CCAI Newsletter June-18

Published on : 28.06.2018 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. XLVI No. 15 June 2018 CCAI Monthly Newsletter June 2018

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From the Editor’s Desk CIL has increased Coal supply to the power plants in the first quarter of the current fiscal. 243 rakes had been loaded per day during April-May in 2018. Daily 47 rakes were also loaded through washery circuit and Railways goods-shed sidings which further helped in augmenting supplies to the power sector.

As a firm step towards augmenting production, applications have been invited by the Union Government from state-run companies for allotment of nine coal mines for commercial use and captive power generation.

Railway has increased extra 15 million tonnes of coal in April and May this year compared to the same months in 2017. It is a trend reversal against the last two years when coal loading had dropped on a year-on-year basis.

Though Government has prudently advised CIL and Subsidiaries to meet the ongoing procurement hurdles, still there is a mismatch in demand and supply scenario resulting in escalation of rake pendency.

To meet the same, Power Ministry has advised all state governments and private power companies to import coal for replenishing the shortfall if any.

Coal-fired power plants with total installed capacity of around 9,000 MW are asking for extension of temporary coal supply contracts for at least six years, since they have not been able to start production from the captive blocks allotted to them more than three years ago.

Huge coal demand in the Non-power Sector also fetched handsome premium even in the tune of 80% in some cases in Auction of Linkage Tranche IV for the Sponge Iron Sector.

Hope CIL would take adequate measures for smooth running of both the sectors prudently.

4 | CCAI Monthly Newsletter June 2018

Content Vol. XLVI No. 15 June 2018

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

06 |Consumers’ Page 08|Power 14|Domestic

Editor : Subhasri Nandi Annual Subscription Rs. 400/(including postage)

18|Global

MO/DD to be made in favour of “Coal Consumers’ Association of India”

24 |Monthly Summary of Domestic Coal

CCAI do not necessarily share or support the views expressed in this Publication.

26 |Energy Genaration Report 28 |Monthly Summary of Imported Coal and Petcoke

28 |Global News 30 |Production and Offtake Performance of CIL and Subsidiary Companies

32 |Overall Domestic Coal Scenario CCAI Monthly Newsletter June 2018

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CONSUMERS’ PAGE Present Coal Scenario Coal India has achieved its production at 85% of the targeted at 44.88 million tonnes in June 2018. The company produced 136.87 million tonnes (mt) during the April-June period, an 18.03-mt increase over the 118.84-mt produced during the same quarter last year.

Offtake for the same month stood at 90% of the targeted at 49.59 million tonnes. A higher rake loading saw a 16.01 mt increase to 153.43 mt for Q1 FY19.

Consumers’ Concern 1. Coal Stock Position Coal supplies to the power plants has increased 15%

PPAs could not take part in Auction due to various

during the first quarter of the current fiscal. Number

reasons, have urged to commence Auction to provide

of power stations having a critical coal stock situa-

them the opportunity to win long term supply assur-

tion has come down to 16 at present.

ance.

Though Government has prudently advised CIL and

Similarly, non-PPA holders have also requested for

Subsidiaries to meet the ongoing demand of coal,

commencing Auction for them as per provisions of

due to the surging demand there is a mismatch in

Shakti Scheme.

demand and supply scenario resulting in escalation in pendency of rakes.

2. Power Companies with and without PPAs have urged to start Auction under Shakti Scheme Power Plants without assured coal supply but with

06 | CCAI Monthly Newsletter June 2018

3. Request to expedite coal supply by rail from BCCL and MCL Power Companies are not getting adequate coal supply from Bharat Coking Coal Limited (BCCL) and Mahanadi Coalfields Limited (MCL) by rail mode. As Ministry of Power has given a mammoth target of an-

nual power generation for the FY 2018-19 to meet the

ers are not satisfied with the quality specially from

power demand of the country, therefore these com-

these two Subsidiary Coal Companies resulting in

panies have requested CIL to advise BCCL and MCL

loss to the Power Plants.

for providing relief in this regard.

4. Request for resuming normalcy in coal supply by rail from Korba and Korea Rewa region of SECL Companies both in the Power and Non-power Sectors are facing shortage of coal due to scanty supply by rail mode from Korba and Korea Rewa region of South Eastern Coalfields Limited (SECL).

8. Under loading of coal in rakes Under loading even in the tune of 300 to 400 tonne of coal resulting in idle freight is a direct load to the consumers. Before 2009, it had been compensated by the coal companies as under loading rebate but now this has been restricted to stencil carrying capacity only.

9. Overloading penalty

Therefore, they have requested to establish a bal-

Customers have to pay penalty for overloading and

anced supply mechanism otherwise abrupt demand

that is quite higher than the normal freight. Therefore

would jeopardize the supply plan of the Subsidiaries.

loading should be done as per the chargeable carrying capacity fixed by the Railways.

5. Reconciliation at regular intervals is needed for refund or ad- 10. CHP or SILO loading For ensuring time bound efficient loading of coal, justment of balance amount

both Power and Non-power Sectors have requested

Reconciliation against advance payment should be done at regular intervals otherwise it takes inordinate time to get back the adjusted amount.

CIL & Subsidiaries for loading only through Silo or rapid loading mechanism. Advanced Coal Handling Plants (CHP) should be put in place.

6. Delay in issuance of credit 11. Consumers urge WCL to notes against GCV slippage conduct Exclusive e-Auction In case of GCV slippage in different subsidiaries, inorfor Non-power Sector including dinate delay in issuance of credit note is resulting in CPPs stuck up of funds.

Therefore, coal consumers are requesting Subsidiary Coal Companies for timely release of credit notes as

Consumers in the Non-power sector are unable to run their plants smoothly due to shortage of coal as

it is done in case of debit notes.

they have not been offered sufficient quantity in Spot

7. GCV slippage repeatedly found

Therefore, they have urged WCL to offer more coal

Power Consumers are repeatedly complaining of

clusive e-Auction.

e-Auction. to Non-power Sector consumers by conducting Ex-

GCV slippage from different areas of ECL and BCCL. In spite of Third Party Sampling & Analysis, consumCCAI Monthly Newsletter June 2018

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POWER Power plants seek extension of Thermal power sector starts seetemporary coal agreements ing gains from slow capacity adCoal-fired power plants with total installed capacity ditions of around 9,000 MW are asking for extension of temporary coal supply contracts for at least six years, since they have not been able to start production from the captive blocks allotted to them more than three years ago.

Delays in land acquisition, forest clearance and issue of possession letters from states have delayed production at these mines.

