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Demand for thermal coal to rise due to increase in electricity demand: Indian Coal ministry

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Coal block allocatees have a golden opportunity to augment production as the demand for thermal coal will rise due to an increase in electricity demand, according to a senior government official. There are reports of coal shortages amid rising demand for electricity with the onset of summer season. New coal blocks are being allocated for commercial mining and prospective bidders have shown encouraging responses for these blocks. Some of these blocks have started coal production within a year of allocation, the coal ministry said in a statement. “Coal block allocatees have a golden opportunity for increasing coal production as the price of imported coal is very high at the moment and demand of thermal coal will increase due to increase in electricity demand of country,” Coal Secretary Anil Kumar Jain said. The production from captive coal blocks registered an increase of 35 per cent to 85 million tonnes in FY22.

Coal crisis hits India Industry

A severe coking coal shortage has hit Indian industry, pinching sectors like paper and pulp, cement, aluminium, engineering and steel. Supply disruption due to the war in Ukraine has led to a sharp increase in price of imported coal starving companies which run captive power plants. Others that are grid dependent are facing acute power shortages for the same reason. Sector experts and consultants say a combination of factors are responsible for this latest snag in the manufacturing sector. “Imported non-coking coal pricing (Indonesian variety) has seen a pricing surge of 160% y-o-y in fiscal 2022 and is expected to see a further 7% y-o-y growth over the high base in fiscal 2023,” said Hetal Gandhi, director, Crisil Research. While better industrial activity and an overall economic rebound is driving demand sentiment, supply side constraints and the Russian-Ukrainian conflict have had an impact on imported coal supplies. Meanwhile international coal prices have shot through the roof because weather disruptions in the key mining areas of Australia, and Indonesia’s ban on coal exports to meet domestic demand. As a result, prices of Australian coal (up over 157% on-year in fiscal 2022) surpassed the $300-per tonne mark in March and was more than 35% higher sequentially in the fourth quarter, said the report.

State Govts Auction 6 Mineral Blocks Funded by NMET During 21-22

Union Minister of Coal, Mines and Parliamentary Affairs, Shri Pralhad Joshi said that during the year 2021-22, National Mineral Exploration Trust (NMET) has received the highest ever release of funds of Rs.125 crore and approved projects cost of Rs.748 crore. Minister Shri Joshi was chairing the fourth Governing Body meeting of NMET on April 13, 2022. Stating that as a fully autonomous body at present, funds will not be a limiting factor for NMET operations, the Minister urged the State Governments to speed up exploration and mining activities to give further fillip to Atma Nirbhar Bharat. Shri Joshi said that six mineral blocks funded by NMET were auctioned by four State Governments during 2021-22 with a revenue generation stream of Rs. 1.63 lakh crore. Rs. 880 lakh has been released as an incentive during 2021-22 in favour of 14 State Governments by the Centre. During the financial year 2021-22, NMET has performed exceedingly well in terms of sanctions of projects and providing funds to exploration agencies, surpassing the performance of previous years. The National Mineral Exploration Trust (NMET) was established in 2015 with the objective to increase mineral exploration in the country. The Governing Body (GB) of NMET lays down the broad policy framework for the functioning of the Trust and reviews its work

47 coal blocks get mine opening permission, likely to increase to 60 blocks in FY23: Coal Ministry

After giving permission to 47 coal blocks for mine opening, the government now aims to scale it up to a total 60 coal blocks in 202223 out of the total 106 blocks that have been allocated to different entities for captive use, the ministry of coal said on April 12. Thermal coal still fuels around 75 percent of India’s power generation. As the domestic coal supply has not been able to catch up with the growing demand and international coal prices continue to soar, the government has been prioritising supplies to the power sector and has asked the captive coal mine owners, especially from non-power sectors, to increase their output for their own consumption.

The Ministry of Coal said that its Nominated Authority has reviewed the production of coal with allocatees of captive coal blocks whose coal blocks have either commenced production or are likely to commence production during the financial year 2022-23 and found that coal production from captive coal blocks during 2021-22 was 85 million ton (MT), an increase of around 35 percent on year. “The enhanced coal production helped in shortening the demand-supply gap in the domestic market,” the ministry said.

