CCAI Newsletter August-19

August, 2019 Price: 40/W H E R E S E R V I C E A N D D E D I C AT I O N J O I N H A N D S

Vol. XLVIII No. 05 Published on : 28.08.2019

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From the Editor’s Desk

Government’s decision to ope n India’s coal sector to 100 percent foreign direct investment at the end of last month will garner inte rest from the global players who may soon populate the country’s coal mines with their deep pockets and high-e nd technology, turning the hun t for the much coveted ‘black gold’ into an intense and interesting sag a. India is estimated to have coal res erves of up to 300 billion ton ne, while it produced 730 million tonne of coal in 2018-19. The cou ntr y has set a target to increase its coal pro duction to 1,500 million ton ne by 2022.

The ministry has termed the move to allow 100 percent FDI as the biggest reform in the coal sec tor under the current regime and said it would create an “efficient and competitive” coal market in India.

The Coal Ministry is hopeful that the production from auc tioned mines will soar to 45 million tonne in the current fiscal 2019-20 ). However, the higher production does not necessarily mean lower import s. In spite of the improvement in domestic coal production in the country in recent years, the rising dem and for the fuel has led to a surge in coal imports. It increased to 208.2 7 million tonne in 2017-18 and fur ther to 235.24 million tonne in 20 18-19.

Being the largest importer of Australian metallurgical coal, India has recently urged Australia to wo rk out a favourable differentia l pricing mechanism for it. Both countr ies agreed to expand the sco pe of cooperation in the fields of LN G, coal and uranium. India is currently the only nation in the Asia-P acific region, where cost of pro ducing solar power is almost 14 percent less than cost of electricity gen erated from coal. In a bid to encourage clea n energy and its domestic ma nufacturing, the government is also planni ng to increase import duty on solar equipment down the value cha in in the coming years.

In spite of the country’s sign ificant push towards renewa ble energy sources like solar, the main thr ust for fuel remains on coal.

According to experts, it is highly unlikely tha t renewables will be able to sur pass coal as the major source for power generation in the near future . Coal India Chairman Anil Kumar Jha also backed the notion, saying ren ewables cannot take over coal comple tely in the country. India’s reli ance on coal, however, is not a one-off phe nomenon as major miners in countries like South Africa also thinks their nation would depend on the dry fuel for decades to come. Even Indone sia, another major thermal coa l producer, has recently announced shifting its capital from Jakarta to the nexus of the country’s coal and oil hub s in eastern Borneo.

Meanwhile, in the power sec tor India has emerged as AP AC region’s cheapest power producer fro m coal, solar and wind source s. However, in terms of tariffs paid by consum ers, the country is fourth che apest after Malaysia, Vietnam and China.

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Content Vol. XLVIII No. 05 August, 2019

06 Consumers’ Page

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 / 22621516 E-mail : sec.ccai@gmail.com Website : www.ccai.co.in

08 Power

Editor : Subhasri Nandi

14 Domestic

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.

24 |In Parliament

20 Global

32 |Monthly Summary Of Domestic Coal Monthly Summary Of Imported Coal & 34 |

Petcoke

36 |Overall Domestic Coal Scenario And Offtake Performance 37 |Production Of Cil And Subsidiary Companies CCAI Monthly Newsletter August 2019

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CONSUMERS’ PAGE Present Coal Scenario Coal India has produced 34.77 mt of coal in August 2019, dropped by 10.3% compared to the same month last year. Total production (210.23 mt) for the first five months of this fiscal has also declined by 2.8% compared to the same period last year.

Coal offtake was down by 10.4% to 40.47 mt in August this year as compared to last year. Total offtake for the period of April-August 2019 was lower by 2.5 % to 240.57 mt against 246.82 mt during the same period last year.

Consumers’ Concern 1. Coal Stock Position Coal stocks have fallen at as many as 47 thermal power plants at present. Out of these 12 plants have just two days’ stocks, eight have only one day’s stocks and six that don’t have stocks for even one day. Coal supply by CIL to power plants between April and August has declined by 4% year-on-year to 190 million tonnes.

2. Coal Quality issues Grade slippages have been observed from the sidings/collieries stated below:

Coal Company

Collieries/Sidings (Declared Grades)

ECL

DBCP-Siding (G-4) of Pandaveswar Area, Bankola -1 (G-4), Khandra (G-4), Kumardihi-A(G-4), Tilaboni (G-4) & Shyamsundarpur (G-4) of Bankola Area, Jhanjra (G-5) of Jhanjra Area, Madhabpur (G-4), Madhabpur-Patch (G-5) & Jambad OCP (G-5) of Kajora Area and Gourangdi (G-8), Bonjemahari (G-5), Dabor (G-7) & Mohanpur (G-7) and Gourangdi Begunia (G-7) collieries of Salanpur Area and Sankurpur (G-6) of Kendra Area, Chitra (G-6/G-8) , SP Mine Area

BCCL

Dahibari (G-6) & Dohibari OCP (G-8) of Chanch Victoria Area and Muraidih (G-9) & Phularitand (WIV) collieries of Barora Area, ENA(W-III) Kusunda Area, Rajapur OCP (W-III) Bastacola Area

SECL

Jampali Mines (G-12 & G-15) and Govinda (G-11) & Churcha Mines (G-8) of Korea Rewa field and Chirimiri Sidings, Katora Sidings

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MCL

Hingula Mines (G-13), Garjanbahal Mines (G-13), Lajkura Mines (G-13), Sardega-Siding (G-13) and Kanika Siding (G-13)

CCL

Magadh Mines (G-12) and Amrapali Mines (G-11), Gridih (G-8/G-10), Central Pit Area’

WCL

Tawa- 1 & Tawa- 2 Mines (G6) and Chhattarpur- 1 Mines (G-9) of Pathakhera Area and Neharia Mines (G-7) of Pench Area

Consumers have requested the Coal Ministry, Coal Controller, CIL & its Subsidiaries to kindly intervene into the matter so that actual grade of coal may be received as per the contracts from the said sources.

3. Request to formulate a suitable methodology and implement the approval of MoP regarding Non-lapsing of short supplies of coal to Power Plants in the lapsable category Power sector consumers have requested Coal Ministry, Railway Board and CIL for formulation of suitable methodology and implementation of the MoP approval (notice dated 08.03.2019) regarding Non-lapsing of short supplies of coal so that these consumers can maintain safe coal stock level at their plants and eventually be prepared for such difficult situation in future as well.

4. Non-receipt of Referee Analysis Report and reconciliation from different CIL Subsidiaries and request for formulation of a suitable policy for all Subsidiaries

by the consumers in this regard. Early issuance of Credit notes may provide desired relief to the consumers from financial burden.

6. Cancellation of rakes due to nonavailability of coal from SECL & WCL Number of rakes to the industries (including CPPs) are getting cancelled from Dipka, Junadih, New Kusmunda, Gevra, Surakachar, Manikpur, Robertson and Jairamnagar Sidings of SECL as the loading did not commence within stipulated time due to non-availability of coal. Similar situation has arisen in WCL mainly from Wani and Ghugus sidings. Consumers have requested for formulating a suitable policy so that the cancelled rakes are revalidated and seniority of such long awaited rakes do not get lapsed for no fault at the consumers’ end.

7. Non issuance of DOs from SECL causing blockage of working capital Consumers are suffering badly due to pendency of huge quantity of Delivery Orders (DOs) leading to blockage of working capital. Therefore, consumers have requested to release the same as soon as possible or allot the quantity from Secondary source for the desired relief.

Consumers procuring coal from different CIL Subsidiaries have not received Referee Analysis Reports since long. Though they have already deposited the required amount to the Referee Laboratory for analysing the samples they have challenged but due to non-receipt of analysed reports entire reconciliation procedure is held up at the Subsidiary Coal Companies. Subsidiaries have asserted that they would release the reports shortly. CIL has been requested for formulation of a suitable policy so that such situation does not arise in future.

8. Shortage of coal quantity in rakes received against linkage from SECL

5. Huge backlog in issuance of Credit notes

SECL is demanding advance payment against old FSAs which have already expired and no monthly programme is being accepted against these FSAs as well. Therefore, asking for entire MSQ amount in advance by SECL from the consumers should be reconsidered.

There has been enormous delay in issuance of credit notes mainly due to grade slippage by the Coal Companies and even no confirmation has been received

A few consumers have witnessed shortage of 2 to 3% coal quantity in the rakes received by them. A few rakes, originated from Gevra mines of SECL, shortages have gone up to even 10%. Authorities should intervene into the matter in order to resolve it.

9. Demanding of advance payment against old FSAs by SECL

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POWER Short supply of coal: Government Debt servicing: Govt cuts tax burclears methodology to compen- den on stressed power plants sate power firms The power ministry has updated the definition The power ministry has approved a methodology to compensate power producers for any short supply of coal.

The move follows the Cabinet Committee on Economic Affairs’s (CCEA’s) decision in March to help power producers who are essentially facing a shortage of raw material supplies for reasons beyond their control.

Even after making advance payments, power plants were not compensated for short supply of coal even if it was due to the fault of Coal India or the railways.

The CCEA had clarified that in case of such shortfalls, the supply contract may not lapse and be carried over for up to a maximum of three months.

08 | CCAI Monthly Newsletter August 2019

of “statutory payments” in its latest order on the debt servicing mechanism for stressed power generation assets, effectively leaving more money for debt-servicing with the firms concerned and reducing their tax burden.