These plants are likely to require between 35 million and 40 million tonnes of coal to run at 80% capacity.

This coal could have been supplied to other users who do not have captive blocks if production from the allotted coal blocks had started on schedule, a senior Coal India executive said.

“These plants were offered temporary coal supply contracts for three years on the understanding that they would be able to start coal production from their captive mines within the time frame. These three-year supply contracts are scheduled to expire this year for all these plants and none of them has been able to start production from their captive blocks. Having failed to start production, they are now asking for extension of coal supply contract,” the executive said

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Renewable energy may have taken some of the wind out of the sails of the thermal power sector. But if the latest data points are anything to go by, thermal power is beginning to see the glimmer of a recovery.

Thermal power generation in the seasonally strong month of May grew by an unexciting 5%. However, slowing thermal capacity additions and a steady rise in overall demand means that utilization levels at thermal power plants are rising (see chart).

Importantly, utilization or plant load factors for the thermal power sector have expanded on a cumulative basis—April to May 2018. Utilization levels rose as growth in capacity additions slowed to the low single-digits, as the chart alongside shows.

Considering the fact that thermal power caters to most of India’s electricity needs at present and a limited number of plants are being built or are in the pipeline, the country may end up in a tight supply situation in three-four years if battery storage does not become cost-effective (making renewable energy accessible round the clock), says Sanjay Jain, senior vice president (institutional research) at Motilal Oswal Securities Ltd.

All electricity meters to be smart prepaid in 3 years: R K Singh The government has urged electricity meter manufacturers to scale up production in India, as it plans to shift all connections to smart prepaid meters over the next three years.

The Power Minister has made a strong pitch for smart and pre-paid metering as a means of making state utilities more efficient and bringing down their losses in the past.

The meter manufacturers were also assured of a steady demand for smart prepaid meters which the government is also planning to make mandatory after a particular date.

The meeting discussed aspects of smart meters like BIS certification, compatibility with GPRS, harmonisation with existing digital infrastructure among other things.

“This will revolutionise the power sector by way of reduced AT&C losses, better health of DISCOMs, incentivisation of energy conservation and ease of bill payments etc,” the statement from the power ministry added.

tor’s stressed projects should not be categorised as stressed in 90 days, while the deadline of 180 days to resolve a bad loan, after which liquidation process is immediately triggered, should be extended to 270 days, a government official told ET. The regulatory and policy issues are being worked upon and will be sorted out by the power ministry.

“If the RBI circular continues in the present form, all these efforts will become futile,” he said.

The banking secretary had called a meeting of all stakeholders including private developers, lenders, RBI and officials from the ministries of finance, power, coal and oil, after which they were asked to give their submissions this week. The department of financial services will compile all the comments and submit it in Allahabad high court. The meeting was held by banking secretary upon the directions of the court.

As Power Ministry seeks to make green retrofitting cost a ‘pass on’, tariffs to rise New environmental norms for coal-based power plants could have a bearing on your electricity bill.

The government is procuring smart and prepaid meters to be deployed across the country. State-owned Energy Efficiency Services Limited (EESL) has floated two global tenders for procuring a total of 10 million smart meters.

The Power Ministry has written to the Central Electricity Regulatory Commission (CERC) asking for thermal power plants to be allowed to pass on to consumers the cost of complying with the revised environmental standards.

Another tender for procuring 10 million standalone prepaid meters is underway. The prepaid meters will be deployed in Uttar Pradesh as part of the Saubhagya scheme which aims to electrify over four crore households till December this year.

Earlier this year, Power Minister RK Singh had told the Rajya Sabha that the retrofitting of old thermal plants is likely to increase their tariff by 62-93 paise a unit.

Power ministry seeks change in RBI order on stressed units Stressed power assets have got a major boost as the power ministry has strongly recommended substantial changes to the RBI’s controversial Feb 12 circular on loan defaults that industry says will send capacity of 30,000 megawatts into liquidation, while the coal ministry has assured higher fuel supply to thermal plants with the help of auctions. The power ministry has told the banking secretary that the sec-

As many as 295 coal-based power plants were given a timeline of 2-4 years to meet the strict environmental norms, which were to be implemented by December 2017. These plants now have time till 2022.

A November 2017 statement from the India Energy Forum said the cost of retrofitting a power plant ranges from Rs. 1 crore to Rs. 2 crore per MW, while that for a new coal-based plant would be around Rs. 5 crore per MW. A retrofitting will involve installation of equipment for flue-gas desulfurisation and conversion of open cycle to close cycle. This will increase the cost of operation and maintenance of thermal plants, particularly CCAI Monthly Newsletter June 2018

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those older than 25 years. Industry watchers see the move as a positive for major thermal power producers, such as the NTPC, that were apprehensive of the environmental-compliance cost hitting their bottomline.

In December 2016, then Minister of State (Independent Charge) for Power and Renewable Energy, Piyush Goyal, had said: “The NTPC board has taken an in-principle decision...to replace its 25-year-old 11,000 MW power plants in the next five years.”

Discom losses down 70% to Rs 17K cr, says report The UDAY scheme has helped debt laden discoms reduce annual losses by 70 per cent to around Rs 17,350 crore in last two years, according to the Deutsche Bank Market Research report. The scheme for restructuring power distribution companies has also helped them cut aggregate technical and commercial losses by 5 per cent.

The report said however that the net results of UDAY scheme have not been keeping pace with the stringent targeted trajectory. It also said that the gap between ACS (actual cost of supply of power) and ARR (Cost & Tariff rate) has reduced to Rs 0.24/kWh or by 57 per cent over two years.

The government had launched Uday reforms for the power distribution sector in November 2015, to turn them around from deep financial and operational losses. At that time the accumulated losses of these discoms amounted to Rs 4.3 lakh crore with annual incremental losses of Rs 60,000 crore.

It said that electricity demand revival is partly showing up in elevated exchange tariffs as well as better health of state utilities and ‘Saubhagya’ household electrification led growth.

As per the study, top 5 states which saw maximum reduction in A&TC losses in 2017-18 over 2016-17 were Manipur, Jammu & Kashmir, Assam, Rajasthan and Bihar, while bottom 5 performers were Mizoram, Madhya Pradesh, Punjab, Tripura and Uttarakhand.

Odisha has launched the crackdown on frivolous thermal power producers. The state government has kicked off the process of resuming land from developers of failed power projects.

