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Vol. L No. 01
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CCAI Monthly Newsletter 2021 1 Published on :April 28.04.2021
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From the Editor’s Desk
In a bid to meet it's growing power demand, India, one of world's largest coal consumers, could add more coal fired generation capacit y in coming years as the dry fuel continues to be the cheapest source of Power, according to a draft of National Electricity Policy (NEP), 2021. As per latest data, coal’s sha re in India’s electricity gen eration rose to the highest level in 24 months dur ing the first three months of 2021 as seasonal factors have limited output of renewables, including hydro elec tricity. The share of coal and lignite has risen by more than 78% during the quarter ending in March this year. While the priv ate sector has predominantly taken a step back from investing in coal, almost all the coal-fired power plan ts which are under construction belong to the pub lic sector. In sync with the Governmen t’s prerogative, national min er Coal India Limited has increased its fuel allocati on by 36% under spot e-aucti on scheme, for the April-February period of FY2 0-21. According to Coal Min ister Pralhad Joshi, the coal behemoth is going to invest over Rs 1.22 lakh cror e on projects related to coal evacuation, exploration and clean coal technologies by 2023-24, to achieve 1 billion tonnes of fuel output target. Last month, CIL has approved as many as 32 new coal mining projects including 8 greenfield projects wor th a total investment of US$6.4 billion, as India looks to reduce reliance on imports in a bid to boost the Centre' s Aatmanirbhar Bharat programme. The Navaratna company is also set to invest Rs. 40, 000 crore to ramp up domestic coal evacuation faci lities, establish coal handling plants and improve connectivity including constru ction of 21 greenfield and brownfield railway sidings in four of its subsidi aries in addition to 132 ope rational sidings for dispatching coal to consumers. Inspired by global push for clean power sources and the consistent growth of renewable energy capacity in the country’s energy mix, CIL is has added two more 100% subsidiary compan ies to its fold — CIL Navikar niya Urja and CIL Solar PV — to pursue its clea n energy initiatives.
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Content Vol. L No. 01 April 2021
Official Organ of the Coal Consumers’ Association of India. Disseminates News and Views on Coal and all other sources of Energy. 4, India Exchange Place - 7th Floor Kolkata - 700 001 Landline : +91 33 22304488 E-mail : sec.ccai@gmail.com Website : www.ccai.co.in
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Consumers' Page
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Power
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Global
Editor : Subhasri Nandi Annual Subscription Rs. 400/(including postage) MO/DD to be made in favour of “Coal Consumers’ Association of India” CCAI do not necessarily share or support the views expressed in this Publication.
29 Monthly Summary Of
Imported Coal &Petcoke
32 Overall Domestic Coal Scenario 33
Production And Offtake Performance Of Cil And Subsidiary Companies
CCAI Monthly Newsletter April 2021
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CONSUMERS’ PAGE Submission by both Power and NRS consumers: 1. Submission regarding extension of validity of Road Delivery Orders (RDOs) till 30th June, 2021: The sudden upsurge of Covid-19 cases across India in recent weeks is making coal operations through Road mode difficult due to transporters and drivers getting infected in large numbers, pocketed lockdown in different states and lower turn out of vehicles. In spite of the relief provided by CIL through extending the validity of RDOs till April'21, the consumers, whose DOs have been issued in March’21, may not be able to complete lifting the allotted quantity within the extended time period due to the increasing severity of COVID-19 crisis. Request has been made to MoC, CIL and the concerned Subsidiaries so that the facility to lift DOs ending in April & May’21 may be extended upto 30th June for both Power and NRS consumers for FSAs and e-Auction Quantities.
2. Submission regarding temporary change of mode from Road to Rail due
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to increasing number of COVID cases: The critical condition caused by resurgence in the number of COVID-19 cases in many parts of India is affecting the availability of transport vehicles, crew/ truck drivers and causing coal transport by Road mode unviable. Request has been made to CIL to extend the temporary arrangement of change of mode for coal transportation from Road to Rail for the willing consumers who have urgent requirement of coal for their MSQ from April'21 till September'21.
3. Submission to SECL for early issuance of long-pending credit notes and coal value reconciliation by Roadmode consumers: Consumers from both Power and Non-power sectors have pointed out that delay in reconciliation of excess coal value against quantity despatched through Road mode has caused a large amount of their fund to be stuck for long. Certain credit notes are pending in this regard since more than 2 years. In case of up gradation in analysed grade of coal, issuance of supplementary invoices is inordinately delayed for the Power consumers (Road mode) and as
a result they are unable to submit the same to the Discoms. Request has been made to SECL for timely issuance of pending credit notes and supplimentary invoices and ensure reconciliation of coal bills pertaining to despatch through Road mode at the earliest possible.
4. Submission to SECL regarding continuation with single LC against coal supply through Rail and Road mode: So far, the consumers had to provide a single Letter of Credit (LC) for the entire supply irrespective of the mode of dispatch. However, as per instructions given by SECL, separate LC needs to be issued for separate modes of dispatch (Road or Rail mode). Many consumers have to avail both modes of transport (Road/Rail) for convenience of coal supply at their respective plants. Hence, issuance of separate LC for separate modes would be financially difficult as well as cumbersome for them. Request has been made to SECL to continue with the provision of a single LC for entire supplies irrespective of mode of dispatch (Rail/Road) to the respective companies.
5. Application of the provisions of section 194-O of the Income-tax Act, 1961 in relation to e-Auctions of coal conducted for Power and Non-power consumers: According to the sale intimation letter, purchasers of e -Auction coal have highlighted that in addition to the bid price and the statutory levies payable for purchase of coal under various e-Auctions, coal consumers are also asked to deposit an additional amount of 0.75% of the material value as TDS within three working days of the said letter. The liability to deduct taxes under the aforesaid section is that of the e-commerce operator and the company from whom taxes should be deducted is the e-commerce participant (seller of coal). Therefore, the said TDS should not be recovered from the coal purchasers. Request has been made to CIL to ensure that the TDS should not be deducted from the consumers but it should be deducted from the coal value submitted to the e-commerce perticipants.
Submission exclusively by Power sector consumers: 6. Submission by Power sector regarding supply of lower grade coal and high short-receipt from ECL sidings: Certain power Utilities procuring coal from Salanpur and Mugma sidings of ECL has complained regarding supply of significantly lower grade coal as compared to the grade mention in the FSA (5-8 grade lower) during March and April’21. Also, there are numerous instances short-receipt in rakes dispatched from those two ECL sidings. Request has been made to ECL to atleast minimise grade slippage the problem of grade slippage in order to eradicate them and also look into the issue of consistent short-receipt so that proper quantity and quality of coal can be supplied to Power consumers as per the billed grades.
7. Submission to WCL by the Power Sector Consumers for immediately conducting Special Forward e- Auction: Special Forward e-Auction for Power Sector consumers both in Rail and Road mode consumers were last held on 09.02.2021 for the February’21–April’21 period in spite of an urgent requirement of coal among the Utilities. Request has been made to WCL for urgently conducting Special Forward e-Auction in order to replenish the shortage in coal stock at their respective plant ends.
8. Submission to MCL regarding supply of washed coal through the upcoming washeries: Considering huge demand of raw coal produced by MCL, mammoth demand for washed coal can be anticipated from consumers across the board. Installation of washeries will benefit the consumers as higher GCV of washed coal would eventually reduce the transportation cost, ash disposal cost and cost of pollution emission. 1. Request has been made by the FSA consumers to
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MCL to offer washed coal through MoU route. 2. MCL may also consider selling of washed coal through e-Auction in case surplus coal is available after fulfilling prior commitments or if any quantity remains unsold. 3. A part of the total quantity of washed coal may be earmarked for Non-power sector as well.
Submission exclusively for Non-power sector consumers: 9. Submission regarding discontinuation of supply under expired FSAs: As per CIL’s notification, coal supplied to NRS consumers at notified price as per the MoU signed between them and the Subsidiary coal companies even after expiration of their erstwhile FSAs of pre linkageauction regime is to be discontinued after 31st March 2021. This would stop the supply of coal till the next Tranche is held and the cost of coal under Exclusive auction will significantly increase as the auction floor price is 10-20% higher than the notified price. Also, there is uncertainty over the commencement of 5th Tranche of auction. Request has been made to MoC and CIL to continue with the supply of coal at notified price as per MoU signed between these consumers till the next Tranche of auction is held. Also, the reserve price of coal is requested to be kept the same as notified price in the coming auctions.