The latest clarification modifies a recent order on the creation of ‘Trust Retention Account’ (TRA) by stressed power plants which are receiving coal through the Shakti scheme.

The power ministry has now clarified that that revenue deposited in the TRA would be used to clear taxes and duties only for additional electricity that plants are producing from the extra coal they receive through the Shakti scheme. So, tax obligations from power produced from other sources of coal won’t now burden stressed units. The power ministry, in consultation with

the Department of Financial Service, has introduced the TRA mechanism for stressed power plants to utilise their surplus revenue for servicing debt.

According to the mechanism, all revenue of power plants using Shakti-coal would be deposited in a TRA — which would be used to first pay statutory payment, followed by fuel cost, transmission expenses, operation and maintenance expenses and then pay interest on loan and principal to lenders.

ing litigation have been attributed as the key reasons behind slow growth in the production of domestic energy resources such as coal. The Adarsh scheme aims to fast track production by overcoming such impediments.

Stressed power companies told to use cash surplus to pare debt

Energy projects: Govt plans Adarsh scheme to put mining on track

The power ministry has notified that certain stressed power plants would have to use their cash surplus after meeting operating expenses to service debt through a Trust Retention Account (TRA) managed by the lead banker to the project, as part of the stress reduction measure for the thermal power sector.

The government is planning to identify 25-30 mineral-rich districts in the country to accelerate mining programmes by expediting the approval mechanism for energy projects in these regions.

For developers using coal linkage under the amended Scheme for Harnessing and Allocating Koyala Transparently in India (SHAKTI), a TRA should be set up, if it is not there already, as per an office memorandum issued on Monday.

According to official documents reviewed by FE, the initiative comes under the ‘Agrim Districts for Accessing Resources Sustainable and Harmoniously’ (Adarsh) scheme, which is being planned by the government to meet the rising energy demands of the country, via domestic resources.

It said the entire revenue from generators would be deposited to the TRA, which will then be used to pay different stakeholders.

The plan has been designed by the ‘Five Year Vision Resources Group 2024’. the ministries of power, renewable energy, petroleum and natural gas, environment and forest, coal, mines and external affairs constitute the group.

According to the Adarsh plan, energy projects of both public and private companies in the identified mineral-rich districts would undergo an ‘accelerated consent and clearances framework’, subject to the approval of an ‘integrated plan’ — which would incorporate environment clearances, compensatory afforestation, resource development, smart townships, connectivity and market places.

Delays in receiving forest clearances, miningsafety permissions, land acquisition and ongo-

Coal auctions still far from transparent The SHAKTI (Scheme for Harnessing and Allocating Koyala Transparently in India) policy was approved in May 2017 with the intent of better allocation of coal to present and future power plants.

It aimed to phase out the present Letter of Assurance and Fuel Supply Agreement (FSA)-based regime, and instead introduce a more transparent and competitive coal allocation policy.

The policy also offered a potential solution to the lack of coal linkages to 17 power plants with capacity of about 15,000 MW, which were part of the 34 power plants (of about 40,000 MW) declared as stressed.

Transparency is a part of the scheme’s name and also a major objective. However, in reality, it is conspicuously absent. For example, the limCCAI Monthly Newsletter August 2019

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ited information available about the B(i) linkage allocations has to be gleaned from the Ministry of Coal (MoC)’s monthly summaries for Cabinet reports, and even they provide only aggregate figures and not linkage-wise source, recipient and quantity.

Even with regard to allocations under Section B(ii) of the policy, few details are available in the public domain.

Full transparency about these details is necessary, not only because it is a central objective of the policy, but also because it has a direct impact on electricity tariffs, and citizens have a right to know such information SHAKTI was conceptualised with the intention of moving to a transparent and effective system for coal linkage allocation that could partially address stressed assets and encourage a competitive coal-thermal sector.

However, two years after the policy was announced, those objectives still do not seem to be realised.

Discoms will have to supply power through franchisees: RK Singh State power distribution companies will have to hand over electricity supply businesses to multiple licensees or franchisees to get central government assistance or loans from the Power Finance Corporation, said power and renewable energy minister RK Singh.

The minister said the Centre withstood pressure from states to get all discoms to open bank guarantees against power purchases. “I will not name, but some chief ministers asked for more time. We said no.

But they implemented it and now this has become part of the system. No power curtailments were required, barring a few in some states,” Singh said.

“The proposed Tariff Policy will mandate discoms to pay on a first-in first-out basis so the dues get cleared. It also provides that any late

10 | CCAI Monthly Newsletter August 2019

payment will attract late payment surcharge and even generators cannot waive it,” the minister added..

Adopt smart and prepaid meters to prevent power theft: Power Minister State power distribution utilities (DISCOMs) should adopt smart and prepaid meters to prevent power theft said Minister of State (Independent Charge) for Power and New and Renewable Energy, RK Singh. Addressing Chief Secretaries and Principal Secretaries of Power of North-Eastern (NE) States in Guwahati, Singh said, “Concerted efforts will have to be made to make the system sustainable.

In order to redeem our pledge for 24/7 power, we will have to reduce the losses and make the DISCOMS viable. ” He cited examples of some States which had huge commercial losses but have been able to bring down the losses to 15 per cent or below.

He urged NE States to adopt smart and prepaid meters to prevent power theft.

The Minister also stated that grant for Central Government schemes will be made available to only those states who undertakes reforms, such as reduction of losses among others.

IBC won’t hurt fuel supply, power pacts In what is likely to help allay concerns of the power sector about the impact of insolvency proceedings against electricity producers, the government said the process under the Insolvency and Bankruptcy Code will not have any impact on their power purchase and fuel supply agreements.

“There are enough NCLT (National Company Law Tribunal) rulings which say whatever supplies are essential for keeping the unit a ‘going concern’ cannot be stopped,” said a senior official. Companies have to make current payments

for the supply of such goods and services during insolvency, he added.

He said the government was clear that both power purchase and fuel supply agreements were covered under the moratorium granted to companies undergoing insolvency proceedings.

Govt cancels coal block jointly allocated to NTPC, JKSPDC The central government has cancelled the joint allocation of Kudanali-Luburi coal block in Odisha to state-owned NTPC and Jammu & Kashmir State Power Development Corporation.

NTPC and Power Development Department, Jammu and Kashmir, had earlier requested the coal ministry for cancellation of the coal block.

The coal block, in the Talcher Coalfield of Odisha, has a reserve of 396.10 million tonne (MT). The ministry further said there is no provision under the Mines and Minerals (Development and Regulation) Act, 1957, and the rules made thereunder to allocate fresh coal block in lieu of a cancelled coal block.

Renewables unlikely to overtake coal for power generation, says CIL chief Coal India Chairman Anil Kumar Jha recently said renewables are unlikely to surpass coal as the major source for power generation in the near future and asserted that India’s energy migration scenario will be different compared to many other countries which have been switching to renewable sources.

His remarks also come against the backdrop of increasing focus on renewable energy sources for generation of power in different parts of the world.

India is APAC’s cheapest power producer India has emerged the least costly electricity producer from coal, solar and wind sources in

the Asia Pacific region. It is the only country in the region where cost of producing solar power is almost 14% less than cost of electricity generated from coal. However, in terms of tariffs paid by consumers, India is fourth cheapest after Malaysia, Vietnam and China. Cost of power generation is highest in Japan so is its tariff for consumers among all Asia Pacific countries.

According to data compiled by global consultant Wood Mackenzie, levelised cost of electricity generation from fossil fuel at around $44.5 per MWh (Rs 3.05 per unit) in India, is the cheapest in the region. It is followed by China at $ 48.5 per MWh (Rs 3.33 per unit) and Australia at $50.9 per MWh (Rs 3.49 per unit) among other 12 countries in the region. Levelised cost of solar power generation in India according to the study, estimated at around $38.2 MWh (Rs 2.62 per unit), is also the lowest.

Coal-based power makes India top global SO2 emitter: Greenpeace Sulphur dioxide (SO2), a significant contributor to air pollution, may be within the national ambient air quality standard in all major cities in India, but the country is the largest cumulative emitter of this pollutant in the world and thus prone to being a victim of a cocktail of several toxic air pollutants, a new report recently released by Greenpeace, a global environmental NGO stated. As a reactive pollutant, SO2 reacts with other air pollutants to form sulphate particles and makes a significant part of particulate matter (PM2.5), which has the largest public health impact. It is estimated that SO2 commonly makes up more than 10% of the deadly fine particles in India and China. The Greenpeace study, released on Monday, finds that Singrauli, Neyveli, Talcher, Jharsuguda, Korba, Kutch, Chennai, Visakhapatnam, Ramagundam and Raigarh are the major SO2 emission hotspots in India. Analysis of ambient air quality data by the Central Pollution Control Board (CPCB), India’s national pollution watchdog, however, shows that sulphur dioxide levels were within the acceptable limits in all 50 major cities.

CCAI Monthly Newsletter August 2019

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Solar manufacturers ready to expand if govt gives incentives, curbs imports The country’s solar cell and module makers are ready to add 8-15 Gigawatt (Gw) manufacturing capacity annually but want the government to offer them demand surety and restrict Chinese imports. In a letter to the ministry of new and renewable energy, the manufacturing industry said it is confident that the Centre will provide them supply exclusivity for the Kisan Urja Suraksha evam Utthaan Mahabhiyan (KUSUM) scheme and several projects of Central public sector companies.