To secure long-term power security, the state government had signed pacts with 30 IPPs, envisaging generation capacity of 37,000 Mw. Later, two MoUs (memorandum of understanding) signed with Essar Power and Vijay Ferro Power were scrapped for unsatisfactory performance on the projects. Most of the remaining proponents have not evinced interest to install their projects primarily due to lack of coal linkages and drying out of long-term power purchase agreements (PPAs). Key players such as Chennai-based BGR Energy Systems and CESC Ltd have offered to surrender lands acquired or identified for their projects. Kalinga Energy & Power Ltd, an Odisha-based developer has also written to the state government, indicating an intent to shelve its 1000 Mw coal-fired power plant.

NTPC plans to load cheaper power first, plans new despatch schedule NTPC, India’s largest thermal power producer, is planning a power despatch schedule wherein cheaper power will be loaded first.

The move aims to reduce the cost of power for stateowned power distribution companies (discoms) that are facing financial difficulties.

This approach will replace the existing merit order despatch of power, which is based on availability.

Company officials said if cheaper power was made available for states, the demand would also pick up and states could plan their power supply accordingly.

About half of NTPC’s 40.4 Gw coal-based installed capacity, generates power at Rs 3 or lower. The company will add a 5,000-Mw coal-based capacity this year.

Passed benefits of lower power tariff worth Rs 683 crore to disOdisha government starts taking coms: NLC back land from failed power projState-run NLC India Ltd said it has passed on the ects benefit of lower power tariff amounting to about Rs 10 | CCAI Monthly Newsletter June 2018

683 crore to distribution firms following reduction in transfer price of lignite.

NLC said it has been able to reduce Lignite Transfer Price for captive use by around Rs 300/tonne leading to lowering of power tariff ranging from Rs 0.35 to Rs 0.58 per Kwhr (unit) of electricity from its power plants with effect from April/May 2018.

NLC said in a statement that around Rs 683 crore will be passed on by it to the beneficiary Power Distributing Companies in southern region. It said that earlier, with GST roll out from July 1, 2017, as a power generator using lignite from its own mines in the same state, the company passed on the benefit coming from the non-applicability of compensatory cess.

Tata Power expects nod for spot sale of excess power from Mundra in 2 months Tata Power, India’s largest private-sector power producer, has sought the government’s permission to sell the excess capacity above 80% of the plant load factor (PLF) from its Mundra unit as spot power. The facility is expected to help the firm reduce its over `1,400-crore losses in FY18 due to lower cost of power purchase agreement (PPA) with the five procurers.

The company expects to get the permission in a few months.

Praveer Sinha, MD and CEO of Tata Power, told a TV channel: “We have made a submission to the government regarding the sale of balance power in the spot market and expect a resolution in one-to-two months that will address the lower costs we are getting from the PPAs we have signed with procurers, besides addressing the issue of high cost of imported coal.

However, this will come as a composite solution that the government is working on to resolve the issue at Mundra for the benefit of all stakeholders.”

The government is also in the process of forming a high-powered committee that will look into the Mundra issue and is expected to come out with a win-win solution for all, Sinha said. He further said the Mundra plant has been affected by rising cost of coal which last week touched a record high of $114 per tonne.

To overcome the issue, the company is looking at increasing the blending of high gross calorific value coal (GCV) with low calorific value domestic coal.

“We expect to take this ratio to 50:50 level by the end of the year,” Sinha added.

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Gujarat unveils wind-solar hybrid power policy The Gujarat government announced the Wind-Solar Hybrid Power Policy - 2018, that aims to make optimum use of the land and grid.

The policy, which will have a coverage period of five years, provides incentives to renewable power producers supplying to the grid as well as those having captive use.

Gujarat Energy Minister Saurabh Patel, who announced the policy, stated that the developer of an existing solar project will now be able to use the same land for setting up wind and solar power units. Also, it will allow them to use the common transmission line to evacuate power.

The benefits of the new policy will be applicable for a period of 25 years or lifetime, whichever is earlier. The electricity generated from wind-solar hybrid projects will be exempted from energy charges. The policy provides 50 per cent concession for cross-subsidy surcharge and additional surcharge when the generated energy is sold to a third party.

For the captive users, the hybrid projects will have complete waiver on cross-subsidy surcharge and additional surcharge. Also, it will qualify for 50 per cent relaxation in wheeling charges and distribution loss.

Gujarat currently generates over 5,500 MW of wind power and 1,600 MW of solar power. The total renewable power installed capacity in the country stood at about 70 gw last financial year.

The policy provides for a comprehensive framework to promote large grid-connected wind-solar photovoltaic (PV) hybrid system for optional and efficient utilisation of transmission infrastructure and land, thereby reducing the variability in renewable power generation and achieving better grid stability, the ministry of new and renewable energy said in a release.

Besides, the policy also aims to encourage new technologies, methods and way-outs involving combined operation of wind and solar PV plants, it added.

Government aims to build 30 GW of offshore wind capacity by 2030 In order to beef up its clean energy portfolio, the

government wants to build 30 GW offshore wind capacity by 2030, a move which may bring India in the list of leading markets in the segment. India has set itself a target of achieving 175 GW renewable energy target by 2022, which the government is expected to exceed by additional 50 GW within the same timeline, Minister for Power and New & Renewable Energy RK Singh recently announced.

The ministry has earlier announced a short-term target of setting up 5 GW offshore wind capacity by 2022. Globally, UK tops the list of offshore wind markets, followed by Germany, Taiwan, China and the USA. The government has already invited expression of interest for 1GW offshore wind tender in India, and has elicited interest from leading wind players in India and abroad, sources said. Leading clean energy players including Sembcorp Green Infra, ReNew Power, Mytrah Energy and France’s Engie, among others have been shortlisted by the government for the technical stage of the tender.

Solar thermal industry seeks govt attention The solar thermal industry in India is miffed as it believes that the ministry of new and renewable energy is ignoring its contribution in the renewable energy space, though the country ranks among the top five markets globally for solar thermal.

There is scope to save Rs 5,000 crore annually by supplementing solar thermal with fuel oil, said the Solar Thermal Federation of India (STFI).

According to the STFI, the solar thermal industry in India has been growing without any financial assistance from the Centre. Yet, it fails to find a mention of its contribution. Solar heating and cooling solutions are a substitute for fuel oil/diesel. Solar heat is used in large public and private building as well as factories for cleaning, steam production, heating and surface treatment in manufacturing, and comes at 40% lower costs.

As per the Renewable Global Markets Status 2018, India continues to maintain its position among the top five markets globally for solar thermal. “Solar heat for industrial processes (SHIP) is an upcoming market in India and we are placed fourth in the world.

