract purchases. Traders said they would only bid $205 per ton fob at most for an Australian prime-quality low-vol because that is where talk of the lower end of the settlement is. It is predicted spot activity in the Atlantic could pick up within three weeks, as European and Brazilian mills start shopping around for April cargoes. There is a widespread expectation in the market that many steelmakers globally could increase the proportion of HCC bought on a spot basis, starting April 1. Some traders forecast that HCC prices would erode further, converging with potentially lower term contract prices, and more supply than demand in the market. There were reports that annual benchmarks had been set

Met coke import prices ease in Feb Coal Insights Bureau

et coke import prices eased in February owing to lack of buying interest from coke makers and steel mills. Till now the mills in India are faced with iron ore shortage owing to the mining ban in three districts of Karnataka and operating at lower capacity, sources said. The import prices of met coke were hovering around $366 per ton currently, down from $383 per ton at the beginning of February. 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.

for US coals for contracts from January to December 2012. These prices were close to $210-215 per ton fob for US lowvols, around $200 per ton fob for A-grade high-vol, and around $170 per ton fob for B-grade high-vol. However, there did not appear to have been any settlements signed so far for Q2 2012 contracts in Asia. 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. The market feels that traders and buyers are waiting for the Q2 benchmark prices for future course of action. The January to March 2012 benchmark price is $235 per ton fob Australia for top-quality material.

Coking coal price trend

($/ton)

HCC Peak Down fob Australia

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

1-Feb

219

3-Feb

216

Date

HCC 64 Mid Vol fob Australia

Low Vol PCI fob Australia

Semi soft coking coal rates fob Australia

Met coke price cfr India

217.5

197

152.5

142.5

383

214

195

154

144

375

6-Feb

216

214

195

152

142

376

9-Feb

215

213.5

197

153.5

144

378

10-Feb

215

213.5

197

153.5

144

375

13-Feb

215

213

196

153.5

144

375

14-Feb

217

215

195

153.5

144

372

15-Feb

219

217.5

195

153.5

143

369

16-Feb

219

217.5

195

153.5

144

369

20-Feb

217

215

189

148

139.5

366

COAL INSIGHTS 22 February 2012

feature

CIL confident of FY13, 12th Plan production targets Rakesh Dubey

he Coal India Ltd (CIL) interim chairperson Zohra Chatterji has said that she expects to achieve the production target of 440 million tons (mt) for 2011-12 and is confident that the company will achieve its target of 464 mt for 2012-13. “We have targeted to produce 566.5 mt in the business as usual scenario in the terminal year of 12th Five Year Plan (2016-17) and can produce 615 mt if we get all the necessary clearances on time,” Chatterji told Coal Insights in Kolkata on the sidelines of her first press conference as interim chairperson of the world’s largest coal producing company. She also informed that the quantity of coal to be sold

through e-auction route for non-linked consumers will be maintained at 10 percent of the total production. “We had offered around 4 million tons of coal from the quota of e-auction to power sector on as is where is basis in October 2011 when there were severe disturbances in coal supplies due to heavy rainfall, but there was very negligible offtake from it,” she added. Earlier, CIL’s former interim Chairman N.C. Jha had told Coal Insights that only about 500,000 tons of coal was lifted by power sector consumers in October 2011 against the offered quantity of 4 million tons. The power sector could not lift the coal earmarked for

COAL INSIGHTS 23 February 2012

Feature On being pointed out that CIL had been missing production targets mainly because of delays in getting environmental and forestry clearances during the last two years and the situation has not changed much, Chatterji said, “The compulsions are different now and commitment is greater on the part of the ministry of coal.” “The PMO as well as all ministries are also monitoring the progress, and things are being done on fast track. There is a sense of urgency now,” she added. On the targets for 2011-12, Chatterji said the company’s production had suffered during the second quarter (JulySeptember), but was back on track in the third quarter (October-December). “We have registered a growth of around 5 percent in January 2012 production compared with January 2011 and the trend is better even in February 2012,” she said. Coal import not focus area

Zohra Chatterji, Chairperson, Coal India Limited

e-auction as almost 80 percent of the offered quantity was meant for delivery by road and the consumers were required to make their own arrangement for lifting of coal from mine head, Jha had said. CIL’s director (finance) A.K. Sinha said, “In 2010-11, we did sell 47 million tons of coal through e-auction route and with the increase in production, the quantity of coal to be sold through e-auction would also increase.” The New Coal Distribution Policy (NCDP) announced in 2007 says that CIL should sell at least 10 percent of its total coal production through e-auction platform so that non-linked consumers can also have access to domestic coal. Incidentally, the government does not grant linkages to consumers whose requirement is less than 4000 tons per annum and as such these consumers had to depend on illegal sources of domestic coal to meet their requirement, a CIL official said. In order to streamline supplies to small and non-linked consumers, the NCDP provided for sale of up to 10 percent of total coal production through spot e-auction route in which anyone can participate. In addition, CIL conducts forward e-auction in which smaller consumers can book their quantity for entire year at slightly higher price. On CIL’s production plans, Chatterji said: “We are in active talks with the Ministry of Environment and Forest and they have assured that they will fast track the clearances.” “An additional 2 million tons of production can be immediately added with these clearances,” Chatterji said.

Chatterji said importing coal and then supplying to consumers in India is not the focus area for CIL and they are currently focusing on expanding production to bridge the gap between demand and supply of coal in the country. “The import business is not CIL’s USP, but if the situation arises, we have to import and then we will address the situation at that stage. Import is one of the ways by which the gap between demand and supply could be bridged. If the gap is too wide and we are legally bound to supply then we will explore the option. But our focus right now is to expand production,” Chatterji said. “With a coal reserve of 67 billion tons, there is lots of coal out there, and it is a question of how to mine it and get to it,” she said. Commenting on media reports that said CIL will go for import of coal, the Chairperson said, “That was stated by me on February 16 as one of options in which the gap could be bridged. It was not stated categorically that we shall import.” Chatterji, however, said the CIL’s efforts to acquire coal assets abroad will continue as by acquiring coal assets the company would be doing mining of coal, which is its core competence. Asked on the possibility of pooling of imported coal, Chatterji said, “We have not yet considered that. We have not even seriously considered import of coal. So I cannot comment on that.” “Till now we have stayed away from the business of import. We had tried a little bit earlier in the past, but we could not get firm demand from the power companies and I do not know even if now they will come up with firm demand or agree to sign up agreements to accept the import at import price,” she said. “If they (power companies) are willing to accept that

COAL INSIGHTS 24 February 2012

Feature (accepting the imported coal at import price), we could have agreed to supply imported coal and could consider supplying even now,” Chatterji said. All time high rakes in Feb Chatterji said that the company is receiving adequate number of rakes from the Indian Railways for evacuation of coal and she is confident of supplying a much higher quantity of coal to consumers in 2011-12 compared with 2010-11 even as production is unlikely to go up significantly. During the third quarter ending December 31, 2011, the company enhanced its offtake to 110 million tons (mt) against 93 mt of the second quarter of 2011 largely due to increased availability of rakes, she said. “The performance in supply of rakes in any case was good till now. It has been at an all-time high. However, given the need to make up for the production loss and increase in supplies in the previous quarter (October-December), we had made special efforts and had met the Chairman, Railway Board,” she said. Chatterji said the Railway Board chairman was able to talk to his officials to see if more rakes could be provided to CIL and how that could be provided. “So we worked out at 1012 rakes and immediately the number of rakes went up and today it stands at 197 rakes per day and we expect to go up to 205 rakes or so per day in the balance months of 2011-12,” she added.

“Even in the January-February 2012 period, there had been increased availability of rakes by 5 percent. The average availability of rakes per day has touched an all time high in February,” Chatterji said. CIL’s newly appointed director (technical) N. Kumar said consequent to higher availability of rakes, the pithead coal stock which was around 70 mt at the beginning of 2011-12 had come down to around 54 mt on the last day of third quarter (December 31, 2011). As far as production is concerned, it was 335 mt till January 2012, but despatches were at 350 mt. Despatches were higher by about 15 mt compared with production during the production and this was largely due to higher availability of rakes, Kumar said. Re-working on R&R policy In an effort to speed up land acquisition for new projects, Coal India Ltd (CIL) is re-working on its existing Relief and Rehabilitation (R&R) policy, Chatterji said. “CIL is re-working its R&R policy. We hope that this will make land acquisition much faster and we will be able to give better packages to the affected people,” she added. CIL had announced its own R&R policy about three years ago with an aim to speeding up land acquisition, but the new policy did not benefit it much and the company is now re-working the policy with an aim to making it more successful.

COAL INSIGHTS 25 February 2012

Feature

‘Captive’ woes continue, blocks to miss FY12 target Coal Insights Bureau

otwithstanding the positive trend in domestic coal production in recent months, India’s captive coal production has remained flat and is expected to miss the annual production target yet again. As per the latest data, captive production till December 2011 is hovering below the target as well as last year’s figure. Still worse, there is hardly any sign of a turnaround in the near future. Peeved at the slow development of the blocks, the coal ministry has de-allocated a number of blocks in the recent past, but the punitive actions helped little to improve the overall scenario. Neither the de-allotment nor the coal price hike seems to boost up the captive block holders, industry experts said. As of February 2012, only 29 of over 200 blocks allocated (at least once) have come to production stage. This shows net addition of three new blocks in one year. At this rate, it may take half-a-century for all these blocks to come on-stream. “Sometimes, the classical management tools just don’t work,” said a veteran mining consultant. “In this case, neither the carrot nor the stick could infuse the urgency in the block holders. But it couldn’t have, any way, because you cannot possibly drive the cart if joined before the horse,” he said. Precisely! As the latest review of the segment shows, at least 40 blocks are held up due to forest clearance, mining lease or land acquisition issues. “The government should first decide on what to do with the statutory clearances…the fault may not always be with the rule or the ruled, but may sometimes be with the ruler,” The consultant said. Captive production flat The production of coal from India’s captive coal blocks, including that of SAIL and Tata Steel, during the first nine months (April-December) of 2011-12 stood at 33.30 million tons (mt). This was much lower than the target of 42.00 mt and also below 34.00 mt produced during the corresponding period of the previous financial year. In December, production by operating mines, including 29 mines that came into operation after 1991, stood at 4.09 mt, almost flat compared with 4.07 mt produced in November, according to provisional data available with Coal Insights. The production in December was 12.42 percent lower than the target of 4.67 mt for the month and also lower by 1.21 percent compared with 4.14 mt produced in December 2010. Given that the annual production target for captive blocks (including SAIL and Tata Steel) is 56 mt, there is little possibility that these blocks would achieve the same, industry sources said. Excluding SAIL and Tata Steel, the annual production target is 36 mt, but that too looks a distant dream.

Production target up Although the captive blocks are likely to miss their FY12 target, the ministry of coal has increased production target for the same by 3.05 mt for the year 2012-13. A large number of block holders are facing problems in starting production. “The target for coal production for 2011-12 was 36.15 mt for captive coal blocks and it has been raised to 39.2 mt for 2012-13, the first year for Twelfth Plan in a meeting to review the progress of development of coal blocks allocated up to December 2011 and chaired by Additional Secretary (Coal) Zohra Chatterjee,” a ministry source said. The Additional Secretary expressed concern over the overall progress of captive coal/lignite blocks, especially for the blocks allotted prior to 2003 and 2004 and informed that demand and supply gap of domestic coal has to be reduced by supporting the increase of captive coal production from the allocated coal blocks. She also urged the State Governments to enhance their cooperative with the block allocated in order to clear the pending major milestones on time bound manner. Blocks struck due to FC Meanwhile, as many as 29 captive coal blocks of 12 PSU companies and 17 private sector companies in different states are facing major constraints in the way of achieving milestones due to pendency of forest clearance at State Forest Department as well as Ministry of Environment and Forest (MoEF) levels, a coal ministry official said. The forest clearance of all the 29 blocks is still awaited despite all blocks having environmental clearances, the official who attended the review meeting for captive coal blocks said. “The meeting suggested that with the assistance of state governments (forest department) as well as Ministry of Environment and Forest as Central level, these blocks could be able to start coal production within the assured time frame,” the official said. Blocks delayed Along with forest clearance, mining lease and land acquisition (LA) issues continue to affect the captive block owners. As revealed at the review meeting, the owners of at least 12 captive coal blocks are currently unable to start production because of lease and acquisition related issues. Of the 12 blocks spread over five states (Jharkhand, Chhattisgarh, Madhya Pradesh, Maharashtra and Odisha),

COAL INSIGHTS 26 February 2012

Feature two were allotted to PSU companies – NTPC (Pakri Barwadih) and SAIL (Chasnala), eight to private sector companies- JSPL (Gare Palma IV/6 and Utkal B1), Nalwa Sponge Iron Ltd (Gare Palma IV/6), Field Mining & Ispat Ltd (Chinor and Warora Southern Part), Chaman Metallics Ltd (Koser Dongargaon), Utkal Coal Ltd (Utkal-C), Monnet Ispat & Energy Ltd (Utkal B2), Bhusan Steel and Power Ltd (Jamkhandi); and another two (Moher and Moher Amlori Extension) to Sasan Power Ltd’s Ultra Mega Power Projects (UMPP). “These blocks in five different states have successfully completed all the major milestones, except grant of mining lease and land acquisition. Allocates are thus not being able to start coal production,” the MoC official said. For Pakri Barwadih block of NTPC, the official said that land acquisition is pending after Stage-II forest clearance was obtained even as it has possession of 600 acres of government land. The company has already appointed a Mine Developer and Operator (MDO) and built a coal handling plant (CHP). Construction of railway line and RR projects are going on in full swing along with exploration in unexplored area and the coal production from the block will be raised to 18 million tons per annum soon. As far as Sitanala block is concerned, SAIL is yet to get mining lease and acquire land, but it has formed a joint venture with Tata Steel Ltd for sharing the coal on 50:50 basis after it is mined through underground route. De-gasification is required first to develop the seam.

Five blocks to reach production in Q4 Amidst the gloomy scenario, a total of five captive coal blocks are likely to come to production stage during the fourth quarter (January-March) of 2011-12, the MoC official said. He said these blocks have completed all the milestones and the owners of these blocks have assured to commence coal production during the last quarter of current financial year. Of the five blocks, two are owned by PSU companies – WBMTDCL (Trans Damodar) and DVC (Khagra Joydev) - and three by private companies – Prism Cement Ltd (Sial Ghogri) and Topworth Urja & Metals Ltd (Marki Mangli – II and Marki Mangli – IV). The official said that WBMTDCL has obtained all the clearances, but part of land acquisition is still pending for Trans Damodar block. The company has already started Overburden (OB) removal and assured to start coal production by February. For Khagra Joydev block, DVC has assured to start production in 2011-12 even though land acquisition is pending, the official said, adding, no forest land is involved in the block, but land acquisition is the main problem even as 1500 hectares of land has already been acquired. Prism Cement has already started mining operation at Sial Ghogri block and coal will start coming out from March, the official said, adding for Marki Mangli – II and IV, Topworth Urja has got all the clearances and is ready to start mining anytime.

COAL INSIGHTS 27 February 2012

Feature

CIL cuts price till March, delinks prices from imports Coal Insights Bureau

oal India Ltd (CIL) on January 31 announced that it has revised its prices based on gross calorific value (GCV) system that came into effect from 00.00 hours of January 1, 2012 with retrospective effect (i.e. with effect from January 1) and will review the impact of the revised prices after March. “Under instruction from the government and the ministry of coal, we have reduced the prices of almost all the 17 bands of coal on January 30, but with retrospective effect. We will review the impact of the reduced prices on our revenues in the quarter January to March i.e. fourth quarter of 2011-12,” a senior official of the marketing department of the company told Coal Insights. Explaining the rationale behind reduction in prices, the official said, the company had earlier fixed the prices of 17 bands of coal based on import parity price (after like-to-like basis comparison of imported steam coal with Indian steam coal), but they have now decided to de-link their prices from imported coal. CIL had benchmarked prices of its noncoking coal to GCV from the earlier useful heat value (UHV) based gradation. The move evoked protests from users in cement and steel sectors as they found that instead of being revenue neutral the shift had led to sharp increase in prices. Coal Ministry and CIL had earlier said

anywhere between 5 and 150 percent as the company had compared the price of heat value of imported coal with that of its own coal. CIL chairman N.C. Jha, who retired on January 31, said in New Delhi that while the GCV pricing system would continue, domestic Sriprakash Jaiswal, Union Minister for coal

prices would not be linked to global rates, a move that will make coal cheaper. Jha said delinking local prices from global rates would help offset a projected 12.5 percent rise in prices. Revised mechanism

A day after CIL rolled back the hike in coal prices, Coal Minister Sriprakash Jaiswal said the new coal pricing mechanism will be reviewed after assessing the January to March quarter revenues of CIL, which produces about 80 percent of India's coal. Jaiswal said any revised mechanism N C Jha, former chairman, Coal India would be revenue-neutral for CIL. Jaiswal said the shift to GCV based that shift to GCV pricing was essentially made at the behest of the coal consumers will be “as far including the power utilities. The GCV based hike was aimed as possible a at bringing more efficient grading system. However, the huge revenue neutral opposition from the consuming sectors led to the rollback of exercise”, but the increased price. after the new At the current scenario, he said CIL will delink the rates mechanism came from international parity prices – a move aimed at reducing into effect on the prices for different grades of coal. January 1, 2012,

M S Ahluwalia, Deputy Chairman, Planning Commission

it was found that coal prices had gone up by

Low energy prices While the coal ministry and CIL assured not to link domestic

COAL INSIGHTS 28 February 2012

Feature The new and effective prices of CIL following revision New Price after revision on Jan 31, 2012 (For Power Sector) but effective from Jan 1, 2012

New Price after revision on Jan 31, 2012 (for nonpower sectors), but effective from Jan 1, 2012

S No

GCV Bands (Kcal/kg)

7000+

6700-7000

4870

6400-6700

4420

6100-6400

3970

5800-6100

2800

5500-5800

1450

1960

5200-5500

1270

1720

4900-5200

1140

1540

4600-4900

880

1180

4300-4600

780

1050

4000-4300

640

870

3700-4000

600

810

3400-3700

550

740

3100-3400

500

680

2800-3100

460

620

2500-2800

410

550

2200-2800

360

490

Indicative Grades (as per previous classification)

Price/Range as on Feb 27, 2011 (Power Sector) as per Grades and mine to mine

Price/Range as on Feb 27,2011 for nonpower sectors as per grades (mine to mine)

Change for Power Sector

Change for Other Sectors

3690

4100

730 to 1180

320 to 770

3590

3990

(-)790 to (+) 380

(-)20 to (-)1110

1050 to 1500

1300 to 1860

(-)50 to (+)450

100 to 660

790 to 1240

1110 to 1560

30 to 480

430 to 610

730 to 1020

870 to 1080

50 to 150 and in some cases (-) 240

100 to 180

570 to 610

630 to 860

30 to 70

10 to 240

350 to 700

440 to 650

150 to 200

90 to 300

Ungraded

Note: * For GCV exceeding 7000 Kcal/kg, the price shall be increase by Rs 150/- per ton over and above the price applicable for GCV band exceeding 6700 but not exceeding 7000 Kcal/Kg, for increase in GCV by every 100 Kcal/kg or part thereof. For WCL, there shall be a 10% add on over and above the price mentioned above for GCV bands not exceeding 5800 Kcal/Kg and below. All other elements of the ex-colliery delivered price as are presently applicable in terms of the last coal price notification circulated vide ref. no S & M: GM(F): Pricing: 1907 Dated 26.02.2011 will continue to remain applicable. For coal produced by the coal companies of CIL including NEC other than non-coking coal, the prices as are presently applicable in terms of the coal price notification circulated vide ref no. CIL: S&M: GM (F) Pricing 1907 dated 26.02.2011 will continue to remain applicable shown as under.

coal prices with international parity prices, Planning Commission deputy chairman Montek Singh Ahluwalia said the artificially low energy prices will be addressed in the next Five Year Plan (2012-17). He said the prices of all forms of energy in India - coal, natural gas and oil - were below global levels and needed to be priced according to the “real cost of energy”. Domestic gas prices should be aligned with international rates. Similarly,

CIL also sells coal much below international rates, he noted. This was not the first time that Ahluwalia advocated for increasing energy prices, but the utterances at the time of rollback brought to fore the lack of consensus in crucial government policies. Ahluwalia said the shift in domestic energy prices would be done gradually, implying there could be a number of such withdrawals and roll-backs during the coming years.