The domestic industry is now banking on several schemes wherein domestic content would be preferred. The KUSUM scheme is one of those. The current solar cell manufacturing capacity stands at 3 Gw. The short-term plan is to expand current cell manufacturing by 2.5 Gw and set up another 10 Gw by 2021. The industry plans to add 15 Gw of module manufacturing by same year.

India to hike import duty on solar equipment in coming years: Power Minister

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In a bid to encourage domestic manufacturing, India will increase import duty on solar equipment down the value chain in the coming years, Power Minister R K Singh said on Thursday.

“Right now safeguard duty is imposed on solar equipment which will be diluted in few years,” the minister said.

India had imposed 25 per cent safeguard duty on solar cells for July 30, 2018 to July 29, 2019 period. Now it has come down to 20 per cent for July 30, 2019 to January 29, 2020. It will further come down to 15 per cent during January 30, 2020 to July 29, 2020. There has been a significant increase in imports of solar cells in absolute terms. Imports of cells jumped to 9,790 MW in 2017-18 from 1,275 MW in 2014-15. India produced 842 MW solar cells in 2017-18.

Ocean energy declared as green energy The power ministry has approved a proposal to declare ocean energy as renewable energy, an official statement said. Ministry of New and renewable energy has clarified to all the stakeholders that energy produced using various forms of ocean energy such as tidal, wave, ocean thermal energy conversion etc. shall be considered as renewable energy and shall be eligible for meeting the non-solar Renewable Purchase Obligations (RPO).

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DOMESTIC India urges Australia to work out favourable differential pricing for metallurgical coal India has recently urged Australia to work out a favourable differential pricing mechanism for metallurgical coal. Oil and Steel minister Dharmendra Pradhan held a meeting with Australian minister for resources and northern Australia Senator Matt Canavan, an official statement said. He said India is the largest importer of Australian metallurgical coal and noted that a favourable differential pricing mechanism should be worked out, the statement said.

Pradhan called for greater investment flow from Australia and sharing of best practices in the fields of LNG, coal and uranium. Both countries agreed to expand the scope of cooperation as India offers a large energy market and Australia

14 | CCAI Monthly Newsletter August 2019

is rich in natural resources. Coal ministry rejects Niti Aayog’s proposals on raising mining output Terming them ‘completely contrary to principles of transparency’, the Union coal ministry has rejected the recommendations of a high-level committee of the Niti Aayog on ramping up coal production.

The panel had suggested to put an end to captive coal block allocation and to conduct auctions only for commercial mining.

“Any sudden change in policy pushing for mining of coal for commercial use only as suggested in the report will disrupt supplies to the power sector. This has the potential to plunge the country into darkness,” coal ministry wrote to the think tank.

The Niti committee had also recommended the revision of a number of Acts to enable offering of coal blocks on exploration-cum-production

lines on revenue sharing basis. The coal ministry said that the proposed method of allocation ‘is fraught with danger of losing government revenue that was precisely the raison d’etre of action leading to cancellation of mines on court intervention’.

Auto slowdown could hit demand for recycled aluminium products The slowdown in the automobiles sector is likely to retract demand for recycled aluminium products like aluminium castings in the near term.

The share of recycled aluminium in the aggregate share of aluminium consumption in India has shot up in the last three years to fiscal 2019 to 34% from 26% earlier driven by better cost dynamics, according to a report by CRISIL. While usage of primary aluminium grew at a compounded annual rate of 3.5-4% that of recycled aluminium grew at a strong 17-18%, the report said. However, going ahead, in the near term, CRISIL said it expects a “bump in the growth trajectory due to the slowdown in sale of two wheeler and passenger vehicles.” The growth momentum though is likely to pick up in the medium term.

‘Higher output, better evacuation can help India trim coal import by half’ Anil Kumar Jha, Chairman of Coal India Ltd (CIL), said on Friday the country can reduce the import of coal by nearly 50 per cent over the next three years. India imported close to 235 million tonnes (mt) of coal in FY19. Coking coal constituted around 50 mt of the total.

Another 70 mt was imported by power plants located in coastal areas — these imports made sense both logistically and on the cost front.

However, the remaining 115-120 mt of imports can be substituted if domestic production is ramped up and evacuation is better. A majority of the import can be substituted by ramping up CIL’s production by 50-55 mt every year for the next three years, the official added.

Centre to amend MMDR Act to expedite coal exploration The Ministry of Coal is likely to offer four additional blocks for allocation to PSUs for coal sale.

This will be over and above the 42 coal blocks for which notice inviting tender and application has been published. The Coal Ministry had, in the first week of August, started the process of auctioning 27 coal mines and allotting 15 coal mines to Central and State PSUs. According to the objective of auctioning of coal blocks, the government is auctioning 21 coal mines for end use non-regulated sector and six coking coal mines for end use iron and steel. In the case of allotment, five coal mines are for power sector, nine for sale of coal and one for iron and steel, the Ministry had indicated. With a view to expedite the process of giving mining lease, the Coal Ministry is looking to do away with the need for taking ‘prior approval’ of the Centre before the State hands over the mining lease. This would call for an amendment to the Mines and Minerals Development and Regulation Act (MMDR), 1957.

Coal production from auctioned mines set to soar to 45 mt this fiscal The Coal Ministry is hopeful of domestic production from auctioned mines to reach pre-cancellation levels when the current financial year comes to an end. The Supreme Court had cancelled allocations of 208 coal blocks in August 2014. This included 42 coal producing mines.

The Ministry estimates that in 2019-20 about 45 million tonnes of coal may be produced from these auctioned or allocated coal mines.

“The production from 42 operational coal mines during the pre de-allocation period (2014-15) was 43.22 million tonnes. Production stopped in these mines when the Supreme Court had cancelled allocations. This year (2019-20) we expect coal production from the mines auctioned or allocated after the cancellation to reach the pre de-allocation levels,” a Coal Ministry official said. The higher productions do not necessarily mean lower coal imports. There is a demand– supply gap of 120 million tonnes in the country that can be met by domestic output. If the alloCCAI Monthly Newsletter August 2019

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cation was not cancelled, we could have bridged this gap by 2021-22. Besides, there will be a remaining demand for 105-110 million tonnes of imported coal as the projects are based on those imported grades,” the official said.

Govt Index to Show Revenue of Coal Block Operators The government will use its own coal price index to calculate revenue earned by operators of coal black to ascertain its share of income from 27 blocks being auctioned to the non-regulated sector. The decision will rule out potential disputes over possible under-reporting of revenues by operators, which, the government feels, cannot be audited regularly. Payments by operators are likely to be made on monthly basis and the government has released that keeping a tab on the price/revenue may not be feasible on a regular basis. Winners of the current auction will be selected on the basis of the highest share of revenue offered to the government.

CIL’s 54 projects facing delays State-owned CIL’s 54 coal mining projects are facing delay due to various reasons such as contractual issues and delay in green clearances among others, the world’s largest coal miner said. “A total of 120 coal projects costing ₹20 crore and above are in different stages of implementation. Out of which 66 projects are on schedule and 54 projects are delayed,” Coal India Ltd said in its annual report. The major reasons for delay in implementation of these projects are delays in obtaining environment clearance, forest clearance, possessions of land and issues related to resettlement and rehabilitation, contractual issues and evacuation facilities among others.

Govt to take bigger revenue share from coal sold in open market The government will take a higher revenue share from the portion of coal output that is sold in the open market by winners of coal blocks on offer in the current round of the auction. Winners will

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be allowed to sell a quarter of the output in the open market without price restrictions. Blocks will be awarded on the basis of the highest share of revenue offered to the government. On top of this share, the government will take another 15% for sales in the open market. The remaining 75% of the output is for captive consumption by winners of 27 blocks being auctioned to private companies from sectors like iron and steel, cement and captive power plants. The government will calculate its share of revenue from a block on the basis of a proposed index to rule out disputes over possible underreporting of revenue by operators. Payments by operators are likely to be made on monthly basis and the government has realised that keeping a tab on the price/revenue may not be feasible on a regular basis.

West Bengal government seeks clarity on rules for world’s second largest coal block The centre is ready to officially handover Deocha Pachami coal block in Birbhum to West Bengal government, however, the state has sought greater clarity on performance guarantee calculations and implementation timeframe for the proposed mine which is believed to be a geologically difficult block. It is the world’s second largest coal block and the state was looking at the possibility of selling a portion of its produce in the open market, if allowed by the centre, which, however, seem unlikely. States query relates to calculation of performance guarantee and payment modalities – lumpsum or over years. The state has suggested some changes in the timelines for the block. Deocha Pachami is estimated to hold reserves of 2.1 billion tonnes and investments for its development is likely to range between Rs 12,000 crore and Rs 15,000 crore. It may create 100,000 jobs and result in rapid economic development in the area. During June last year the centre allotted Deocha Pachami to WBPDCL as a captive block. Operations of the block will be undertaken by Bengal Birbhum Coalfields.

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STEEL

Economic slowdown: Steel consumption set for slowest growth in three years Demand for steel in India could grow at the slowest pace in three years as an economic slowdown in the global industry’s bright spot deepens. Steel consumption in India is likely to increase by less than 6 per cent this fiscal year, according to ICRA Ltd., the local arm of Moody’s Investors Service. That would make it the slowest pace since a 3.1 per cent increase in the year ended March 2017. India’s steel companies are taking a battering this year.