Coal offtake likely to pick up in April-June: India Ratings

Coal offtake is likely to increase in the April-June quarter of FY23 compared to the same period of the last financial year, according to India Ratings & Research. “Coal offtake is likely to be higher YoY in 1QFY23, especially from the power sector amid sustained high import prices, for pre-monsoon re-stocking at power plants up to the government mandated levels of 45 million tonnes (MT)," said statement by the ratings agency. As of end of March 2022, the closing stock was around 25 million tonne. It added that the inventory build-up shall also be supported by a lower dependence on thermal power as the contribution of renewable sources of power having the must-run status is generally higher in the first two quarter of a fiscal. It also said that India’s coal production is likely to be higher on a year-on-year (YoY) in 1QFY23 in line with pre-covid levels. During the first quarter last fiscal, coal production was 9.4% lower than that in 1QFY20.

Coal India Ramps Up Supply To Power Plants As Heat Wave Propels Demand

Country's largest dry fuel producer Coal India Limited (CIL) said it has increased supplies by 14.2 per cent to coal-based electricity generating plants in the first half of the current month, but soaring power demand due to hotter-than-normal summer seems to have dwarfed the upsurge in supplies. CIL said that it is coordinating with the ministries of coal, power and railways to build up stocks at power plants in a synergic effort, in the wake of a decline in coal stocks at power plants. CIL's supplies have hit 1.6 million tonnes per day during this period, against 1.43 million tonnes in the corresponding period of last year. The company had ramped up its production to 26.4 million tonnes during the first half of April, registering Y-o-Y growth of 27 per cent. “The company is heading for its highest April production ever. Output expansion in volume terms was 5.7 million tones. The company's supplies are on the up so far. The pressure would ease if the imported coal-based power plants meet their requisite imports set for the year, “ the company said.

Coal India to set up 13 Coal Washeries to reduce ash and useless component

Coal India Limited (CIL), a Government-owned coal mining plans to set up 12 new coking coal washeries and one non-coking coal new washery to reduce the quantity of ash and useless component from coal. All these washeries are expected to be operational by Financial Year 2026. The new washeries Commissioned in the last 5 Years are Dahibari Coking Coal Washery (1.6 MTY), and Patherdih I Coking Coal Washery (5 MTY). The Construction of Madhuband Coking Coal Washery (5 MTY) Completed in 2021-22. The planned Coking Coal Washeries under 1st Phase are Patherdih II (2.5 MTY), and Bhojudih

(2 MTY) which are under construction. LoI issued to New Kathara (3 MTY), BasantpurTapin (4 MTY). Moonidih (2.5 MTY) is under Tender evaluation. Ib Valley (10 MTY), the new Non-Coking Coal Washeries is under Construction Further, in SCCL, one washery with 1.0 MTPA operational capacity is working on BOO (Build Own Operate) basis at Manuguru area, Bhadradri Kothagudem District of Telangana.

SCCL to supply over 81% of its coal production to thermal plants this year

Singareni Collieries Company Ltd (SCCL) has decided to supply over 81%, 57 million tonnes (MT) out of its targeted 70 MT, of coal production during the current fiscal (2022-23) to thermal power generation plants in Telangana and other States, mostly in the Southern region, to meet their energy needs. The management of SCCL has recently written to the Coal Ministry assuring it of supplying 57 MT of coal to thermal power plants which have coal linkage with it (Singareni). Accordingly, the company has plans to supply 4.8 MT coal to thermal power plants this month. Till April 17, about 2.67 MT coal was supplied. To meet the demand of thermal power plants, the company has decided to mine at least 2.1 lakh tonnes (0.21 MT) of coal every day with supply of at least 1.7 lakh tonnes (0.17 MT) to thermal plants. Instruction has been given to ensure coal dispatches at least by 36 railway rakes every day. They were told to dispatch 6.5 rakes from Kothagudem, 5.5 each from Srirampur and RG-2 (Ramagundam), 5 from Manugur, 4 from Yellandu and 3.5 from RG-1. It has been decided to supply 4,000 tonnes of coal every day from Bhupalapally area to the 1,100 megawatt (MW) Kakatiya thermal power plant.

Private sector can get over 3,200 hectares of demined coal mine land on lease

Private sector will now be eligible to take mined out or de-coaled land on lease from Coal India to develop coal and energy-related infrastructure. Over 3,200 hectares of such lands are available as on date. These are lands acquired under Coal Bearing Areas (Acquisition & Development) Act, 1957, popularly known as CBA Act for coal mining activities by Coal India and its subsidiaries. However, these are either mined out or are practically unsuitable for coal mining, prone to unauthorised encroachment, and entail avoidable expenditure on security and maintenance. The government company which owns the land would lease such land for a specific period given under the policy and the entities for leasing will be selected through a transparent, fair, and competitive bid process and mechanism in order to achieve optimal value. The lands will be considered for the activities such as setting up coal washeries/conveyor systems, establishing coal handling plants, constructing railway sidings, rehabilitation and resettlement of project affected families due to acquisition of land under the CBA Act or other land acquisition law.