COAL INSIGHTS 29 February 2012

fEATURE

GCV to boost coal testing biz in India Coal Insights Bureau

ndia’s recent shift to Gross Calorific Value (GCV) based coal pricing (from Useful Heat Value or UHV based pricing) is likely to give a fillip to the coal sampling and testing business in the country. Although the initial hike and subsequent rollback in coal prices have created some uncertainty in the market, the alignment of India’s coal price fixing methods to international practices would benefit the domestic players, the sources said. “There have been increased queries in recent months,” an official of Inspectorate Griffith, a leading testing agency, told Coal Insights. “Many companies are approaching us. These include both big and small coal consumers as well as captive miners who have suddenly realised the importance of getting their coal quality verified,” he said. For instance, the Jai Balaji group and Rungta Mines have recently approached the company for sampling of coal at downloading point. “The talks are on,” he said.

Scope of testing and inspection services

♦♦ Draft surveys

♦♦ Volumetric assessments and determination of bulk density

Ash Analyser

♦♦ Loading or discharge supervision ♦♦ Sampling ♦♦ Analysis ♦♦ Size ♦♦ Moisture analysis ♦♦ Proximate analysis ♦♦ Ultimate analysis ♦♦ Calorific value ♦♦ Ash analysis including alkalies ♦♦ Ash fusion temperature ♦♦ Free swelling index ♦♦ Hardgrove grindability index ♦♦ Micum tests ♦♦ CSR / CRI analysis ♦♦ Gray King Index ♦♦ Fluidity ♦♦ Vitrinite

Source: Inspectorate Griffith

Inspectorate has also participated in the recent tender floated by Mahagenco for testing of 36 million tons (mt) of coal supplied by Singareni Collieries Company Ltd (SCCL) and Western Coalfields Ltd (WCL), the official said. “Besides, captive block holders who were given tapering linkage and are charged a premium by CIL are approaching us. These units, mostly power and sponge iron, get coal at a premium of 50 percent. With the tapering linkages drying out, these companies are likely to go for import in the near future. This is yet another set of potential customers approaching the agencies,” he said. Mitra SK, another Kolkata-based leading testing agency, however, was not so positive. The company has not been approached by any new potential domestic customer post January 1, 2012. “We do not see any major change in the scenario in the short term. However, the shift to GCV will align our pricing with the international practice. Besides, the scope for third party independent assessment of GCV, as is done for overseas cargo, will be required for domestic delivery as well,” a senior official of the company said. He said the increasing volume of imports and the domestic

COAL INSIGHTS 30 February 2012

fEATURE

Mahagenco testing agency for WCL coal by March

Coal Insights Bureau

tate-owned power utility Mahagenco is expected to appoint a coal inspection agency for sampling of coal received from Western Coalfields Ltd (WCL) by March 2012, a company official said. “The contract is likely to be finalised by March. The appointed agency will be given the mandate for sampling coal coming from WCL,” he said. The company had recently floated a tender to this end, inviting bids from coal inspection agencies and has received eight bids against the tender, the official added. In December 2011, the power utility awarded a twoyear contract to Intertek for inspection of coal received from Singareni Collieries Company Ltd (SCCL). Mahagenco procures around 40 million tons (mt) of coal per year from SCCL, WCL and other sources. It also imports around 4-5 mt of coal to meet its coal requirements.

need for GCV measurement will together drive the industry in India. “We expect the industry to grow by around 20 percent year-on-year.” Asked if the domestic agencies will be benefited, he said, “There is enough technical talent in India. There have been reports that there is not sufficient equipment (Bomb calorimeter, auto sampler etc) at present, but that can always

Bomb Calorimeter

Automatic Sulfur Analyzer

be ramped up. The domestic industry is well poised to meet the increasing requirement.” CIL offer For long, a major concern for both coal consumers and inspection agencies has been that CIL does not allow coal inspection for orders below 400,000 tons per annum. This issue was raised by the Coal Consumers Association of India (CCAI) following the GCV rollout. Lately, there has been a positive development in this regard. Following the hue and cry over the shift to GCV and the related problems, CIL has planned to consider offering third party inspection for determination of coal to be offered for sale through e-auction route. This was recently intimated by a top official of the company while responding to a proposal from a coal consumer. “I wish to agree to your proposal. As a supplier of coal I have to be more quality conscious to supply the right type of coal. Though currently we may find it a little bit difficult, but in the longer time frame, it will be more beneficial to both the parties. And I agree that third party sampling should be done before the lot of material is offered for e-auction,” the official said. The official, however, said that providing the facility will take some time. “Having a third party inspection for determining the GCV before the e-auction is done can be introduced, but it will take some time to come to that because the whole process has to be restructured accordingly,” he said. The official said in UHV system there was no incentive to coal companies or mine managers for improving the quality of coal. “In fact there was a disincentive. There was an underlying feeling that if this grade suffices then there is no initiative to improve quality,” he added. CIL has now moved to a GCV based system and if there is a quality slippage, there is a huge penalty involved. “So as a producer and manager of a colliery, one can always question why the grading has come down. And the consumer will always raise a question regarding the drop in quality even as they pay a higher price,” the official pointed out.

COAL INSIGHTS 31 February 2012

fEATURE

Steam coal import market looking up Coal Insights Bureau

fter cooling down in the first half of 2011-12, India’s demand for imported steam coal has started improving once again. The consumers are back in the market with fresh enquiries, much to the relief of the trading circle. “Enquiries are coming from everywhere as consumers are testing prices and these will soon materialise into firm orders,” a leading coal trader told Coal Insights. “In fact, fresh quantity of South African coal is not available for February delivery as it has already been sold out not only to Indian buyers, but Chinese companies as well. Offers are not coming even for bids of $110/ton fob for South African coal for February delivery,” he claimed early this month. There was improvement in overall sentiment as the rupee appreciated considerably over US Dollar during the recent weeks, the trader said. The US Dollar is currently available at around `50 for one US Dollar as against `53 for a Dollar very recently. “The appreciation in the rupee will also help a large number of consumers as Letters of Credit (LCs) opened in July-August last will be due for honour in February-March,” said another trader. “I think, steam coal prices would continue to move around current levels of $105/ton fob, with slight movement here and there, though demand will increase,” he added. Regarding coking coal, the trader said current spot prices are hovering around $225/ton, but it should come down a bit in March when negotiations for April-June quarter would be concluded. “The indicative offers for coking coal will start coming in next 5-7 days for delivery in second quarter of 2012,” he felt. India Inc. placing order Buoyed by improved business sentiment, domestic companies across the industries have started showing interest in fresh Coking and non-coking coal imports during Apr-Dec 2011 (in mt)

buying. Hindalco Industries Ltd, an Aditya Birla Group company, has floated an enquiry to procure one Indonesian coal cargo, but has not yet made up its mind on when to place the order. “We have not yet decided on when to place order. It is difficult to say at this point in time, but yes coal import is in the pipeline,” an official of the company said recently. “We will take a final decision as early as possible,” he added. Binani Industries Ltd, a Braj Binani Group company, has also initiated talks with a number of suppliers to procure at least one parcel of imported coal, an official of a coal trading company said. UltraTech Cement Ltd is believed to have placed an order for one shipment of South African coal, an industry source said. “The cement maker had placed an enquiry for 75,000 tons of imported coal for delivery at Krishnapatnam port towards end of February and is believed to have placed the order with Swiss Singapore,” the source said. Other major suppliers, including Adani Enterprises, were also in the contention, but Swiss Singapore appears to have clinched the deal on February 8, the source added. Meanwhile, India’s leading cement maker ACC and Ambuja Cement Ltd are tapping a large number of miners for direct purchase of coal from them instead of buying through traders, an official of a trading company said. “They are now directly talking with mining companies in South Africa and Indonesia and looking at finalising deals on FOB basis instead of buying from traders on cif/cfr basis,” the official said. Even the sponge iron makers, who had been going through a very rough phase, have started coming back to the imported coal market during the past three to four weeks, an official of a leading coal trader said. “There have been a large number of enquiries from sponge iron makers during the past three or four weeks and a number of orders have been placed by them. The situation was slightly different in the fourth quarter of 2011 (October-December),” the official said. He claimed that orders are now being placed by sponge iron makers based out of Orissa as well as the Raipur belt, but refused to divulge the names of buyers.

Coking coal

Non-coking coal

Total

April

3.2

6.9

10.1

May

2.1

8.0

10.1

June

2.9

7.4

10.3

July

2.5

6.7

9.2

GCV may reduce higher grade import

August

2.8

7.5

10.3

September

2.1

7.0

9.1

October

2.6

5.9

8.5

November

1.9

6.3

8.2

While the industry is showing renewed interest in imports, some analysts believe the shift to Gross Calorific Value (GCV) based pricing by Coal India Ltd (CIL) would lead to a cut in higher quality coal imports. This may be the case as the new pricing system, which creates increased number of price bands, would provide incentive for producers to increase the quality of produce. Earlier, "there was absolutely no incentive for producers to

December

2.3

6.4

8.7

Total

22.4

62.1

84.5

Source: India Coal Market Watch (ICMW)

COAL INSIGHTS 32 February 2012

fEATURE

In million tons

Growth in coal import 100 90 80 70 60 50 40 30 20 10 0 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 Coking coal

Non-coking coal

Total

improve the quality," N.C. Jha, CIL chairman who retired on January 31 said after implementing the new formula. "Now since we are going for 17 different bands of GCV, the producers will have the incentive to improve quality and move products to a higher band."

Under the earlier pricing formula, coal prices were divided into seven very broad categories, with the calorific value ranging from 600 kCal/kg to 1,100 kCal/kg. This offered hardly any incentive to produce better grades of coal. However, trade circle sources averred that raising coal prices alone will not solve India's coal shortages. Additionally, the increased prices have been rolled back due to staunch opposition from the coal consuming sectors. This would have an adverse impact on CIL’s finances as the company has already agreed to offer hefty increase in wages for its 365,000 workers, taking a hit of around `6,500 crore. The company aims to produce 464 mt of coal in 2012-13, higher than the 447 mt targeted in 2011-12. However, the higher growth in demand has seen India’s imports going up to around 114 mt in 2011-12. The import growth is likely to continue surging ahead and touch 200 mt by another five years.

SCCL Jan coal production up 5.63% m-o-m Coal Insights Bureau

he state-run Singareni Collieries Company Ltd (SCCL) produced a total of 5.78 million tons (mt) of coal in January 2012, up 5.63 percent compared with 5.47 mt produced in December 2011. Also, the January production was nearly 20 percent higher than the target of 4.83 mt set for the month. Of the total production in January 2012, 0.99 mt came from 36 underground mines and 4.79 mt from 14 open cast mines. The production target from underground mines in

January was 1.24 mt and that from opencast mines was 3.59 mt. The cumulative production during the first 10 months of 2011-12 stood at 41.04 mt, 5.81 percent lower than the target of 43.57 mt for the period and 1.16 percent lower than 41.52 mt produced during the corresponding period of 2010-11. Of the total production during the 10 months of 2011-12, 8.46 mt came from underground mines and 32.58 mt from opencast mines against the respective target of 12.31 mt and 31.26 mt.

Production performance PRODUCTION (’00,000 tons)

NO. OF MINES YEAR 2010-11 2011-12(Current Year): April,2011 May,2011 June,2011 July,2011 Aug.,2011 Sept.,2011 Oct.,2011 Nov.,2011 Dec.,2011 Jan.,2012 Feb.,2012 March,2012 PROG (Jan.'12) PROG (Last Year)

Under ground

Open Cast

Total

36 36 36 36 36 36 36 36 36 36

36 36

UNDERGROUND

OPENCAST

TOTAL

Target 158.70

Actual 116.07

Target 354.30

Actual 397.26

Target 513.00

Actual 513.33

14 14 14 14 14 14 14 14 14 14

50 50 50 50 50 50 50 50 50 50

12.28 12.08 12.28 12.73 12.73 12.72 11.55 12.34 11.98 12.39

9.73 9.34 8.99 8.98 9.32 3.90 4.51 9.83 10.35 9.89

30.07 30.55 30.15 25.69 26.92 27.51 34.04 35.98 35.84 35.89

25.33 30.44 32.27 29.83 30.48 17.77 26.06 41.09 44.35 47.89

14 16

50 52

123.07 131.52

84.63 96.84

312.63 291.88

325.73 318.37

42.35 42.63 42.43 38.42 39.65 40.23 45.59 48.32 47.82 48.28 0.00 0.00 435.70 423.40

35.06 39.78 41.26 38.81 39.80 21.67 30.57 50.92 54.70 57.78 0.00 0.00 410.36 415.21

Source: SCCL

COAL INSIGHTS 33 February 2012

fEATURE

CIL unions hail NCWA IX, contract workers’ pact by April Coal Insights Bureau

arely ten minutes before relinquishing his office, Coal India (CIL) chairman N.C. Jha signed what is being termed as an “unprecedented” wage agreement for CIL’s 365,000 workers. It was not only about the monetary bonanza – 88 percent hike in basic, 25 percent hike in gross wage plus 4 percent special allowance – but the inclusion of social welfare benefits that made the agreement a milestone in public sector wage negotiation. The real milestone, however, is still awaiting the stamp of approval and may come into existence three months from now, trade union sources told Coal Insights. “The National Coal Wage Agreement (NCWA) IX has been quite good, both in monetary and social welfare aspects. The agreement includes post retirement benefits (the pension scheme is strengthened), post-retirement medical benefits, improvement in service conditions, increased allowances, among others. This is quite an achievement. But there is more to come,” said a top union leader. It could be because of time constraint – the NCWA IX was signed at 11.50 pm on January 31 – or a tentative stance taken by the unions, the issue of contract workers’ wages was kept on hold. “But the management has assured that the contract workers’ issue will be settled in three months’ time,” he said. Meanwhile, the hike covering 3.65 lakh non-executive workforce, would be effective retrospectively from July 1, 2011, and is for a five-year period. The agreement was inked

in Delhi between central trade unions – including Congressbacked INTUC, Left backed-CITU and AITUC, and Hind Mazdoor Sabha – and the CIL management. Along with CIL, the NCWA IX also covers Singareni Collieries Company Ltd (SCCL). Wage bill up 60% CIL’s new wage pact has seen an 88percent increase in minimum basic of its employees to `15,712 per month, as against `8,360 during the previous deal, the company said in a statement. “The minimum basic in NCWA IX now will be `15,712 per month, an increase of 88percent from `8,360 of NCWA VIII. The other important highlights of the agreement are a special allowance of 4percent of revised basic; HRA of 2percent of the basic pay for those who have not been provided with residential accommodation in other than urban area; post retirement medicare scheme for retired non-executives and their spouses to be finalised within three months,” the statement said. Overall, the wage hike would result in around 60 percent increase in CIL’s wage bill (salary, wages and allowances), union sources said. They said that along with the increase in basic salary, the annual increment would also go up. In line with unions’ estimates, the company said that the wage hike would put an additional burden of `6,500 crore on the firm. As

COAL INSIGHTS 34 February 2012

fEATURE CIL (consolidated) employees’ remuneration & benefits (in `crore) For the year ended March 31, 2011

For the year ended March 31, 2010

11,715

10,859

Normal overtime

490

438

Sunday/holiday production overtime

662

624

Sunday/holiday maintenance overtime

297

261

Incentive

Leave encashment

687

290

Attendance bonus

590

600

Fall back wages

122

114

Salary, wages & allowances

1,634

1,490

Ex-gratia, PPLB, PPLR

Contribution to PF & Other Funds

856

703

LTC/LLTC/RRF

122

140

Pension

116

Gratuity

1,484

1,481

Life cover scheme

VRS

Workman compensation

Others

Total (A)

18,881

17,246

Social overhead

618

551

Development

Power & Fuel

0.99

Less: Transferred to

Repairs & Maintenance Total (B) Total (A-B)

Source: Coal India Ltd

670

591

18,211

16,655

* Figures are rounded off

of March 2011, CIL’s total outgo on employees’ salary, wages and allowances was `11,715 crore. “As per the NCWA VIII, which came into effect from July 1, 2006 workers got a raise of 24percent in the wages, which had an impact of around `2,500 crore, so this was more than what they had expected,” R. Mohandas, director (personnel) of Coal India Ltd (CIL) had said. Initially, CIL had offered a hike of 10 percent when the talks started, while the workers unions were demanding a 50 percent hike. Contract workers’ wage Although charmed by the wage increase for permanent workers, the trade unions were apparently not satisfied with the management’s proposal for the contract workers. The differences in opinion led to the postponement of contract workers’ wage agreement, which was initially planned to be signed simultaneously. According to union sources, the management had proposed to hike the minimum daily wage for contract workers to `367 and the maximum daily wage to `440. The daily wage level varies depending on the level of skills required for a job. “The unions have not agreed to the suggested figures. We proposed that the minimum wage of permanent workers, as per NCWA IX, be made the floor level for contact workers as well. Currently, they contribute 50 percent of CIL’s production and deserve a decent wage,” the sources said. While the issue has remained unsettled, they said the management has pledged to finalise the wage increase as well as improvements in their service conditions by April 2012. Asked if the management has indicated any price rise of coal to pass on the increased wage burden, the union leader said, “Earlier, they had something similar in mind, but after the roll back of price following the shift to gross calorific value (GCV), it is unlikely the management will go for another round of price hike in near future.”

COAL INSIGHTS 35 February 2012

fEATURE

Coal consumers cry for regulator as Bill hangs fire Coal Insights Bureau

mid recurrent debates over coal price hikes by stateowned Coal India Ltd (CIL), the coal consumers in India, especially the power sector, are strongly pitching for the formation of a coal regulator. The statutory body, once established, would not only bring transparency into pricing, but also address several other issues that continue to affect the consumers but do not concern the coal monolith, industry sources believe. The demand for a regulator has been placed time and again by the consuming sectors, but the recent increase in coal prices and its prompt roll-back has seen the most vociferous demand. It was none other than former CIL chairman Shashi Kumar who voiced concern over the delay in the formation of the proposed regulatory body. “In the current scenario, coal regulatory authority is a must. There is a Bill pending; but we do not know when it will be placed,” said Kumar. The monopoly position of CIL, he said, makes it absolutely necessary to have such a body in place. Echoing the concerns, Coal Consumers Association of India (CCAI) president P.K. Chand said post-listing the outlook of CIL has been changed, and the company seems to be more concerned about its shareholders rather than customers. Also, the growing importance of coal in the overall economic matrix has necessitated the formation of such a body. “This is so because a coal price hike, justified or not, will have a spiral effect across the board. Hence keeping proper checks and balances in the system is crucially important,” he said. In a similar vein, Indian Coal Merchants Association (ICMA) president V.K. Arora said the regulator would help redress various issues that CIL apparently prefers to leave unaddressed. The malfunctioning of weigh bridges, for instance, could be one such problem, he suggested. The issue of over-loading of vehicles, non-testing of coal quality at pitheads are similar other concerns. Power sector most concerned While the formation of a regulator may be an universal demand, the power sector seemed to be most concerned, having the most at stake. The issue gathered momentum after CIL shifted from Useful Heat Value (UHV) to Gross Calorific Value (GCV) based pricing of coal with effect from January 1, 2012. According to reports, the issue of establishment of a coal regulator came up for discussion during the meeting between Prime Minister Manmohan Singh and the industry CEOs held

on January 18. The power ministry strongly pitched for a regulatory mechanism for coal sector to be put in place at the earliest. The power sector, on its part, has put in place not only the regulator but also an appellate tribunal. The petroleum sector has a Petrolum & Natural Gas Regulatory Board (PNGRB). The telecom sector and insurance industry have their own full fledged regulators. On the other hand, there is no regulator in the coal sector. “Coal regulator is an imperative to bring about transparency in pricing, benchmarking of production and laying down procedural framework for moving from UHV to GCV mechanism,” said Ashok Khurana, director general, Association of Power Producers made a strong case for coal regulator. Status of Bill In 2007, the TL Sankar committee had recommended the setting up a Coal Governance and Regulation Authority. This proposed committee was seen as a development and regulation organisation which would help develop the sector as a whole. The issue was brought under focus in the Integrated Energy Policy. Later on, the government formulated a draft Bill for the setting up of Coal Regulatory Authority through consultation with different ministries and departments. The proposed authority was expected to facilitate, among other things, standardised operational norms, establishment of benchmarks in safety standards and performance, productivity through adoption of best mining practices, and effective resolution of problems facing the coal miners. The Coal Regulatory Authority Bill was supposed to be placed before Parliament in the Budget session of 2011, but was delayed by a year as the Ministry of Law had to examine and incorporate changes and suggestions made by various ministries and departments. Once finalised, the draft Bill would be submitted for the approval of the competent authority before being tabled in the Parliament. “Setting up of a regulatory Authority for coal would require appropriate legislation to be passed by the Parliament. Hence, it may not be possible to indicate the exact time frame for setting up the said authority,” said P.P. Patil, minister of state for coal, on November 29, 2011. There were reports that the Bill may finally be placed in the coming Budget session (2012), but going by the minister’s response, it seems the regulator has a long way to go before coming to fruition.