10. Request for not imposing penalty for short-lifting from Wani Siding for NRS FSA consumers: A number of NRS consumers procuring coal from WCL are not able to lift allotted quantity from the Subsidiary’s Wani sidings as a) The offered G13 grade of coal is not suitable for direct feed to the boilers and needs to be blended with high grade imported coal making it unviable for the plant. b) In order to lift 75% of ACQ from Wani siding as per the FSA clause, the consumers need to lift a huge number of rakes within less than 2 months which may not be feasible due to shortage in storage capacity.
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c) The coal price structure of Neeljay OCM, the newly introduced feeding source of Wani siding, is yet to be sent to the consumers. Request has been to WCL for not penalizing the consumers for short-lifting as contracted grade of was coal was not available from Wani sidings during most of the FY2020-21.
Submission to Railways: 11. Submission to Railways for not including ancillary charges for direct debit through e-payments: As per the Notification by Railway Board and East Coast Railways, the consumers would have to sign a supplementary tripartite agreement for Inclusion of Wagon Registration Fee (WRF) and other ancillary charges such as Siding Charge, Shunting Charge, Demurrage Charge, Wharfage Charge, Re-booking Charge, Diversion Fee, Freight Under Charges to debit directly through E-Payment facility.
Concerns: 1. In the changed system of payment, the ancillary charges will be automatically debited from the freight account of the consumers on the basis of bills raised by Railways without preinitiation and consumers’ authorisation. 2. Earlier ancillary charges were paid after reconciliation of bills because in some cases the bills are raised erroneously, however, in the present system of payment there will be no such provision and in case of any wrong / over-billing. 3. Responsibility of coal loading in rakes lies with the Subsidiaries, in which consumers do not have any control. Apart from Sardega siding of MCL, demurrage charges have not been levied upon the consumers anywhere else so far.
Submission: Request has been made to the Ministry of Railways, Railway Board as well as East Coast Railways to continue with the current practice of accepting these charges through DDs/cheques/RTGS and not to debit the ancillary charges directly from consumers’ accounts before the final reconciliation.
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POWER Coal's share in India's power mix hits highest in more than two years Coal's share in India's electricity generation rose to the highest level in at least nine quarters during the first three months of 2021, government data showed, reversing a trend of renewable energy gaining at coal's expense. The share of renewable energy rose in 2020 when overall power demand was reduced by lockdowns to limit the pandemic. This year seasonal factors have limited output of renewables, including hydro electricity, which are weather dependent, helping coal's share to rebound. The share of coal and lignite rose to 78.9% during the quarter ending March 31, compared with 75.9% in the same period last year, a Reuters analysis of daily load despatch data from the federal grid regulator POSOCO showed. Coal's contribution to India's annual electricity
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generation fell for the second straight year in 2020, the data shows, marking a departure from decades of growth in coal-fired power. A consistent rise in the share of renewables culminated in coal's share in electricity generation falling below 60% for the first time in decades on Aug. 12. Just over five months later, coal's contribution to daily power output rose to more than 80% for the first time in at least 750 days on Jan. 20, a feat that was repeated nine more times to March 31, the data showed. Recovery in coal-fired generation coincided with India's overall electricity demand returning to growth: the country's power demand and share of coal-fired power rose for seven straight months starting September, POSOCO data showed. India's annual electricity demand fell for the first time in at least 35 years in the fiscal year to March, with electricity consumption declining for six straight months ending August.
India's power consumption grows nearly 45 pc in first half of April Power consumption in the country grew nearly 45 per cent in the first half of April to 60.62 billion units (BU) over the corresponding period a year ago, showing robust recovery in industrial and commercial demand of electricity, according to power ministry data. Power consumption in the first half of April last year (from April 1 to 15, 2020) was recorded at 41.91 BU.
The power producers give 45 days to power distribution utilities (discoms) to pay bills for electricity supply. After that, the outstanding dues become overdue and generators charge penal interest on that in most cases. In May 2020, the government announced Rs 90,000 crore liquidity infusion for discoms under which these utilities would get loans at economical rates from Power Finance Corporation (PFC) and REC Ltd.
On the other hand, the peak power demand met, which is the highest supply in a day, during the first half of this month remained well above the highest record of 132.20 GW in the same period in April 2020.
This was a government initiative to help generation companies (gencos) to remain afloat. Later, the liquidity infusion package was increased to Rs 1.2 lakh crore and further to Rs 1.35 lakh crore. Under the liquidity package, the PFC and REC together have disbursed Rs 78,855 crore so far.
During the first half this month, peak power demand touched the highest level of 182.55 GW on April 8, 2021, and recorded a growth of 38 per cent over 132.20 GW recorded in the entire month of April last year.
Overdues of discoms reduced significantly in March 2021, after PFC and REC began releasing second tranche of disbursements under DISCOM liquidity package in February end this year, showed the data available on PRAAPTI portal.
Power consumption in April last year had dropped to 84.55 BU from 110.11 BU in the same month in 2019. This happened mainly because of fewer economic activities following imposition of lockdown by the government in the last week of March 2020 to contain the spread of deadly COVID-19.
Niti Aayog launches India Energy Dashboards Version 2.0
Similarly, peak power demand met also slumped to 132.20 GW in April last year from 176.81 GW in the same month in 2019, showing the impact of lockdown on economic activities. .
Discoms overdues falls by over Rs 151 bn to Rs 740 bn in Mar: Report The outstanding overdues of power distribution utilities fell by over Rs 15,118 crore to Rs 74,510 crore in March this year, as compared to the preceding month, mainly due to the release of the second tranche of liquidity infusion package, according to PFC Consulting Ltd data. The overdue amount stood at Rs 89,628 crore in February.
With an aim to provide single-window access to the energy data for the country, government think tank NitiAayog launched India Energy Dashboards (IED) Version 2.0, according to an official statement. While launching the IED, NitiAayog Vice Chairman Rajiv Kumar said that it is an endeavour to establish a central energy database of the country. "With the rise of renewables and many other new energy technologies, the interplays between energy supply and demand sectors are now becoming increasingly critical," he said adding that the scenario building exercise is the key as India needs to seize today's opportunities to build a sustainable tomorrow. Also speaking at the event, NitiAayog CEO Amitabh Kant said the goal is to turn data into information, and information into insights to inspire those in a position to make a difference. CCAI Monthly Newsletter April 2021
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CIL floats two new subsidiaries to pursue alternative energy projects PSU miner Coal India (CIL) has added two more 100% subsidiary companies to its fold — CIL Navikarniya Urja and CIL Solar PV — to pursue its clean energy initiatives. It has also signed a power purchase agreement (PPA) with Gujarat Urja Vikas Nigam (GUVNL) for sale of solar power from its upcoming 100 MW solar power plant in Gujarat. The new subsidiaries, both West Bengal-based, will function as special purpose vehicles to carry out the coal miner’s green ventures, with the first project being the solar power plant won in the GUVNL-conducted reverse auction. This takes CIL’s total number of subsidiaries to 10, at a time when the government is reportedly planning to spin off CIL subsidiaries into independent coal producing companies. CIL CMD Pramod Agarwal told FE, however, that the company does not have any information about the government’s plans. A CIL executive said the PPA is for a tenure of 25 years with a stipulation that the power generated has to be supplied to GUVNL within 18 months from the date of signing the deal. The PPA was signed.
Coal India signs first 100 MW Solar power purchase agreement In its maiden venture into solar power, stateowned miner Coal India Ltd (CIL) announced it had signed a first-of-its-kind power purchase agreement for the sale of 100 Megawatt (MW) solar power with Gujarat Urja Vikas Nigam (GUVNL).
of solar power generation by 2024. The firm plans to invest around Rs 13,500 crore in solar power projects through company’s internal resources, Special Purpose Vehicles (SPV) and bank loans. “Solar will replace coal as a key energy provider in future and we are laying the groundwork to remain relevant in the country’s energy sector. We plan to venture into solar power generation in a big way,” a senior executive of CIL said. The miner secured the project work with a stipulation that it enters into a PPA for the establishment of a solar power project and supply the power generated to GUVNL within 18 months from the date of inking the PPA.