With oil prices looking high, SHIP will have a vital role to play in reducing dependence on oil,” Jaideep N Malaviya, secretary general at STFI, said.

The Indian solar thermal capacity saw a 26% y-o-y growth in 2017, the highest growth across the globe.

With capacity of 2.8 MW thermal India was among the top 10 markets for concentrated heat technologies in 2017 along with Oman, China, Italy and Mexico. When it comes to solar water heating collectors capacity in operation, India was at number six behind China, the US, Turkey, Germany and Brazil.

CCAI Monthly Newsletter June 2018

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DOMESTIC CIL may offer 30 million tonnes of thermal and coking coal for non-power sector Coal India plans to offer a mix of 30 million tonnes of thermal and coking coal at its recently announced fourth tranche of long-term supply contract for the non-power sector.

In the auction, the offer price for the coal would be the notified price for the non-power sector. Notified price for non-power is almost 20% higher than price fixed for the power sector.

“Auctions would be held in phases where each phase would be meant for a specific industry and the first one would be for sponge iron sector where around 7 million tonnes of coal is on offer by seven Coal India subsidiaries” said a senior Coal India executive.

This would be followed by offers for other sectors like cement, steel and captive power plants. According to a senior Coal India executive, 25 million tonnes of thermal coal would be on offer under the auction while the rest at 5 million tonnes would be coking coal for metallurgical uses.

Government admits coal shortage, asks discoms to import 14 | CCAI Monthly Newsletter June 2018

The power ministry has advised all state governments and private power distribution companies (discoms) to import coal as Coal India was unable to meet the growing demand. To add to problems, there was also a shortage of rail rakes to evacuate coal. The advisory comes in the wake of states demanding more coal to run their thermal units in face of growing demand.

In Tamil Nadu, power demand shot up by 2383MW this summer. If Tangedco is to import five million tonnes of coal to meet the shortage, it would cost the state discom around $5,000, said officials.

Across the country, hydro power generation came down this summer because of low water level in reservoirs, mostly in the Himalayan states. It was after the NDA government took charge, the power ministry asked all government discoms to stop importing coal. Tamil Nadu alone was importing 5.5 crore tonnes to meet its demand in all thermal units.

“The power ministry, in coordination with ministry of railway and ministry of coal, has been closely monitoring coal supply to thermal units. During 201718, we faced acute shortage. Coal stock in power stations depleted to 7.26 million tonnes in October 2017,” said power ministry chief engineer Ghanshyam Prasad in a letter to all discoms.

The coal consumption during April 2018 increased

by 3.9% compared this year. “The hydro generation has also come down by 26% in April as compared to last year. In the coming months too, hydro generation will be less due to low storage level in reservoirs,” said Prasad.

Govt to allot 9 coal blocks to PSUs for captive power generation & commercial use The government has invited applications from staterun companies for allotment of nine coal mines for captive power generation and commercial use.

The Nodal Authority, under the coal ministry, has invited applications seeking allotment of two coal mines to state public sector undertakings for the purpose of sale of coal. Applications for another seven coal mines for captive power generation have also been invited.

Of the seven reserved for power generation, one is proposed to be allotted under ultra mega power projects model where the state calls tariff-based competitive bids and the lowest bidding firm is awarded the coal block for power generation.

Coal India’s realisation from e-auctions rose 20% in FY18 Coal India’s average realisation from e-auctions has jumped 31% during the March quarter and 20% for FY18 on higher demand and international prices.

However, its realisation from sales through fuel supply agreements rose only 2% in the quarter from a year ago, but was up 19% from the preceding three months after the company raised prices. For the full fiscal year, price realised from fuel sales agreements fell about 3% as it had to deliver more coal to power plants to meet additional demand. This fetches a lower price than e-auctions.

Niladri Bhattacharjee, metals and mining expert at KPMG India, said coal output was lower than the initial target. “Therefore the entire unmet demand fell upon e-auction coal, which pulled up premium considerably,” he said. A Coal India executive said the trend was likely to continue this fiscal also.

Coal India rake movement up Coal India loaded 243 rakes per day during April-May this year, thereby registering an increase of 23 rakes over the corresponding period of last fiscal.

According to a release by the company, 47 rakes per

day were also loaded through washery circuit and Railways goods-shed siding which further helped in augmenting supplies to the power sector.

Besides enhancing dispatches through rail, the power stations that are located within a 50-60 km vicinity of the mines and have a FSA are being offered coal through road and rail-cum-road mode.

CIL has requested the Union Power Ministry to persuade power stations situated within 20 km of the mine to lift their entire requirement by road. This, company claims, will increase availability of rakes for movement to distant power plants.

The miner is holding a stock of about 44 Million tonnes of coal as on 31 May 2018 and there is no dearth of coal, the release said.

Piyush Goyal assures support to Singareni Collieries for new mines Piyush Goyal, Union Minister for Railways, Coal, Corporate Affairs and Finance, has appreciated the progress made by State-owned mining company Singareni Collieries Company Limited (SCCL) in production and sales.

The Minister assured the Singareni management that the Centre would extend its co-operation in opening new mines and taking up projects as it aims to achieve a 100 million tonne (MT) per annum target over the next few years. During his visit here, the Minister conducted a review meeting on the performance and long-term business plans of the company.

N Sridhar, Chairman and Managing Director, SCCL, outlined the company’s performance, its expansion and sustainability initiatives. Goyal expressed his happiness over the high growth recorded by the company in coal production and also the multi-faceted welfare activities taken up by company.

The Minister appreciated thevarious activities initiated by Singareni, including a super-speciality medical facility for employees and their parents, extending highest matching grant, taking up CSR activities, and eco-friendly mining initiatives. The Minister lauded the setting up of the 1,200 MW power plant, which contributes to the power needs of the State and nation.

The Singareni initiative to establish 500MW solar power plants in the coal belt was a good move, the Minister said. He said he would look into the request made by the CMD to allocate some coal blocks for

CCAI Monthly Newsletter June 2018

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Singareni in Chhattisgarh and Odisha, and provide clearances for new projects in Telangana.

GDP growth will reach 10% by fourth quarter of FY 19: Piyush Goyal The government is hopeful of achieving double-digit gross domestic product (GDP) growth in the country by the fourth quarter of the ongoing financial year, Railway and Coal Minister Piyush Goyal said.

Responding to a query at the Growth Net conclave here on how India proposed to go much faster than the current 7 per cent growth rate, Goyal, who also has temporary charge of the Finance Ministry, said his optimism on the 10 per cent GDP growth was based on the revival of domestic demand and the dynamism of a society that has become “aspirational”.