COAL INSIGHTS 36 February 2012

fEATURE

MoEF to lift CEPI after report of State PCBs

Coal Insights Bureau

early two years after the introduction of the controversial Comprehensive Environmental Pollution Index (CEPI), the ministry of environment and forests (MoEF) has finally decided to lift the restrictions placed with CEPI’s implementation in the coalfield areas. At a recent meeting of the Group of Ministers (GoM), the MoEF declared it was ready to lift the restrictions once the state pollution control boards (SPCB) submit suitable pollution mitigations plans for the affected areas. Environment minister Jayanthi Natarajan stated that the CEPI restrictions have already been lifted in seven out of the nine coalfields. “In the remaining coalfields also, coal projects with mitigation plans are considered on priority basis even though pollution levels in those areas are double the permissible limits,” she said at the fifth meeting of GoM. According to a communiqué of the meeting released recently, the MoEF further stated that “once the mitigation plans are formulated by the concerned state pollution control boards, the ministry would lift moratorium from the other coalfields also.” Introduced in March 2010, the CEPI index took into account all kinds of pollution and debarred new projects or expansion of units in heavily polluted zones. This affected CIL production significantly, as the company lost nearly 100 million tons (mt) of annual production and failed to kick-start major expansion projects in various collieries. On the issue of “go/no-go”, the minister agreed with recommendations of the committee that it should not form the basis for clearance or rejection of coal blocks. However, she argued that in any case the classification was the initiative of the ministry of coal (MoC) and not the MoEF. She said that the MoEF will revert to its original practice of examining projects by FAC on a case by case basis. The projects will be cleared

on merit, and these would include projects rejected earlier on the “no-go” approach. Montek Singh Ahluwalia, deputy chairman of the Planning Commission, supported the move to do away with the approach of “go/no-go”. The GoM accepted the recommendation to do away with the “no-go” concept. But at the same breath, the MoEF maintained that the Forest Act provides diversion of forest land for non-forest purposes as “exception rather than rule”. Home minister P. Chidambaram supported the view regarding importance of dense forests and suggested that identified pristine forests should be barred from any kind of non-forest activity. Finance minister Pranab Mukherjee, who headed the GoM, stated that all such forests which can never be regenerated to the desired quality should be protected. He further suggested that a committee comprising experts in the field can be constituted to identify such forests. e-filing of applications Meanwhile, in order to reduce delay in forest and environment clearances, the GoM was considering strict monitoring of new applications and outright rejection of “incomplete” applications through the use of e-filing. According to the communiqué of the fifth GoM meeting, Natarajan claimed that in many cases, delay in processing of applications takes place “due to incomplete submission of application forms.” In this regard, Ahluwalia suggested the use of e-filing of applications “where system will not accept any incomplete application”. Addressing the meeting, the finance minister said that “suitable directions may be issued to the concerned agencies for a proper scrutiny of application and essential documents at the submission stage and incomplete applications have to be rejected straightaway.”

COAL INSIGHTS 37 February 2012

fEATURE

Indian plants generate 73,396 MU power in Jan Coal Insights Bureau

ower generation by Indian power plants in January 2012 stood at 73,396 MU, marginally higher than the target of 73,377.66 MU set for the month, according to provisional data made available by the Central Electricity Authority (CEA). The total generation in January 2012 was also higher as compared to 71,654.73 MU generated during the corresponding month of the previous year. The target set for January 2011 was 72,401.56 MU, the data revealed. Electricity generation in December 2011 was 72,717.69 MU against a target of 71,241.6 MU, whereas total generation in November 2011 stood at 71,033.06 MU against a target of 69,671.27 MU. Of the total generation in January 2012, the thermal sector accounted for 63,175.41 MU, while 2,903.94 MU was generated by the nuclear sector. The hydro sector contributed 7,190.33 MU and Bhutan imports accounted for the remaining 126.32 MU. The target for generation in thermal sector for the month was 63,966 MU, while that for the nuclear and hydro sectors was 2,126 MU and 7,192.66 MU, respectively. The target for Bhutan import stood at 93 MU. In January 2011, power generation achieved by the various power sectors stood at 61,149.91 MU for thermal, 2,806.51 MU for nuclear and 7,573.3 MU for the hydro sector. The remaining 125.01 MU was contributed by Bhutan imports during the month. During the first 10 months (April-January) of 2011-12, the Indian power utilities had generated 726,279.93 MU whereas the figure stood at 669,898.41 MU during the corresponding period of the previous year. Capacity addition The power utilities in India added 895 MW of generation All India PLF factor – Jan 2012 (in %)

Categorywise energy generation in January 2012 (in %)

Source: Cental Electricity Authority

capacity in January 2012 taking the total capacity addition during the first 10 months of 2011-12 to 12,360.5 MW, according to provisional data released by CEA. The capacity addition in January 2011 was 480 MW and that during the first 10 months of 2010-11 was 11,404.5 MW, the data revealed. In December 2011, total capacity addition was 1,158 MW, much higher than the lowly target of 71 MW. In November 2011, the capacity addition stood at 2,807 MW against the target of 1,877 MW, the data revealed. In January 2012, total generation capacity added in the thermal sector was 795 MW, while capacity addition in the hydro and nuclear sectors stood at 100 MW and nil, respectively. The capacity addition target was 2,185 MW for thermal sector, 60 MW for hydro sector and nil for nuclear sector, the data showed. In January 2011, total capacity added in the thermal sector was 260 MW, against the target of 2,932.5 MW. The capacities added in hydro and nuclear sectors stood at nil and 220 MW, against respective targets of 66 MW and nil. Critical coal stock

Source: Cental Electricity Authority

Inadequate coal supplies by domestic coal companies and lower imports by power utilities led to critical coal stock position at a number of Indian power plants during the month. According to data available with Coal Insights, a total of 37 plants of the total 89 in the country were faced with critical coal stock position of less than seven days as of January 30. The data further shows that out of the 37 plants facing

COAL INSIGHTS 38 February 2012

fEATURE ‘critical coal stock’ position, 21 were facing ‘super critical’ coal stock position of less than four days. On January 15, out of the 43 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 Andhra Pradesh, Orissa, Rajasthan, Tamil Nadu and West Bengal were the worst sufferers.

Achievement vs target in capacity addition (in MW)

Plant load factor The Plant Load Factor (PLF), a measure of the output of

Mixed Q3 results from power utilities

he leading power utilities in India have shown mixed results in terms of operational and financial performances in the quarter ended December 31, according to information available with Coal Insights. NTPC Limited, the country’s largest power producing company, has recorded a drop in net profit as it fell to `21.3 billion for the quarter ended December, from `23.7 billion a year earlier, even as sales rose 14 percent from a year earlier to `153.32 billion. During the quarter, Tata Power’s results reflected a strong financial and operational performance. Revenues for the quarter were up by 35 percent and stood at `2,161.05 crore as compared to `1,595.87 crore in Q3 FY11. PAT increased by 178 percent to `425.88 crore as against `153.07 crore registered in the corresponding quarter last year. On a consolidated basis, Tata Power’s revenues were up by 51 percent and stood at `6,645.87 crore as compared to `44.12 billion in the corresponding period last year owing to the robust performance of both power and coal business. “Our strong financial and operational performance for the quarter is driven by all our business divisions. All Tata Power operations and subsidiaries have done well this quarter as compared to the corresponding period last year,” said Anil Sardana, Managing director of Tata Power. “Our key projects under implementation are progressing well. We have successfully synchronized India’s first 800 MW sized super critical Unit 1 of our 4,000 MW Mundra Ultra Mega Power Project; commissioned Unit 1 of 1,050 MW Maithon Power Project and also synchronized our 25 MW solar plant at Mithapur, one of the largest in the country. Our growth opportunities continue to be on course,” he added. Another power major, Reliance Power’s Q3 net profit was up at `204 crore against `144 crore, y-o-y. The company’s net sales were up at `457 crore against `251 crore, y-o-y and its Q3 consolidated other income was up at `217 crore against `104 crore on an year on year basis.

Source: Cental Electricity Authority

a power plant compared to the maximum output it could produce, for the country for the month of January 2012 stood at 76.38 percent against the planned 70.04 percent. The PLF was 75.83 percent and 70.69 percent for December 2011 and November 2011, respectively. The PLF of power plants of central sector-run companies such as NTPC and DVC stood at 86.39 percent in January 2012, compared with 82.98 percent in December 2011. The plants in the private sector recorded a PLF of 72.82 percent against the planned 67.7 percent. The worst performer was GMDCL which recorded a PLF of 28.5 percent against a target of 75.27 percent. JSEB recorded a PLF of 5.18 percent against a target of 27.06 percent continued to be a poor performer. Power supply position In the month of January 2012, the country’s peak power demand was estimated at 81,061 MU, but actual availability was only 73,498 MU, reflecting a shortfall of 7,563 MU or 9.3 percent. Earlier, in the month of December 2011, the country’s peak power demand was estimated at 81,381 MU, but actual availability was only 72,195 MU, reflecting a shortfall of 9,186 MU or 11.3 percent. An interesting observation is that despite overall peak shortage of power in the country in January 2012, Lakshadweep, Andaman & Nicobar islands and Sikkim did not have any peak power shortages, according to data made available by CEA. Maharashtra, however, faced the highest shortfall among all states during peak period with total shortfall of 2,295 MU. Tamil Nadu recorded the second highest shortfall during the month under review. The state recorded total shortfall of 942 MU in January 2012, against 804 MU in December 2011. Madhya Pradesh continued to be a worse performer recording a shortfall of 892 MU against 1,216 MU in December 2011. Uttar Pradesh (933 MU versus 1062 MU in December) was also another state facing major peak period shortfall during the month.

COAL INSIGHTS 39 February 2012

fEATURE

PMO asks CIL to sign FSAs with power generators Coal Insights Bureau

oal India Limited (CIL) will sign fuel supply agreements (FSAs) with power plants that have entered into long-term power purchase agreements with power distribution companies and have been commissioned/ would get commissioned on or before March 31, 2015. For power plants that were commissioned up to December 31, 2011, FSAs will be signed before March-end, a PMO statement said on February 15. “The FSAs will be signed for full quantity of coal mentioned in the Letters of Assurance (LoAs) for a period of 20 years with trigger level of 80 percent for levy of disincentive and 90 percent for levy of incentive,” the release read. As per the directive of Prime Minister Manmohan Singh, in the event of a short supply of coal as committed by CIL, the public sector firm will arrange for supply of coal through imports or through arrangement with state/Central PSUs who are allotted coal blocks.

Coal crisis causes 5.32 BU generation loss

Coal Insights Bureau

ower Minister Sushilkumar Shinde has said that a generation loss of 5.32 billion units (BU) was caused in India between April and October 2011 due to inadequate availability of coal. The generation loss in entire 2010-11 was brought down to 8.39 BU from 14.49 BU in 2009-10, he said, adding the generation loss stood at 10.92 BU in 2008-09. He, however, said, “No operating thermal power station in India reported shutdown due to nonavailability of coal during the last three years as well as till October of 2010-11. Less transportation of coal from coal mines to railway sidings, inadequate crushing capacity at the coal mines, law and order problems in the Central Coalfields Limited and Mahanadi Coalfields Limited and excessive rains of the coal fields of Northern Coalfields Limited, Central Coalfields Limited and Mahanadi Coalfields Limited were the four main reasons for short supply of coal by the subsidiaries of Coal India Ltd during the current year, Shinde said.

“These arrangements would provide relief to power plants with estimated capacity of more than 50,000 MW. The proposed set of arrangements is being seen as a major step forward in solving the problems of power sector in the country and is likely to boost investors’ confidence in India’s power sector,” the PMO statement said. This will help in achieving power generation capacity targeted in the 12th Plan and assist in achieving the targeted growth of GDP, it said. No PMO directive yet: CIL Meanwhile, Zohra Chatterji, acting chairperson of CIL, said on February 17 in Kolkata that the company is yet to get a directive from the government (Ministry of Coal and Prime Ministers’ Office) to sign FSAs with power companies for supply of minimum of 80 percent of total coal requirement of these companies. “I would say let us not be speculative on what has come in the news because the directive from the Ministry of Coal is yet to come. Let that come and then we will react to it. Let’s not speculate on that. Let the directive come,” Chatterji, who is also additional secretary (coal) said while responding to a query on media reports on PMO directive. She, however, said, “The government is the major owner of CIL and we will abide by the mandate. The directive of the government is binding on CIL and that is for sure.” Chatterji said given the gap between demand and supply, CIL was willing to sign FSAs. “It is not that FSAs were not signed at all. FSAs have been signed by a few companies, but all companies have not signed. It will have to be a question of sitting down, discussing and considering the figures and we will do that,” she added. CIL’s director finance, A.K. Sinha said, “Up to March 2009 we have signed FSAs with penalty clause below 90 percent and there is discussion on FSAs for the plants coming after March 2009, but the details of what would be the terms and conditions, what would be the penalty etc is to be worked out and then only we can come to a conclusion on whether this 80 percent or 90 percent can be accepted or not.” Sinha said as per New Coal Distribution Policy (2007), CIL was to supply 50 percent domestic coal and if necessary, 50 percent imported coal. “So let us see what direction comes from the ministry. If it is 100 percent, then we will see in the FSA provision what would be the penalty clause or bonus

COAL INSIGHTS 40 February 2012

fEATURE Estimated shortage of supply to various industries in the terminal year of Twelfth Plan

in million tons

Sl.No.

Sector

Demand (Prov).

Indigenous availability (Prov.)

67.20

31.70

(-)35.50 (-)119.61

Gap (Prov.)

Steel

Power Utilities

682.08

562.47

Power Captive

56.36

48.57

(-)7.79

Cement

47.31

40.30

(-)7.01 (-)13.28

Sponge Iron

50.33

37.05

Others

77.22

65.21

(-)12.01

980.50

715.00

(-)265.50

Total

clause. At present, we are signing LoAs with 50 percent trigger norm and discussion is going on. Let us see what happens.”

Coal shortfall India’s coal demand is estimated to touch 980.50 million tons (mt) by the terminal year (2016-17) of the Twelfth Five Year Plan while indigenous availability is projected at only 715 mt leaving a shortfall of 265.50 mt that is likely to be met by imports, Coal Minister Sriprakash Jaiswal had said in December 2011. Quoting a draft report of the working group on coal and lignite for formulation of Twelfth Plan (2012-17), Jaiswal said of the total demand of 980.50 mt, the demand for thermal/ steam coal is projected at 913.30 mt while that of coking coal is projected at 67.20 mt. Against these demands, the production of thermal coal and coking coal is projected at 683.30 mt and 31.70 mt respectively in the terminal year of Twelfth Plan leaving a shortfall of 230 mt for thermal coal and 35.50 mt for coking coal, the minister said.

COAL INSIGHTS 41 February 2012

fEATURE

India’s Dec cement production up Coal Insights Bureau

hough there does not seem to be any marked change in the demand scenario, the Indian cement industry has seen a moderate increase in production in December 2011 over the same month a year ago. Industry sources said that in the coming months, the hike in raw material prices, especially of fuel and power, may put some pressure on the margins. Production and despatch India’s cement production by large plants, except ACC and Ambuja Cement, moved up 14.99 percent to 15.72 million tons (mt) in December 2011, compared to 13.67 mt in the corresponding month of 2010, according to information made available to Coal Insights by a member of the Cement Manufacturers’ Association (CMA). Cement production in December 2011 was also 12.45 percent higher as compared to 13.98 mt reported for November 2011. Production by ACC and Ambuja in December 2011 was 2.03 mt and 1.91 mt, respectively. Taking into account the combined production of these two companies, total cement production in the country was 19.66 mt. Total production (except ACC and Ambuja) during the first nine months (April-December) of 2011-12 stood at 128.53 mt, up 5.06 percent from 122.34 mt during the same period of 2010-11. Meanwhile, India’s clinker production by large plants, except ACC and Ambuja Cement, in December 2011, stood at 11.96 mt, up 12.51 percent over 10.63 mt produced in the corresponding month of the previous year. Clinker production in November 2011 was 11.28 mt. Clinker production during the first nine months (April-December) of 2011-12 stood at 99.02 mt, up marginally by 0.98 percent from 98.06 mt during the corresponding period of 2010-11.

Despatch scenario India’s cement despatches by large plants, except ACC and Ambuja Cement, in December 2011 stood at 15.76 mt, up 15.12 percent as compared to 13.69 mt in the corresponding month of 2010, according to information received from CMA. Total despatches in November 2011 were 14.08 mt. Despatches by ACC in December stood at 2.09 mt and that by Ambuja Cement at 1.93 mt. Total cement despatches or sales in the country in December stood at 19.78 mt. Despatches (except ACC and Ambuja) during the first nine months (April-December) of 2011-12 stood at 127.69 mt, up from 121.45 mt during the corresponding period of 2010-11. Cement majors UltraTech Cement Ltd, an Aditya Birla Group company, reported December cement production of 3.57 mt, up 17.43 percent compared with 3.04 mt produced in November. The company’s production in December was also higher by 10.8 percent as compared to 3.21 mt produced during the same month of 2010. Cement production during the first nine months (April-December) of 2011-12 stood at 28.48 mt against 27.99 mt produced during the same period of 2010-11. UltraTech’s cement despatches or sales in December stood at 3.62 mt, up 17.15 percent compared with 3.09 mt despatched in November. Despatches in December were 10.5 percent higher as compared to 3.23 mt despatched in December 2010. Cement despatches during the first nine months (AprilDecember) of 2011-12 stood at 28.51 mt, up 1.97 percent compared with 27.96 mt despatched during the corresponding period of 2010-11. Another leading cement manufacturer, ACC Ltd’s cement

COAL INSIGHTS 42 February 2012

Feature

Cement makers post healthy growth in Q3 profit

Coal Insights Bureau

espite taking a hit from increased coal prices, the leading Indian cement makers have witnessed significant growth in profits during the quarter ended December 31, 2011. The higher demand offset the impact of the cost rise and is expected to pay dividend in coming months. UltraTech Cement’s profit after tax (PAT) stood at `617 crore during Q3 of FY12, up 93.41 percent compared with `319 crore in the corresponding quarter of FY11. The company’s net sales stood at `4,572 crore as compared to `3,715 crore in the same period of the previous year. Profit before Interest, Depreciation and Tax (PBIDT) stood at `1,120 crore versus `768 crore in the same quarter of the previous year. However, variable cost of the company rose by 16 percent, mainly on account of increase in energy cost as there had been 30 percent rise in the price of domestic coal by Coal India Limited (CIL), the company said in a statement. Ambuja Cements has reported a 17 percent jump in net profit (year-on-year) for the October-December quarter. The company’s PAT rose to `302.40 crore in the third quarter ending December 31, 2011 as against `258.12 crore in the corresponding quarter of last fiscal.

production surged by 10.93 percent to 2.03 mt in December compared with 1.83 mt in November. Production in December was 6.28 percent higher as against 1.91 mt produced in December 2010, the company said in a release. The company’s cement production during JanuaryDecember of 2011 stood at 23.66 mt, up 11.55 percent against 21.21 mt produced during the same period of 2010, the release added. The company’s despatches or sales in December rose by 14.21 percent to 2.09 mt from 1.83 mt in November. Despatches in December were 8.85 percent higher compared with 1.92 mt despatched in December 2010. Total despatches during January-December of 2011 stood at 23.68 mt, up 11.86 percent compared with 21.17 mt despatched during the corresponding period of 2010, the release said. Ambuja Cement Ltd’s December cement production stood at 1.91 mt, up by 5.52 percent as compared to 1.81 mt produced in November, and 6.7 percent higher compared with 1.79 mt produced in December 2010. The company’s cement production during JanuaryDecember of 2011 stood at 20.97 mt, up 4.22 percent against

Sales jumped 30 percent (y-o-y) to `2,329.11 crore, against `1,788.47 crore. ACC Limited recorded net profit of `463.2 crore against `248.87 crore earned during the corresponding period of the previous year. “While economic growth during the year was not robust, we are seeing some positive signs during the last few months. In the near term, we expect that the economic development will accelerate as India plans to invest about $1 trillion in infrastructure in the Twelfth Plan period,” an ACC Cement official said. “This makes us optimistic about healthy growth in demand for cement which we are well place to serve. As regards, raw materials coal pricing is volatile and we also anticipate a rise in the costs of other critical inputs,” he added. According to market sources, demand is likely to grow by around 8 percent in the coming fiscal year. However, the surplus scenario is likely to continue over the next three years. At the same time, growing input costs is likely to result in a squeeze in margins. On an average, depending on quality, about 0.225 mt of coal is required to produce 1.0 mt of cement and this means that coal requirement will go up substantially if cement production actually goes up in the country.