Top steelmaker Tata Steel Ltd.’s first-quarter profit slumped to the lowest in more than two years and rival JSW Steel Ltd.’s earnings fell by more than half as a crisis in the South Asian country’s shadow banking sector fueled a cash crunch and economic growth slowed to a fiveyear low.

Steel sector to weaken in FY20 due to twin impact of softer prices and high input cost Fundamentals for the steel sector are likely to weaken in FY20 under the twin impact of softer prices and higher input costs on the back of low demand. Domestic steel companies will be impacted by muted demand from auto sector, even though government projects in affordable housing and infrastructure are expected to improve the demand scenario, India Ratings and Research (Ind-Ra) has said in its latest sector report.

“On the domestic front, the Indian steel sector is likely to see robust demand from the affordable housing and infrastructure sectors, bolstered by various government schemes and projects.

However . demand from the automobile sector is likely to be muted,” it said. A key area to

18 | CCAI Monthly Newsletter August 2019

watch out for is the auction of mines by March 2020, where any delay could lead to disruption in domestic steel production in FY21, the Ind-Ra report added. Supply of coking coal is likely to be tight in the coming months, the report said with large Australian miners reducing their output. However, with India, the largest coking coal importer from Australia, maintaining its monthly import levels, the agency expects coking coal prices to remain firm in near to medium term.

CEMENT

India Cements net profit rises 244% YoY to Rs 72 cr in Q1, revenue 8% India Cements reported a profit of Rs 72.21 crore for the quarter ended June 30, 2019 (Q1FY20), as against Rs 21.03 crore during the same quarter last year, an increase of around 244 per cent.

Revenue for the quarter under review rose to Rs 1,468.80 crore up by 8 per cent from Rs 1,360.65 crore reported in the corresponding period of the last year.

The company reported significant improvement in its operating performance for Q1FY20 on the back of improved selling price and sustained efforts of cost reduction. The EBIDTA of the company increased by more than 50% when compared with the same corresponding quarter of the previous year. Net plant realisation went up by 11 per cent during the quarter under review, said N Srinivasan, vice chairman, India Cements.

The company’s EBIDTA stood at Rs 245 crore during the quarter ended June 30, 2019, as compared to Rs 162 crore in the same quarter of the previous year.

Reserved for PSUs: Govt abandons plan to open offshore mining to private players The government has abandoned a plan to allocate offshore mining leases to the private sec-

tor through the auction route. Instead, it will reserve them for the public sector.

The plan to amend the Offshore Areas Mineral (Development and Regulation) Act, 2002, to pave way for allocation of offshore leases through auction was attempted through a 2017 Bill.

However, there has been no progress since then. The OAMDR Act, 2002, governs all offshore minerals barring crude oil and other hydrocarbons but does not provide for auctioning of the minerals, unlike the Mines and Minerals (Development and Regulation) (Amendment) Act, 2015, which makes auction mandatory for all non-coal minerals in onshore areas.

The auctioning provision under the MMDR (Amendment) Act also could not be extended for offshore minerals.

The UPA government had in 2010 allocated 62 exploration mineral licences in the offshore area, but these were to be annulled subsequently following a raging controversy over the process of allocation.

India’s exports need to contribute $1 trillion in economy: Piyush Goyal Commerce and Industry Minister Piyush Goyal on Wednesday said India’s exports will have to contribute USD 1 trillion as the country aims to become a $5 trillion economy in the next few years.

Commerce and Industry Minister said that the ministry is working on making India’s export products competitive and simplifying rules and regulations for easy availability of export credit,” an official release said.

The minister asked exporters and importers to flag issues regarding availability of land, labour, common effluent treatment plants, cluster development and logistics support required in ports, airports and customs to the ministry.

This would help the ministry to iron out the issues impeding India’s exports and facilitate the exporters to take maximum benefit from tariff escalation between the US and China, the minister said.

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GLOBAL Russian thermal coal production 440 million mt/year to 550 million mt/year, and as high as 670 million mt/year, the minister said. to grow to 550 million mt/year by 2035: Putin South Africa will rely on coal for Russian thermal coal production is set to grow decades, key miner says over 100 million mt by 2035, as the country looks to invest in new coal infrastructure and focus increasingly on the growing Asia-Pacific region, President Vladimir Putin said in a meeting with heads of coal mining regions.

Putin said Russia’s main competitors in the seaborne market were Australia and Indonesia, which both benefitted from better logistical conditions as the coal mines are generally located closer to the export terminal than in Russia.

Seriti Resources Holdings, poised to become Africa’s second biggest coal producer, is betting that South Africa will rely on coal for decades even as Africa’s biggest emitter of greenhouse gases implements carbon taxes and is under pressure to improve air quality.

“We operate in a developing economy” where alternatives will need to be phased in gradually,” Mike Teke, Seriti’s chief executive officer said.

“About 300 million mt of new coal mining capabilities were commissioned over the past ten years,” the minister said.

The most-industrialized economy on the continent will soon release an energy blueprint to outline the sources it will get its power from in the future. The carbon tax, designed to incentivize a move away from the coal that accounts for almost all power generation, could eventually cost state-owned power utility Eskom about R11.5-billion a year.

Russia’s coal development program through to 2035 had been revised upward, from current

Some government forecasts are in line with Teke’s view. While coal-fueled plants will decline

Alexander Valentinovich, minister of energy, said that Russia’s current coal production exceeded 440 million mt, and was nearly 10% higher than the initial plan for Russian coal through to 2030.

20 | CCAI Monthly Newsletter August 2019

to less than half of the country’s total installed power generation capacity by 2030, it will still contribute more than 65% of energy production as the plants run around the clock.

Get coal mine project in Queensland moving, Australian Minister tells Adani Australia’s Resources Minister Matt Canavan has asked Adani Group chairman Gautam Adani to focus on the coal mine project in central Queensland and get it “moving” forward, refuting reports of any “widespread” opposition against the controversial venture.

Gautam Adani-led Adani Group entered Australia in 2010 with the purchase of the greenfield Carmichael coal mine in the Galilee Basin in central Queensland, and the Abbot Point port near Bowen in the north.

says. It also warned of long-term uncertainties in the market considered a “great hope” by miners.

The report, recently released, came as the resources minister, Matt Canavan, prepared to visit He argued India has an “astonishing” appetite for Australian thermal coal that could support “three to four new Adani-sized coalmines”.

“If India’s thermal coal imports decline, there could be substantial implications for seaborne markets.”

These uncertainties were largely out of the control of Australian miners and policymakers.

This month India announced a plan to cut its coal imports by a third, counting on an increase in domestic production and in renewable energy output.

The massive coal mine in Queensland state has been a controversial topic, with the project expected to produce 2.3 billion tonnes of lowquality coal.

The growth of its domestic coalmining sector, and an increase in the uptake of renewables, were among the uncertainties cited by the chief economist’s report.

The project which was facing resistance for nine years had received environmental approvals recently needed to begin work on its Carmichael mine in Queensland.

“The pace of India’s coal production growth will be the key driver of its future thermal coal import needs. In the long term, the outlook for thermal coal usage in India depends heavily on the prospects for other energy sources, particularly the pace of expansion in renewable generation in India, that has set itself ambitious renewable energy targets,” the report added.

Refuting reports of widespread resistance against the project, Canavan said there was “no significant opposition” against it and it has “overwhelming support” from the local population.

On sale of nuclear energy to India, Canavan said Australia has signed an agreement with India for supplying uranium and they continue to remain in discussions about shipments in the future.

Australian thermal coal exporters warned of falling demand from India Thermal coal exporters face “significant risk” that demand from India will decline, a report by the Australian office of the chief economist

Indonesia picks coal and oil heartland as site of new capital city Indonesia’s new capital city will sit at the nexus of the country’s coal and oil hubs in eastern Borneo, the president revealed on Aug. 26.

President Joko Widodo, who has long teased relocating the capital from the chronically congested and fast-sinking Jakarta, announced that the new capital would straddle the border between the two districts of North Penajam Pasar and Kutai Kartanegara, in East Kalimantan province.

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“It’s a strategic location in the middle of Indonesia,” the president said at a press conference in Jakarta.

He said the location was chosen based on a threeyear assessment of the risk of disasters such as floods, landslides, forest fires, earthquakes, tsunamis, and volcanic eruptions.

possible ambition” when it renews its climate pledges next year, and its energy policies have come under increasing scrutiny in the run-up to a major United Nations climate change conference in New York last September.

Construction is expected to begin as early as 2021, with a completion date of 2024, when Widodo’s second and last term in office ends, according to Bambang Brodjonegoro, Indonesia’s planning minister.

Though the share of coal in the country’s total energy mix fell to 59 percent last year from 68.5 percent in 2012, overall consumption in 2018 rose 3 percent from a year earlier to 3.82 billion tonnes, official data showed.

China’s coal output surges in past 70 year China’s coal industry has seen notable development in the past 70 years, with output surging and structure improving, data showed.

Coal output reached 3.68 billion tonnes in 2018, 115 times of only 32 million tonnes 70 years ago, according to Huang Yuzhi, head of the National Coal Mine Safety Administration.