Solar industry seeks four-month extension for all ongoing projects The solar industry is seeking an extension of four months on all ongoing projects from the government owing to further disruptions in labour and supply chain due to the resurgence of Covid-19 in many parts of the country. "Owing to the continued rise in COVID-19 cases and a re-surge in many parts of the country, solar power projects continue to face implementation issues due to the absence of Government officials, lockdowns, slow processes due to understaffed office being overly busy and preoccupied with pending works," said a statement by the National Solar Energy Federation of India (NSEFI), Without an extension, some projects might lead to cancellations, the solar body said.
The company had won a 100 MW solar power project in March in a reverse auction conducted by GUVNL. The tenure of the agreement period is for 25 years.
"[Non-extension] will lead to heavy liquidated damages to be paid by the developer on account of delayed project completion, or non-release of funds by financial institutions in absence of Financial Closure(FC) leading to extreme financial losses even for established players," the letter added.
CIL said it is serious in its intent to pursue solar power as an alternative green energy source and for that it has rolled out a plan for 3,000 MW
Projects in states such as Rajasthan, Maharashtra, and Madhya Pradesh have seen complete or partial lockdowns, disrupting the ongoing con-
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struction. To help developers deal with the delays due to lockdown last year, the Ministry of New and Renewable Energy had granted a blanket extension of five months to all ongoing projects last August.
CSC, Tata Power to set up 10,000 solar micro grids in rural areas The government's e-governance services arm CSC announced a collaboration with Tata Power to set up solar-powered micro grids and water pumps in rural areas across the country. To begin with, Tata Power has proposed to set up 10,000 micro grids to support rural consumers through Common Service Centres (CSCs). CSC e-Governance Services India Managing Director Dinesh Tyagi said the collaboration will amplify the government's ongoing campaign to provide clean and sustainable energy to households and businesses in rural areas. "This partnership will increase energy access and provide an economic opportunity to the company by providing off-grid or microgrid power. This will help rural customers move away from burning relatively expensive fuels such as kerosene and can provide basic energy services and meet economic needs," Tyagi said in a statement. Under the partnership, over 3.75 lakh CSCs will be involved in supplying solar water pumps to farmers and help in setting up micro grids in residential and commercial establishments in rural areas. The partnership is initially expected to create employment to a minimum two persons in each panchayat where microgrid are proposed to be installed, thereby leading to generation of 20,000 jobs for rural youth. CSC CEO Sanjay Kumar Rakesh said the association with Tata Power will help it reach out to farmers and rural enterprises with clean energy solutions and will not only create new employment opportunities for Village Level Entrepreneurs (VLEs) but also offer Tata Power a grasp over the potential rural market. The micro grids will be supported by CSC VLEs at the ground level. VLEs will help in providing connection to rural citizens, including MSME units for commercial purposes. The power available through these units would be affordable,
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qualitatively better, decentralized and serviced by a local entrepreneur, as per the statement.
Green energy deals deferred amid 2nd wave With India facing a very severe covid-19 second wave, and states imposing lockdowns and travel restrictions, several green energy deals have been deferred, said two people aware of the development, seeking anonymity. With due diligence necessitating travel to remote locations where the solar and wind farms are located, several sale processes have been delayed, given the difficulties involved in arranging logistics. There is also a growing clamour from a few countries to impose travel bans to India due to the spike in covid-19 cases. This assumes significance, given that there is a large global investor interest in India’s green economy. “There are many sales processes for which the mandate has been given. However, there is a rethink happening regarding the timing of starting them, given the associated problems with the pandemic that hinders travel and necessary due diligence exercise," said one of the two people cited above. “We plan to start a sale process but are postponing it given that the investors or their advisors won’t be able to travel in the present circumstances to our sites that are located in remote locations," said the second person, overseeing the sale of large solar assets. While there is a growing interest in India’s green economy, there are concerns over inability of projects meeting commissioning deadlines, which will result in hefty penalties for developers. Considering the growing concerns in the wake of the pandemic, solar industry lobby group Solar Power Developers Association (SPDA) pitched for an additional three-month extension in project commissioning dates to the ministry of new and renewable energy. This is in addition to the five months extension already granted by the ministry. Power purchase agreements signed by developers specify strict commissioning deadlines and a failure to meet them can result in fines and encashment of their bank guarantees.
DOMESTIC Coal India firms up Rs 40,000-crore domestic coal evacuation plan In a bid to give a fillip to the Centre’s Aatmanirbhar Bharat programme, Coal India (CIL) has drafted plans to ramp up domestic coal evacuation facilities at a cost of Rs 40,000 crore. The miner will execute 35 projects to improve first-mile connectivity and coal handling plants as well as create more rail lines and sidings. Coal handling capacity of these 35 projects is estimated to be close to 405 million tonnes per annum (mtpa) by FY24. Each of the mining projects would have production capacity of 4 mtpa and above. “As of now, three of the projects have already been commissioned. Of the remaining 32 projects, 29 have been awarded and are at various stages of construction. Tenders were opened for the remaining three and are under scrutiny,” said a senior CIL executive.
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In June last year, the finance minister — under the Aatmanirbhar Bharat Abhiyan package of Rs 20 trillion — allocated Rs 50,000 crore for creating coal evacuation infrastructure. It included Rs 18,000 crore for mechanised coal transport. The move was in line with the Centre’s efforts to bring down coal imports. Under phase-I of the first-mile connectivity or transport of coal from mine’s end to dispatch points, CIL will increase rail connectivity projects to 24. They are 11 currently. These points would also have coal handling plants at mines with rapid loading systems. In the second phase, CIL will set up 14 more first-mile connectivity projects. Mahanadi Coalfields, one of the subsidiaries of CIL, inaugurated its 10th railway siding at Talcher Coalfields in Odisha. The company said it will enhance the deptach capacity of the mine to 4 mtpa.
India Is Pushing For More Coal Coal stocks at pitheads of Coal Capacity India touch 100 million tonnes One of the world’s largest carbon dioxide emitters, India, could add more coal-fired electricity generation capacity despite the global push for clean power sources. India could still need new coal capacity in the coming years to balance more renewable energy sources, also because coal is still the cheapest source of generation, according to a draft new strategy, National Electricity Policy (NEP) 2021, which Reuters has seen. “While India is committed to add more capacity through non-fossil sources of generation, coalbased generation capacity may still be required to be added in the country as it continues to be the cheapest source of generation,” reads the draft document, as carried by Reuters. Still, the strategy, which has not been unveiled, has clean power generation as the main objective, according to the document. India is the third-largest emitter of carbon dioxide in the world, behind China and the United States. Last month, state miner Coal India approved as many as 32 new coal mining projects worth a total investment of US$6.4 billion, as one of the world’s largest coal consumers, looks to reduce reliance on imports as its coal demand continues to grow. A total of 24 of the 32 projects will be for the expansion of existing operations, while eight will be greenfield projects, Indian media quoted the company as saying this week. While major developed economies look to reduce reliance on coal as part of emission reduction goals, India, which will be the key driver of global energy demand in the coming decades, continues to rely heavily on coal, and its demand is expected to continue to rise. Despite its renewable and low-carbon push, India continues to bet big on coal, and the share of coal in total primary energy consumed has been broadly stable, around 56 percent in recent years, according to BP’s Energy Outlook 2020.