20.12 mt produced during the same period of 2010. The company’s despatches or sales during the month of December stood at 1.93 mt, registering an increase of 5.46 percent over 1.83 mt produced in November 2010. Total despatches during January-December of 2011 stood at 20.96 mt, up 4.17 percent as compared to 20.12 mt despatched during the corresponding period of 2010. December cement exports India’s cement export, except ACC and Ambuja Cement, in December 2011 stood at 0.13 mt, the same as it was during the corresponding month of 2010, according to information available to Coal Insights. The exports during the first nine months (April-December) of 2011-12 stood at 1.23 mt, up 7.89 percent compared with 1.14 mt exported during the same period of 2010-11. Export of clinker in December 2011 fell by 14.29 percent to 0.18 mt from 0.21 mt in December 2010. The exports during the first nine months of 2011-12 stood at 1.34 mt, down 33 percent from 2 mt during the corresponding period of 2010-11.

COAL INSIGHTS 43 February 2012

Feature

Sponge iron makers slash production to tide over crisis

Sanjukta Ganguly

acing strong headwinds during the last few months, the sponge iron sector in India is resorting to production cuts to survive the difficult market scenario. Increased raw material prices and short supply of materials are also driving them to reduce production. To address these issues, a number of meetings have been held in the recent weeks. However, there has been very little positive outcome so far, industry sources said. Coal, one of the essential raw materials for the direct reduced iron (DRI) industry is becoming increasingly difficult to obtain. The quantity of the material actually supplied by Coal India Limited (CIL) for the sector is far below the level of adequacy. Domestic coal availability issues coupled with price hike have toughened the situation. At a juncture when higher prices of imported coal has almost pushed it beyond the reaches of medium to small sized sponge iron makers, domestic coal price hike has caused the industry to bleed profusely. However, CIL’s recent decision to roll back the increased prices has eased the situation to some extent. The other problems however still remain unresolved, the sources said. In addition to coal, availability of iron ore continues to be a grey area for the industry as lower availability

Sponge iron makers importing coal again: Trader

large number of Indian sponge iron makers have started coming back to the imported coal market, an official of a leading coal trader told Coal Insights. “There have been a large number of enquiries from sponge iron makers during the past three or four weeks and a number of orders have been placed by them. The situation was slightly different in the fourth quarter of 2011 (October-December),” the official said. He claimed that orders are now being placed by sponge iron makers based out of Orissa as well as the Raipur belt, but refused to divulge the names of buyers. “On an average we have sold around 100,000 tons of imported coal to various sponge iron makers during the last few days,” the official said, adding, there had been practically nil enquiries for imported coal from the sponge iron sector before this revival, which started from the middle of January 2012.

of the material has caused the prices to shoot up. “We mainly procure iron ore from Odisha region. But at present, only nine mines in the Keonjhar area of Odisha are operating while no mining is being done in the other mines,” a West Bengal based sponge iron maker complained. “However, recently the cabinet is taking a few decisions to ease the availability of iron ore by opening up more mines which might solve the problem to some an extent. But, this might come into effect only after April,” he added. Sinking demand In India, the monsoon is long over; but infrastructural development is still taking a backseat. This has proved to be another dampener for the industry. Unlike other years, the industry has failed to push up demand for sponge iron. The possibility of any major change in demand in the near future also looks dim, industry experts told Coal Insights. In West Bengal, the industry is reeling under great pressure due to acute dearth of raw materials and slumping demand, said S. Bhattacharjee, Secretary of West Bengal Sponge Iron Manufacturers’ Association (WBSIMA). “Throughout the country, the situation is dull for the sponge iron industry. But in West Bengal, the industry is operating at only 30 to 35 percent capacity,” he said. Currently, the total installed capacity of sponge iron production in West Bengal stands at 13,400 tons/day. “Availability of raw materials is worsening with iron ore availability becoming poorer by each passing day,” he added. Echoing his views, a senior official of Jai Balaji group, one of the leading direct reduced iron (DRI) manufacturers of the country, said the Indian market is absolutely dull with demand showing hardly any growth over the last few months. 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, the ban on iron ore mining by the Karnataka government is leading to massive fall in iron ore production; and this has become the biggest evil of the DRI industry at present. With CIL reducing their jacked up prices to some an extent and the government considering certain policy decisions to improve iron ore supplies to the sector, business may not remain as dull as ever in the coming months. The sponge iron makers are, however, keeping their fingers crossed. The good days will be greeted as they come. But right now, the struggle for existence continues.

COAL INSIGHTS 44 February 2012

Feature

Sponge iron Q3 production down 21% y-o-y Coal Insights Bureau

roduction of sponge iron in India has declined by 21.36 percent in Q3 of 2011-12, as compared to the production of the material during the corresponding period last year, according to the data made available to Coal Insights by a member of the Sponge Iron Manufacturers’ Association of India (SIMA). During Q3 of 2011-12, total production of sponge iron stood at 4,510,459 tons whereas in Q3 of 2010-11, the figure was at 5,735,347 tons, as per the available data. Out of the total sponge iron production during OctoberDecember 2011, gas based production accounted for 977,754 tons (1,473,008 tons in October-December 2010) whereas the remaining coal based production of sponge iron stood at 3,532,705 tons (4,262,339 tons in Q3 of 2010-11). Exports of sponge iron by three major sponge iron manufacturers – namely Welspun Maxsteel Limited, Tata Sponge Iron Limited and Monnet Ispat & Energy Limited – has dipped by 70.53 percent in the third quarter of 2011-12 as compared to the corresponding period of 2010-11, according to the data. In Q3 (October-December) of 2011-12, total exports of sponge iron by these companies stood at 13,583 tons whereas

the exports were 46,092 tons during the corresponding period of last year. Export of sponge iron (in tons) Company

Oct-Dec (2011-12)

Tata Sponge Iron Limited

Oct-Dec (2010-11)

4,900

Welspun Maxsteel Ltd

3,540

41,192

Monnet Ispat & Energy Limited

10,043

Total

13,583

46,092

*Note: Sponge iron export figures of Monnet Ispat & Energy Limited for Q3 of 2010-11 is not available. Source: Sponge Iron Manufacturers Association (SIMA)

DRI Production in Q3 of 2011-12 (in tons) Oct

Nov

Dec

TOTAL GAS BASED

341,718

311,031

325,005

TOTAL COAL BASED

1,168,241

1,150,631

1,213,833

GRAND TOTAL

1,509,959

1,461,662

1,538,838

SPONGE IRON MANUFACTURERS ASSOCIATION DRI Production 2011-2012 CPTY L/T A. GAS BASED ESSAR STEEL LTD. JSW ISPAT STEEL LIMITED WELSPUN MAXSTEEL LTD. TOTAL GAS BASED B. COAL BASED AARTI SPONGE & POWER LTD. ACTION ISPAT & POWER LTD. ADHUNIK CORPORATION LTD. ADHUNIK METALIKS LTD. AKSHARA INDUSTRIES LTD. AMBEY IRON PVT LTD. AMBEY METALLIC LTD ARYAVRATA STEEL PVT LTD. BALAJI SWAMI PREMIUM LTD. BALDEV ALLOYS PVT LTD. BELLARY ISPAT PVT LTD. BENAKA SPONGE IRON LTD. BIHAR SPONGE IRON LTD. CRACKERS INDIA LTD. DHANALAKSHMI SPONGE IRON DIVYAJYOTI STEELS LTD. DINABANDHU STEEL LTD. DROLLIA ELECTRO STEEL LTD. ELECTROTHERM INDIA LTD. SCAN STEELS LIMITED GALLANTT METAL LTD.

APR

MAY

70.00 16.00 10.00 96.00

375834 105682 80360 561876

329878 104632 66930 501440

0.60 2.50 0.60 2.70 0.60 0.45 0.36 0.36 0.20 0.30 0.20 0.60 1.86 0.60 0.60 0.30 0.60 0.66 0.75 0.60 1.70

4799 10456 3926 16537 4763 0 0 705 1081 2854 516 1272 5180 3585 3554 1115 0 5069 11759 3000 8687

3049 11512 3514 14465 5044 0 0 715 951 2323 843 1757 4638 3227 532 1759 0 3559 15330 2600 8895

JUNE

JULY

AUG

357746 88570 67635 513951

404956 99348 55297 559601

351275 121087 53430 525792

2853 12836 3669 3669 4133 0 0 713 1049 2616 439 1932 11894 3115 473 1048 0 3616 12042 2400 7165

3786 9368 3762 14090 4375 0 0 606 1087 1873 772 835 6821 2564 0 0 0 2762 10852 2200 5223

2171 7592 4062 8277 4162 0 0 662 1269 1172 441 1045 10835 1683 0 0 602 3764 6789 2100 3876

COAL INSIGHTS 45 February 2012

SEPT

OCT

NOV

DEC

TOTAL

267557 102534 34550 404641

208613 96970 36135 341718

181845 77761 51425 311031

205147 75328 44530 325005

2682851 871912 490292 4045055

2651 7564 2638 22107 3705 0 0 631 152 2072 1294 452 9504 1702 0 0 2268 3357 5897 1900 7017

3502 4980 3109 18248 4371 0 468 547 600 2558 650 760 5138 1650 1303 0 1898 3500 2901 1600 10370

2907 5623 2131 5719 4202 0 3198 760 500 1852 540 750 3917 1500 2681 0 370 3400 3869 1800 9853

1960 5707 0 12286 4483 0 2152 882 450 3089 600 800 4818 1600 2499 0 1466 3600 4093 1700 8858

27678 75638 26811 115398 39238 0 5818 6221 7139 20409 6095 9603 62745 20626 11042 3922 6604 32627 73532 19300 69944

Feature

GAYATRI METALS LTD. GANESH SPONGE PVT LTD. GODAWARI POWER & ISPAT HI-TECH POWER & STEEL LTD. HOSPET ISPAT PVT LTD. HOTHUR ISPAT LTD. HOWRAH GASES LTD. HARYANA STEEL & POWER HARE KRISHNA METALLICS JAI BALAJI SPONGE/HEG JANKI CORP. LTD. JINDAL STEEL & POWER LTD. JAI DURGA IRON PVT LTD. JAYASWALS NECO INDUSTRIES JAY IRON & STEEL LTD. KANISHK STEEL INDUS. LTD. MINERA STEEL & POWER PVT LTD. LLOYDS METAL & ENGG. LTD. MONNET ISPAT & ENERGY LTD. NALWA STEEL & POWER LTD. NOBLE DISTILLERIES LTD. OCL IRON AND STEEL LTD. ORISSA SPONGE & POWER PGM FERRO STEELS LTD. POPURI STEELS LTD. RAYEN STEEL LTD. SARDA ENERGY LTD. RANGINENI STEEL LTD. RASHMI ISPAT LTD. RUNGTA MINES LTD.(Est.) SKS ISPAT LTD. NARBHERAM POWER SCAN SPONGE IRON (Est.) SHRADDHA ISPAT LTD. SHRI BAJRANG & POWER SHYAM SEL LTD. SINGHAL ENTERPRISES LTD. SURANA INDUSTRIES LTD. SURENDRA MINING INDS. LTD. SREE METALIKS LTD SUNFLAG IRON & STEEL CO. SURAJ PRODUCTS LTD SURYAA SPONGE IRON LTD. TATA SPONGE IRON LTD. TOPWORTH STEELS LTD. VANDANA GLOBAL LTD. VISA STEEL LTD. MPL Cement & Sponge Pvt Ltd. WELSPUN STEEL LTD. YESHASHVI STEEL LTD. OTHER UNITS (Est.) TOTAL COAL BASED GRAND TOTAL (A+B) EXPORTS 2010-2011 WELSPUN MAXSTEEL LTD. TATA SPONGE IRON LTD. MONNET ISPAT & ENERGY LTD. Total

CPTY L/T 0.30 0.90 4.95 0.60 0.60 0.90 0.60 0.35 0.75 3.45 1.80 13.70 0.36 2.55 0.60 0.60 1.20 3.00 8.00 1.98 0.72 1.20 2.50 0.60 0.45 0.60 2.10 0.25 0.60 6.30 2.70 1.00 0.24 0.60 2.10 1.60 2.50 1.28 1.20 1.74 2.55 0.36 0.84 3.90 1.65 2.31 3.00 0.09 1.20 0.30 140.00 250.60 346.60 10.00 3.90 8.00

APR

MAY

JUNE

JULY

AUG

SEPT

OCT

NOV

DEC

TOTAL

595 5220 26107 3279 0 0 2428 2000 7210 18560 7974 126834 1281 17344 768 2363 6590 12604 58889 14820 0 9201 3946 3000 672 2370 19395 1057 2288 35000 12922 8193 1200 3372 9305 11914 13875 1242 3514 13325 5034 2655 900 27364 12482 14368 10376 240 12000 306 850000 1495240 2057116

0 4960 34656 4304 0 0 2714 1900 5092 17299 7377 128459 1208 16748 448 2885 5942 13455 55842 15264 0 9601 4804 2750 1544 1132 20832 787 1635 35000 10329 5746 1100 3440 10891 12252 13983 619 2945 11239 13032 3016 3036 23272 15605 11147 11734 200 11840 12 850000 1496789 1998229

562 3965 29957 3949 0 0 2735 1800 8044 15198 7032 108360 1365 21130 712 1220 5034 16743 51126 13734 0 8272 1938 2500 1295 1104 21687 1455 1489 35000 11212 180 1000 3049 12385 11504 15064 2205 2983 8548 13699 2714 2286 20469 14052 16300 13733 192 10179 287 850000 1455109 1969060

203 3460 31985 3221 0 738 2291 1500 4733 19365 9862 117554 1351 19037 631 2294 5588 17122 71262 14857 0 8149 0 2000 1100 78 21879 1130 1650 35000 11509 8969 1000 2640 7340 10993 11363 963 3111 7771 7982 2576 2665 22684 14081 15369 18301 248 10060 1633 800000 1430274 1989875

209 3690 31015 2312 0 1443 1738 1300 8988 14761 11305 115595 1207 19529 489 2753 8614 17064 71135 15617 0 8007 0 1800 1100 984 18820 956 2115 35000 13613 2948 1000 3092 11645 11903 13959 1952 3514 5700 11992 2529 1283 27802 11448 16435 15922 216 9037 726 700000 1324764 1850556

0 1870 17759 3227 0 1203 2593 1100 9450 14578 10940 106660 768 14252 345 1886 8018 13754 67705 15173 0 7013 3284 1700 1100 512 16187 335 1662 35000 11533 0 1000 3034 9092 9832 9242 2680 1249 4668 14096 2560 340 23530 13981 10285 4490 216 7842 50 650000 1212705 1617346

0 3135 29369 3167 0 1200 2167 1200 8056 14490 18255 100030 627 15667 116 1332 7510 14885 76433 13166 0 8333 1446 1600 1200 439 19462 0 1235 35000 10231 0 1200 3200 6726 10811 11250 737 2914 4448 15316 2467 0 8876 11785 14894 3756 194 11763 0 600000 1168241 1509959

0 2570 28098 2837 0 1100 2710 1350 9350 17592 12060 100557 1245 4147 534 1333 8018 7660 70316 14955 0 9868 4103 1500 1150 460 21646 0 1392 35000 12766 7973 1150 2369 7708 9327 12703 51 2542 5923 15287 2500 0 13042 11496 13925 2861 775 10911 199 600000 1150631 1461662

0 2505 19131 3802 0 1250 1890 1250 8453 17812 12235 111577 1335 18055 518 2185 8349 9349 73580 14606 0 7670 6189 1800 1250 669 19130 0 2921 35000 11600 4775 1000 2584 7637 13055 15542 127 3147 4894 9327 1776 0 31455 16232 10441 24408 258 11996 25 600000 1213833 1538838

1569 31375 248077 30098 0 6934 21266 13400 69376 149655 97040 1015626 10387 145909 4561 18251 63663 122636 596288 132192 0 76114 25710 18650 10411 7748 179038 5720 16387 315000 105715 38784 9650 26780 82729 101591 116981 10576 25919 66516 105765 22793 10510 198494 121162 123164 105581 2539 95628 3238 6500000 11947586 15992641

7754 0 2601 10355

15278 2500 2576 20354

2591 2500 2607 7698

3102 2451 5252 10805

1852 869 7616 10337

1570 7500 10275 19345

500 0

0 0

500

3040 0 10043 13083

35687 15820 40970 92477

COAL INSIGHTS 46 February 2012

Feature

25 countries take part in mining show Coal Insights Bureau

ore than 800 delegates from over 25 countries took part in the 2012 edition of the International Mining Exhibition (IME 2012). Concurrent to the 4th Asian Mining Congress, the 2012 edition of IME was organised by MGMI in association with Tafcon Projects (I) Pvt. Ltd. at the Salt Lake Stadium, Kolkata. The event provided an ideal forum for miners, planners and policy makers to discuss the various issues affecting the mining industry in the Asian region as well as in the rest of the world. The event provided good business opportunities for the manufactures of mining and allied industries to showcase their products, technologies, new initiatives and services to the global audience. The earlier three editions of the event held in January 2006, 2008 and 2010 had also been highly successful. A large number of delegates and exhibitors from India and 20 other countries had participated in these events, offering excellent networking and business opportunities. Over the years, IME has turned out to be a unique platform for entrepreneurs, decision makers, senior government officials, investors, industry members, traders, equipment buyers and suppliers, academia, miners, engineers and trade delegation to congregate, brainstorm, showcase and forge meaningful partnership for business.

World clean coal week, 2012 in Delhi

he World Clean Coal Week (WCCW), India Focus will be held on June 14-15, 2012 in Delhi, India, according to information available with Coal Insights. Over 300 leaders and experts from more than 30 countries are about to attend the event. The theme of this year's conference is ‘Roadmap to Active Deployment of Cleaner Coal Technologies’. This covers a wide spectrum of important topics on gasification, coal to liquid, syngas, clean power generation and environmental issues. In 2010 and 2011, WCCW was held at Beijing, China and attracted more than 700 attendees from 50 countries. This year the event is expected to be attended by an even larger audience and is likely to exceed the previous two editions in terms of business generated.

COAL INSIGHTS 47 February 2012

Feature

I M E

COAL INSIGHTS 48 February 2012

fEATURE

2 0 1 2

COAL INSIGHTS 49 February 2012

CORPORATE

tate-owned Coal India Ltd (CIL) has posted a 54 percent jump in net profit to `4,037 crore for the quarter ended December 2011, compared to `2,626 crore in the corresponding period last year. The company, which is 90 percent owned by the government, registered a 21 percent growth in sales to `15,349 crore in the December quarter against `12,686 crore in the same period last year. CIL also reported other income of `1,856 crore largely due to the cash pile that it holds. This was almost a third of the profit before tax of the company. The company's stand-alone net profit grew over 10-fold for the third quarter at `1,219.33 crore. It reported a stand-alone profit of `115.37 crore during corresponding year last fiscal. CIL’s total income increased nearly four times to `1,566.23 crore for the quarter from `400.56 crore for the quarter ended December 31, 2010. CIL said it has made an additional provision of `333 crore in third-quarter results for the new wage agreement signed on January 31. In the September quarter, the company had provided for `750 crore towards the wage increase. The new wage agreement, signed with its five recognised trade unions, provides for 25 percent rise in gross salaries, and is expected to add about `4,000 crore the company's annual wage bill of `20,000 crore. CIL plans to make the rest of the provision in the March quarter, a company statement said. CIL employee benefit expenses in December quarter rose 20 percent to `5,622 crore. About 3.65 lakh employees stand to benefit from the 25 per Coal India performance highlights (Rs crore) Total operating income EBIDTA EBIDTA margin % Adjusted PAT

Q3FY12

Q3FY11

% Change y-o-y

Q2FY12

% Change q-o-q

15,349

12,687

13,148

4,875

3,466

40.6

2,750

31.8

27.3

444 bp

20.9

1,085 bp

4,043

2,634

53.5

2,588

Production (mln tons)

115

113

1.4

Sales (mln tons)

110

-0.2

106

cent increase in gross salaries that will be effective from July 2011 running until June 2016. Output The company reported production of 114.6 million tons (mt) for the December 2011 quarter as expected, while the offtake during the quarter was 110.27 mt. It has given a guidance of production of 440 mt for the full year ending March 2012. For the nine months ended December 2011, production was at 291.24 mt, while the offtake was 310.25 mt. The company had raised coal prices in February 2011. Last month, CIL buckled under pressure from the government and rolled back another round of price increase under the Gross Calorific Value (GCV) based mechanism effective January 1 after customers protested. The company had switched to the GCV based mechanism in line with the international norms and had proposed a 12.5 percent hike in prices. The new pricing is likely to be reviewed early next financial year. Meanwhile, the Coal India Board has approved the Amarapali coal project in the North Karanpura mines of the Central Coalfields Ltd (CCL). This project has an annual production capacity of 12 mt. It is expected to contribute 1.5 mt in the next financial year. Outlook Based on CIL’s nine-month production figure of 291 mt, analysts estimate that the company is unlikely to meet its revised FY2012 production target of 440 mt. Further, infrastructural bottlenecks (mainly availability of railway rakes) are likely to result in only 2.5 percent and 4.9 percent y-o-y growth in sales volumes during FY2012 and FY2013, respectively. Additionally, higher staff costs are expected to hit CIL’s operating margins during the next fiscal.