As China improves coal mine efficiency and cuts outdated capacity, the number of coal mines saw a significant decrease to about 5,700 in 2019 compared with about 82,000 in 1997, he said. Coal had been an important energy source that has supported China’s industrial growth over the past decades. Mining equipment has evolved rapidly during the years, with automation helping reduce coal mine accidents.

China’s coal demand to peak around 2025, global usage to follow China’s coal demand will start to fall in 2025 once consumption at utilities and other industrial sectors reaches its peak, a state-owned thinktank said in a new report, easing pressure on Beijing to impose tougher curbs on fossil fuels.

The world’s biggest coal consumer is expected to see total consumption fall 18 percent from 2018 to 2035, and by 39 percent from 2018 to 2050, the CNPC Economics and Technology Research Institute, run by the state-owned China National Petroleum Corp (CNPC), forecast in a report. China, the world’s biggest greenhouse gas emitter, has promised to show “the highest

22 | CCAI Monthly Newsletter August 2019

However, the CNPC researchers said they expected the total share of coal to drop to 40.5 percent by 2035 as renewable, nuclear and natural gas capacity continues to increase rapidly.

US thermal coal environment remains grim with expected drops in production and demand: Seaport US thermal coal production is expected to continue declining, particularly in the Powder River Basin, as domestic power coal demand drops and the export environment remains grim, Seaport Global analysts wrote Monday.

“The outlook for domestic utility coal in the second half of 2019 and 2020 looks pretty grim,” Seaport senior analyst Mark Levin and senior associate analyst Nathan Martin wrote in a note following a Seaport-held conference last week.

“This is a function of very weak natural gas prices (most producers will tell you they need at least $2.75-$3.00/MMBtu before demand starts to accelerate), but also a weakening export environment.” According to Energy Ventures Analysis President Seth Schwartz, the report said, US electric coal consumption will go from 560 million st in 2019 to 554 million st in 2020, compared with 626 million st in 2018. Arch Coal’s senior VP of strategy and public affairs, Deck Slone, also said he expected US electric coal consumption to be down more than 50 million st in 2019 compared with last year.

“This is much less of a decline for 2020 than we are projection, but the fall from 2018 to 2019 is unquestionably pretty severe,” Levin and Martin

Bangladesh, Pakistan capacity additions fuel seaborne thermal plants coal demand

wrote. By basin, the PRB “takes the biggest absolute hit.”

U.S. coal-fired power scheduled to shut

U.S. power companies expect to retire or convert from coal to gas over 10,600 megawatts (MW) of coal-fired plants in 2019 after shutting over 13,000 MW in 2018, according to U.S. Energy Information Administration (EIA) and Thomson Reuters data.

The number of megawatts retired in 2018 was the second highest in a year behind 2015 when generators shut over 19,000 MW. One megawatt can power about 1,000 U.S. homes.

U.S. coal power capacity peaked around 317,400 MW in 2011, according to EIA data. It has declined every year since and was down to around 244,000 MW by the end of 2018. The total generating capacity in the United States - including coal, natural gas, renewables and nuclear - was almost 1.1 million MW in 2018.

Cheap gas from record shale production and rising use of renewable sources of power have kept electric prices low in recent years, making it uneconomic for generators to continue operating older, less efficient coal plants, especially if they need upgrades to meet increasingly strict federal and state environmental rules.

Coal had been the primary fuel for U.S. power plants for much of the last century, but its use has been declining since peaking in 2007. That was around the same time drillers figured out how to economically pull gas out of shale formations.

Seaborne thermal coal demand is set to grow in the near to medium term in South Asia as Bangladesh and Pakistan add more coal-fired power plants to cater for their growing populations.

The first shipment of about 20,000 mt of Indonesian GAR grade thermal coal is expected to arrive in the first two weeks of September for a new coal-fired power plant in Bangladesh, a source familiar with the matter said.

The coal will be supplied to Bangladesh-China Power Company Limited for its Payra power plant in Patuakhali, southern Bangladesh.

The first unit of the 1,320 MW power plant is likely to start production in December. The plant is expected to take around 4 million mt/year of coal, and the utility is exploring other thermal coal imports from Indonesia as well as Australia in future for blending purposes, a source said.

Pakistan imported 10.5 million mt of thermal coal in 2018, according to UN Comtrade data, and this figure has been forecast to rise to more than 20 million mt/year by 2020, and as high as 30 million mt/year by 2022-2024, when most of the power projects are expected to be completed. Pakistan’s 1,320 MW coal-fired power project by China Power Hub Generation Company is now operational, the government website states.

The plant will require about 4 million mt of thermal coal per year, which will imported from South Africa and Indonesia.

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IN PARLIAMENT GOVT. OF INDIA MINISTRY OF COAL LOK SABHA Q. No. 350. PRODUCTION OF COAL 17.07.2019 SHRI BALUBHAU ALIAS SURESH NARAYAN DHANORKAR: Will the Minister of COAL be pleased to state: a) the total production, demand and supply of coal by the Coal India Limited (CIL) and its subsidiaries in the country during the last three years and the current year, State/UT-wise; b) the plans chalked out to increase the production of coal to meet the domestic demand; and

24 | CCAI Monthly Newsletter August 2019

c) the steps taken/being taken by the Government to bridge the demand – supply gap of coal in the country?

ANSWER MINISTER OF PARLIAMENTARY AFFAIRS, COAL AND MINES (SHRI PRALHAD JOSHI) (a) to (c): A statement is laid on the table of the House.

STATEMENT IN REPLY TO LOK SABHA STARRED QUESTION NO. 350 FOR ANSWER ON 17.07.2019 BY SHRI BALUBHAU ALIAS SURESH NARAYAN DHANORKAR, M.P. REGARDING “PRODUCTION OF COAL”.

a) All India demand for coal during last three years is given below:Year

2016-17

2017-18

2018-19 (Prov.)

All India Actual Demand (MT)

836.93

898.17

968.00

The demand of coal is not estimated separately for Coal India Limited (CIL). The production and supply of coal by CIL during last three years and current years is given below:Year

2016-17

2017-18

2018-19

2019-20

Production by CIL(MT)

554.14

567.36

606.89#

136.96*

Supply by CIL(MT)

543.32

580.29

608.14#

153.29*

# Provisional

*Upto June 2019

Subsidiary-wise state-wise, raw coal production of CIL during the last three years and the current year till June’19 is given below: (in Million Tonnes) STATE

2016-17

2017-18

2018-19

West Bengal Jharkhand Total West Bengal Jharkhand Total Jharkhand Uttar Pradesh Madhya Pradesh Total Madhya Pradesh Maharashtra Total Madhya Pradesh Chhattisgarh Total Orissa Assam

23.58 16.93 40.52 2.14 34.90 37.04 67.05 16.06 68.04 84.10 5.23 40.41 45.63 11.93 128.08 140.00 139.21 0.60

25.61 17.96 43.57 1.38 31.23 32.61 63.41 18.31 74.71 93.02 4.45 41.77 46.22 12.11 132.60 144.71 143.06 0.78

29.40 20.77 50.16 1.19 29.85 31.04 68.72 20.28 81.23 101.50 3.93 49.25 53.18 12.60 144.75 157.35 144.15 0.78

2019-20 (Till June) (Provisi onal) 7.13 4.42 11.54 0.14 6.32 6.46 11.66 5.47 20.75 26.22 0.78 11.13 11.91 2.73 31.61 34.33 34.78 0.07

554.14

567.37

606.89

136.96

COMPANY

ECL

BCCL CCL NCL

WCL

SECL MCL NEC

TOTAL

State wise Supply of coal from CIL and its subsidiaries for the last three years and the current year (till June ’19) is given below:-

CCAI Monthly Newsletter August 2019

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(in Million Tonnes) Name of State

2016-17

2017-18

2018-19

(Till June) (Provisional)

WEST BENGAL

50.57

46.43

48.61

12.53

BIHAR

18.04

18.98

17.96

4.67

JHARKHAND

31.29

35.26

31.77

7.65

ORISSA

75.60

68.79

69.18

16.16

ASSAM

0.91

0.91

1.51

0.38

U.P.

86.95

92.22

91.43

23.16

PUNJAB

14.77

12.99

17.42

4.53

HARYANA

11.86

15.21

16.91

4.41

DELHI

1.69

1.35

1.55

0.40

RAJASTHAN

10.08

10.77

14.10

3.65

GUJARAT

13.35

18.05

19.24

4.98

CHHATISGARH

67.66

74.51

94.98

23.75

MADHYA PRADESH

41.46

53.35

61.22

15.61

MAHARASHTRA

48.41

55.18

68.28

17.40

TAMIL NADU

18.94

22.49

24.61

6.42

KARNATAKA

4.83

5.49

4.39

1.13

ANDHRA PRADESH

24.87

26.14

24.62

6.37

OTHER STATES

22.05

22.18

0.35

0.08

TOTAL

543.32

580.29

608.14

153.29

b) In order to meet the domestic demand, there is a plan to increase the total production of coal in the country to the level of 1 Billion Tonnes by the year 2022-23. c) The gap between demand and supply of coal cannot be bridged completely as there is insufficient domestic availability of coking coal and power plants designed on imported coal will continue to import coal for their production.