Coal stocks at the pitheads of Coal India have touched 100 million tonnes (mt) amid sluggish lifting by the Power Sector. Power plants procured 444.5mt in 2020-21 against the projected demand of 526mt. Coal India produced 596.2 mt in 2020-21 against 602.1mt a year ago. Officials of the government-owned miner said a higher production would only have added to the stockpile. The public sector miner has a plan to liquidate the stock in the ongoing fiscal. Coal India is banking on a revival in the demand from power companies. It is also expecting higher sales in the auctions and a greater substitution of imported coal. In the last fiscal, the offtake at 573.8mt was only 1.3 per cent lower than in 2019-20., despite lower power sector demand. This was made possible by an all-time high in e-auction sales at 124mt against 113.6mt in 2016-17. Coal India also booked 90 mt of sales from buyers who previously imported the fuel. Of this, around 48mt was from non-power consumers and 42mt was from the power sector. The Modi government is looking to allow both private and government firms to surrender nonoperational coal mines without forfeiting bank guarantees. The coal ministry has floated a cabinet note on issues related to non-operational coal mines and has sought views from the related ministries, a television channel reported. The proposal seeks to allow private companies to surrender their mines under genuine reason on case to case basis without forfeiting the guarantee. As of now, companies are allowed to exit a mine without forfeiting bank guarantees under the regional or partial exploration stage but not after fully exploring the mine. CCAI Monthly Newsletter April 2021
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‘Bringing more Pvt Players can Cabinet okays subsidy for urea reduce coal imports’ produced via coal gasification India could reduce its dependency on imported coal through concerted efforts by allowing more private players to come in through commercial mining and by focusing on improving the transport, logistics and distribution infrastructure, said Atanu Mukherjee, Co-chairman and Chief Executive Officer, Dastur Energy and MN Dastur. Coal imports, which are currently hovering around 240-250 million tonne (mt) each year, could be brought down to around 150 mt over the next four-to-five years, he said.
The Cabinet Committee on Economic Affairs approved subsidy for urea to be produced by state-run Talcher Fertilizers (TFL) at its soonto-be-commissioned Odisha facility. This will be only plant to produce the nitrogenous soil nutrient through coal gasification route. The Centre pays subsidy on urea to fertiliser manufacturers on the basis of cost of production at each plant and the units are required to sell the fertiliser at the government-set maximum retail price (MRP).
Of the 240-250 mt imported stock, around 50-60 mt is metallurgical coal which is used for production of steel and has to be brought in from outside as India does not have the necessary resource. Another 50 mt of low ash coal import is unavoidable. The remaining 150 mt or so is essentially thermal coal, which can be procured domestically by ramping up productivity of existing mines and bringing in more private players through commercial mining route, he said. CIL currently produces close to 600 mt of coal, another 200 mt comes from captive mines and the rest is imported.
Talcher Fertilizers — a joint venture of Coal India, GAIL (India), Rashtriya Chemicals and Fertilizers and Fertilizer Corporation of India — is setting up the 1.27 million tonne per annum capacity urea plant based on coal gasification technology in Odisha with an estimated investment of Rs 13,277 crore. The project is expected to be complete by September 2023, but the construction process has faced delays after the Covid 19 pandemic.
As the share of private mining goes up and the efficiency of the distribution system and production of coal improves, imports can be brought down. “With more companies apart from CIL participating and with improvement in transport and logistics infrastructure, we should be able to bring this down significantly over the next few years to say 50-60 mt of thermal coal (and 100 mt of metallurgical and low ash coal, so a total of about 150 mt of imports). There needs to be concerted efforts,” he said. Reliance on coal to stay.India’s demand for coal is not likely to go down as energy needs of the country are huge. The country’s power consumption is only onethird of global average and with the industry and retail consumption growing, there would be increasing demand for affordable baseload power from coal.
Agri ministry, ICAR to promote bio-fortified varieties cereals & pulses via revamped NFSMJusticeChandrachud, writing for the bench, said that the conditions which are prescribed by the statute for a valid exercise of the power, based on tangible material, must be strictly fulfilled. GST law: Taxman must not proceed to attach property in haste, says SC Coal gasification plants are strategically important as coal prices are non-volatile and coal is abundantly available in the country. India still has large coal reserves but its known gas reserves are limited. The Cabinet also approved Bangalore Metro’s 58.19-km expansion plan at a completion cost of Rs 14,788 crore to provide the much-needed additional public transport infrastructure to Bengaluru, one of the fast-growing metro cities in the country.
Green nod to SCCL mine put off Non-compliances with closure plan for the ex-
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isting mine, safety issues related to proposed coal washery and want of information on several other aspects have made an expert committee of the Ministry of Environment and Forests defer the environmental clearance proposal for the expansion of JalagamVengal Rao opencast mine of Singareni Collieries Company Ltd.t
Details of control blasting with adequate safeguards for nearby people, conducting noise and vibration monitoring in nearby villages during day and night for one month and proper response of local people’s demand on pollution mitigation measures raised during the public hearing were sought by the expert panel.
At its meeting held during the fourth week of March, the appraisal panel of experts noted that the proposed project was expansion of amalgamation of JVR-I and II of SCCL in 1,953 hectares at Kommepalli in Khammam district as the coal reserve of JVR-I is likely to get exhausted by the end of the year. The the mine void of JVR-I would be used for dumping the overburden material.
The panel recommended formation of a subcommittee to conduct site visit to analyse the prevailing condition and implementation of measures. Meanwhile, the expert panel has issued terms of reference for appraisal of the proposal for P.V. Narasimha Rao opencast mine in 1,071 hectares near Venkatapur in Mulugu district.
According to company officials, the total geological reserves reported in the mine area are 309.55 million tonnes with 291.97 million tonnes of extractable reserves. The balance extractable reserves as on March 31 last year were estimated at 230.63 million tonnes with the mine life span of 26 years from 2020-21.
Odisha government grants mining lease of Utkal-E coal block to NALCO
The committee observed that surface water quality of nearby water tank was poor and exceeding the norms. It was noted that disposal of washery rejects from the proposed new coal washery in OB dump may have safety issues and could lead to wastage of extracted resources. It was pointed out that the certified compliance report of JVR-II has various non-compliances based on the site visit conducted in September 2019. Besides, the project proponent (SCCL) did not submit the certified compliance report of EC of JVR-I and the amendment of EC conditions of JVR-II regarding transportation by road till December 2021 was still under the consideration in the Ministry. The expert committee further observed that there were various issues which require further deliberations and suitable response. While deferring the proposal for recommending EC, the MoEF committee listed out gaps in information on the past production details of both the mines since their inception, sought fresh compliance report and action-taken report on ECs for JVR-I and II.
The Department of Steel and Mines of Odisha government granted the mining lease of Utkal-E coal block to National Aluminium Company Limited (NALCO) through a notification issued on April 12, the public sector enterprise informed. NALCO is a leading producer of alumina and aluminium in the country. As per the notification, the mining lease of the Utkal-E coal block is over an area of 523.73 hectares in villages Nandichhod, Gopinathpur Jungle, Kundajhari Jungle, Kosala and Korada under ChendipadaTahasil of Angul District. "The initial capacity of Utkal-E coal block is 2 million tonnes per year with a total mineable reserve of approximately 70 million tonnes," the notification said. "NALCO has already executed the mining lease for the Utkal D Coal block in March 2021. With the grant of Utkal D and E coal blocks, the total mineable coal reserve of the company will be 175 million tonnes, which will be pivotal in meeting the coal requirement of its Captive Power Plant at Angul in Odisha," it said. CMD of NALCO Sridhar Patra has thanked the state and the Central governments for sanctioning the mining lease and said that the NALCO CCAI Monthly Newsletter April 2021
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team is very optimistic about starting the mining operation from the Utkal-D coal block in this financial year.
The decline in the volume was partially offset by growth of iron ore, containers and other commodities.
"With the grant of the mining lease of Utkal E coal block, the planned expansion activities of the Company will get a boost and will contribute significantly to the bottom line of NALCO," he said.
Besides, it said that quick clearing of Suez Canal blockage is unlikely to create any further pressure on the shipping freight rates.
Port volumes moderate but still resilient: Ind-Ra India's port volumes growth has moderated but is still resilient to shocks such as the recent Suez Canal blockage, ratings agency India Ratings and Research (Ind-Ra) said. According to the agency, overall volumes continued grew 2 per cent YoY in February 2021, backed by robust growth in iron ore & containers. The overall volume declined 7 per cent YoY in 11MFY21, but was much lower than earlier anticipated 12-14 per cent. "Most of the volume decline was from major ports, with non-major ports showing resilient volume growth." As per Ind-Ra, during February 2021, petroleum oil and lubricants (POL) volumes fell 9 per cent YoY, while fertiliser and thermal coal volumes declined by 21 per cent YoY and 17 per cent YoY, respectively.