COAL INSIGHTS 50 February 2012

CORPORATE

Narsing Rao tipped to become CIL chairman

Coal Insights Bureau

is currently held (on temporary basis) by he Public Enterprises Selection Board Zohra Chatterji. (PESB) has recommended Singareni Collieries Company's Chairman and A tough choice Managing Director S.S. Narsing Rao, IAS, for the top position of Coal India (CIL), the Selecting the most suitable candidate was world's largest coal producer. a tough choice for PESB given that the list The search-cum-selection committee of of interested candidates was a pretty long PESB interviewed 19 aspirants including one. heads of a clutch of state-run firms and The persons who were interviewed in CIL's director (personnel) R. Mohan Das. the selection meeting were R. Mohan Das, According to information available DIR (P & IR), CIL, D.C. Garg, CMD, WCL, on the PESB website, Rao was found T.K. Lahiry, CMD, BCCL, V.K. Singh, the most suitable among the candidates. CMD, NCL, Rakesh Sinha, CMD, ECL, A 1986-batch IAS officer of the Andhra A.N. Sahay, CMD, MCL, B.L. Bagra, Dir Pradesh cadre, Rao is heading Singareni Narsing Rao, Chaiman, SCCL (Fin), NALCO, R.B. Misra, Dir (Fin) HECL, Collieries since 2006. Following the I.S. Jha, Dir (Project), PGCIL, Ansuman Das, Dir (Comm), recommendation of the PESB, the coal ministry would refer its Nalco, S.K. Tripathi, CMD, MSTC, K. Hari Kumar, CMD, choice to the Appointments Committee of the Cabinet, which HIL, A.K. Mathur , ED, SAIL, Dr Nandita Chatterjee, IAS, As, will have the final say on the appointment. MoEF, Shreemat Pandey, IAS, G/o Rajasthan, Raj Pal Singh Rao would have to face lots of challenges in the face of Kahlon, IAS 1984, G/o West Bengal, Rakesh Kumar Tandon, growing demand for coal in the country, which is grappling IRTS, 1978, Ministry of Railways, S. Narsing Rao, IAS, CMD, with a severe coal crunch amid a widening demand-supply SCCL and Mukund Prasad, Dir (CS), WELSPUNH. gap. The gap is pegged at 114 million tons (mt) this fiscal Rao, an IAS officer, is currently working as CMD of and is likely to exceed 200 mt by 2016-17. In the face of huge Singareni Collieries Company Ltd (SCCL), a joint venture of demand growth, CIL is battling to augment production amid Andhra Pradesh Government and Government of India. He is regulatory and other hurdles. credited with bringing SCCL back on the revival path after it Currently, the state-run coal monolith is headed by Zohra was referred to the BIFR years ago. Chatterji, an additional secretary in the Coal Ministry. Chatterji SCCL had produced 51.33 mt of coal in 2010-11, marginally assumed the charge of CMD with effect from February 1, 2012 higher than the target of 51.3 mt for the year. For the year 2011following the retirement of N.C. Jha. 12, the company has set a production target of 53.4 mt. It is to be The CIL CMD’s position was lying vacant after the noted that SCCL had never missed its production target during retirement of P S Bhattacharyya on superannuation in the past nine successive financial years beginning 2002-03. February 2011. Jha was acting CMD of the company from However, the major challenge before Rao as CMD of March 2011 to January 2012 till his retirement and the position CIL, which meets around 70 percent of country’s total coal demand, will be to achieve the Grand predecessors production target set for the company for the coming years. CIL had missed its production target of 440 mt in 2010-11 and is also on the verge of missing its revised production target of 447 mt for 2011-12. The actual production target for 2011-12 was initially fixed at 520.5 mt, but was subsequently reduced to 485 mt and then further to 460 mt and the current target is only 447 mt. P S Bhattacharyya N C Jha Zohra Chatterji COAL INSIGHTS 51 February 2012

CORPORATE

Adani Power hit by high coal import cost Coal Insights Bureau

he high cost of imported coal has claimed yet another victim in India’s sprawling power sector. Adani Power Limited, the energy arm of the `45,000-crore Adani Group, has slipped into the red in the third quarter of FY12. This, despite the group’s prolific coal import business and overseas assets, shows the expected impact of the importdependent expansion drive in a controlled power tariff regime, said analysts. Incidentally, Adani Power depends entirely on imports for its current coal requirements. Apart from the increased coal costs, non-availability of transmission lines and foreign exchange losses drained the company’s coffers. Adani Power reported a net loss of `358 crore for the October-December quarter against a net profit of `109 crore in the same period a year ago.

“These results are a reflection of price increase on imported coal and non-availability of transmission line for evacuation of power,” company chairman Gautam Adani said. The company’s net sales more than doubled to `1,059 crore. Its average PLF for the third quarter was 66 percent for FY12 as against 85 percent of the corresponding quarter in the last fiscal. The company said it could not operate its 1,320 MW of generation capacity, as the state power utility did not commission transmission grid in time. Adani Power posted a mark-to-market loss of `205 crore on derivatives during the quarter. The rupee fell 7.7 percent against the dollar in the period and has rebounded nearly as much in January. CFO Prabal Banerjee stated that loss worth `295 crore was

COAL INSIGHTS 52 February 2012

CORPORATE

Adani finalising $1.5-bn port loan

Gautam Adani, Chairman, Adani Group

incurred on account of fluctuations in the foreign exchange values and claimed that over `200 crore of the same will be recovered during the current quarter. “Since the rupee has recovered since December-end, almost 90 percent of these losses have been reversed,” Banerjee said. Its average cost of coal doubled during the fiscal under review while its average realisation stood at `3.51 per unit, which was at `3.62 per unit in the second quarter of the current fiscal. The merchant tariff, which refers to prices outside longterm agreements, rose to `4.09 per unit in the quarter from `3.88 per unit in the year-ago period. The company operates 3,300 MW of imported coal-fired power generation capacity at Mundra in Gujarat. By July, the company is aiming to add 1,320 MW of capacity at Mundra and 660 MW at Tiroda in Maharashtra.

dani Enterprises is finalising a A$1.4-billion ($1.51 billion) project finance loan with a group of lenders to replace a US$2-billion bridge loan raised to buy an Australian coal terminal last year, according to reports. Adani could sign the deal by end March and is in talks with Commonwealth Bank of Australia, National Australia Bank , Westpac Banking Corp and a couple of the Japanese mega banks for the debt, reports said. The one-year bridge, provided by Standard Chartered Bank and State Bank of India, falls due at end May. The bridge was raised to fund the acquisition of the Abbot Point coal terminal in Queensland State. Adani’s port operating arm Mundra Port & Special Economic Zone bought the port in May last year in one of the largest acquisitions by an Indian company in Australia. The tenure of the new facility is split into three and five years. The loan margin has not been set, reports said, and there is still some room for it move up as banks’ funding costs continue to soar. Located in North Queensland in Australia, the Abbot terminal services three mines in the Bowen Basin. The port also helps Adani ship coal from Galilee in Australia to its power plants in India. Reports said Macquarie Capital Advisers and Standard Chartered are advising Adani on the refinancing. Adani sounds positive

Adani port reports profit

he group’s port operations performed better. Adani Port & SEZ Limited (APSEZ) reported that net profit rose 36 percent to `311 crore for the third quarter. Income for the third quarter stood at `693 crore, registering a 53 percent growth over the same period of 2010-11. During the period under review, APSEZ emerged as fourth largest commercial port in India by cargo. CFO B. Ravi said that the flagship Mundra Port registered a 29 percent jump in cargo while all the major ports grew by 3 percent in the past nine months. “We will consolidate the results of Abbot Port of Australia and the newly commissioned facility at Hazira by March. Today, we have the capacity to handle 165 mt of cargo a year and it will increase to 225 mt in the next 3-5 years,” said Ravi.

The current trend, analysts said, could continue unless the government took some measure to address the coal issue. Adani, however, was hopeful about an improvement in the overall scenario, going forward. “Coal availability and price, both have now become important national issue and since Government of India is now involved at the highest level in finding solution, the power industry is hoping for an early and positive solution,” Adani, also chairman of the Adani Group, said. Recently, an industry delegation led by Ratan Tata recently met prime minister Manmohan Singh to press for measures to help the power sector. Adani was a member of the delegation. Subsequent to the meeting, the prime minister announced the government’s commitment to redress the situation and urged Coal India Ltd (CIL) to deliver goods. India holds 10 percent of the world's coal reserves but has struggled to meet power producers' needs because of stagnating output due to delays in environmental clearance and land acquisition and poor investment in mining, forcing generators to import.

COAL INSIGHTS 53 February 2012

CORPORATE

Mahagenco coming up with 13,940 MW capacity Sanjukta Ganguly

aharashtra State Power Generation Company Limited (Mahagenco), a state-owned power utility of the country, has embarked upon a number of new power projects to increase its generation capacity by 13,940 MW. This additional capacity would add to its current installed base of 9,996 MW and help the utility meet the future energy needs of the state as well as the country. Some of the projects are already in the stage of implementation while others are in the pipeline. The existing projects of the utility include seven thermal power projects (Koradi, Nashik, Bhusawal, Paras, Parli, Khaparkheda, Chandrapur) with combined capacity of 6,800 MW. The hydro power capacity (Koyna and small projects) is 2,344 MW, while gas based projects (Uran G.T. and waste heat recovery) have total capacity of 852 MW. Projects in the pipeline One of the major projects that Mahagenco has undertaken is the Uran Gas Based Combined Cycle Power Plant. This project would have a total capacity of 1,220 MW with 406 MW coming up under block-I and 814 MW under block-II. Tender for Lump sum turnkey contract for installation of 1,220 MW advance class gas turbine based CCPP was invited on January 28, 2011. Bids were received on July 8, 2011 and Cover-I opened on the same day. Letter of award for lump sum turnkey contract was planned by December 2011. To this extent, the commissioning (COD) of Block I (406 MW) is expected by June 2014 followed by Block II (814 MW) by August 2014. Land, Water and other statutory clearances are available. Tying up of gas for

the project is in progress. The group of ministers (GoM) has accorded approval for implementation of 1,220 MW Combined Cycle Power Project at Uran, according to company sources. The second project in the pipeline is the Bhusawal TPS Unit 6 with capacity of 1x660 MW. Land necessary for the project has already been acquired. Water required for the project can be made available from Hatnur Dam and Sudhgaon Bandhara as well as the balance water requirement of 7 MM3/year can be made from Ozerkheda Dam, informed company sources. Fuel supply has been assured by MahaGuj from Machhakata coal blocks. As far as environmental clearance is concerned, the Terms of Reference (TOR) was received from the Ministry of Environment & Forests, Govt. of India on August 27, 2010. Accordingly, Environment Impact Assessment (EIA) study has been carried out and application made to MPCB for public hearing. To expedite the process, NIT was issued on November 5, 2011 for Bhusawal Thermal Power Station (1x660 MW) on EPC basis. In fact, Government of Maharashtra has accorded approval for implementation of this project and the project is expected to be commissioned by October 2016. The third project on the list is the Nasik Thermal Power Station Unit 6 (1x660 MW) which is planned to install one coal based super critical unit of 660 MW capacity at Nasik TPS premises. Land for setting of this project is being made available by suitable readjustment of land in possession of Mahagenco. Fuel will be supplied to the project by from Mahanadi coal blocks. Environment Clearance entailing the Terms of Reference (TOR) has been received from the Ministry of Environment &

COAL INSIGHTSâ&#x20AC;&#x201A; 54â&#x20AC;&#x201A; February 2012

CORPORATE Forests, Govt. of India on June 9, 2011 whereas the Environment Impact Assessment study is in progress. The Government of Maharashtra has accorded approval for implementation of this project in its cabinet meeting held on November 9, 2011. Currently land acquisition is in progress for another TPP named the Paras Thermal Power Project Unit 5 (1x660 MW) which is planned to install one coal based super critical unit of 660 MW capacity at Paras. Allocation of water for this project has already taken place with Water Reservation department whereas coal supply has been assured from Mahanadi coal blocks. As for the Latur Coal Based Unit 1&2 (2x660 MW) or Gas based CCPP Block-I & II (2x750 MW) is concerned, MSPGCL signed Memorandum of Understanding (MoU) with BHEL in 2009 for formation of Joint Venture Company to set up 2x660 MW super critical Power Plant or 1,500 MW gas based combined cycle power plant at Latur. The JV agreement with BHEL was signed on November 11, 2010. The activities for land acquisition for 1,500 MW gas based project are in progress. The Divisional Commissioner has accorded approval for rates of the land required to be acquired whereas action for fuel linkage is in progress. It is envisaged to place the LOA for Main Plant by April 2012. To this extent the commissioning of the project is expected as under: (i) Gas based: Block-I by April 2015 and Block-II by June 2015 or (ii) Coal based: Unit 1 by April 2016 & Unit 2 by September 2016. After finalisation of coal based or gas based projects, Mahagenco will submit the proposal of this project to GoM for approval. The type and capacity of the project will be decided by Latur Power Company Ltd. The Dhopawe TPS Project Unit – 1 to 3 (3x660 MW), the fourth project on the cards of Mahagenco, is proposed to be implemented by way of JV structuring. The proposal for acquisition of land has been submitted to the Collector, Ratnagiri. Joint measurement for 194.81 Ha was completed in February 2009, whereas Joint measurement of the remaining land has been started from June 8, 2011. Water required for the project is available from Koyna tailrace whereas supply of coal will take place from Machakkata coal block. The Terms of Reference (TOR) has been issued by the Ministry of Environment & Forests, Government of India for carrying out Environment Impact Assessment (EIA) studies. For carrying out Marine EIA study in line with TOR, work order is placed on National Institute of Oceanography, Mumbai. The proposal has been submitted to GoM for in principle approval for JV structure, ownership and equity participation. In case of the Dondaicha TPS Unit – 1, 2, 3, 4 & 5 (5x660 MW), based on the reconnaissance survey, proposal for acquisition of 885 Ha of land at Vikharan, Methi, Kampur & Varjhari was submitted to the Collector, Dule in 2009. Joint measurement of 533.06 Ha land at Vikharan (238.11 Ha) & Methi (294.95 Ha) was completed in the month of June 2009. Due to the protest of land owners at Kampur & Varjhari, balance land of 315.49 H (private) & 112.21 H (Govt.) at Vikharan for ash disposal was identified and proposal for

its acquisition submitted to the Collector. Coal required for Unit 1&2 (Stage-I) will be made available from Chendipada coal block, Orissa. The U.C.M (Uttarpradesh-ChattisghadMaharashtra) JV company who has been allotted the coal block have appointed MDO to develop the said mine. Coal needed for Unit 3, 4 & 5 (Stage-II) is proposed to be made available from Machhakata coal block in Orissa. However, if Dhopawe 3x660 MW project is approved by GoM, the coal available from this coal block will be diverted to Dhopawe project and the coal required for Dondaicha Stage-II project will be made available from Mahanadi coal block in Orissa. In case of delay in availability of coal from Mahanadi coal block, coal will be made available from tapered linkage. The Terms of Reference (TOR) has been received from Ministry of Environment & Forests, government of India on May 5, 2011 and Environment Impact Assessment study is in progress, according to company sources. Another coal based Thermal Power Project near Kanpa (2x660 MW) has been proposed for implementation by way of JV structuring. Preliminary activities for land acquisition are in progress. For grant of long term coal linkages, follow up is going on with Ministry of Coal as well as the Central Electricity Authority. The coal based thermal power project in Mendki with a capacity of 2x660 MW has been proposed for implementation by way of JV structuring. Preliminary activities for land acquisition are in progress. For grant of long term coal linkages, follow up is going on with Ministry of Coal. Lastly, the coal based Thermal Power Project near Manora has been proposed for implementation by Mahagenco near Manora in Gondia District. Preliminary activities for land acquisition are in progress. For grant of long term coal linkages, follow up is going on with Ministry of Coal/ CEA. Mahagenco moves HC The Maharashtra State Power Generation Company Limited (Mahagenco) has moved the judiciary challenging a lower court's order of January 6 directing it to lift 2.15 tons coal from Western Coalfields Limited (WCL) mines to transport it to a nearby thermal power station. According to the petitioner, WCL had expertise in this task and it was an important part of fuel supply agreement between the two entities. Terming the lower court order as "impractical", the generation company contended that it ignored the coal transportation practice including difficulty in transporting coal from pit head to the railway siding. In their appeal filed under Section 37 of the Arbitration and Conciliation Act, Mahagenco argued that it had already obtained consent of former Chief Justice of India V.N. Khare to act as an arbitrator while WCL had failed to do so. The generation company has prayed for modification of a lower court order and also a direction to the coal company to transport the same from their mines to railway siding. The petitioner had accused WCL of misusing its position to deny legitimate supply of coal to its thermal power station, leading to loadshedding in the state.

COAL INSIGHTS 55 February 2012

expert speak

Jharia coalfields must be evacuated to augment coking coal production J.P. Panda

oking coal is one of the most critical steel making raw materials and domestic availability is limited. Steel makers thus have no option but to import coking coal. Total coking coal reserves in the country is 34 billion tons, approximately 12 percent of the total reserves of 285 billion tons. Occurrence is also limited to mostly Jharkhand and the Jharia coal basin is the biggest coking coal reserve of this country. If the country has to augment its own coking coal production and reduce dependence on imports, it does not have any alternative but to go for evacuating the Jharia Coalfields. Apart from reducing dependence, the import bill may also become very high as global coking coal price is moving up daily and may touch as much as $500 per ton in the near future. Therefore if we conduct a cost benefit analysis of importing 100 million tons (mt) of coal at $500 per ton at the port plus transportation charges to the steel plant and cost of infrastructure to handle to handle 100 mt of coking coal and compare it with the cost of evacuation of townships, building of new townships and the mining cost of working at a very high coal:overburden ratio, we will find the latter option will be far more economical. Problems of Jharia coalfields The Jharia coalfield is one of the oldest coalfields of India which started mining in the mid 18th century and is also one of the biggest problematic areas from the mining point of view. It has been exploited for more than 150 years leaving behind a landscape riddled with fire, subsidence etc. There are 65 surface and underground fires in the coalfield and billion tons of coal locked up due to fire. Depillaring of pillars cannot be done in the area due to problem of blocked reserves under townships, underground and surface fire, waterlogged workings etc. There are townships like Jharia , Kirkend, Katras etc, under which huge coking coal reserves are blocked. Unfortunately, nearly 60 percent of the prime coking coal has been lost due to poor extraction technology. The whole of Jharia coalfields has on the surface a habitation of nearly 12 lakh people who need to be evacuated. In any case they are

in the danger zone because of the fire underneath and have to be evacuated in course of time. A Jharia Action Plan is in operation for the evacuation of endangered persons. Planning for Jharia coal basin Immediately after nationalization of coking coal in the year 1971, Polish mining engineers planned for an integrated development of the whole coal basin, dividing it into 10 to 11 opencast blocks and five to six underground blocks. Somehow the management was so shortsighted at that point of time that it did not approve such a balanced integrated approach. The result is that we are facing acute shortage of coking coal at an exorbitant cost to the nation. However, I believe it is not too late even now. I believe the shortage of coking coal in the country can be met by subdividing the Jharia coal basin into mega opencast projects This assumes a lot of importance at a stage when the coking coal import may touch 100 million tons per annum (mtpa) by 2020 at an astronomical cost of nearly $50,000 million. Even if a fraction of this amount is utilised, then Jharia and its neighbouring townships can be evacuated. A cost benefit analysis, as I mentioned earlier, will show that evacuation of the townships will be a cheaper alternative. The upper seams of Jharia coalfield are prime coking coal, i.e seams XVIII to IX seam and semi coking are VIII to V seam and the rest are non coking. Mega washeries may be set up for washing the run of mine. The washed coal is used by steel plants. The Damodar river and a few rivulets are passing through the Jharia coalfields and a lot of coal is blocked under the river and the rivulets. As I already mentioned, a lot of prime coking coal which has been lost due to poor extraction rate of the upper coking coal seams can be taken out once the surface is freed from townships. Once the fire is dug out, huge quantities of prime coking coal will be released for extraction. Also, the Damodar and the rivulets should be diverted if necessary for releasing the coal underneath. Fire and subsidence is threatening a large population of the Jharia Basin. Even the townships of Jharia, Kirkend and Katras etc are threatened. An approved project, the Jharia master plan of approximately `10,000 crore envisages that 79,159 houses will be rehabilitated. Since the DGMS has already mentioned that most of the areas are unsafe for be living, it will be prudent for the government to act before any disaster happens.