“I see double digit growth happening by the fourth quarter of this year. There is a demand optic in the country and this growth will be driven by a society that has become very aspirational,” he said. There is one caveat to this... when this country decides to do business honestly, we will have 10 per cent GDP growth,” he added.

Noting that the NDA government was committed to being an enabler of growth, Goyal said its focus had been providing on providing political and macroeconomic stability.

CEMENT Domestic cement sector is expected to post a 6% growth in FY2019 The domestic cement sector is expected to post a 6% growth in FY2019 with growth momentum likely to sustain though input costs like power, fuel and freight expenses are likely to put pressure on the operating profitability of cement companies in the coming quarters, ratings agency ICRA has said.

Domestic cement production was higher by 6.3% at 298 million tonnes in FY2018, against 280 million tonnes in FY2017. Most of this growth was recorded during the second half of FY2018 and driven largely by improved demand in key markets, the agency said in its latest report on cement sector.

16 | CCAI Monthly Newsletter June 2018

The Budget of FY2019 also supports with higher rural credit, increased Minimum Support Price (MSP), increased allocation for the rural, agricultural and allied sectors, along with continued focus on the Pradhan Mantri Awas Yojana (PMAY) and infrastructure investments, the report said.

“Cement demand from rural housing saw a pick-up, post monsoons, following an improvement in the rural economy as a result of normal monsoons,” he added.

Cement production was healthy in Q4 FY2018, reporting 18.2% Y-o-Y growth and the momentum continued in April 2018. Production was in the range of 26–27 million tonnes in the December 2017–February 2018 period and increased to 28.5 million tonnes in March 2018. In April 2018, the production continued to remain healthy at 27.3 million tonnes, an increase by 16.7% on a Y-o-Y basis.

Cement demand to grow by 7% in 2018, excess capacity a concern: ACC Cement demand in India is expected to grow by 7 per cent this year but intense competition and “not enough” consumption will lead to excess capacity, cement maker ACCNSE -0.85 % said in its annual report.

The demand will grow in 2018, helped by the Centre’s push on big infrastructure projects and continued focus on rural development and affordable housing schemes. “Consequently, the demand for cement in 2018 is expected to increase from 6 per cent to 7 per cent,” ACC said in its annual report for 2017. The cement industry had a growth of 6 per cent in 2017 as against 5.1 per cent in the previous year, it added.

Around 66 per cent of its demand came from the housing sector, followed by infra with 18 per cent and 16 per cent by commercial sectors.

The total installed capacity of the cement industry in India is around 465 million tonnes (MT), ACC said.

However, the industry is battling with under-utilisation of the installed capacity as it is currently producing 305 MT for both domestic demand and export requirement.

STEEL

Government issues order to bring Steel demand off to a strong start 16 more steel products under in 2018 quality control Steel demand has moved up a few notches in reThe steel ministry has issued two Quality Control orders namely Steel and Steel Products(Quality Control) Order, 2018 and Stainless Steel Products (Quality Control) Order, 2018 that brings 16 more steel products under the ambit of quality control order.

Earlier, 34 carbon steel products and three stainless steel products were notified by steel ministry . In effect, the quality control orders now cover 50 carbon steel and three stainless steel products, which have direct bearing on health and are critical to safety & security of infrastructure, housing, engineering application and public at large.

On implemention of these orders, around 85-90% of steel and steel products consumed in the country would be covered under Quality Control Orders (QCO).

The notifications were issued on June 20, 2018. The notified steel items cannot be produced, sold / traded, imported and stocked unless they bear BIS mark.

Domestic manufacturers of these items have to obtain BIS certification mark licenses. Foreign suppliers willing to supply these items to India have to obtain BIS registration.

Government working on ‘alloy policy’ to augment special steel output: Steel Secretary The Centre is planning to come out with an alloy policy in a bid to augment the output of special steel in the country, a top government official has said.

Last year, Steel Minister Chaudhary Birender Singh had expressed unhappiness over steel PSUs performance and asked the companies pay attention towards value addition as well as production of special steel that has multiple uses including in the automobile sector, defence, shipping among other areas.

“We are coming up with an alloy policy,” Steel Secretary Aruna Sharma told PTI stressing that the need for such a policy was felt in the wake of increased demand of special steel from various sectors.

She, however, did not elaborate on the time-frame as to when the policy will be ready for roll out.

cent months. April and May have collectively seen an 8.5% increase in steel consumption over a year ago, according to the Joint Plant Committee flash report.

There was no low base effect, as FY17 April and May saw output rise by 4.2%.

The strength of domestic demand meant that even as steel output rose by 6.1%, exports declined as producers found buyers at home. Steel producers benefit more from selling locally, earning more relative to exports. Imports actually rose by 14.8% in these two months. Rising demand does not seem a oneoff phenomenon. The last quarter of FY18 too saw a step-up in demand, taking full-year demand growth to 7.9%. Demand growth in the first nine months was a relatively low 5.2%.

One reason for domestic demand growth is the pickup in automobile sales. For instance, the top three commercial vehicle companies in India saw their sales in May increase by 50% over a year ago, with a similar increase in April. While automobiles chiefly use flat steel, long steel products were finding the going tough in FY18, due to a slowdown in end use sectors such as real estate and industrial projects.

RAILWAYS Reversing recent trend, Railways moves more coal over longer distances The Railways lugged an extra 15 million tonnes (mt) of coal in April and May this year, against the same months in 2017. This is not just a record high in incremental coal and incremental total freight loaded but also a trend reversal against the last two years, when coal loading had dropped on a year-on-year basis.

The last time this occurred was in April and May 2011, when the Railways had loaded an extra 8 mt over the previous year period. However, the gain for coal meant loss of transport for a few other commodities such as iron ore and finished steel. These products are transported in similar wagons.

Sharma said the demand for the special steel is going to increase as industries like shipping, automobile, defence are growing in the country where such steel will be required.

CCAI Monthly Newsletter June 2018

| 17

GLOBAL May coal imports rise 19% on Energy minister would welcome year to 2.05 million mt new coal-fired power plant Thailand imported 2.05 million mt of coal in May, up 19.2% from a year earlier, according to customs data released.

Of the total, 413,279 mt comprised bituminous coal, 50% lower year on year, largely from Australia -- 314,194 mt, down 15.5% year on year -- and Indonesia -- 98,189 mt, down 76.1%.

Imports of other coals, however, increased 84.9% year on year to 1.64 million mt in May. They were imported mostly from Indonesia -- 1.58 million mt, up 79.8% from a year earlier -- and Russia at 54,436 mt compare with none a year ago.

