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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. 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.
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India Is Pushing For More Coal Capacity
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.
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. 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. 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.
Cabinet okays subsidy for urea produced via coal gasification
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). 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. 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-
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 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. 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. 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. 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. 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.
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
team is very optimistic about starting the mining operation from the Utkal-D coal block in this financial year. "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.
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. The decline in the volume was partially offset by growth of iron ore, containers and other commodities. Besides, it said that quick clearing of Suez Canal blockage is unlikely to create any further pressure on the shipping freight rates. 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
Covid-19 pushed steel exports to record high in FY21
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. 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 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. 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. 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.
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 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 av-
erage, 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.