Analysts bet big on Gangavaram Port; see significant expansion opportunities with APSEZ takeover

In one year of APSEZ taking stake in the strategically located Gangavaram Port, analysts see immense growth for the all-weather, multipurpose port in India. After participating in a roadshow organized last week by Adani Ports and SEZ Ltd. (APSEZ) for Gangavaram Port Limited (GPL), analysts are positive that GPL will see a massive augmentation in its capacity

mainly due to large land availability near the port, and the strategic location of the port and its hinterland reach. The port, which handled ~30 MMT cargo in FY22, is expected to handle more than double the current cargo at 66 MMT by FY 25. The target for FY23 is to manage cargo volumes over 40 MMT. Currently, a new container facility of 0.8 MTEUs is under commissioning and is expected to complete by Jul ’22. Already, contracts for 150,000 TEUs (~2 MMT) of container cargo handing have been tied up, which is expected to go up to ~400,000 TEU (~6 MMT) of containers by FY25. The growth is tipped to various catalysts, including commencement of NMDC plant at Nagarnar in FY23, rising Steel EXIM from names such as SAIL, Rashtriya Ispat Nigam Ltd (RINL), JSW Steel and JSPL with operations in the GPL hinterland, and significant momentum being observed for export of agricultural products such as wheat from North India, and rice, tobacco, and chillies from the Guntur belt in Andhra Pradesh.

RAILWAYS & SHIPPING

India's railway ministry says to grant higher priority in loading of coal

India railways ministry has decided to prioritise loading of coal for power plants from sheds, washeries to June end, it said in a notification. It has also been decided to prioritize loading of imported coal from ports, the railway ministry said. India is likely to face more power cuts this year as utilities' coal inventories are at the lowest pre-summer levels in at least nine years and electricity demand is expected to rise at the fastest pace in at least 38 years. Coal inventories at power plants had an average stock of nine days at the beginning of this financial year starting April 1, the lowest since at least 2014. Federal guidelines recommend power plants to have at least 24 days of stock on average.

Railways mulling 1,00,000 more wagons amid rising freight, coal demand

Amid rising demand for coal freight and an aggressive push towards diversifying its freight basket, Indian Railways is planning to buy 1,00,000 more wagons over the next three financial years. The procurement plan will majorly consist of BOX N wagons, which are used to transport coal, a senior ministry of railways official said. Notably, the railways recently floated a sizable tender worth Rs 35,000 crore of wagons, which had been in the pipeline since 2018. “Our budget estimates for freight increase were conservative. With the encouraging freight numbers in this financial year, we want to attain higher numbers both in this year and in the medium-term,” the official added. According to the budget, railways aims to increase its annual freight loading to 1475 mt, with a projected revenue at Rs 1.65 trillion in 2022-23. Under the National Rail Plan (NRP), the Centre wants to significantly increase the national transporter’s freight numbers, along with its modal freight share to 45 per cent by 2030. As per government estimates, consolidated demand for freight will be over 6300 million tonne (mt) by 2026 and 8220 mt by 2031.

Core sector grows by 5.8% in February

India's core sector growth grew by 5.8% in February, data released by the commerce and industry ministry showed.

The output of eight infrastructure sectors had registered a growth of 4.0% year-on-year in January 2022 while in February 2021, it had contracted by 3.3%. The index of eight core industries measures the output of eight infrastructure industries - coal, crude, natural gas, refinery products, fertilisers, cement, steel and electricity. On a sequential basis, the output of eight core sectors fell by 5.3%. Six out of the eight core sectors, viz., coal (6.6%), natural gas (12.5%), refinery products (8.8%), steel (5.7%), cement (5.0%) and electricity (4.0%) reported a growth in the month of February while crude oil (-2.2%) and fertilisers (-1.4%) contracted. The double-digit output in natural gas has continued for the 12th straight month while refinery production has posted a four-month high growth. The cumulative growth rate of the Index of Eight Core Industries (ICI) between Apr & February 2021-22 stood at 11.0% (provisional) as compared to the corresponding period of last fiscal, data showed. This double-digit growth can be attributed to the negative base of last year.