However, there has been a consistent effort to increase domestic coal production. The all India

26 | CCAI Monthly Newsletter August 2019

raw coal production has increased from 565.77 MT in 2013-14 to 730.35 MT (Provisional) in 2018-19. Absolute increase in all India coal production from 2013-14 to 2018-19 is 164.58 MT as compared to an increase of coal production of 73.01 MT between 2008-09 and 2013-14.

Coal India Limited (CIL) has also increased its production from 462.41 MT in 2013-14 to 606.89 MT in 2018-19. Absolute increase of 144.48 MT as compared to increase of coal production of 58.68 MT between 2008-09 and 2013-14. In or-

der to augment supply, a total of 84 coal blocks has been allotted under Coal Mines (Special Provision Act, 2015) so far.

DIN OWAISI:

Further, the focus of the Government is on increasing the domestic production of coal which includes pursuing with State Government for assistance in land acquisition and coordinated efforts with Railways for movement of coal.

a) whether the Government has opened commercial coal mining to the private sector;

In addition, CIL has taken the following steps to increase domestic coal production: CIL and its subsidiaries are going for higher capacity mega mines (Capacities > 10 MTY) with high mechanization.

CIL has already introduced state of the art technology to improve its work efficiency. High capacity Heavy Earth Moving Machinery (HEMMs) like 42 cum Shovel with 240 T Rear Dumper have been introduced for this purpose.

Will the Minister of COAL be pleased to state:

b) if so, the details thereof and the time since when it has been opened; c) whether currently the Coal India Limited (CIL) is the world’s largest miner being allowed to sell coal to end-users and if so, the details thereof; d) whether CIL has not been able to fulfil its responsibility due to which the commercial coal mining has been allowed/opened to the private sector, if so, the details thereof and the reasons therefor; and e) the steps taken/being taken by the Government to ensure that the opening of coal mines to the private sector is transparent?

Surface Miners have been introduced in opencast mines in a big way to improve operational efficiency & to cater environmental needs by CIL. During 2018-19, in CIL, around 50% of the opencast coal production was through Surface miners and is likely to further increase in subsequent years.

ANSWER

In underground mines, basic thrust is on mechanization of coal winning/loading system, coal drilling & supporting system, coal evacuation system etc. High capacity Load Haul dumps (LHDs), Side Discharge Loaders (SDLs) & Universal Drill Machines (UDMs) in conjunction with belt conveyors have been introduced wherever possible.

No. 441 for answer on 24.07.2019 asked by Shri Syed Imtiaz Jaleel and Shri Asaduddin Owaisi regarding Commercial Coal Mining.

Q. No. 441. COMMERCIAL COAL MINING 24.07.2019 GSHRI SYED IMTIAZ JALEEL: SHRI ASADUD-

MINISTER OF PARLIAMENTARY AFFAIRS, COAL AND MINES (SHRI PRALHAD JOSHI) (a) to (e): A statement is laid on the Table of the House.

(a) & (b): Yes, Sir. The policy for auction of coal mines/blocks for sale of coal was issued on 27.02.2018. The objective of the policy is to create a market place for coal with multiple producers to drive competition and adopt best practices in mining as well as environment management. Auction of coal mines for sale of coal in a transparent manner is expected to encourage transparent pricing of coal, based on market forces and also to enhance overall domestic production. Public Sector Undertakings (PSUs) are also eligible to participate in this auction. Coal blocks have already been allotted to Central and State PSUs for sale of coal. Further, CCAI Monthly Newsletter August 2019

| 27

the coal block allocatees are allowed to sell excess coal to Coal India Limited and now a methodology has been issued allowing allocatees of coal mines for specified end use or own consumption to sell up to 25% of actual production in open market. (c) & (d): Coal India Limited (CIL) is the largest company in the world in terms of coal production.

CIL sells coal to its linked Power and non-Power consumers through bilateral Fuel Supply Agreements and Memorandums of Understanding. CIL also sells coal to the end consumers including traders through various e-auction schemes. Details of domestic coal demand from CIL projected

by Ministry of Power and actual supply of coal to Power Sector from CIL sources for last two years and current year are as under: (in Million Tonnes) 2017-18

2018-19

2019-20 (up to 30.06.2019)

Demand

Supply

Demand

Supply

Demand

Supply

478.00

454.22

525.00

491.25

132.50

119.62

Details of coal supply to non-Power Sector from CIL sources for last two year and current year are as under: (in Million Tonnes) 2017-18

2018-19

2019-20 (up to 30.06.2019)

126.07

116.89

33.67

(e): As per the provisions of the Coal Mines (Special Provisions) Act, 2015 [CM(SP) Act, 2015] and the Mines and Minerals (Development and Regulation) Act, 1957 [MM(DR) Act, 1957], coal mines are allocated to private sector companies by way of auction. Auction of coal mines under the provisions of CM(SP) Act, 2015 has been done on e-platform after conducting security audit of the e-platform. Further, any prior allottee who is convicted of an offence relating to coal block allocation and sentenced with imprisonment for more than three years is not eligible to participate in the auction under CM(SP) Act, 2015.

Q. No. 3966. IMPORT OF COAL

17.07.2019 SHRI G.M.SIDDESHWAR: SHRI C.TADAS: SHRI RAVI KISHAN:

RAMDAS

Will the Minister of COAL be pleased to state: a) whether the Government is heavily dependent on coal imports; b) if so, the details thereof along with the amount

28 | CCAI Monthly Newsletter August 2019

spent on it; c) whether the Government proposes to use imported coal to generate power for the next three years; d) if so, the details thereof along with the estimated cost involved therein; and e) whether the Ministry is engaged in any discussion with the Ministry of Shipping to address the increase in the volume of imported coal?

ANSWER MINISTER OF PARLIAMENTARY AFFAIRS, COAL AND MINES (SHRI PRALHAD JOSHI) (a)to(b): Demand of coal is higher than the current level of supply of coal in the country. In order to bridge the demand-supply gap of coal, all efforts have been made to increase domestic availability of coal. Coal production has increased from 565.77 MT in 2013-14 to 730.35 MT (Prov.) in 2018-19. Absolute increase in all India coal production from 2013-14 to 2018-19 is 164.58 MT as compared to an increase of coal production of 73.01 MT between 2008-09 and 2013-14. In view of increased production, coal imports fell from a level of 217.78 MT in 2014-15 to 203.95 MT in 2015-16 and 190.95 MT in 2016-17. However, thereafter Import of coal increased to 208.27 MT in 2017-18 and further to 235.24 MT in 2018-19.

During the year 2018-19, as against a total actual demand of coal of 969.46 MT, the domestic supply was 734.23 MT (Provisional), coal import was 235.24 MT (Provisional) and the value of the imported coal was Rs.170881 crores. (c)to(d): The Plants designed and dependent on imported coal are importing coal to meet their requirement. Further, some domestic coal based plants also import coal for blending purposes. In addition, costal power plants import coal considering their cost economies. These imports are likely to continue in the near future. The price of coal depends upon various factors such as quality of coal, international price, country of source etc. and therefore, the future cost of imported coal cannot be estimated. (e): As the coal import comes under Open General License (OGL), Ministry of Coal does not interfere in the import of coal by domestic consumers or its transportation.

RAJYA SABHA Q. No. 1580. TRANSPORTATION OF COAL 08.07.2019 DR. R. LAKSHMANAN Will the Minister of COAL be pleased to state: (a) whether Government has taken any measures which are conducive to environment while transporting coal from the mining sites to Thermal Power Plants; (b) if so, the details thereof: (c) whether Government has studied/observed the best practices that are being followed internationally in transportation of coal; (d) if so, the details thereof; and (e) if not, the reasons therefor?

ANSWER MINISTER OF PARLIAMENTARY AFFAIRS, COAL AND MINES (SHRI PRALHAD JOSHI) ((a) to (e) : Ministry of Environment , Forest & Climate Change (MoEF&CC) vide notification dated 02.01.2014 has specified norms for use of coal with ash content not exceeding 34% for certain distances (beyond 500 km with effect from 05.06.2016) and sensitive locations such as urban area, ecologically sensitive area or critically polluted industrial area irrespective of its distances from pithead. In addition to the above, it is mandatory to obtain Consent under Air (Prevention & Control of Pollution) Act, 1981 from the concerned state Pollution Board.

Ministry of Power in a meeting on 25.01.2018 stressed upon and decided the use of captive CCAI Monthly Newsletter August 2019

| 29

mode of transport for movement of coal like elevated closed belt conveyors for Power plants within 20 kilometers from pithead, Merry-GoRound (MGR) for plants located within 40 Kms from pithead and the option of MGR based on financial viability for power plants upto 100 Kms.

Q. No. 2377. REDUCTION OF IMPORT OF COAL 15.07.2019

with Steel companies -10-15 years’ linkage to Steel Sector.  Supply of washed coking coal to Steel sector - will be enhanced to 15 MT in 3/4 years from now from the present level of 1.6 MT.

Q. No. 3176. ACQUISITION OF RAILWAY RAKES BY CIL

22.07.2019

SHRI LAL SINH VADODIA:

SHRI A.K. SELVARAJ:

Will the Minister of COAL be pleased to state: (a) whether it is a fact that Government is seriously contemplating on reducing the import of coking coal; (b) if so, whether Government has taken any effective steps in this regard so far; and (c) if so, the details thereof and if not, the reasons therefor?