Thailand imported just 66 mt of anthracite coal in the month, down 99.1% year on year.

During January-May, Thailand imported 9.86 million mt of coal, up 7.6% year on year, comprising mainly bituminous coal -- 3.09 million mt, down 34.5% year on year.

Other coal accounted for 6.7 million mt, up 53.4% from the same period in 2017. Indonesia and Australia remained key suppliers.

18 | CCAI Monthly Newsletter June 2018

Energy minister Josh Frydenberg has declared he would welcome the construction of a new coal-fired power plant in Australia ahead of meetings where internal critics of his electricity plan are expected to voice their objections.

Frydenberg used an interview with News Corp to send the positive signal about coal before internal deliberations, with some Nationals still on the war path about the government either subsidising new coal plants or bankrolling the refurbishment of existing assets.

While economic modeling associated with the guarantee assumes there will be no new coal built under the policy, Frydenberg said: “I would welcome a new coal-fired power station for our country because it supplies reliable base load power and it has served us well in the past and will continue to serve us well in the future.”

Frydenberg said the national energy guarantee would prolong the operating life of the existing coal fleet – an eventuality which some of the state and territory governments, which will ultimately make or break the policy, profoundly object to.

U.S. coal miners worry Trump-China trade dispute could hit exports Beijing this month added coal and other energy products to a list of U.S. goods facing import tariffs in retaliation for Trump administration levies. The measure has already dampened Chinese demand for U.S.-mined coal, multiple U.S. and Chinese industry sources said.

For instance, trade sources said China National Building Material International, one of the biggest metallurgical coal importers in China, pulled back from supply talks with U.S. coal broker XCoal and miner Consol Energy (CEIX.N) shortly after Beijing’s announcement.

A source familiar with the matter said Consol had been in talks with China to supply up to 1 million tons per year of metallurgical coal but would not confirm whether the deal would be delayed.

newable electricity,” Koss says.

Drax started transitioning its units off of coal and onto wood fuel because the UK government is putting tight restrictions on carbon emissions to help fight climate change. This year, the country announced its plan to cease burning coal for electricity entirely by 2025. And under EU law, biomass is classified as a source of carbon neutral energy.

The wood pellets, which are made from compressed sawdust and look like something you might feed a pony at a petting zoo, are burned, just like coal is. And just like coal, that emits carbon dioxide.

But Koss says there’s a key difference. Wood releases carbon when it’s burned, but trees also absorb carbon from the atmosphere as they grow.

Officials at XCoal declined to comment.

South Africa coal terminal boosts productivity with $98 million upgrade

“We’re obviously watching it closely, particularly given what a bright spot exports have been for our industry of late,” said Ashley Burke, a spokeswoman for the National Mining Association, which represents U.S. mining companies.

South Africa’s Richards Bay Coal Terminal (RBCT) has boosted productivity and improved turnaround times after a 1.34 billion rand ($98 million) machinery upgrade, the firm said, as it reiterated forecasts for record exports this year.

The UK’s move away from coal means they’re burning wood from the US

RBCT, Africa’s largest coal export facility, launched the project to replace its ageing machines with the aim of sustaining the terminal’s 91 million tonne capacity, but the process has also increased efficiencies, it said.

The 12 cooling towers at the Drax Power Station have dominated the flat North Yorkshire countryside since the plant was built to burn coal from local mines in the ‘60s.

“We are already enjoying several operational efficiencies of the new machines,” said RBCT Chief Executive Officer Alan Waller.

It’s the largest power plant in the UK, and for years it served as a visible reminder of how essential coal has been for the country. But five years ago, Drax started switching from burning coal to burning wood.

A boom in biomass helps the UK meet its renewable energy goals “We’ve converted three of our six generators to run on wood pellets,” says Andy Koss, Drax Power’s CEO, while standing in the shadow of four new cathedral-sized storage domes built to store those wood pellets on the sprawling Drax grounds.

“This single site produces 15 percent of the UK’s re-

The project installed two new rail-mounted stacker reclaimers, which scoop up and transfer coal into and out of the yard and its rail-mounted shiploaders.

They in turn transport coal along a conveyer into a ship’s hold.

The two new reclaimers are expected to have a capacity of 6,000 tonnes per hour compared to the previous machines’ 4,500 tonnes per hour, while the shiploader will have 10,000 tonnes per hour capacity compared with 8,000 tonnes per hour previously.

The reclaimers have also cut the amount of bulldozing needed after its coal-carrying arm was extended further into the coal yard from 40 metres to 60 metres, said RBCT project general manager Bill Murphy.

CCAI Monthly Newsletter June 2018

| 19

Coal Import Restrictions Eased as Summer Electricity Demand Boosts Prices The Chinese government has reduced restrictions on coal imports at the nation’s major ports in response to concerns about higher prices and regional power shortages, as demand for electricity jumps during the peak summer months.

Limits on how quickly customs ports can process coal imports were eased, with ports in Shandong, Fujian and Guangzhou provinces having accelerated their clearance times to 10 days from 15 working days, according to industry platform Coal Lakes. Other ports across the country have also been told to prioritize handling coal for power generation.

China’s port inventories are well-stocked and coal plants are well-prepared for the extra demand as air conditioners whir into action across the country, according to Zhang Zhibin, an analyst with COSCO Coal.

Nevertheless, the National Development and Reform Council (NDRC) has already warned that some areas may suffer power shortages, with provincial bodies in economic powerhouse provinces Guangdong and Shandong announcing they are already under strain due to an unusually warm May. The country’s electricity demand increased significantly in early 2018, with 2.66 trillion kilowatt-hours consumed from January through May, an increase of 9.75% compared to the same period last year. Coal consumption at China’s six biggest power generators in the country’s southeast reached its second-highest level in history last month, when they burned through 724,000 tons a day. The six include China Guodian Corp. and Guangdong Yudean Group Co. Ltd., and are often used as a benchmark for the country’s coal industry.

The increased demand resulted in unusually high spot coal prices in May, leading the NDRC to make its first direct intervention in the market in two years.

The agency ordered utilities to stop stockpiling thermal coal and told miners to increase production by 50%.

Russian coal exports reach record high Russian coal deliveries by rail for export rose to a new record high in May, despite active phase of rail

20 | CCAI Monthly Newsletter June 2018

maintenance that started in April and intensified last month.

Coal deliveries by rail for export increased by around 400 000 t on the month and by 130 000 t on the year, to 17.8 million t in May amid higher supplies through overland border crossings, which offset lower deliveries to ports.