STEEL

Steel companies betting on IndiaAustralia ECTA to source coking coal cheaper

The free trade agreement (FTA) signed between India and Australia last week will bring down the import cost of coking coal for steelmakers and boost their financials as coal costs account for over 50 per cent of production expenses. After negotiating for about 11 years, both countries signed a historic trade deal — the Australia-India Economic Cooperation and Trade Agreement (ECTA). This agreement will provide, among other benefits, duty-free access to India for about 96.4 per cent of exports. Both governments expect this deal to boost bilateral trade to $45-50 billion over the next five years. Under the ECTA, the effective tariff of 2.5 per cent will be eliminated upon the agreement’s entry into force for most types of coal including coking coal, which accounts for the majority of Australia’s coal exports to India, said an Australian High Commission spokesperson. Indian steel companies are completely dependent on imported coking coal as it is not produced in India. Australia is the preferred destination compared to the US and Canada due to logistics convenience. Coking coal shipments from Australia to India have grown over five-fold to 16.5 million tonnes between last January and September, particularly after unofficial of ban of trade between China and Australia.

India: Surge in raw material cost pushes steel prices to new high in April

The surge in raw material prices prompted major steel companies to increase prices in April after two successive months of hikes. The country’s largest steel producer, JSW Steel, and ArcelorMittal Nippon Steel India (AM/ NS India) and Jindal Steel & Power (JSPL), among the top private sector steelmakers, have increased prices of hot rolled coil (HRC) – a benchmark for flat steel – by Rs 4,000-5,000 a tonne. JSW Steel and JSPL which are into long products have increased rebar prices by Rs 2,250-3,000 a tonne, respectively. Data from SteelMint shows that the price of HRC after the increase stands at Rs 79,00079,500 a tonne for JSW Steel and AM/NS India ex-Mumbai. Revised JSW rebar prices are at Rs 73,000-73,500 a tonne ex-Mumbai and JSPL

rebar at Rs 76,000-76,500 a tonne ex-Delhi. Coking coal prices that had gone up to $670 a tonne have come off its highs in the past few weeks. However, industry sources pointed out prices were still high compared to a year back. Moreover, other raw material prices continued to be at high levels. Also, iron ore, the other key input material, was on an uptrend. NMDC also increased prices in April by up to Rs 200 a tonne.

BSL sets record in sale of secondary products

The Bokaro Steel Plant (BSL) has achieved 45% more sales of its secondary products in the 2021-22 financial year as compared to the previous fiscal, it said . The Steel Authority of India (SAIL), which commands BSL, has appreciated the PSU’s performance in spite of the hurdles posed by the Covid-19 pandemic. “The sales in secondary products have increased by 45% as compared to that in the previous year. BSL has sold secondary products worth Rs 2,184 crore in the 2021-22 financial year, as against Rs 1,502 crore in 2020-21 FY. The sales in secondary products grew by three times in value during the past two years,” said Manikant Dhan, the chief of communication, BSL.

CEMENT

ACC’s earnings down on lowered demand in first quarter of 2022

ACC’s earnings before taxation, interest, depreciation and amortisation (EBTIDA) fell by 26% year-on-year to US$83.1m in the first quarter of 2022 from US$113m in the same period in 2021. Net sales rose by 3% to US$566m from US$552m. Sales volumes of cement dropped by 3% to 7.71Mt but volumes of readymixed concrete grew by 5% to 0.87Mm3. The subsidiary of Ambuja Cement and Holcim said that its costs had been negatively affected by a global rise in fuel costs caused by ‘geopolitical events.’ The cement producer said that its new integrated plant at Ametha in Madhya Pradesh is scheduled to be commissioned in the fourth quarter of 2022. It commissioned an upgrade to its Tikaria grinding plant in Uttar Pradesh in February 2022. Waste heat recovery unit projects at its Jamul and Kymore plants are ‘on track’ and the board of ACC has approved the next phase of similar projects at its Chanda and Wadi plants.

Vedanta Jharsuguda supplies first rake consignment of fly ash to cement industry

Vedanta Aluminium, India’s largest producer of aluminium, dispatched its first rake consignment of 4,000 tonne of fly ash from Jharsuguda plant to one of the plants of Holcim India – ACC Cement, Chaibasa Cement Works, to produce low-carbon cement. This initiative is a part of Vedanta Jharsuguda’s waste-to-wealth imperatives and ensures gainful utilisation of an industrial by-product such as fly ash in circular economy avenues, the company said in a statement. Fly ash is a by-product of thermal power generation using coal, which caters to electricity requirement of Vedanta’s aluminium smelters at Jharsuguda. The inherent properties of fly ash can be utilised for improving product quality, conserving energy, water, and other valuable resources, and reducing the industry's carbon footprint. Also, being voluminous in nature, fly ash comes with significant cost and energy advantages as well. In cement manufacturing, every tonne of fly ash used can help save 700-800 kg of carbon emissions, 4.2 million KJ of energy, and 341 litres of water.

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