Will the Minister of COAL be pleased to state : (a) whether it is a fact that Coal India Limited will acquire enough railway rakes to transport coal to all thermal power plants in the country; (b) if so, the details thereof; and (c) whether it is also a fact that the shortage of railway rakes for coal transportation has been one of the major reasons behind the supply shortage?

ANSWER

ANSWER

MINISTER OF PARLIAMENTARY AFFAIRS, COAL AND MINES (SHRI PRALHAD JOSHI)

MINISTER OF PARLIAMENTARY AFFAIRS, COAL AND MINES

(a): During FY 2018-19, import of coking coal was 51.84 MT (Prov.). The entire demand of coking coal is not met from domestic production as the supply of high quality coal/ coking coal (low-ash-coal) in the country is limited and thus no option is left but to resort to import of coking coal. As per the current import policy, coal is kept under Open General License (OGL) and consumers are free to import coal from the source of their choice as per their contractual prices on payment of applicable duty. (b)&(c): Reduction in Import of coal in the country is always a priority area of the Government. In order to increasing the availability of coking coal, following steps are taken by the Government:

(SHRI PRALHAD JOSHI) (a & b) Coal India Limited (CIL) has drawn up a plan to procure wagons to add to the existing pool of Railway wagons to enhance the capacity of coal supplies to Power Plants under General Purpose Wagon Investment Scheme (GPWIS) circulated by Indian Railways. For that purpose, a committee has been constituted at CIL to liaison with Railway Board, to study and identify the possible routes for optimum coal evacuation under the initiative. Railway Board has been requested to procure the wagons on behalf of CIL. (c) There has been an increase in coal despatch

by CIL. During the fiscal 2018-19, CIL supplied 608.14 Million Tonnes (MT) of coal registering a growth of 4.8% over the despatch of 580.28 MT in 2017- 18.

Similarly, in the fiscal 2018-19, an average of 280.7 rakes/day have been sourced from CIL sidings, goodsheds and washeries against 265.5 rakes/day in the fiscal 2017-18, thereby achieving a growth of 5.7% over the last year.

 Coal India Limited (CIL) has planned to increase coking coal production from 34.12 to 52.95 MT (2019-20) (growth: > 50%).  Notification of additional 2 coking coal grades viz. W-V & W-VI.  New 9 coking coal washeries being set up by CIL by 2020-21.  Long term Fuel Supply Agreements (FSAs)

30 | CCAI Monthly Newsletter August 2019

MONTHLY SUMMARY OF DOMESTIC COAL Comparative Price of Domestic Coal: Power/Non-power. *The price shown in the Chart below is without: (a) Surface Transportation Charges. (b) State specific taxes. (c) Coal company or area wise charges if any. (d) Evacuation Facility Charges INR 50 per tonne w.e.f. 00:00 of 20.12.2017 GCV (Kcal/kg) (Mid-value)

G3-6400-6700

G5-5800-6100

G7-5200-5500

Basic ROM price (Rs./te)

3144/ 3144

2737/2737

1926/2311

1024/1228

955/1145

886/1063

Tentative Ex-Mine Price*

4447/4447

3941/3941

2932/3411

1809/2063

1724/1959

1638/1858

COAL * In a first, state-owned miner Coal India Limited has decided to buy 40 rakes for Rs 700 crore to enhance its evacuation capability by 56 million tonne. This will not only give the company direct control to move coal to desired power plants, but also help free up pithead stocks. Moreover, as the availability of rakes increases, the maharatna public sector unit (PSU) could also enhance its allocation to non-power clients. * Commerce and Industry Minister Piyush Goyal said that India’s exports will have to contribute USD 1 trillion as the country aims to become a $5 trillion economy in the next few years. Speaking at an interactive session with the exporters, Goyal urged manufacturers and exporters to come forward with data and details which directly and indirectly add to the cost of exported products like cess paid on coal, electricity and royalty paid on mines. * Coal India managed to fetch premiums ranging between 33 percent and 66 percent over its notified price for different categories of auction sale during the quarter ended June 2019. E-auction offerings are currently being regulated to stock power plants with adequate fuel, which analysts say, may increase spot e-auction prices in the near future. * Centre to auction, allocate coal mines again.

32 | CCAI Monthly Newsletter August 2019

G10-4300-4600

G11-4000-4300

G12-3700-4000

The Ministry of Coal has started the process of auctioning 27 coal mines and allocating 15 mines to developers. This process is being re-initiated after previous attempts elicited poor response from bidders in view of market conditions. The allocation of blocks will be restricted to Central and State public sector undertakings. The government is likely to auction large coal blocks for commercial mining to Indian and overseas miners by the end of November, said a senior government official. * The government will use its own coal price index to calculate revenue earned by operators of coal black to ascertain its share of income from 27 blocks being auctioned to the nonregulated sector. The decision will rule out potential disputes over possible underreporting of revenues by operators, which, the government feels, cannot be audited regularly.

Payments by operators are likely to be made on monthly basis and the government has released that keeping a tab on the price/revenue may not be feasible on a regular basis.

POWER * Power ministry’s directive, asking all distribution companies to open and maintain sufficient letters of credit as payment-security mechanism may lead to an additional working capital requirement for all state distribution companies since it will shorten the prolonged

credit periods that discoms have enjoyed by deferring dues to generators, CRISIL has estimated. It will also lead to increased financial charges for implementing regular letters of credits. * The Central government has asked states to ensure that the “must-run” status of renewable energy plants is honoured and that if supply from these units is curtailed, the reason must be given in writing to generating companies. The letter from the ministry of new and renewable energy to the chief secretaries of all states follows Andhra Pradesh's curtailment of wind and solar power over the last few days. * The power ministry has notified that certain stressed power plants would have to use their cash surplus after meeting operating expenses to service debt through a Trust Retention Account (TRA) managed by the lead banker to the project, as part of the stress reduction measure for the thermal power sector. For developers using coal linkage under the amended Scheme for Harnessing and Allocating Koyala Transparently in India (SHAKTI), a TRA should be set up, if it is not there already, as per an office memorandum issued. * The Ministry of New and Renewable Energy (MNRE) is exploring the possibility of offering a combination of solar and thermal power to push more solar power into the grid and bring down long-term power prices. According to Deepak Amitabh, Chairman & Managing Director, PTC India, the move is aimed at making stressed thermal assets more viable and enhance solar power production in the country. In a bid to encourage domestic manufacturing, India will increase import duty on solar equipment down the value chain in the coming years, Power Minister R K Singh said.

CEMENT * Data from the Ministry of Commerce & Industry shows that cement production rose by 6.3% year-on-year to 178Mt in the first half of 2019 from 167Mt in the same period in 2018.

On a month-on-month basis production fell by

1.5% to 28.3Mt in June 2019 from 28.8Mt in June 2018. June 2019 was the first month since October 2017 that cement production had fallen in this way. * India Cements plans to set up a new integrated cement factory in Madhya Pradesh and a grinding unit in Uttar Pradesh involving an investment in the range of ₹1,300-1,400 crore in preparation for the future demand in North and Central India. Its current capacity is about 16 million tonnes and the proposed expansion may take the total capacity to about 20 million tonnes in 2-3 years’ time. The move is also expected to make the company a pan-India player.

STEEL * India’s crude steel output rose by 4 percent to 9.336 million tonne (MT) in June 2019 compared to the year-ago month, according to the World Steel Association. The country had produced 8.976 MT of crude steel in June 2018, the global steel body said in its report. Global steel production increased by 4.6 percent to 158.978 MT in June 2019 compared to 152.002 MT in June 2018, it said. China’s crude steel production for June 2019 was at 87.533 MT, an increase of 10 per cent compared to 79.585 MT in June 2018. * Fundamentals for the steel sector are likely to weaken in FY20 under the twin impact of softer prices and higher input costs on the back of low demand. Domestic steel companies will be impacted by muted demand from auto sector, even though government projects in affordable housing and infrastructure are expected to improve the demand scenario, India Ratings and Research (Ind-Ra) has said in its latest sector report. * Demand for steel in India could grow at the slowest pace in three years as an economic slowdown in the global industry’s bright spot deepens. Steel consumption in India is likely to increase by less than 6 percent this fiscal year, according to ICRA Ltd., the local arm of Moody’s Investors Service.

CCAI Monthly Newsletter August 2019

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MONTHLY SUMMARY OF IMPORTED COAL & PETCOKE Coal Price Index COAL

(kcal/kg)

Monthly Price - FOB

Monthly Price - FOB

Monthly Change (USD)

South Africa South Africa Australia Indonesia Indonesia USA

6000 NAR 5500 NAR 5500 NAR 5000 GAR 4200 GAR 6900 NAR

USD 61.57 USD 48.38 USD 50.62 USD 47.50 USD 32.05 USD 51.48

INR 4367 INR 3431 INR 3590 INR 3369 INR 2273 INR 3651

- 3.72 - 5.51 - 2.75 - 1.66 - 3.29 - 0.26

PET COKE

Sulphur

Price

India-RIL(Ex-Ref.) Saudi Arabia (CIF) USA (CIF)

-5% + 8.5% - 6.5%

INR 6900 INR 5305 ($75) INR 5447 ($77)

Exchange Rate

Change (Monthly)

USD/INR 70.922

2.20

Coking Coal Price: Premium Low Vol

FOB Aus 156.88

CFR China 171.18

HCC 64 MID Vol

FOB Aus 144.08

CFR China 158.55

Semi Soft

Low Vol PCI

Mid Tier PCI

FOB Aus 87.53

FOB Aus 102.98

FOB Aus 100.98

MET COKE 62% CSR

CFR India 315.50

FOB N China 299.00

South Africa: * South Africa will rely on coal for decades, key miner says Seriti Resources Holdings, poised to become Africa’s second biggest coal producer, is betting that South Africa will rely on coal for decades even as Africa’s biggest emitter of greenhouse gases implements carbon taxes and is under pressure to improve air quality. The most-industrialized economy on the continent will soon release an energy blueprint to outline the sources it will get its power from in the future. * Public Enterprises Minister Pravin Gordhan is threatening the South African coal mining industry with “tough conversations” about the sky-high price of coal. At the release of Eskom’s miserable year-end results, Gordhan lashed out at the 17% increase in Eskom’s cost of primary energy and said this threefold inflation was unacceptable. This includes coal, which increased more than 14% in unit price, according to an Eskom integrated report.