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The 193km waterway canal connects Asia and Europe in which the container ship 'Ever Given' got twisted diagonally. Suez remains important for global trade as about 12 per cent of the world trade passes through the canal.
Visakhapatnam Port Trust targets 80 million tonnes cargo handling in FY 2021-22 The Visakhapatnam Port Trust (VPT) is targeting to handle 80 million tonnes of cargo in the 2021-22 fiscal. Despite Covid-19, VPT stood third among major ports in India for the second consecutive year with 69.84 million tonnes, after Paradip Port and Goa. This is the second highest annual cargo throughput in the history of VPT. Fighting against supply chain disruptions and economic downturn due to the pandemic, VPT stood just short of last year’s performance of 72.72 million tonnes. The VPT’s decline in cargo handling is only 4% whereas the decline recorded in other major
ports is about 7%. A major decline in cargo was imports of coking coal (27% decline) and steam coal (45%) but it was offset by an increase in iron ore and pellets handling (31%) and other cargo (22%). VPT chairman K Rama Mohana Rao said there was an increase in exports of iron ore and finished steel to China and an increase in iron pellets movement to Gujarat. “We improved the average wait time of a ship to 1.15 hours as against 1.22 hours. A total of 2,040 ships were handled this fiscal as against 2,099 in 2019-20,” he said. The port has recorded an operating surplus of Rs 698 crore. “Installation of electronic route relay interlocking system to do away with manual intervention in railway signalling operation would be completed. Extension of existing container terminal with an additional capacity to handle 5.4 lakh TEU would be completed by the end of December this year,” Rama Mohana Rao said. The chairman also pointed out that ambient air quality levels are under control. “The port alone is not causing pollution in the city. Even during the lockdown, VPT handled cargo and there was no pollution. Pollution levels dropped during the lockdown as all industries were shut at that time. I request the public to be aware that the port is not causing pollution in the city,” he said.
STEEL
were at 6.6 million tonnes, an increase of 133 per cent. JPC officials said that the data showed that this was an all-time high. The previous high was in 2017-18 at 11.614 million tonnes. SteelMint data pegged finished steel exports in FY21 at 11.65 million tonnes and semi-finished at 7.25 million tonnes, an increase of 31 per cent and 153 per cent over the previous year. SteelMint said that exports in FY21 was an all-time high. Industry sources said that the previous high was in 2017-18 at 11.614 million tonnes. Jayant Acharya, director – commercial & marketing, JSW Steel, said, exports of 17-plus million tonne in FY21 is the highest. “Of this, about 11 million tonne was in the first half. China was importing large quantities during this period,” he explained. Sushim Banerjee, former director general, Institute for Steel Development & Growth (INSDAG), too, said that this was a record for exports. In the first half of the year, when India imposed a nationwide lockdown to contain Covid-19, companies resorted to exports. Jindal Steel & Power (JSPL) managing director, V R Sharma, said that the company had recorded its highest exports. Exports accounted for 35 per cent of sales in FY21 for the company compared to 13 per cent in the prior year. However, it now stands at 25 per cent of sales, pointed out Sharma.
Steel exports touched a record high in FY21, saving the day for companies, as domestic consumption dragged due to Covid-related disruptions in the first half of the year.
Explaining the backdrop, Acharya, said, “In H1, domestic consumption was down by 28 per cent due to strict Covid related restrictions and lockdown. Exports was the main outlet in H1. With gradual opening up, domestic business started picking up from July/August ‘20 and consumption improved in Q3 ‘21 and Q4 ‘21. In H2, consumption was up by 15-16 per cent,” he added.
Data compiled by Joint Plant Committee (JPC) shows that finished steel exports between AprilMarch 2020-2021 (provisional) stood at 10.785 million tonnes, an increase of 29.1 per cent; exports of semi-finished steel during the period
Overall, the year ended with a drop in consumption of 6.7 per cent and production to the tune of 7.8 per cent. However, it was still better than the projections made in April last year for FY21 as demand picked up over Q3 and Q4.
Covid-19 pushed steel exports to record high in FY21
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Buoyant global rates to support domestic steel prices amid possible moderation in demand: ICRA Domestic steel rates are likely to remain elevated on the back of favourable international price trends despite a possible moderation in demand in the near term, rating agency. NSE said. Buoyancy in international steel prices kept Indian steelmakers' export volumes high in February 2021 with a year-on-year and monthon-month growth of 15 per cent and 25 per cent respectively, a trend which ICRA said is likely to continue in March 2021 as well. According to ICRA, India's steel consumption growth is expected to moderate in the near term due to a surge in the number of new COVID cases and increasing mobility restrictions. Despite the possibility of a demand moderation, ICRA expects domestic steel prices to remain elevated on the back of favourable international price trends. "In terms of demand trends, it is to be noted that contraction in domestic steel consumption has been much lower at 9.9 per cent in 11M FY2021 compared to a 19.6 per cent drop witnessed during 8M FY2021 on the back of a sharp pullback in demand during December 2020 and January 2021," ICRA said in a statement. Steel demand in February 2021 reported a month-on-month decline of 7.6 per cent as elevated steel prices kept some of the end-users in wait and watch mode.
CEMENT Cement demand FY22 could surpass 340 mn tonne; highest in a decade: Icra Domestic cement demand is expected to be
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highest in the decade, estimated to surpass 340 million tonne in FY2022, driven by sustained rural housing demand and significant pick-up in infrastructure activity. On the supply side, the capacity addition is also expected to increase by 22-25 million tonne in FY2022. As per an Icra note, while the cement prices are expected to largely sustain at the recently increased levels supported by the improved demand, the higher input costs are likely to exert pressure on operating margins during the fiscal. Though this is likely to result in some moderation in debt coverage metrics, they are likely to remain at healthy levels. Alongside, continued focus on agriculture and rural development in the Union Budget of 20212022 is expected to boost rural housing demand. Meanwhile, the Union Budget has also increased the capital outlay for infrastructure sector. The pick-up in the construction activity in infrastructure segment will also support the cement demand, said Icra. On the supply side, capacity additions are expected to be in the range of 15-17 million tonne in FY2021 as against the earlier estimates of around 20 million tonne owing to the Covid-19 pandemic when demand is adversely impacted, and the companies preserved liquidity. The capex is likely to get back to around 22-25 million tonne in FY2022 and FY2023. The addition in eastern India is expected to lead the expansion and is expected to add around 20 million tonne followed by the central region at around 13 million tonne during FY2022-FY2023. While in some regions like the North, the NorthEast and the East, the cement players’ utilisation is likely to be higher than the national average, in other regions such as the South and the West, the utilisation is likely to remain muted, given the past capacity overhang.
With the expected revival in the demand in FY2022, the utilisation levels are likely to im-
prove to 63 percent on expanded base. The capacity utilisation will remain moderate owing to the significant capacities (especially in eastern region) being added during the same period.
Cement stocks rally on strong demand hopes; Shree, JK Cement hit new highs Shares of cement companies were in focus trading session, with Ambuja Cements, Shree Cement, JK Cement and the Ramco Cement hitting their respective new highs on the BSE, on strong demand expectations. Besides these stocks, UltraTech Cement, ACC, JK Lakshmi Cement, India Cements, Orient Cement, Prism Johnson and Star Cement from the S&P BSE Allcap index were up in the range of 2-6 per cent on the BSE. In comparison, the S&P BSE Sensex was up 0.82 per cent at 50,067 around 01:35 pm. The cement sector is set to report strong double-digit volume growth during the JanuaryMarch quarter (Q4FY21) given the low base and sharp recovery in the cement demand, led by higher government spending and strong rural economy. Sustained demand from individual housing (IHB) in the semi-urban, rural region and
a healthy pick-up in infra activities is expected to aid growth in volumes during Q4FY21. "In terms of regions, demand in the east and north are likely to remain strong with plant utilisation in the east region expected at over 90 per cent whereas plant utilisation in the north is expected to operate at over 85 per cent. Further, demand in the south and west would largely be supported by a pick-up in government-led infrastructure activities leading to healthy sales volume growth during the quarter at all India level," ICICI Securities said in cement sector Q4FY21 results preview. The Budget for the financial year 2021-22 (FY22) laid increased thrust on higher government capex on infrastructure (roads, railways and metro), which could boost demand, if executed well, believe analysts. Coupled with strong rural housing demand and improving urban housing in Tier 2 or 3 cities, the industry may see healthy demand for the next few years, analysts at Emkay Global Financial Services said in a sector update. Aided by a low base of March 2020, the industry is likely to report over 20 per cent year on year volume growth in Q4FY21E and broadly flat volumes YoY in FY21E, in our view, the brokerage firm said.