But supplies may decrease this month amid a lack of available railcars for coal loading, repairs at large northwestern port and ban on deliveries through Ukrainian ports. Coal dispatches for exports have dropped in the first 12 days of June by around 3% on the year, to around 578 000 tpd, reflecting lower supplies to ports.

Coal Plants Keep Shutting Despite Trump’s Order to Rescue Them President Donald Trump has ordered a rescue of the nation’s struggling coal and nuclear power industries, but that doesn’t mean utilities are reconsidering the shutdown of unprofitable plants.

Many power generators contacted said Trump’s June 1 announcement hasn’t altered their plans to retire old units even as the administration dangles the prospect of using emergency powers to force grid operators to buy power from struggling plants.

“I will tell you it is not a matter of if we are going to retire our coal fleet in this nation, it’s just a matter of when,” Ben Fowke, Xcel Energy Inc.’s chief executive officer, said June 6 at a utility trade group conference. The company announced later that day that it would retire two coal-fired units in Colorado and add thousands of megawatts of capacity from renewable power and natural gas.

That trend has been underway for years. Since 2010, nearly 40 percent of the capacity of the nation’s fleet of coal-fired power plants has either been shut down or designated for closure, according to the American Coalition for Clean Coal Electricity, a trade-group that represents coal-fired utilities and mining companies such as Peabody Energy Corp., and Murray Energy Corp.

More than a quarter of U.S. nuclear power plants don’t make enough money to cover their operating costs, raising the threat of early retirements, according to Bloomberg New Energy Finance.

CCAI Monthly Newsletter June 2018

| 21

Trump ordered Energy Secretary Rick Perry on June 1 to take immediate action to stem further coal and nuclear plant closures in the name of national security. The Trump administration argues that the loss of coal and nuclear plants is harming the dependability of the U.S. power grid and its ability to recover from storms or cyber attacks.

Australian coal prices hit 6-year high as Asia demand spikes Australian thermal coal prices have risen to their highest level since 2012 as hot weather across North Asia spurs buying ahead of the peak summer demand season.

Spot prices for thermal coal cargoes for export from Australia’s Newcastle terminal last closed at $115.25 per tonne, the highest level since February 2012.

Thermal coal, the world’s most used fuel for electricity generation, has surged by 130 percent since its record lows below $50 per tonne in 2016 following a years-long decline.

Prices have been driven up by economic growth, especially in Asia, along with constraints on supply due to earlier mine closures and high hurdles to developing new mines amid concerns about pollution and global warming.

In recent weeks, a heat-wave in North Asia and restocking ahead of the hottest summer months in July and August have led to soaring demand for both residential and industrial cooling, traders said.

22 | CCAI Monthly Newsletter June 2018

Weather data in Thomson Reuters Eikon shows that large parts of North Asia, including cities like Beijing and Tokyo have experienced unusually warm weather since late May.

Anglo to boost coal capacity in Australia Anglo American is set to boost metallurgical coal capacity at a mine complex in Australia 25% as the business once destined for the chopping block turns into a cash machine for the century-old miner.

The company plans to increase processing capacity to 20-million from 16-million tonnes a year at a preparation plant that processes coal from the Moranbah and Grosvenor underground mines, Tyler Mitchelson, CEO of Anglo’s metallurgical coal unit, said. A project study was in the early stages and optimisation of the existing facilities was expected to be completed over the next few years.

“I don’t anticipate making any material investment into the mining complex, it’s more about getting improvements out of the assets,” said Mitchelson. “We think we can get very significant value out of there and that’s really our focus right now.”

Anglo’s metallurgical coal division was the biggest earner for the producer in 2017, just two years after the unit — along with its iron ore business — were put up for sale as prices languished. A rebound in coal prices, up 140% since the start of 2016, gave the unit some reprieve, and management halted the disposal plan. The company is now reaping the rewards.

With Best Compliments From:

Sharda Ma

( )

COAL MERCHANTS, IMPORTERS & HANDLING AGENTS INDIA SOUTH AFRICA INDONESIA SINGAPORE HONG KONG NIGERIA

UGF 1& 2, Kanchenjunga Building, 18 Barakhamba Road, New Delhi-110001, India P : +91 11 23354046/47 F : +91-11-23354047 E : corporate@shardamaa.com W : www.shardamaa.com

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

G10-4300-4600

G11-4000-4300

G12-3700-4000

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 Consistent efforts to supply coal to the power sector on a priority basis have started paying off. But the non-power sector — such as cement and steel is suffering from the low availability of domestic coal and spike in international prices, leading to an impact on the bottom-line. And, as growth rebounds, there may not be any immediate solution to the crisis.

Coal India plans to offer a mix of 30 million tonnes of thermal and coking coal at its recently announced fourth tranche of long-term supply contract for the non-power sector. In the auction, the offer price for the coal would be the notified price for the non-power sector. Notified price for non-power is almost 20% higher than price fixed for the power sector.

Coal India is expected to end the June quarter with 18 million tonnes excess production growing 15 per cent over last year. Though there is an uptrend in production, will it sustain growth? The reason behind the concern is its poor performance in over-burden (OB) removal. Coal mining in India is essentially opencast, where the topsoil is removed to expose and extract minerals.

RAILWAYS The Indian Railways has posted a 7.26 per cent rise in its freight traffic during April-May this fiscal with coal traffic showing considerable increase because of rise in power demand in the last two months.

The Railways lugged an extra 15 million tonnes (mt) of coal in April and May this year, against the same months in 2017. This is not just a record high in incremental coal and incremental total freight loaded but also a trend reversal against the last two years, when coal loading had dropped on a year- on-year basis.

The railway ministry is maintaining close coordination with the coal ministry and other state agencies to ensure adequate availability of dry fuel at power plants, an official source said. The development comes at a time when Delhi is staring at electricity shortage due to the fast depleting coal stockpiles at power plants in the city.

24 | CCAI Monthly Newsletter June 2018

POWER New environmental norms for coal-based power plants could have a bearing on electricity bill. The Power Ministry has written to the Central Electricity Regulatory Commission (CERC) asking for thermal power plants to be allowed to pass on to consumers the cost of complying with the revised environmental standards.

Modi govt plans ‘Pariwartan’ scheme for power sector revival. The government plans to warehouse stressed power projects totalling 25,000 megawatts (MW) under an asset management firm to protect the value of the assets and prevent their distress sale under the insolvency and bankruptcy code till demand for power picks up.