COAL INSIGHTSâ&#x20AC;&#x201A; 56â&#x20AC;&#x201A; February 2012

Expert Speak The master plan can be extended further to evacuate the Jharia, Kirkend and Katras townships in a phased manner and make the whole area free from habitation. After that, the entire BCCL operations can be converted into a few mega projects of 40 to 50 mtpa capacity mines. Mega project planning should include infrastructure planning of the whole coalfield/coal basin or the mega coal mine, involving the Planning Commission, ministry of coal, ministry of railways, ministry of power and ministry of environment. All coal mega projects should be treated at par with UMPPs of the power sector. A single window clearance should be aimed for all the mega projects. Comprehensive mine planning including R & R package and mine closure plan can be sanctioned at one go. New and modern townships can be built to settle the PAPs (Project Affected People) and employment opportunities can be created by building skill development centres. Some advantages of mega opencast projects are: ♦♦ All the coal lost due to underground mining can be recovered; ♦♦ All fires can be dug out and environ can be made very clean; ♦♦ The time taken for all clearances, like environment and forests, is the same as that of small project. Indeed it is always advisable to go for environment clearance for the whole Jharia coal basin; ♦♦ The infrastructure such as rail, road etc. can be planned much in advance;

♦♦ Large coal washeries can be built in the peripheries for beneficiation of coal; ♦♦ The mechanisation level can be very high and manpower requirement will be much less; ♦♦ The environment management can be managed by a highly skilled team and indeed zero pollution level can be easily achieved and maintained; ♦♦ The backfilling and post mining restoration of ecology or the mine closure plan can be done in a much better way; ♦♦ The CSR (corporate social responsibility) and other needs of local population can be met due to higher profit; ♦♦ Very high capacity HEMM (heavy Earth Moving Machinery) like Draglines of 122 m3 bucket capacity with 128 m boom length, rope shovels of up to 63 m3 capacity, hydraulic shovels with 50 m3 bucket capacity and dumpers with 360 to 400 t payload and dozers up to 860 HP are the maximum sizes presently available in the market. Coal India has already procured and inducted 42 Cum shovel and 240 ton dumpers at Gevra OCP producing currently 35 mt that is likely to go up to 50 mt. The necessary expertise is available with Coal India, which can be of huge advantage in mining mega projects. (The author is managing director of Priya Mining Consultancy and Services Ltd, which provides consultancy on both underground and opencast coal mines, including EMP-EIA, forest clearance etc. The company has also produced CDs on a wide variety of subjects including all DGMS circulars from 1957 till December 2010, a history of disasters in coal mines for the last 100 years and safety and productivity improvement in both opencast and underground mining. The author can be contacted at jppanda2003@yahoo.com.)

COAL INSIGHTS 57 February 2012

Government

Procedure for coal block auction by competitive bidding notified

Coal Insights Bureau

he government will fix a “floor price” and “reserve price” for auctioning captive coal blocks through competitive bidding route to private sector companies and government sector companies respectively, but will fix a separate procedure for allotting blocks to power projects under competitive bids for tariff, The procedure for allotment of coal blocks were announced by a notification by Ministry of Coal, on February 2, nearly six months after the ministry came out with four sets of drafts inviting suggestions from stakeholders to finalise the rules and regulations for the auction. According to the notification, “floor Price” will be the minimum price fixed by the Central Government for an area containing coal offered for auction by competitive bidding whereas “reserve price” will be applicable price for an area containing coal which is to be allotted otherwise than through auction by competitive bidding. Competitive bidding The notification says that the Central Government will identify the area containing coal for allocation through auction by competitive bidding and will earmark areas containing coal for each specified end use separately for the purpose of auction. The government will invite offers through auction from the companies engaged in the business of specified end uses as mentioned in Section 11A of the Mines and Minerals (Development and Regulation) Act, 1957 for the allocation of coal or lignite blocks in the areas identified and then notify a floor price for each identified area. The companies intending to participate in competitive bidding would be required to submit their offers in two parts i.e. technical bid; and commercial bid, and the successful bidder would be allocated the area containing coal, the notification said. Government companies The notification says that Central government will identify the area containing coal for allocation to the Government company or corporation and will also earmark the area containing coal for mining or other specified end use, separately for the purpose of allocation after fixing a reserve price for each of the areas. The Central Government will then circulate to the State Government and concerned Ministries of the Central Governmental list of the areas containing coal identified inviting applications from the government companies or

corporations for allocations. The applications received would be considered in consultation with concerned state governments and the ministries of the Central Government, it said. The notification further said that the company or corporation for allocation of area containing coal would be selected from amongst the eligible applicants and the areas would be allotted to the selected Government company or corporation. Competitive bids for tariff Detailing the procedure for allocation of area containing coal to a company or corporation awarded a power project on the basis of competitive bids for tariff, the notification said that the Central Government will identify the area containing coal for allocation to a company or corporation awarded a power project on the basis of competitive bids for tariff for the purpose of reconnaissance permit, prospecting licence or mining lease from the State Government. The central government will also fix a reserve price for each area and circulate to the State Government and the Ministry of Power of the Central Government a list of the areas for inviting applications from eligible Government companies and corporations for allocation, it said. The notification further said that the applications received would be considered in consultations with the concerned State Governments and the Ministry of Power of the Central Government. Thereafter, the Central government shall earmark the area containing coal to the selected State Governments for allocation to the company or corporation awarded a power project on the basis of competitive bids for tariff. It further said that the State Governments shall select a company or corporation on the basis of competitive bids for tariff and recommend for allocation of area containing coal to such company or corporation and the allocation would be made to selected company or corporation. The notification said that the proceeds of the auction and reserve price shall be transferred to the concerned State Government where the area is located. The notification said that the Central Government shall enter into an agreement with the allocatee company. In case of contravention or non-fulfillment of the obligations under the agreement or the terms and conditions of allocation, government reserves the right to take appropriate action, including the right to de-allocate the area containing coal after giving reasonable opportunity of being heard.

COAL INSIGHTS 58 February 2012

International

US power sector coal consumption to decline in 2012: EIA Coal Insights Bureau

he Energy Information Administration (EIA) of the US has estimated that US coal consumption for electricity generation fell by 4 percent to 40 million short tons (million s.t) in 2011. The agency, which is an independent statistical organisation within the US Department of Energy, further said that electric power sector coal consumption in the US is expected to decline by an additional 2 percent in 2012. This is so because generation from natural gas, nuclear and wind would register significant growth while electricity consumption would grow by less than 1 percent, going forward. Electric power sector coal consumption would continue to decline in 2013 as increased output from other generation sources would help meet growing demand for electricity. The marginal drop in consumption and continued inventory withdrawal would lead to a decline in production as well. On the price front, the agency said, delivered coal prices to the electric power sector have increased steadily over the last 10 years and this trend continued in 2011, with an average delivered coal price of $2.40 per MMBtu (5.8 percent increase from 2010). Looking forward, several factors are exerting downward pressure on the average delivered coal price, including lower demand for coal to generate electricity due to lower natural gas prices and concerns about the effects of the implementation of pending environmental requirements. EIA forecasts the average delivered coal price to be slightly lower than the 2011 level in 2012 and 2013. Electricity demand The agency expects that the total US consumption of electricity will rise slightly during 2012 and grow by 1.8 percent during

US coal production (million short tons)

Source: EIA

2013. Much of the growth in consumption during 2012 will come from the commercial and industrial sectors. In contrast, moderate weather this year leads to reduced consumption in the residential sector. Temperature during January was much warmer than normal, particularly in the Southeast, where a large proportion of homes heat with electricity. This lower winter consumption of electricity combined with projected lower summer temperatures is expected to push electricity sales to the residential sector down 1.2 percent in 2012. However, the total number of US households is expected to grow 1.3 percent during 2013, which would be the highest growth rate since 1998. The increased number of households is projected to lead to a relatively strong 2.1 percent increase in residential electricity consumption in 2013.

A mountain top mine in West Virginia

COAL INSIGHTSâ&#x20AC;&#x201A; 59â&#x20AC;&#x201A; February 2012

INTERNATIONAL Oil consumption In 2011, total US liquid fuels consumption fell by 340,000 bbl/d (1.8 percent) from 2010. Motor gasoline consumption accounted for much of that decline, shrinking by 250,000 bbl/d (2.8 percent). In contrast, distillate fuel oil consumption rose by 60,000 bbl/d (1.5 percent), brought about by recovery in industrial output and freight transport. Despite the prospects for continued economic recovery and projections of slight increases in petroleum product prices, the next two years are expected to see only small increases in total liquid fuels consumption, with growth of about 30,000 bbl/d (0.1 percent) in 2012 and 90,000 bbl/d (0.5 percent) in 2013. Motor gasoline consumption, constrained by slowing driving age population growth and the improving fuel economy of new vehicles, is forecast to fall slightly in both 2012 and 2013. Distillate fuel consumption, however, would continue to rise by an annual average of 60,000 bbl/d through 2013. Trade On the export front, the agency said that US coal export of 107 million s.t in 2011 was the highest since 1991. In anticipation of continued strong exports, several North American ports have announced plans to expand facilities to export coal. Facilities have been upgraded in the Hampton Roads, VA area, and

US coal consumption (million short tons)

Source: EIA

significant terminal upgrades to Gulf Coast coal handling facilities are currently underway. Canada’s Pacific coal terminals are undergoing expansion to meet Asian demand for coal and to help facilitate increasing exports from the US Western Region. Several potential sites for new coal export facilities have been identified in the Pacific Northwest (Oregon and Washington), but no final decisions have been made.

COAL INSIGHTS 60 February 2012

INTERNATIONAL

India-Australia trade to reach ` 2,000 billion by 2015 Sanjukta Ganguly

ndia’s trade relationship with Australia is set to hit a new milestone as the bilateral trade between the two countries is expected to reach `200,000 crore (A$40 billion) in the next three years, according to a recent report by Grayson Perry, Australian trade and investment commissioner. Indian investment in Australia has already reached an estimated `50,000 crore (A$10 billion) due to the country’s abundance of natural resources, economic and political stability as well as the world class infrastructural facilities available in the country. This has led to major Indian investments in Australia in coal, gas, minerals, agricultural production and processing sectors to support India’s need for energy and food security, Perry said while addressing a seminar organised by the Australian Trade Commission in collaboration with Gujarat NRE Coke Limited. Taking a step forward, further investment particularly in the mining sector is expected in the coming days as the country boasts of a huge reserve of coking coal which will be able to meet the requirement of the Indian steelmakers to a large extent. Speaking at the seminar, Arun Kumar Jagatramka, Chairman and Managing Director of Gujarat NRE Coke Limited said, “We are the only Indian company to own and operate hard coking coal mines in Australia. Our hard coking coal production is being increased from 2 million tons per annum (mtpa) to 6 mtpa by 2015, making us one of the top ten hard coking coal producers in the world.” “The coking coal assets in Australia provide us with the security of supply of the raw material for the met coke plants in India,” he added. In fact, assessing the opportunities and advantages of holding coking coal mines in Australia, many other Indian

firms including GVK Power, GMR Infrastructure, JSW Steel and Essel Mining of the Aditya Birla group are also coming forward to own such assets there. Companies which are already negotiating deals for strategic equity in coking coal mines in Australia include state-owned Steel Authority of India Limited (SAIL) JSW Steel, Adani group etc., as per the report. Indian companies, particularly steel manufacturers, have been looking to shore up supplies of coking coal to meet their current needs and obtain future reserves that would be essential to feed steel capacities that have been planned for the near future. Moreover, the demand for coking coal is expected to increase further as new capacities are being commissioned, according to an analysis by Coal Insights. India, Australia’s fourth largest trading partner, is all geared up to tap the immense business opportunities that exist in the latter and hence has embarked upon a number of initiatives to enhance its business activities in Australia, Perry said. “On the other hand, eastern India is also a significant business destination for Australian companies. Sectors of potential Australian involvement in Eastern India include across mining, education based learning and skill development, food and beverage, agribusiness, infrastructure, clean energy solutions for energy generation as well as other areas,” he added. Hence, the two-way trade between the two countries which has already reached ` 110,000 crore (A$22 billion) in 2010-11 and is showing a steady growth till now, is likely to take an exponential jump in the days to come as more and more business houses are ready to invest. The buoyant IndiaAustralia bilateral trade in turn is likely to act as the key driver in the Australia-India relationship as well.

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

COAL INSIGHTS 61 February 2012

logistics

Indian Railways Apr-Jan commodity freight revenue up 9.7% Coal Insights Bureau

ndian Railway’s revenue earnings from commodity wise freight traffic moved up by 9.70 percent to `55,382.80 crore during the first 10 months (April-January) of 2011-12 from `50,487.91 crore during the corresponding period of 2010-11, according to information available with Coal Insights. The commodity-wise freight traffic volume during the period increased by 4.76 percent to 791.84 million tons (mt), compared to 755.86 mt during the corresponding period last year. The Net Tonne Kilo Metres (NTKM) went up from 498,014 million during April 2010 to January 2011 to 524,186 million during April 2011 to January 2012, showing an increase of 5.26 percent. The data revealed that the Railways’ revenue earnings in January 2012 was `6,173.57 crore while freight traffic volume stood at 87.03 mt and NTKM at 57218 million. The Railways earned `2,583.54 crore from transportation of 41.35 mt of coal in January 2012, marginally higher than `2,548.54 crore earned from transportation of 41.01 mt coal in December 2011. However, earnings from transportation of iron ore for exports, steel plants and other domestic users fell to `481.60 crore (8.25 mt) in January 2012 from `543.64 crore (8.94 mt) in December 2011. Earnings from transportation of cement increased to `615.32 crore (9.92 mt) in January 2012 from `562.73 crore (9.37 mt) in December 2011, while that from foodgrains was up to `434.18 crore (4.24 mt) from `403.71 crore (3.94 mt). According to the data, earnings from transportation of petroleum oil and lubricant (POL) in January 2012 fell to `322.21 crore (3.46 mt) from `328.89 crore (3.52 mt) in December 2012. Earnings from transportation of pig iron and finished steel from steel plants and other points increased to `403.34 crore (3.23 mt) in January 2012 from `369.32 crore (3.10 mt). Revenues earned from transportation of fertilizers fell to `462.01 crore (5.32 mt) in January 2012 from `484.77 crore (5.61 mt) in December, while earnings from transportation of raw material for steel plants, except iron ore, by container service increased to `312.78 crore (3.45 mt) from `100.41 crore (1.12

mt). Earnings from other goods remained flat at `458.62 crore (6.60 mt) in January 2012, compared with `456.80 crore (6.74 mt) in December 2011. Volume of freight and earnings by the Railways in January 2012 vs January 2011 Commodity

Quantity (in mt) Jan'11

Jan'12

Earning (in Rs crore) Jan'11

Jan'12

Coal i) for steel plants

4.02

3.92

167.38

ii) for washeries

0.17

0.12

2.4

0.96

25.44

28.11

1527.13

1809.14

iii) for thermal power houses iv)for public use

179.91

8.38

9.2

498.09

593.53

38.01

41.35

2195

2583.54

1.31

1.21

100.87

99.97

i) from steel plants

2.38

2.49

284.61

342.66

ii) from other points

0.67

0.74

61.21

60.68

iii) Total

3.05

3.23

345.82

403.34

i) for export

1.92

0.32

400.81

90.2

ii) for steel plants

3.97

4.94

118.98

181.21

iii) for other domestic users

4.21

2.99

234.3

210.19

iv) Total

10.1

8.25

754.09

481.6

Cement

8.77

9.92

529.82

615.32

Foodgrains

4.03

4.24

400.5

434.18

Fertilizers

4.21

5.32

343.33

462.01

Mineral Oil (POL)

3.48

3.46

303.85

322.21

v) Total Raw material for steel plants except iron ore Pig iron and finished steel -

Iron ore -

Container Service i) Domestic containers

0.9

0.8

85.09

80.91

ii) EXIM containers

2.39

2.65

207.45

231.87

iii) Total

3.29

3.45

292.54

312.78

6.3

6.6

432.54

458.62

82.55

87.03

5698.36

6173.57

Balance other goods Total revenue earning traffic.

COAL INSIGHTS 62 February 2012

Logistics

CIL to invest `6,000 cr on rail infrastructure

Coal Insights Bureau

oal India Ltd (CIL) has proposed to invest a total of around `5,000 to `6,000 crore on a number of railway projects in its mining areas in Jharkhand and Chhattisgarh for smooth evacuation of coal from its mines and transportation to consumers, the company’s director (finance) A.K. Sinha said. As part of this initiative, CIL has identified projects in MaanRaigadh coalfields in Chhattisgarh and North Karanpura coalfields in Jharkhand where it will set up rail tracks, he said. He said that around `1,600 crore will be spent only for SECL’s MaanRaigadh field, adding that the company plans to lay a 130 km rail line between Barood and Anuppur and another 91 km between Bhoopdevpur to Barood in North Karanpura. In addition, there are two to three projects like KaranpuraHazaribagh, Angul- Kalinganagar, Jharsuguda-Sardega and Macluskygunge-Piparwar line of 31 km for doubling of track. The Angul-Kalinganagar rail track will help evacuate coal from Talcher coalfields while Jharsuguda-Sardega line will be in Ib Valley. CIL has already proposed investment of `350 crore for Barood and Anuppur section that will connect to Katni line and `1,200 crore for Bhoopdevpur to Barood section which will connect to Howrah-Mumbai line for which they are carrying out survey for laying down the rail line, Sinha said. He said the Railways had been trying to get forestry clearances for the last three-four years for Tori-Shivpur line in North Karanpur and they have got the forest clearance recently. Around 100 million tons (mt) of coal can be evacuated from this line, he added. “We have potential in these two coalfields, but the main problem that we are facing is in evacuation of coal and we are also facing some problem in Relief and Rehabilitation (R&R). We are carrying out some exercises to solve both these problems and once that is done, we will be able to produce more coal,” Sinha said. He said the Prime Ministers’ Office has recently directed them that if the company is not able to spend their planned investment amount on new projects due to delays in getting clearances, then it can invest on infrastructure projects in and around coalfields so that infrastructure could be made ready. CIL’s interim chairperson and additional secretary (coal) Zohra Chatterji said this is a very important development which is going to help production and transportation of coal. “These projects are being monitored intensively by the coal ministry. On February 29, the coal secretary will hold a meeting and these will all work as an important link for increased coal production,” Chatterji said. Sinha said he had meetings with Secretary of Chhattisgarh and Jharkhand and they have agreed to work on the project “Both MaanRaigadh and North Karanpura coalfields have huge potential, but they are far away from railways sidings or main corridor of the railways. So we proposed that we are ready to invest in that. The railway ministry has called other

senior officials of other PSUs like SAIL who are operating in these areas. We have agreed to form a special purpose vehicle to that the corridors can be utilized by everybody,” he said. Sinha feels that the plans for developing the corridors could be formulated in the next one or two months. “We have already carried out a survey in the MaanRaigadh area, for the proposed railway line and that has already been placed to the Railway Board. Once we get the approval from the Railway Board, we will give the award to RITES for development of the corridor,” he said. Asked who will have majority stake in the proposed railway corridors, Sinha said all the PSUs (SAIL, RINL, CIL, Indian Railways) and other private sector steel companies operating in those areas will sit together and decide on the quantum of investment and the shares or stakes will be decided as per the discussions at the meetings. “We may sit again in Chhattisgarh in March to take the matter forward. Even if the matter is finalised fast, it will take a couple of years to lay the railway line because there are issues like acquisition of land and forestry clearances,” Sinha added. Sinha said CIL has already chalked out investment plans, after discussion with PMO, of whatever surplus fund it has. “We have some plans for investment, particularly in the infrastructure area because the government of India envisaged for the Eleventh and Twelfth Plans a growth of 9.5 percent. “To achieve this kind of growth, we have to invest on railways, ports and other infrastructure. We also need electricity to achieve this kind of growth for which we need coal,” he added. Capex plans Dwelling on the subject of capital expenditure for 2012-13, Sinha said the company has plans to invest `4,275 crore during the year on business as usual scenario, but it may increase. “In 2012-13, we will do some aggressive investment of about `4275 crore, particularly in different projects so that production picks up,” Sinha said. The capex will be primarily on plant and machinery, HEMM, land acquisition and land development, he said. Sinha said the company on an average spends at least 6-8 percent of its total expenditure on land and that will go up as land value in different states goes up. Around 66 percent of expenditure will be on HEMM and plant and machinery and that will also go up because they are now purchasing high capacity equipment like 240-ton dumpers, he added. For 2011-12, the capex plan was around `4220 crore and it has already spent around `2,500 crore till December 2011 and perhaps in the next three months, it will be able to spend around `1,700 crore to achieve the target, he said. The company has cash reserve of `55,000 crore as on December 31, 2011, Sinha said. He said CIL has planned to invest a total of around `25,000 crore during the five years of the Twelfth Plan (2012-13 to 2016-17) besides a separate provision for foreign acquisitions.