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GLOBAL Coal production from mining’s top ten set to increase Coal production from the top ten mining companies (Coal India, China Shenhua, Yanzhou Coal, Peabody, China National Coal, Glencore, Siberian Coal, PT Bumi, BHP and Arch Resources) fell from a collective 1,704Mt in 2019 to 1,633Mt in 2020, which is a 4.2% decline. The most significant declines were observed from Arch Resources (28.6%), PT Bumi (24.9%), Glencore (23.9%), and Peabody (21.8%), according to GlobalData, a leading data and analytics company. GlobalData expects production from the top ten companies to be between 1,683-1,740Mt in 2021, which is an increase of up to 6.6% compared with the collective output in 2020 (1,633Mt). Operating activities, backed by the rollout of vaccine and strict COVID-19 protocols
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on-site, returning to normal is expected to be a key production driver for companies in 2021. Peabody’s output dropped primarily due to the upgrade of the main line conveyor system at Shoal Creek, alongside pit sequencing work at Moorvale and a dragline outage at Coppabella while BHP’s coking coal production was impacted by planned maintenance at the Saraji and Caval Ridge mines, environmental disruptions at La Nina, and lower yields at the South Walker Creek and Poitrel mines.. In contrast, production from Coal India rose by 4% owing to a recovery in the offtake from India’s power sector, which was supported by a resumption in industrial and commercial activities
China to cut coal use share below 56 per cent in 2021
China aims to cut its coal use to below 56 per cent of energy consumption in 2021, the National Energy Administration (NEA) said in a statement on Thursday, but said the fuel would still play a vital role in ensuring the nation's energy security. China, the world's biggest coal consumer, lowered the share of coal use in its primary energy mix to 56.8 per cent in 2020, from around 68 per cent at the beginning of the previous decade. The NEA also plans to raise electricity use to 28 per cent of end-use energy consumption in China, up from the 2020 goal of 27 per cent, the document said. The production target for crude oil is set at 196 million tonnes in 2021 and for natural gas at 202.5 billion cubic metres. Installed non-fossil fuel power capacity is aimed at around 1,100 gigawatts (GW). The NEA is seeking to raise its power generation from solar and wind plants to around 11 per cent of the country's total power consumption in 2021. .
China is paying a high price for its ban on Australian coal China is paying a high price for its unofficial ban on coal imports from Australia, with the cost of domestic and alternative foreign supplies rising for both thermal and coking grades of the fuel.
have been facing higher costs, with prices for alternatives to supplies from Australia, both local and foreign, rising as the market adjusts to the unofficial ban. In coking coal, the price of free-on-board Australian cargoes has been weakening since the ban was imposed, apart from the usual seasonal gain for the northern hemisphere winter. The Singapore Exchange contract for Australian coking coal ended at $113.71 a tonne on Thursday, down 18.8 per cent from the $140 that it reached at the start of October, just as the Chinese ban was coming into effect.
Indonesian coal-fired capacity to rise by 14-16GW: PLN Coal is expected to remain the dominant power source in Indonesia's energy mix this decade, according to a report by state-controlled utility PLN, which expects 14-16GW of generation capacity to come on line by 2030. This will account for up to 36.6pc of proposed total capacity additions of 40.9GW, which also includes power plants being developed under the country's 35GW power generation project. The additional coal-fired capacity will be broken down into an expected 3.5GW of mine-mouth capacity and 12.5GW of non-mine-mouth capacity.
China, the world's biggest importer, producer and consumer of coal, has effectively ended imports from Australia, the biggest shipper of coking coal used to make steel and number two in thermal coal used to produce electricity, as part of an ongoing political dispute between the two nations.
The country is still dependent on coal for its baseload needs because of its availability and lower cost compared with other baseload fuel sources, PLN said. The company said coalfired plants accounted for 181GWh or 65pc of the country's total generation output in 2020. There are currently 237 coal-fired plants in the country with an installed boilerplate capacity of 34.61GW.
The restrictions on imports from Australia came into effect in the second half of last year, resulting in China's imports dropping to virtually zero in the first two months of this year from a 2020 high of 9.46 million tonnes in June, according to Refinitiv vessel-tracking and port data.
Coal demand for power generation will increase significantly if power plant construction follows the targets set out in the PLN report. If all projects come on line on their targeted commercial operation dates, the power sector will need 140mn-170mn t of coal by 2030
However, China's consumers of imported coal
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South Korea ends aid for coal plants overseas South Korea will stop funding coal-powered plants overseas, President Moon Jae-in told a US-led summit Thursday, as he vowed a larger role in fighting climate change. The progressive president said he was expanding a decision at home to phase out coal, the dirtiest form of energy. "Korea will end our public financing for overseas, coal-fired power plants," Moon told the summit convened by President Joe Biden. The event will engage the leaders to help shape the global, regional and local agenda in the energy sector including Power, Energy Transition, Oil & Gas, Renewables, Coal, Digital Transformation among others. "It is imperative for the world to slow down coalfired power plants, although developing countries that will struggle due to the heavy dependence on coal should be given due consideration and proper support," he said. Moon said that Asia's fourth largest economy was committed to going carbon neutral by 2050 and would "aim to enhance" its goals by 2030.
Renewable increase cuts Vietnam coal burn in 1Q An increase in hydro and renewable output in Vietnam cut the country's coal burn on the year in the first quarter, despite an increase in overall power generation. Vietnam's coal burn declined by 12pc on the year to 29.8TWh in January-March — a 1.6mn t drop to 11.2mn t of NAR 5,700 kcal/kg-equivalent coal burn at 40pc efficiency — as exports to the country also fell. The country almost tripled its generation from renewables on the year in the first quarter to 7.8TWh, up from 2.8TWh a year earlier and 99GWh in the first quarter of 2019. Vietnam's increased renewables and hydro
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output meant that demand for coal reduced despite overall power generation increasing. The country's first-quarter power generation increased by 4pc on the year to 59.7TWh, up from 57.3TWh in 2020 and 53.9TWh in 2019. Thermal coal exports to Vietnam retreated to their lowest since August 2018 in January, down to 1.4mn t from 2.5mn t in 2020 and 1.9mn t in 2019. Indonesian exports for Vietnam halved on the year to 577,000t in January, while exports of Australian coal fell by a quarter to 588,000t. South African exports to Vietnam declined by three quarters to 55,000t, while exports of Russian coal fell by 38pc to 174,000 tn. .
Glencore, China Huaneng sign deal to fit carbon capture to Australian coal plant Mining and trading company Glencore and China Huaneng Group have signed a Memorandum of Understanding to cooperate on carbon capture utilization and storage, starting with a project at the 850-MW Millmerran coal-fired power station in Queensland, Australia, Glencore said April 12. The companies have committed to support deployment of low carbon emission technologies like CCUS to reduce greenhouse emissions from the use of fossil fuels and other industrial processes, it said. "This project is vitally important because it can scale up to support the reduction of Scope 3 emissions from the use of fossil fuels across a broad range of industrial sectors," Glencore CEO Ivan Glasenberg said. "This is the first integrated international carbon dioxide capture and storage project that China has participated in," said Li Weidong, Chairman of China Huaneng Group Clean Energy Research Institute. It would help build cross-industry cooperation in achieving "near zero emissions" from a coal plant, he said.
Australia’s Queensland coal exports hit four-year low
It comes ahead of the UK staging COP26, the United Nation's annual climate gathering, in Glasgow in November.
Shipments from the four largest coal export ports in Australia's Queensland state were at the lowest level in four years on an average daily basis in March, entirely because of a drop in shipments from the 85mn t/yrDalrymple Bay Coal Terminal (DBCT) to a four-year low last month.
On Thursday, Johnson will address a climate summit hosted by US President Joe Biden, as he attempts to make Britain a world leader on the issue in the run-up to November.