34 | CCAI Monthly Newsletter August 2019

Australian Coal News:

* The new Australian government is looking to expand its trade ties with India in areas other than from thermal coal, where it is confident that the demand will remain robust. The country is looking to export lithium for electric vehicles, rare earth for high-tech renewable component, and high-quality coal. * Australian Pacific Coal said, it was considering its options after a state regulator refused to extend the life of a mothballed coal mine, partly due to a lack of information around the proposed mine’s carbon emissions. Australian Pacific applied last year to restart a thermal coal mine in New South Wales. The state’s Independent Planning Commission (IPC) approved the restart, but rejected a five-year extension beyond the current permit which ends Dec. 5, 2022.

Indonesian Coal News:

* Indonesia's coal reference price up slightly in August. The government has set the country's coal reference price (HBA) for August at US$72.67 per ton, a slight increase from $71.92 per ton the previous month. Energy and Mineral Resources Ministry spokesman Agung Pribadi said little change was expected in coal prices on the world market this month. * Indonesia plans to review its regulations on domestic market obligation (DMO) for coal to support gasification of coal, Industry Minister Airlangga Hartarto told reporters. Current DMO rules include requiring coal miners to sell 25% of their output to domestic buyers, such as state power company PT Perusahaan Listrik Negara (PLN). Indonesian President Joko Widodo told parliament that the government aims to expand its downstream industry for natural resources, including processing coal into dimethyl ether to substitute for imported liquefied petroleum gas (LPG).

US Coal News:

* US coal exports totaled 7.2 million mt in June, down 12.6% from May and down 21.6% from the year-ago month, according to US Census data. Exports dropped as global seaborne thermal coal prices hit three-month lows in June, with European-delivered CIF ARA prices averaging $48.36/mt, down 50% from the yearago month. Loading issues in New Orleans caused by high river levels and a decline in US coal railcar loadings also curbed exports for the month. * Powder River Basin produces 43 percent of US coal, but production falling and ownership consolidating. As the United States transitions increasingly away from coal, 16 mines in the Powder River Basin (PRB) region of northeast Wyoming and southeast Montana accounts for 43 percent of the nation’s coal production, according to a new U.S. Energy Information Administration (EIA) report.

Pet Coke News: * US petcoke offers float lower on patchy Indian seaborne demand. There were few trades for seaborne US petcoke even as freight rates fell week on week, according to market sources.

The Supramax freight rate from US Gulf Coast to east coast India was pegged at $42.75/mt, down 75 cents/mt week on week and down 25 cents/mt day on day, according to sources. A west India-based trader reported a trade of US 7,500 kcal/kg NAR petcoke concluded at $81/ mt CFR east coast India for August loading. * Weak demand fundamentals drag down international petcoke prices. Market sources expect downward trend to continue for international petcoke prices, driven by low demand from Indian end users. A West Indiabased source reported offers for US petcoke at $78- $80/mt CFR India East, and pegged its fair value at $72-$75/mt CFR India. “There was a US petcoke deal concluded last week at $74.50$75/ mt CFR India East,” he said.

Shipping Update: * Eight laden coal ships departed from Baltimore in the week ended July 28, up from six in the previous week, according to cFlow, Platts' trade flow software. However, the total dead-weight tonnage of the departures was at 518,358 dwt, down from 531,652 dwt in the prior week, according to the data. Two of the departures are expected to stop in Norfolk, Virginia, while another is expected to head to Savannah, Georgia. * Essar Ports said Essar Bulk Terminal Salaya Ltd (EBTSL), an arm of the company, registered a cargo throughput of 1.3 million tonnes for the quarter ended June 30 2019, showing an impressive growth of 160 percent from 0.5 MT reported for the same period last year. The company said that it is also the best throughput achieved since the terminal’s commissioning in 2018. EBTSL operates the deepest draft allweather terminal in Gujarat’s Saurashtra region, with a capacity of 20 MTPA.

CCAI Monthly Newsletter August 2019

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OVERALL DOMESTIC COAL SCENARIO Coal Production (in MT) Company

July, 2019

July, 2018

% Growth

April - July,2019

April - July,2018

CIL

38.5

SCCL

5.1

% Growth

40.6

-5.1%

175.5

177.4

-1.1%

4.4

16.0%

22.2

19.0

17.0%

% Growth

April –July, 2019

Overall Offtake (in MT) Company

July, 2019

July, 2018

April –July, 2018

% Growth

CIL

46.8

48.2

-2.8%

200.1

201.7

-0.8%

SCCL

5.1

4.5

12.8%

22.0

21.4

2.5%

Coal Despatch to Power (Coal and Coal Products) (in MT) Company

July, 2019

July, 2018

% Growth

April –July, 2019

April –July, 2018

% Growth

CIL

37.8

38.7

-2.1%

156.5

162.2

-3.5%

SCCL

4.3

3.7

17.4%

18.3

17.5

4.6%

Company

Coal Qty. Allocated July, 2019

Coal Qty. Allocated July, 2018

Increase over notified price

Coal Qty. Allocated April - July, 2019

Coal Qty. Allocated April - July, 2018

Increase over notified price

CIL

1.24

2.40

62%

8.66

12.89

61%

Spot E-auction of Coal (in MT)

Special Forward E-auction for Power (in MT) Company

Coal Qty. Allocated July, 2019

Coal Qty. Allocated July, 2018

Increase over notified price

Coal Qty. Allocated April - July, 2019

Coal Qty. Allocated April - July, 2018

Increase over notified price

CIL

0.05

2.05

20%

6.70

16.21

33%

Exclusive E-auction for Non- Power (in MT) Company

Coal Qty. Allocated July, 2019

Coal Qty. Allocated July, 2018

Increase over notified price

Coal Qty. Allocated April - July, 2019

Coal Qty. Allocated April - July, 2018

Increase over notified price

CIL

-

0.46

-

2.20

3.38

33%

Company

Coal Qty. Allocated July, 2019

Coal Qty. Allocated July, 2018

Increase Over notified price

Coal Qty. Allocated April - July, 2019

Coal Qty. Allocated April - July, 2018

Increase Over notified price

CIL

-

-

-

-

-

-

Special Spot E-auction (in MT)

36 | CCAI Monthly Newsletter August 2019

PRODUCTION AND OFFTAKE PERFORMANCE OF CIL AND SUBSIDIARY COMPANIES COAL PRODUCTION (Figs in Mill Te) SUB CO.

AUG’19

APR’19 - AUG’19

ACTUAL ACTUAL THIS SAME % YEAR PERIOD GROWTH LAST YEAR

ACTUAL SAME PERIOD LAST YEAR

ACTUAL THIS YEAR

% GROWTH

ECL

3.2

3

6.5

18.03

17.08

5.6

BCCL

1.81

2.21

-18.1

9.95

12.21

-18.5

CCL

3.97

3.7

7.3

19.41

18.64

4.1

NCL

8.61

7.73

11.4

43.34

40.4

7.3

WCL

1.61

2.19

-26.4

15.7

13.51

16.2

SECL

8.83

10.72

-17.7

53.48

62.4

-14.3

MCL

6.73

9.19

-26.8

50.23

51.8

-3

NEC

0.01

0.03

-69.7

0.08

0.17

-52.3

CIL

34.77

38.78

-10.3

210.23

216.21

-2.8

OFFTAKE (Figs in Mill Te) AUG'19

SUB CO. ACTUAL THIS YEAR

APR'19 - AUG'19

ACTUAL SAME % PERIOD GROWTH LAST YEAR

ACTUAL THIS YEAR

ACTUAL SAME PERIOD LAST YEAR

% GROWTH

ECL

3.29

3.28

0.4

19.77

19.13

3.3

BCCL

2.05

2.51

-18.2

11.92

14.56

-18.1

CCL

5.15

4.59

12.1

28.31

27.13

4.4

NCL

9.08

8.25

10

43.29

41.02

5.5

WCL

2.98

3.71

-19.6

21.16

21.24

-0.4

SECL

9.69

12.12

-20.1

59.35

65.77

-9.8

MCL

8.2

10.66

-23.1

56.62

57.74

-1.9

NEC

0.01

0.03

-56.4

0.16

0.22

-28.6

CIL

40.47

45.15

-10.4

240.57

246.82

-2.5

CCAI Monthly Newsletter August 2019

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Note

38 | CCAI Monthly Newsletter August 2019

REGISTERED

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