COAL INSIGHTS 63 February 2012

Logistics

Port traffic down 0.24% in Apr-Jan Coal Insights Bureau

he 12 major Indian ports have handled 467.098 million tons (mt) of traffic during the April-January period of the current financial year, 0.24 percent lower than 468.199 mt recorded during the corresponding period last year. According to data released by the Indian Ports Association (IPA), the movement of thermal coal through the major ports was up 14.42 percent to 41.178 mt during April 2011-January 2012, compared to 35.988 mt achieved during the same period last year. The volume of coking coal, however, fell marginally by 1.29 percent to 23.978 mt during the same period, the data showed. Among the major ports, Paradip port had the distinction of handling the highest quantum of thermal coal of around 13.283 mt during the period. Visakhapatnam port, on the other hand, shipped the highest quantity of 5.836 mt of coking coal during the period. Movement of coking coal through Paradip, Kolkata, Chennai and Kandla ports declined during the period when compared to the corresponding period last year. Movement of iron ore through the major ports showed a significant drop of 25 percent during the period under review. The major ports together handled 52.147 mt of iron ore during the April-January period compared to 69.525 mt in

the corresponding period last year. Mormugao port handled the highest volume of 24.219 mt of iron ore during the AprilJanuary period of the current fiscal. This volume, however, was about 6.895 mt less than the iron ore traffic moved during the same period last fiscal. The port has shown a negative growth of 17.53 percent during the period. Movement of container traffic both in terms of tonnage and TEUs showed an increase during the April-January period. The major ports handled 100.597 mt, besides 6.530 million TEUs during the period under review compared to 93.128 mt of tonnage and 6.256 mt of TEUs respectively. Six major ports showed positive growth in traffic handling during the April-January period of the current fiscal, while the remaining six showed negative growth on a year-on-year basis. In terms of growth, Ennore port topped the list with a record 43.94 percent increase in cargo throughput. New Mangalore port’s growth was lowest at about 3.44 percent during the period. In terms of traffic volume, Kandla port clinched the top rank with a cargo volume of over 68.563 mt recorded for the period. The Mormugao port registered the highest decline of 17.53 percent in traffic handling during the period.

COAL INSIGHTS 64 February 2012

power sector update List of critical thermal power stations having critical coal stock of less than 7 days (as on 31-01-2012) NORTHERN 1

Badarpur

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

Indira Gandhi

Due to less receipt of coal during the month of January, 2012

Kota TPS

Due to inadequate availability of coal at Chabbra TPS rakes were diverted.

Suratgarh

Due to inadequate availability of coal at Chabbra TPS rakes were diverted.

Anpara TPS

Due to higher generation

Harduaganj TPS

Due to less receipt of coal during the month of January, 2012

Panipat

Due to inadequate availability of coal

Chabbra

Due to inadequate availability of coal

Dadri (NCTPP)

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

Rihand STPS

Due to inadequate availability of coal

Tanda

Due to higher generation

Unchahar

Due to less import

Anpara C

Due to inadequate availability of coal

WESTERN 14

Koradi

Due to less receipt of coal during the month of January, 2012

Bhusawal TPS

Due to less receipt of coal during the month of January, 2012

Sikka

Due to less receipt of coal during the month of January, 2012

Sanjay Gandhi

Due to higher generation

Parli TPS

Due to less receipt from SCCL and MCL during the month of January, 2012

SOUTHERN 19

Dr. N. Tata Rao

Due to higher generation

Tuticorin

Due to less receipt of coal from MCL during the month of January, 2012

Rayalaseema

Due to less receipt from SCCL /MCL during the month of January, 2012

Simhadri

Due to higher generation

Ramagundem STPS

Due to higher generation

Raichur

Due to less receipt from WCL /MCL during the month of January, 2012

Bellary

Due to less receipt of coal from captive block during the month of January, 2012

EASTERN 26

Muzaffarpur TPS

Coal supply regulated as Bihar declined to take its electricity due to financial viability.

Kahalgaon

Due to inadequate coal availability in linked mine ECL (Rajmahal) and inability of railways to supply more imported rakes due to change in tracks.

Bokaro-B

Due to higher generation

Talcher STPS

Due to less receipt of coal during the month of January, 2012

Durgapur steel TPS

Coal supply yet to start by CIL

Kodarma TPS

Coal supply yet to start by CIL

Bandel

Due to huge outstanding dues coal supply affected.

Sterlite TPP

Due to less availability of coal

Kolaghat

Due to huge outstanding dues coal supply affected.

Bakreswar TPS

Due to huge outstanding dues coal supply affected.

Sagardighi

Due to higher generation

Santaldih

Due to huge outstanding dues coal supply affected.

Farakka

Due to inadequate coal availability in linked mine ECL (Rajmahal)

Mejia

Due to Higher Turn around time of rakes between Raniganj and the power station and no import

Source: Central Electricity Authority

COAL INSIGHTSâ&#x20AC;&#x201A; 65â&#x20AC;&#x201A; February 2012

power sector update ALL INDIA ENERGY GENERATION, GENERATION (GWH) Category / Regions

Monitored Capacity (MW)

January 2012

Target April 2011 to March 2012

PROGRAMME

ACTUAL*

ACTUAL SAME MONTH (2010-11)

% OF PROGRAMME 98.76

103.31

588382.00 21077.00

% OF LAST YEAR

PROGRAMME

THERMAL

123416.92

712234.00

63966.00

63175.41

61149.91

NUCLEAR

4780.00

25130.00

2126.00

2903.94

2806.51

136.59

103.47

38748.40

112050.00

7192.66

7186.66

7573.30

99.96

94.93

97547.82

0.00

5586.00

93.00

126.32

125.01

135.83

101.05

5454.00

166945.32

855000.00

73377.66

73395.36

71654.73

100.02

102.43

712406.82

THERMAL

30733.26

173757.00

15723.00

16244.34

15504.26

103.32

107.77

143631.00

NUCLEAR

1620.00

8760.00

782.00

999.09

981.14

127.76

101.83

7351.00

HYDRO

14978.25

53474.07

2603.90

2932.16

2541.46

112.61

115.37

47491.80

TOTAL

47331.51

235991.07

19108.90

20175.59

19026.86

105.58

106.04

198473.80

THERMAL

42554.31

246627.00

22307.00

21508.60

21750.19

96.42

98.89

203323.00

NUCLEAR

1840.00

9874.00

864.00

1269.91

1192.53

146.98

106.49

8250.00

HYDRO

7392.00

14644.91

1315.30

1170.99

1597.56

89.03

73.30

12372.04

TOTAL

51786.31

271145.91

24486.30

23949.50

24540.28

97.81

97.59

223945.04

THERMAL

24780.80

156395.00

14207.00

14080.88

13649.10

99.11

103.19

128898.00

NUCLEAR

1320.00

6496.00

480.00

634.94

632.84

132.28

100.33

5476.00

HYDRO

11372.45

30493.04

2510.22

2590.50

2617.25

103.20

98.98

25696.57

TOTAL

37473.25

193384.04

17197.22

17306.32

16899.19

100.63

102.41

160070.57

24490.05

131047.00

11356.00

10913.53

9817.97

96.13

111.19

108820.00

HYDRO

3847.70

9305.99

540.83

361.91

623.31

66.92

58.06

8243.13

TOTAL

28337.75

140352.99

11896.83

11278.44

10441.28

94.80

108.02

117063.13

858.50

4408.00

373.00

425.32

428.39

114.03

99.28

3656.00

HYDRO

1158.00

4131.99

222.41

134.25

193.72

60.36

69.30

3711.28

TOTAL

2016.50

8539.99

595.41

559.57

622.11

93.98

89.95

7400.28

HYDRO BHUTAN IMP TOTAL NORTHERN REGION

WESTERN REGION

SOUTHERN REGION

EASTERN REGION THERMAL

NORTH EASTERN REGION THERMAL

Provisional based on actual-cum-assessment

COAL INSIGHTS 66 February 2012

Power sector update PROGRAMME AND PLANT LOAD FACTOR PLANT LOAD FACTOR % APRIL 2011 – January 2012

January 2012

APRIL 2011 - January 2012

ACTUAL SAME PERIOD (2010-11)

% OF PROGRAMME

% OF LAST YEAR

PROGRAMME

ACTUAL*

ACTUAL SAME MONTH (2010-11)

PROGRAMME

ACTUAL*

ACTUAL SAME PERIOD (2010-11)

580793.95

546010.15

98.72

106.37

70.04

76.38

80.17

68.39

72.17

73.59

26715.20

20660.52

126.75

129.31

61.06

81.66

81.72

61.32

76.10

61.59

114734.45

97742.64

117.62

117.38

5182.90

5485.10

95.03

94.49

727426.50

669898.41

102.11

108.59

146761.77

135973.17

102.18

107.93

71.35

81.30

84.62

71.27

77.15

77.57

8998.44

7642.71

122.41

117.74

69.15

82.89

81.40

65.85

75.63

64.24

57109.36

49300.18

120.25

115.84

212869.57

192916.06

107.25

110.34

203918.99

193955.35

100.29

105.14

70.71

74.11

81.00

69.43

71.16

73.60

11368.48

8288.40

137.80

137.16

63.11

92.77

87.11

61.05

84.13

61.34

17013.05

12311.37

137.51

138.19

232300.52

214555.12

103.73

108.27

129353.17

119700.72

100.35

108.06

77.62

87.68

88.09

72.27

80.26

78.12

6348.28

4729.41

115.93

134.23

48.88

64.65

73.15

56.49

65.49

58.12

28174.88

24659.39

109.64

114.26

163876.33

149089.52

102.38

109.92

97000.99

92763.68

89.14

104.57

61.79

65.59

67.57

62.44

61.78

65.74

8868.07

7881.48

107.58

112.52

105869.06

100645.16

90.44

105.19

3759.29

3617.23

102.83

103.93

0.00

3569.21

3590.22

95.32

99.41

7328.50

7207.45

99.03

101.68

ACTUAL

Source: Central Electricity Authority

COAL INSIGHTS 67 February 2012

Power sector update List of utility/organisation whose PLF achievement were lower than the respective programme during January 2012

THERMAL

Name of Power Station Achievement

Description

January 2012 Target

January 2012

Achivement

Target

Achivement

CAPACITY ADDITION (MW)

PLF in % Programme

Capacity Addition & Generation during Jan 2012

Shortfall

HYDRO NUCLEAR TOTAL

I. CENTRAL

2185.00

795.00

2932.50

260.00

60.00

100.00

66.00

0.00

220.00

2245.00

895.00

2998.50

480.00

GENERATION (MU)

KOBRA STPS

87.73

62.29

25.44

THERMAL

63966.00

63175.41

62959.77

61149.91

NUCLEAR

2129.00

2903.94

2006.00

2806.51

HYDRO

7192.66

7190.33

7262.62

7573.30

93.00

126.32

173.17

125.01

73377.66

73396.00

72401.56

71654.7.

KAHALGAON TPS

87.14

72.87

14.27

RIHAND STPS

95.43

93.16

2.27

TALCHER STPS

96.24

88.01

8.23

UNCHAHAR TPS

95.62

94.85

0.77

BARSINGSAR LIGNITE

60.22

51.73

8.49

GMDCL

75.27

28.50

46.77

TNGDCL

81.51

75.23

6.28

JSEB

27.06

5.18

21.88

BSEB

21.68

6.49

15.19

BHUTAN IMPORT TOTAL

Note: Generation (MU) achieved in December 2011 is provisional.

Target/Achievement in capacity addition (MW) during January 2012

II. STATE

Achievement in generation (MU) during January 2012

Source: Central Electricity Authority

Sector-wise PLF(%) programme and achievements (thermal) January 2012

April 2011 - January 2012

SECTOR PROG. (%)

ACH. (%)*

PROG. (%)

ACH. (%)*

Central Sector

77.27

86.39

73.59

80.82

State Sector

67.70

72.82

64.93

66.73

Pvt. UTL Sector

61.26

63.15

75.34

76.58

All India

70.04

76.38

68.39

72.17

Source: Central Electricity Authority

All India PLF (%) during January 2012

* Provisional based on actual-cum Assessment Source: Central Electricity Authority

COAL INSIGHTS 68 February 2012

Source: Central Electricity Authority

Power sector update Capacity Addition for December 2011 and April 2011 - January 2012 (MW) Schemes

Target 2011-12

Status of Schemes

Central State Thermal Pvt. Total Central State Hydro Pvt. Total Central Nuclear Total Central State All India Pvt. Total Source: Central Electricity Authority

3570.00 4101.00 6965.00 14636.00 715.00 195.00 1170.00 2080.00 1000.00 1000.00 5285.00 4296.00 8135.00 17716.00

January 2012 Target 500.00 500.00 1185.00 2185.00 60.00 0.00 0.00 60.00 0.00 0.00 560.00 500.00 1185.00 2245.00

April 2011 - January 2012

Achievement 0.00 0.00 795.00 795.00 100.00 0.00 0.00 100.00 0.00 0.00 100.00 0.00 795.00 895.00

Target 3570.00 3851.00 6965.00 14386.00 555.00 123.00 1170.00 1848.00 0.00 0.00 4125.00 3974.00 8135.00 16234.00

Achievement 2820.00 1500.00 6759.50 11079.50 100.00 81.00 1100.00 1281.00 0.00 0.00 2920.00 1581.00 7859.50 12360.50

Deviation (+) / (-) -750.00 -2351.00 -205.50 -3306.50 -455.00 -42.00 -70.00 -567.00 0.00 0.00 -1205.00 -2393.00 -275.50 -3873.50

Programme and Achievememt of Energy Generation (MU) Gen. Sch. Target 20011-2012 Sector-wise Programme Thermal Central Sector 279561.00 25398.00 State Sector 297818.00 26645.00 Pvt.IPP Sector 108835.00 10105.00 Pvt.UTL Sector 26020.00 1818.00 Total 712234.00 63966.00 Hydro Central Sector 42779.02 2229.56 State Sector 61941.98 4496.14 Pvt.IPP Sector 5764.00 310.19 Pvt.UTL Sector 1565.00 156.77 Total 112050.00 7192.66 Nuclear Central Sector 25130.00 2126.00 Total 25130.00 2126.00 Bhutan Import 5586.00 93.00 All India Central Sector 347470.02 29753.56 State Sector 359759.98 31141.14 Pvt. Sector 142184.00 12389.96 Total 855000.00 73377.66 * Provisional based on actual-cum-Assesment

January 2012 Achievement*

April 2011 - January 2012 % Ach.

Achievement*

% Ach.

25162.26 27189.11 8968.51 1855.53 63175.41

99.07 102.04 88.75 102.06 98.76

231316.00 245605.00 89756.00 21651.00 588328.00

230304.75 243729.07 84884.44 21875.69 580793.95

99.56 99.24 94.57 101.04 98.72

2191.04 4630.09 221.93 147.27 7190.33

98.27 102.98 71.55 93.94 99.97

37866.58 53277.39 5077.90 1325.95 97547.82

45404.89 61283.09 6638.61 1408.93 114735.52

119.91 115.03 130.74 106.26 117.62

2903.94 2903.94 126.32

136.59 136.59 135.83

21077.00 21077.00 5454.00

26715.20 26715.20 5182.90

126.75 126.75 95.03

30257.24 31819.20 11193.24 73396.00

101.69 102.18 90.34 100.02

290259.58 298882.39 117810.85 712406.82

302424.84 104.19 305012.16 102.05 114807.67 97.45 727427.57 102.11 Source: Central Electricity Authority

All India energy generation during April 2011 - January 2012

Capacity addition target & achievement (MW) April 2011 - January 2012

Source: Central Electricity Authority

Programme

Source: Central Electricity Authority

COAL INSIGHTS 69 February 2012

Power sector update Power Supply Position (Provisional) State/System/ Region Chandigarh

(Figures in net MU)

January 2012

April 2011 - January 2012

Requirement

Availability

Surplus/Deficit (-)

(MU)

112

Requirement

Availability

(%)

Surplus/Deficit (-)

(MU)

0.0

1,356

1,352

-4

(%) -0.3

Delhi

1,924

1,917

-7

-0.4

23,299

23,227

-72

-0.3

Haryana

2,936

2,845

-91

-3.1

31,211

29,903

-1,308

-4.2

719

753

4.7

6,785

6,734

-51

-0.8 -23.3

Himachal Pradesh Jammu & Kashmir

1,365

1,024

-341

-25.0

11,645

8,936

-2,709

Punjab

2,829

2,756

-73

-2.6

38,926

37,677

-1,249

-3.2

Rajasthan

5,003

4,776

-227

-4.5

41,761

40,064

-1,697

-4.1

Uttar Pradesh

6,965

6,032

-933

-13.4

67,550

59,943

-7,607

-11.3

947

945

-2

-0.2

8,740

8,506

-234

-2.7

22,800

21,160

-1,640

-7.2

231,273

216,342

-14,931

-6.5

Uttarakhand Northern Region Chattisgarh

1,204

1,178

-26

-2.2

12,224

11,864

-360

-2.9

Gujarat

6,350

6,333

-17

-0.3

62,269

62,038

-231

-0.4

Madhya Pradesh Maharashtra

5,372

4,480

-892

-16.6

41,052

34,586

-6,466

-15.8

13,529

11,234

-2,295

-17.0

118,415

98,265

-20,150

-17.0 -10.2

Daman & Diu

210

191

-19

-9.0

1,846

1,657

-189

Dadar Nagar Haveli

461

460

-1

-0.2

3,791

3,760

-31

-0.8

Goa

280

271

-9

-3.2

2,569

2,534

-35

-1.4 -11.3

Western Region

27,406

24,147

-3,259

-11.9

242,166

214,704

-27,462

Andhra Pradesh

7,486

7,205

-281

-3.8

74,178

69,614

-4,564

-6.2

Karnataka

5,744

4,987

-757

-13.2

48,762

43,615

-5,147

-10.6

Kerala

1,713

1,663

-50

-2.9

16,254

15,919

-335

-2.1

Tamil Nadu

6,818

5,876

-942

-13.8

70,469

65,070

-5,399

-7.7

Puducherry

143

141

-2

-1.4

1,796

1,769

-27

-1.5

Lakshadweep #

21,904

19,872

-2,032

-9.3

211,459

195,987

-15,472

-7.3

Bihar

1,286

982

-304

-23.6

11,889

9,263

-2,626

-22.1

DVC

1,463

1,384

-79

-5.4

13,530

13,005

-525

-3.9

490

473

-17

-3.5

5,065

4,938

-127

-2.5

Orissa

1,903

1,819

-84

-4.4

18,981

18,778

-203

-1.1

West Bengal

Southern Region

Jharkhand

2,880

2,815

-65

-2.3

32,094

31,710

-384

-1.2

Sikkim

0.0

300

296

-4

-1.3

Andaman- Nicobar#

202

162

-40

-20

8,046

7,497

-549

-6.8

81,859

77,990

-3,869

-4.7

-4

-7.5

500

458

-42

-8.4

496

474

-22

-4.4

5,133

4,854

-279

-5.4

Eastern Region Arunachal Pradesh Assam Manipur Meghalaya

-4

-10.0

477

436

-41

-8.6

162

118

-44

-27.2

1,609

1,225

-384

-23.9

Mizoram

-3

-8.6

331

296

-35

-10.6

Nagaland

-4

-9.5

479

438

-41

-8.6

Tripura N. Eastern Region All India

-2

-2.6

800

758

-42

-5.3

905

822

-83

-9.2

9,329

8,465

-864

-9.3

81,061

73,498

-7,563

-9.3

776,086

713,488

-62,598

-8.1

# Lakshadweep and A & N Islands stand-alone systems, power supply position of these, does not form part of regional requirement and availability. Source: Central Electricity Authority