Total shipments last month rose from February when exports were at a two-year low in absolute terms but fell from March 2020 levels, according to monthly trade data by North Queensland Bulk Ports (NQBP) and the Gladstone Port Authority. Last month's coal exports averaged 506,900 t/d compared with 567,600 t/d in February and 542,700 t/d in March and was the lowest daily average for a monthly period since 267,500 t/d in April 2017 when shipments were disrupted by Cyclone Debbie and widespread flooding affected rail haulage from mines to ports. The drop in daily exports was largely because of a decline in shipments from Queensland's second-largest coal export terminal of Dalrymple Bay, which fell to the lowest monthly export volume since the 1mn t shipped in April 2017, according to NQBP data.
UK to cut emissions by more than three-quarters by 2035: reports Britain will ramp up its commitment to cut carbon emissions ahead of hosting a UN climate summit this year, vowing a 78 percent reduction by 2035, reports said on Tuesday. Prime Minister Boris Johnson is set to unveil later this week the legally-binding target, which is 15 years earlier than once planned, the BBC reported. It said that for the first time the commitment will also cover emissions from international aviation and shipping, a long-standing demand of environmental activists.
The country has set a target of becoming carbon neutral by mid-century and has already ramped up its targets. The latest 78 percent target for the middle of the next decade was among the recommendations made last year by the UK government's independent advisory body, the Committee on Climate Change (CCC). It noted there would have to be more electric vehicles, an extension of offshore wind power generation, a reduction in meat and dairy consumption, and the planting of new woodland.
Anglo American spinning off thermal coal business Anglo American (AAL) shareholders will vote on spinning off the miner’s thermal coal assets into a new listed company next month. The plan is to shift the mines, which produce coal that is burned at power stations, into the Johannesburg- and London-listed entity Thungela Resources. Each Anglo shareholder will get one Thungela share for every 10 shares they own. Three-quarters of shareholders voting at the annual meeting on 5 May need to back the demerger for it to go ahead. Anglo said the plan would allow Thungela to “attract new shareholders and to access new sources of capital as an independent company offering direct exposure to thermal coal”. Bernstein analyst Bob Brackett said the unit did not generate any free cash in 2019 or 2020 and would likely trade at a lower multiple than Anglo. London has few coal options, with South African company MC Mining (MCM) struggling at just CCAI Monthly Newsletter April 2021
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over a tenth of its valuation from a few years ago. Glencore (GLEN) offers the most exposure of the majors, although Anglo will still have thermal coal through its Cerrejon asset in Colombia, and mines in Australia. Meanwhile, South32 (S32) is handing South African company Seriti Resources $250m (£182m) to take its thermal coal assets, in a deal that will likely complete this quarter.
US thermal coal exports may tighten despite recent price rises: Platts Analytics Downside potential for US thermal coal exports remains for 2021 despite recent rises in prices, S&P Global Platts Analytics warned April 5. The increase in US thermal coal prices, particularly those in the Central Appalachian basin, "is tied to the recovery of CIF Amsterdam-Rotterdam-Antwerp and other Atlantic coal basin prices," which have been pushed up by robust demand in Asia and widespread supply constraints, Platts Analytics said in its US Coal Market Forecast. However, this support may wane with a resurgence of South African coals moving to India in March, Platts Analytics said. Additionally, strong Panamax and Supramax freight rates will put downward pressure on prices. In the short term, price movements support the upside potential for US exports to Europe in the second quarter, Platts Analytics said. Although, any significant increase is unlikely given limited restocking in the ARA region despite an increase in coal burn expected. While ARA ports touched a five-year low of approximately 3.4 million mt in March, Platts Analytics does not expect a rush to restock given currently high FOB prices and freights rates, the International Thermal Coal Forecast said.
Colombia's mining sector recover 15 per cent in 2021
to
Colombia's mining sector is expected to recover 15 per cent in 2021, propelled by greater pro-
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duction of coal, gold and nickel and direct foreign investment, which is expected to almost triple to $2.7 billion, an industry association said on Tuesday. Colombia's mining industry declined around 26 per cent last year, its greatest contraction in history, after being battered by the coronavirus pandemic and a 91-day strike at coal mine Cerrejon, while foreign investment was cut almost in half to $902 million. As well as improving coal production and new projects, the recovery will also benefit from the restarting of infrastructure works and rising demand for luxury goods such as emeralds, the association said. The ACM has set a coal production target this year of 60 million tonnes, after output fell 40 per cent to 49.5 million tonnes last year, Narino said. The production target for gold has been set at 1.78 million troy ounces, up from 1.53 million troy ounces last year, the association said.
Poland to buy coal assets from utilities, create state energy company in 2022 Poland announced a plan late April 16 to separate coal assets from state-controlled utilities and transfer them to a state-owned National Energy Security Agency (NABE), freeing up power companies to access financing for future investments in natural gas and renewable energy. The state Treasury is to buy 70 coal units from three utilities, PGE, Enea and Tauron, and set up NABE next year, the Ministry of State Assets said in a statement. PGE's conventional arm, PGE GiEK, is to be in charge of integrating the assets into NABE. Once it has done so, PGE GiEK will operate under the name of NABE. The open pit mines associated with lignite-fired power stations would also be part of NABE, but no hard coal mining assets would be, the ministry said. Coal-fired cogeneration plants would remain with the utilities with a view to them being modernized towards low and zero-emission sources.
MONTHLY SUMMARY OF IMPORTED COAL & PETCOKE Indicative Imported Coal Price COAL
(kcal/kg)
Monthly Price - FOB
Monthly Price- FOB
Monthly Change (USD)
South Africa
6000 NAR
USD 92.90
INR 6927
5.18
South Africa
5500 NAR
USD 66.26
INR 4940
5.78
Australia
5500 NAR
USD 57.25
INR 4269
1.22
Indonesia
5000 GAR
USD 69.65
INR 5194
2.97
Indonesia
4200 GAR
USD 49.35
INR 3680
9.62
Indicative Pet Coke Price PET COKE
Sulphur
Price
India-RIL(Ex-Ref.)
-5%
Saudi Arabia (CIF)
+ 8.5%
USA (CIF)
- 6.5%
INR 11203 INR 9265 ($124) INR 9787 ($131)
Monthly Change ($) INR 691.00 7.25
Exchange Rate
Change (Monthly)
INR 74.57
1.67
9.25
Indicative Coking Coal Price Premium Low Vol Current Month
Monthly Change (USD)
HCC 64 MID Vol
Semi Soft
CFR China FOB Aus
Low Vol PCI
Mid Tier PCI
FOB Aus
FOB Aus
MET COKE 62% CSR
FOB
CFR China
FOB Aus
109.85
222.32
105.06
207.63
101.44
107.04
106.04
364.88
349.00
-31.23
1.19
-26.85
0.31
3.63
0.84
1.35
-72.51
-104.75
South African Coal News: * A prolonged slump in Indian coal demand threatens a recent recovery in South African prices. And if suppliers are to diversify exports to non-Indian markets in a similar vein to the second quarter of 2020, they may need to rely more heavily on the Chinese market. * Mining giant ANGLO American chose to demerge its South African coal assets because it did not have the right to shut production. Anglo American announced on April 8 that it would
CFR India FOB N China
inject R2.5bn to support Thungela Resources, a holding company for its 16.5 million tons a year portfolio of South African coal mines. * South Africa's Ned bank will stop financing new thermal coal mines from 2025 and cut direct funding of new oil and gas exploration projects with immediate effect, it said amid growing pressure from environmental groups to stop funding fossil-fuel power projects that are seen as a major risk to global plans to tackle climate change.