COAL INSIGHTSâ&#x20AC;&#x201A; 70â&#x20AC;&#x201A; February 2012

Power sector update Peak Demand/Peak Met (Provisional) State/System/ Region Chandigarh

January 2012 Peak Demand

Peak Met

(MU)

(Figures in net MW) April’11 - January 2012

Surplus/Deficit (-) (MU)

Peak Demand

Peak Met

(MU)

(%)

Surplus/Deficit (-) (MU)

(%)

112

0.0

1,356

1,352

-4

-0.3

Delhi

1,924

1,917

-7

-0.4

23,299

23,227

-72

-0.3

Haryana

2,936

2,845

-91

-3.1

31,211

29,903

-1,308

-4.2

719

753

4.7

6,785

6,734

-51

-0.8 -23.3

Himachal Pradesh Jammu & Kashmir

1,365

1,024

-341

-25.0

11,645

8,936

-2,709

Punjab

2,829

2,756

-73

-2.6

38,926

37,677

-1,249

-3.2

Rajasthan

5,003

4,776

-227

-4.5

41,761

40,064

-1,697

-4.1

Uttar Pradesh

6,965

6,032

-933

-13.4

67,550

59,943

-7,607

-11.3

Uttarakhand Northern Region

947

945

-2

-0.2

8,740

8,506

-234

-2.7

22,800

21,160

-1,640

-7.2

231,273

216,342

-14,931

-6.5

Chattisgarh

1,204

1,178

-26

-2.2

12,224

11,864

-360

-2.9

Gujarat

6,350

6,333

-17

-0.3

62,269

62,038

-231

-0.4

Madhya Pradesh Maharashtra

5,372

4,480

-892

-16.6

41,052

34,586

-6,466

-15.8

13,529

11,234

-2,295

-17.0

118,415

98,265

-20,150

-17.0

Daman & Diu

210

191

-19

-9.0

1,846

1,657

-189

-10.2

Dadar Nagar Haveli

461

460

-1

-0.2

3,791

3,760

-31

-0.8

280

271

-9

-3.2

2,569

2,534

-35

-1.4

Western Region

Goa

27,406

24,147

-3,259

-11.9

242,166

214,704

-27,462

-11.3

Andhra Pradesh

7,486

7,205

-281

-3.8

74,178

69,614

-4,564

-6.2 -10.6

Karnataka

5,744

4,987

-757

-13.2

48,762

43,615

-5,147

Kerala

1,713

1,663

-50

-2.9

16,254

15,919

-335

-2.1

Tamil Nadu

6,818

5,876

-942

-13.8

70,469

65,070

-5,399

-7.7

Puducherry

143

141

-2

-1.4

1,796

1,769

-27

-1.5

Lakshadweep # Southern Region

21,904

19,872

-2,032

-9.3

211,459

195,987

-15,472

-7.3

Bihar

1,286

982

-304

-23.6

11,889

9,263

-2,626

-22.1

DVC

1,463

1,384

-79

-5.4

13,530

13,005

-525

-3.9

490

473

-17

-3.5

5,065

4,938

-127

-2.5

Orissa

Jharkhand

1,903

1,819

-84

-4.4

18,981

18,778

-203

-1.1

West Bengal

2,880

2,815

-65

-2.3

32,094

31,710

-384

-1.2

0.0

300

296

-4

-1.3

Sikkim Andaman- Nicobar# Eastern Region Arunachal Pradesh Assam Manipur Meghalaya

202

162

-40

-20

8,046

7,497

-549

-6.8

81,859

77,990

-3,869

-4.7

-4

-7.5

500

458

-42

-8.4

496

474

-22

-4.4

5,133

4,854

-279

-5.4

-4

-10.0

477

436

-41

-8.6

162

118

-44

-27.2

1,609

1,225

-384

-23.9

Mizoram

-3

-8.6

331

296

-35

-10.6

Nagaland

-4

-9.5

479

438

-41

-8.6

Tripura N. Eastern Region All India

-2

-2.6

800

758

-42

-5.3

905

822

-83

-9.2

9,329

8,465

-864

-9.3

81,061

73,498

-7,563

-9.3

776,086

713,488

-62,598

-8.1

# Lakshadweep and A & N Islands stand-alone systems, power supply position of these, does not form part of regional requirement and availability. Source: Central Electricity Authority

COAL INSIGHTS 71 February 2012

Power sector update Power supply to agricultural sector during January 2012 State/Region Northern Region Chandigarh Delhi Haryana HP J&K Punjab Rajasthan Uttar Pradesh Uttarakhand Western Region Chattisgarh Gujarat Madhya Pradesh Maharashtra Goa Southern Region Andhra Pradesh Karnataka Kerala Tamil Nadu Puducherry Eastern Region Bihar Jharkhand Orissa West Bengal

Average hours of supply 24 hrs./day N/A Three Phase Supply : average 10.40 hrs/day 24 hrs./day – Three phase supply: 4.94 hrs/day Three phase supply: 06.00 hrs/day Three phase supply: average 10.03 hrs/day 23.43 hrs./day

–

Three phase supply: 18 hrs/day – Only 8 hours power supply in staggered form in rotation of day and night is given to Agriculture. No supply during rest of 16 hours. Jyotigram Yojana 24 hrs. Three phase supply: 13:10 hrs /day (average) Single phase supply: 00:00 hrs./Day (average) Three phase supply: 8 hrs/day (average) Single phase supply: 16 hrs/day (average) No restriction Three phase supply: 07 hrs/day. Three phase/single phase supply: 06 hrs/day Three phase supply: 9 hrs/day

No restrictions No restrictions

– No supply: 6-12 hrs/day Single phase supply: 15 hrs/day

About 18 hrs About 20 hrs 24 hrs. Average about 23 hrs

–

* Data not furnished for current month.

Transmission lines (prog & achiv) January 2012

Sub-Stations (Prog & Achiv) January 2012

Fig. in ckt Kms Voltage Level/Sector +/- 800 kV HVDC Central Sector State Sector Total +/- 500 kV HVDC Central Sector JV/Private Sector Total 765 kV Central Sector State Sector Total 400 kV Central Sector State Sector JV/Private Sector Total 220kV Central Sector State Sector JV/Private Sector Total Grand Total

Programme 2011-12

Jan 2012 Prog. Achv.

Apr 2011-Jan 2012 Prog. Achv.

0 0 0

822 2 824

0 0 0

343 0 343 1015 64 0 1079

13 2 15 6007 2346 3037 11390

356 1 357

6762 2626 3013 12401

1538 280 1566 3384

6160 1333 988 8481

575 5992 0 6567 19792

46 30 575 155 1140 165 5982 3617 0 0 0 2 1186 195 6557 3774 4570 1617 17962 12612 Source: Central Electricity Authority

Fig. in MVA/MW Voltage Level/Sector

Programme 2011-12

Jan 2012 Prog.

Apr 2011-Jan 2012

Achv.

Prog.

Achv.

+/- 500 kV HVDC Central Sector

State Sector

Total

0 3000

765 kV Central Sector

3315

State Sector

1000

Total

4315

1000

3000

400 kV Central Sector

2630

1945

2000

7225

State Sector

5780

315

630

5235

4760

JV/Private Sector Total

8410

315

2575

7235

11985

220 kV Central Sector State Sector JV/Private Sector

940

840

180

13715

460

3335

9100

12090

127

Total

14655

460

3335

9940

12397

Grand Total

27380

775

5910

18175

27382

COAL INSIGHTS 72 February 2012

Source: Central Electricity Authority

Power sector update Power cuts on industries during January 2012 State/Region

Energy Cut

Demand Cut

Northern Region Chandigarh

No notified power cut

Delhi

No notified power cut

Haryana*

0.90 MU/day and 400MW ( Restriction timings :18:00 hrs to 20:15 hrs)

HP J&K

2.00 MU / day on HT/LT industries

0 MW cut from 18:30 hrs to 21:30 hrs.(peak hrs.) on HT/LT industries.

No Cuts on essentail loads like Hospitals,Defence,PHE(Water Supplies),Irrigation etc. and on domestic,commercial and mixed load feeders that have 100% consumer metering ; 9 Hrs and 30 minutes domestic,commercial and mixed load feeders with partial or no consumer metering ; 3 hours to 8 hours,depending on system peak load demands and system

Punjab*

1.8 MU/day on HT/LT industries

600 MW cut on HT/LT industries from 18:00 to 21:00 hrs.

Rajasthan

No Notified Power Cut

Uttar Pradesh

No Notified Power Cut

Uttarakhand*

0.52 MU/day on HT/LT industries on different days.

70 MW cut on HT/LT industries for different hours on different days.

Nil

Western Region Chattisgarh Gujarat

All industries are allowed to run their units on all days of week and if they want to avail staggered holiday, then they will have to stagger on notified day only and cannot avail as per their choice. All industries are required to keep their recess timings staggered.

Madhya Pradesh

Nil

Maharashtra

Nil

Goa

Nil

Southern Region Andhra Pradesh

One day power holidays in a week along with evening peak restrictions (0630 pm to 1030pm). (Except Hyderabad) w.e.f. 04.01.12. From 1st to 3rd January 2012. Industries in Hyderabad also included. However, there was load shedding of up to 1120 MW (209.0211 MU for the month)

Karnataka

One day Power Holiday to industries (Bangalore City); However, there was load shedding up to 2075 MW (711.29 MU for the month)

Kerala

Nil; However, there was load shedding up to 250 MW (33.04 MU for the month)

Tamil Nadu

20% power cut for HT and Commercial consumers. 1 hour Load shedding for Chennai, 2/3 Hours for Urban and Rural areas; However, there was load shedding up to 3071 MW (875.903 MU for the month).

Puducherry

Nil; However, there was load shedding up to 0 MW (0 MU for the month)

Eastern Region Bihar

No notified cuts

Jharkhand

No notified cuts

Orissa

No notified cuts

West Bengal

No notified cuts

Note: Although some states have reported “No Notified Power Cuts”, load shedding/restrictions are imposed on industries on day. *Data not furnished for current month.

COAL INSIGHTS 73 February 2012

Power sector update Generation capacity addition during 2011-12 (Programme & Achievement) Sl. No.

Unit Name

Unit No.

State

Company

Type

Capacity (MW) Prog.

Commissioning Schedule

Ach.

As per Prog.

Actual (A)

1st Quarter (April - June 2011) CENTRAL SECTOR 1

Koderma #

Jharkhand

DVC

500.00

June, 11

20.07.11 (A)

STATE SECTOR 2

Priyadarshini Jurala

APGENCO

39.00

June,11

09.06.11(A)

Myntdu

Meghalaya

MeECL

42.00

June,11

23.11.11(A)

Khaperkheda TPS Expn #

Maharashtra

MSPGCL

500.00

June,11

05.08.11(A)

Kothagudem TPP - VI

A.P.

APGENCO

500.00

June,11

26.06.11(A)

H.P.

Everest PPL

50.00

May,11

06.08.11(A)

H.P.

Everest PPL

50.00

June,11

14.08.11(A)

Private SECTOR 6 7

Malana-II

Karcham Wangtoo

H.P.

JKHCL

250.00

May,11

24-05-11(A)

JSW Ratnagiri TPP #

Maharashtra

JSW Energy (Ratnagiri) ltd

300.00

May,11

06-05-11 (A)

Maithon RB TPP #

Jharkhand

DVC- Tata JV

525.00

June,11

30.06.11 (A)

Udupi TPP #

Karnatka

UPCL

600.00

April, 11

17-04-11 (A)

Wardha Warora @

Maharashtra

Wardha Power Co. Ltd (KSK)

135.00

April, 11

30-04-11 (A)

3491.00

Sub Total IInd Quarter (July - September 2011) CENTRAL SECTOR 13 14

Chamera-III

H.P.

NHPC

77.00

Aug,11

H.P.

NHPC

77.00

Sep,11

Sipat -1 *

C.G.

NTPC

660.00

July,11

28.06.11 (A)

Durgapur Steel TPS #

DVC

500.00

Aug,11

29.07.11 (A)

State Sector 17

Myntdu

Meghalaya

MeECL

42.00

July,11

Harduaganj Extn #

UPRVUNL

250.00

Bhusawal TPS Expn #

Maharashtra

MSPGCL

500.00

Santaldih TPP Extn Ph-II #

WBPDCL

250.00

Hazira CCPP Extn #

GT+ST

Gujarat

GSECL

GT+ST

351.00

Aug,11

Pragati CCGT- III #

GT-3

Delhi

PPCL

GT-3

250.00

Sep,11

250.00

Sep,11

27.09.11(A)

July,11 250.00

July,11

29.06.11(A)

Private Sector 23 24

Karcham Wangtoo

H.P.

JKHCL

250.00

July,11

21.06.11(A)

H.P.

JKHCL

250.00

Aug,11

08.09.11(A)

Jallipa-Kapurdi TPP #

Rajasthan

Raj West Power ltd

135.00

Aug,11

02.11.11(A)

Anpara-C TPS #

Lanco Anpara Power Pvt. Ltd

600.00

July,11

15.11.11(A)

Mundra UM TPP

Gujarat

Tata Power Ltd

800.00

Mundra TPP Ph-II

Gujarat

Adani Power Ltd

660.00

5652.00

3555.00

Sub Total

COAL INSIGHTS 74 February 2012

Aug,11 Aug,11

20.07.11 (A)

Tear along the dotted line

Power sector update Generation capacity addition during 2011-12 (contd.) Sl. No.

Unit Name

Unit No.

State

Company

Type

Capacity (MW) Prog.

Commissioning Schedule

Ach.

As per Prog.

Actual (A)

IIIrd Quarter (October - December 2011) CENTRAL SECTOR 29 30 31 32 33 34 35 36 37 38 39

Chutak Koteshwar Chamera-III Uri-II Indra Gandhi TPP Sipat -2* Neyveli TPS Exp #

1 2 3 4 3 1 1 2 2 1 1

J&K J&K J&K J&K Uttranchal HP J&K J&K Haryana C.G. T.N.

NHPC NHPC NHPC NHPC THDC NHPC NHPC NHPC APCPL NTPC NLC

2 ST-1

Karnatka Delhi

KPCL PPCL

HP HP H.P. Maharashtra UP Orissa Delhi Gujrat Rajasthan U.P. U.P. Gujrat U.P. C.G. C.G. U.P.

Private Sector LANCO LANCO JKHCL JSW Energy (Ratnagiri) ltd Lanco Anpara Power Pvt. Ltd. Sterlite Energy Ltd. NDPL Bajaj Energy Pvt. Ltd. Raj West Power Ltd. Bajaj Energy Ltd. Bajaj Energy Ltd. Adani Power ltd. Bajaj Energy Pvt. Ltd. ACB India Ltd. SV Power Ltd. Rosa Power Co. Ltd.

HY HY HY HY HY HY HY HY TH TH TH

11 11 11 11 100.00 77.00 60.00 60.00 500.00 660.00 250.00

TH ST-1

500.00 250.00

Nov,11 Oct,11

HY HY HY TH TH TH TH TH TH TH TH TH Th TH TH TH

35.00 35.00 250.00 300.00 600.00 600.00

Oct,11 Nov,11 Oct,11 Oct,11 Oct,11 Oct,11

500.00 600.00

Oct,11 Nov,11 Nov,11 Dec,11 Nov,11 Oct,11 Nov,11 Dec,11 Nov,11 Nov,11 Oct,11

05.11.11(A) 24.12.11(A)

State Sector 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57

Bellary TPP St-II Pragati CCGT- III ST-1 # Budhil Karcham Wangtoo JSW Ratnagiri TPP # Anpara-C TPS # Sterlite (Jharsugda)* Rithala CCPP Khamberkhera IPP Jallipa-KapurdiTPP # Maqssodpur IPP Barkhera TPP Mundra TPP Ph-II Khamberkhera IPP Kasaipalli SVL Rosa

1 2 4 4 2 3 ST 1 4 1 1 1 2 1 1 3

Sub Total

4321.00

250.00 300.00 600.00 600.00 36.50 45.00 135.00 45.00 45.00 660.00 45.00 135.00 63.00 300.00

Aug11

13.09.11(A) 08.10.11(A) 12.11.11(A) 16.08.11(A) 04.09.11 (A) 17.10.11(A) 23.11.11(A) 03.11.11(A) 06.11.11(A) 07.11.11(A) 28.11.11(A) 13.12.11(A) 07.12.11(A) 28.12.11(A)

4419.50

IVth Quarter (January - March 2012) CENTRAL SECTOR 58 59 60 61

Kudankulam Uri-II Koteshwar

NPC

Nucl.

1000.00

NPC

Nucl.

1000.00

Feb,12 Feb12

3 4

J&K Uttranchal

NHPC THDC

HY HY

60.00 100.00

Jan,12 Mar,12

25.01.12(A)

State Sector 62 63 64

Myntdu Harduaganj Extn # Bhusawal TPS Expn

3 9 5

Meghalaya UP Maharashtra

MeECL UPRVUNL MSPGCL

HY TH TH

42.00 250.00 500.00

Feb,12 Feb,12 Jan,12

65 66 67 68 69 70

Maithon RB TPP Tirora TPP Ph-1 Maqsoodpur IPP Barkhera TPP Kundarki Mahatma Gandhi TPP

2 1 2 2 1 1

Jharkhand Maharashtra U.P. U.P. U.P. Haryana

Private Sector JV of DVC-Tata Adani Power Ltd. Bajaj Energy Pvt, Ltd Bajaj Energy Pvt, Ltd Bajaj Energy Pvt, Ltd Jhajjar Power Ltd.

TH TH TH TH TH TH

525.00 660.00

Jan,12 Jan,12

Sub Total Grand Total

45.00 45.00 45.00 660.00 4137.00

895.00

17601.00

12360.50

Note : * - 11th Plan Best effort Units; # - Units slipped from 2010-11 Target; @ - Additional Units not included in 11th Plan Target

COAL INSIGHTS 76 February 2012

21.01.12(A) 28.01.12(A) 10.01.12(A) 12.01.12(A)

Source: Central Electricity Authority

port data Major ports through which coking coal arrived in India Oct-Dec ‘11 Port VIZAG PARADIP KOLKATA MORMUGAO MUNDRA KANDLA NEW MANGALORE CHENNAI

Qty (in Tons) 2574823 1397866 1315507 1081397 348111 85500 15000 437

Grand Total

Country of Origin

5511453

UNITED STATES

615736

NEW ZEALAND

323338

SOUTH AFRICA

303852

OTHERS

64263

Grand Total

Major ports through which coking coal arrived in India - Oct-Dec ‘11 1% 0%

Qty (in Tons)

AUSTRALIA

6818642

Major coking coal supplier countries to India (through mentioned ports) Oct-Dec ‘11

6818642

Major coking coal supplier countries to India (through mentioned ports) - Oct-Dec ‘11 5%

16%

38% 9%

19% 21% VIZAG

PARADIP

KOLKATA

MORMUGAO

MUNDRA

KANDLA

NEW MANGALORE

CHENNAI

81% AUSTRALIA

Major ports through which steam coal arrived in India Oct-Dec ‘11 Port

KANDLA

Qty (in Tons) 2179411

NEW MANGALORE

770286

VIZAG

2138632

KOLKATA

591997

SOUTH AFRICA

PARADIP

1113233

OTHERS

693134

Grand Total

9384575

Major ports through which steam coal arrived in India (through mentioned ports) Oct-Dec ‘11 8%

OTHERS

Qty (in Tons)

AUSTRALIA

7565711 1761491 57373

Grand Total

9384575

Major steam coal supplier countries to India (through mentioned ports) - Oct-Dec‘11

27%

SOUTH AFRICA

Country of Origin

922216

MUNDRA

975666

NEW ZEALAND

Major steam coal supplier countries to India (through mentioned ports) Oct-Dec ‘11 INDONESIA

MUMBAI

UNITED STATES

1% 19%

24%

8% 8%

11%

21%

10%

23% 10%

MUNDRA

VIZAG

12% KANDLA

MUMBAI

KOLKATA

PARADIP

CHENNAI

OTHERS

80%

12% MUNDRA

VIZAG

PARADIP

MUMBAI

KANDLA

NEW MANGALORE

KOLKATA

OTHERS

INDONESIA

SOUTH AFRICA

AUSTRALIA

Note: Name of importers for coal and coke will be provided on request. Figures are based on consignment lifted from these ports for which price details/break-up is available with Coal Insights team

COAL INSIGHTS 78 February 2012