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Australian Coal News:
* Australia's New South Wales (NSW) state government has approved Switzerland-based trading and mining group Glencore's plans to extend the 13.5mn t/yr run-of-mine open-cut Mangoola thermal coal mine in the Hunter valley. Environmental and farming groups had opposed the expansion of Mangoola, which includes extracting an additional 45mn t of coal in an area, on the grounds of dust, pollution and climate change. * Australia’s superannuation funds should be free to support the coal industry’s expansion plans, resources Minister Keith Pitt said, as a battle heats up over new mines in the key Hunter Valley mining region of New South Wales. Pitt’s comments come as pressure grows on institutional investors to limit funding for new thermal coal mines as part of the global energy transition. * Thermal coal exports in Australia fall by 20% in March’21 amid China’s ongoing ban imposed on Australian coal. The country’s thermal coal export has registered a downward trend since last year, shrinking by 4% in January and 7% in February respectively. * Australia's New South Wales state government halted development of two coal mines even as it opened up a new area of land for coal exploration. The state government will pay China's Shenhua Energy A$100 million ($77.17 million) to withdraw its mining lease application for the Shenhua Watermark Coal project in the Hunter Vally, north of Sydney. .
Indonesian Coal News:
* Indonesian coal prices gained for the fifth consecutive week on extended buying interest from Chinese utilities. A firm price outlook in
30 | CCAI Monthly Newsletter April 2021
the physical market also spurred trade in the ICI 4 derivatives market. Some Chinese utilities were heard to have issued tenders recently for low to-mid calorific value (CV) Indonesian coal. Chinese buyers' ability to buy Indonesian coal at higher prices has edged out other buyers. * Indonesia’s HBA benchmark coal price that saw a correction of 4% last month, has recovered by 2.6% in April’21 on m-o-m basis amid improved demand from China. Coal trade between China and Indonesia has increased manifolds in recent months on the back of the country’s decision to ban coal import from Australia. * Indonesia has raised its 2021 coal output target to 625 million tonnes, up from 550 million tonnes previously, according to a Energy and Mineral Resources Ministry regulation. The targeted additional output would be used for exports, the regulation said. * Under the Indonesian government's push to develop derivative mining industries, major coal miners like Adaro are required to set out downstream plans to get their mining permits extended. Some have mentioned plans for coal gasification projects, which involves chemically converting coal into synthesized gas with varying end products.
US Coal News:
* US coal carload originations rose to a sevenweek high 64,252 in the week that ended April 24, up 4.3% from 61,600 a week earlier and 33.5% higher than the year-ago week. It was the fifth time in the last 23 months with weekon-week and yearly increases, while the 33.5% year-on-year increase was the largest in over nine years. * The increase in US thermal coal prices, particularly those in the Central Appalachian basin, is tied to the recovery of CIF AmsterdamRotterdam-Antwerp and other Atlantic coal basin prices, which have been pushed up by
robust demand in Asia and widespread supply constraints, analysts say. However, this recent price hike may cause the export figures to tighten in coming weeks. * Indian demand for US mid-volatile matter and premium hard coking coal imports grew in 2020 as strong steel and met coke fundamentals support India consumption rising to a new high in 2021 and 2022, according to Iman Resources. India imported 4.16 million mt of US metcoke, down slightly from the 4.21 million mt in 2019. However, imports of US mid-vol HCC rose to 2.66 million mt in 2020, up 17% from 2019.
Pet Coke News: * High prices, limited supply and instable freight rates have caused the US petcoke market to be subdued. Spot activities in US gulf market has also been limited while activities in West coast has been limited due to high freight rates but the price of petcoke has remained flat since last few weeks. * Demand for petcoke delivered into the Mediterranean region continued to remain low last week, as consistently rising freight rates and petcoke prices aided the ongoing switch to alternative fuels. All origins of petcoke have risen; USGC and Spain material are at alltime highs.
* As the pandemic related restrictions are being strictly reinforced again, supply of deliveredpetcoke in the Mediterranean region has become tight causing its price to move upwards in April. The price indications for both delivery of both mid and high sulphur FOB US Gulf Coast material for May and June 2021 is expected to go higher under the current conditions.
Shipping Update: * Coal demand in India is forecast to slow down in May and June to around 15 million tons (mt) each month, down 22% from the April’ 21, following an 8.4% month-on-month rise in April amid the looming shadow of COVID-19 pandemic. In the second quarter of 2021, total seaborne coal imports to India is estimated to be 51.4mt, down 10% quarter on quarter according to IHS Markit’s at Sea. * Freight traffic handled by 12 major ports in the country contracted 4.6 percent year on year to 672.61 million tonne in FY 2020-21 due to disruptions caused by the COVID-19 pandemic mainly in the first half of the year, data released on April 5 by the Indian Ports Association showed. Ports’ freight traffic showed a year-onyear increase for the fifth consecutive month in March. Ports’ freight traffic boomed in March, rising 16.4 percent on year, the largest in at least a year.
CCAI Monthly Newsletter April 2021
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Overall Domestic Coal Scenario Coal Production (in MT) Company CIL SCCL
March, 2021 81.15 6.38
March, 2020 84.38 5.92
% Growth -4% 7.8%
April- March, 2021 596.25 50.58
April- March, 2020 602.14 64.02
% Growth -1% -21.0%
Overall Offtake (in MT) Company
March, 2021
March, 2020
% Growth
April- March, 2021
April- March, 2020
% Growth
CIL SCCL
59.74 5.92
53.40 5.03
12% 17.7%
573.80 48.51
581.41 62.47
-1% -22.3%
Coal Despatch to Power (Coal and Coal Products) (in MT) Company
March 2021
March 2020
% Growth
April- March, 2021
April- March, 2020
% Growth
CIL SCCL
47.59 4.93
43.74 4.35
9% 13.3%
445.69 40.90
465.72 52.92
-4% -22.7%
Company
Coal Qty. Allocated March 2021
Coal Qty. Allocated March 2020
Increase over notified price
Coal Qty. Allocated April- March 2021
Coal Qty. Allocated April- March 2020
Increase over notified price
CIL
5.30
2.53
24%
42.51
29.83
25%
Spot E-auction of Coal (in MT)
Special Forward E-auction for Power (in MT) Company
Coal Qty. Allocated March 2021
Coal Qty. Allocated March 2020
Increase over notified price
Coal Qty. Allocated April- March 2021
Coal Qty. Allocated April- March 2020
Increase over notified price
CIL
6.31
0.89
9%
39.33
27.12
8%
Exclusive E-auction for Non- Power (in MT) Company
Coal Qty. Allocated March 2021
Coal Qty. Allocated March 2020
Increase over notified price
Coal Qty. Allocated April- March 2021
Coal Qty. Allocated April- March 2020
Increase over notified price
CIL
5.48
0.00
20%
31.23
8.03
13%
Company
Coal Qty. Allocated March 2021
Coal Qty. Allocated March 2020
Increase over notified price
Coal Qty. Allocated April- March 2021
Coal Qty. Allocated April- March 2020
Increase over notified price
CIL
1.08
0.08
12%
3.45
1.04
13%
Special Spot E-auction (in MT)
Special Spot E-auction For Coal Importers Company CIL
Coal Qty. Allocated March 2021 0.00
Coal Qty. Allocated March 2020 0.00
32 | CCAI Monthly Newsletter April 2021
Increase over notified price -
Coal Qty. Allocated April- March 2021 7.53
Coal Qty. Allocated April- March 2020 -
Increase over notified price 18%
PRODUCTION AND OFFTAKE PERFORMANCE OF CIL AND SUBSIDIARY COMPANIES COAL PRODUCTION (Figs in Mill Te) SUB CO.
ECL
APR'21 ACTUAL THIS YEAR
ACTUAL SAME PERIOD LAST YEAR
2.90
3.40
% GROWTH -13.60
BCCL
2.00
1.70
15.00
CCL
4.80
2.30
112.60
NCL
8.60
8.70
-1.90
WCL
3.60
3.50
5.60
SECL
9.30
9.30
0.10
MCL
10.60
11.50
-7.80
NEC
0.00
0.00
CIL
41.90
40.40
3.70
OFFTAKE (Figs in Mill Te) APR'21
SUB CO. ACTUAL THIS YEAR
ACTUAL SAME PERIOD LAST YEAR
% GROWTH
ECL
4.10
3.70
11.80
BCCL
2.50
1.00
152.80
CCL
6.60
3.00
122.20
NCL
9.40
7.20
31.70
WCL
5.60
2.80
100.20
SECL
12.90
9.80
32.70
MCL
12.80
11.60
10.30
NEC
0.00
0.10
CIL
54.10
39.10
38.40
CCAI Monthly Newsletter April 2021
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Note
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CCAI Monthly Newsletter April 2021
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