Private power producers flagged the preferential allocation of coal blocks to public sector units vis-a-vis private players as one of the major reasons for piling up of huge bad assets in the sector. Submitting additional inputs on stressed assets to financial services secretary Rajiv Kumar, private power producers have argued that the allocation of coal blocks to state-owned units without auction have distorted competition and contributed to the financial stress of private players.

CEMENT The Indian cement sector is receiving fresh investment as capacity utilisation rates increase, with at least six companies at various stages of announcing or implementing expansion plans.

Cement demand in India is expected to grow by 7 per cent this year but intense competition and “not enough” consumption will lead to excess capacity, cement maker ACCNSE 1.33 % said in its annual report. The demand will grow in 2018, helped by the Centre’s push on big infrastructure projects and continued focus on rural development and affordable housing schemes.

The domestic cement sector is expected to post a 6% growth in FY2019 with growth momentum likely to sustain though input costs like power, fuel and freight expenses are likely to put pressure on the operating profitability of cement companies in the coming quarters, ratings agency ICRA has said.

Domestic cement production was higher by 6.3% at 298 million tonnes in FY2018, against 280 million tonnes in FY 2017. Most of this growth was recorded during the second half of FY2018 and driven largely by improved demand in key markets, the agency said in its latest report on cement sector.

STEEL The government has set aside Rs. 200 crore for an innovation fund to increase domestic steel production. Chaudhary Birender Singh, Union Minister of Steel, said that India has huge scope to develop its infrastructure. The target is to increase steel capacity to 300 mt by 2030 from the current levels of 160-170 mt per year.

Steel demand has moved up a few notches in recent months. April and May have collectively seen an 8.5% increase in steel consumption over a year ago, according to the Joint Plant Committee flash report.

The steel ministry has issued two Quality Control orders namely Steel and Steel Products(Quality Control) Order, 2018 and Stainless Steel Products (Quality Control) Order, 2018 that brings 16 more steel products under the ambit of quality control order.

CCAI Monthly Newsletter June 2018

| 25

26 | CCAI Monthly Newsletter June 2018

6780

76.8

Source CEA

TOTAL

66.06

59.63

14

MAY-2018

1265000

5000

13

NUCLEAR

BHUTAN IMP

38500

130000

ACTUAL*

59.63

HYDRO

2

1091500

PROGRAM

274821.51

0

THERMAL

Category

TOTAL

BHUTAN IMP

45403.42

NUCLEAR

HYDRO

222638.09

1

4

3572

104119

425

13038 102082.62

473.77

13186.09

3224.82

85197.94

3 87084

ACTUAL*

PROGRAM

62.4

56.25

15

ACTUAL SAME MONTH 2017-18

97524.88

493.7

13666.89

3046.29

80318

5

ACTUAL SAME MONTH 2017-18

JUNE-2018

98.04

111.48

101.14

90.28

97.83

6

% OF PROGRAM (4/3)

AN OVERVIEW

62.34

61.1

16

PROGRAM

65.63

63.38

17

ACTUAL*

61.18

61.07

18

ACTUAL SAME PERIOD 2017-18

APRIL 2018 - MAY-2018

PLANT LOAD FACTOR (%)

Monitored Target Capacity Apr 2018 to (MW) Mar 2019

THERMAL

Category

SUMMARY- ALL INDIA

104.67

95.96

96.48

105.86

106.08

7

% OF LAST YEAR (4/5)

313346

925

33515

8796

270110

8

PROGRAM

GENERATION (GWH)

PERIOD : JUNE-2018

10

317044.15

809.14

31414.06

9718.33

307979.56

986.1

36269.77

9059.33

275102.62 261664.36

9

ACTUAL*

ACTUAL SAME PERIOD 2017-18

101.18

87.47

93.73

110.49

101.85

11

102.94

82.05

86.61

107.27

105.14

12

% OF LAST % OF PROGRAM YEAR (9/10) (9/8)

APRIL 2018 - JUNE-2018

ENERGY GENERATION REPORT

CCAI Monthly Newsletter June 2018

| 27

MONTHLY SUMMARY OF IMPORTED COAL & PETCOKE Coal Price Index COAL

(kcal/kg)

Price - FOB

Price - FOB

Monthly Change (USD)

South Africa

6000 NAR

USD 104.31

INR 7089

4.60

South Africa

5500 NAR

USD 87.62

INR 5945

0.19

Australia

5500 NAR

USD 81.27

INR 5523

5.05

Indonesia

5000 GAR

USD 67.62

INR 4595

4.37

Indonesia

4200 GAR

USD 48.60

INR 3303

3.54

PET COKE

Sulphur

India-RIL(Ex-Ref.)

-5%

INR 9450

Price

Saudi Arabia (CIF)

+ 8.5%

INR 7223 ($105)

USA (CIF)

- 6.5%

INR 7561 ($111)

Exchange Rate

Change (Monthly)

USD/INR 67.960

0.45

Coking Coal Price: Premium Low Vol

HCC 64 MID Vol

Semi Soft

Low Vol PCI

Mid Tier PCI

MET COKE 62% CSR

FOB Aus

CFR China

FOB Aus

CFR China

FOB Aus

FOB Aus

FOB Aus

CFR India

FOB N China

198.94

205.38

183.10

196.00

129.35

138.98

137.98

370.38

354.38

South Africa: • Thermal coal exports from South Africa in April were 6.6 million mt, down 8% month on month but up 6.7% year on year, according to customs data. India remained the largest importer of South African coal in April, on 3.23 million mt, up 13% month on month, but down 8% year on year.

• South African thermal coal is facing buyer resistance as high prices in recent months has eroded spot demand and left consumers looking for cheaper alternatives, with US and Russian coal appearing the preferred options.

• South Africa’s Exxaro Resources Ltd expects coal production for the half year to June 30 to increase by 1.7 percent to 23.52 million tonnes, the South African coal miner said. It expects thermal coal output to rise by 1 percent to 22.307 million tonnes and metallurgical coal to increase by 12 percent

28 | CCAI Monthly Newsletter June 2018

compared with the preceding six months due to higher production at its Grootegeluk mine.

Australia: • Australian thermal coal prices have risen to their highest level since 2012 as hot weather across North Asia spurs buying ahead of the peak summer demand season. Spot prices for thermal coal cargoes for export from Australia’s Newcastle terminal last closed at US$115.25 per tonne, the highest level since February 2012.

• Coal exports from Australia’s metallurgical coal dominant region of North Queensland bounced back strongly in May after a year-to-date low in April, latest data from the North Queensland Bulk Ports Corporation showed. A total 12.73 million mt of coal was shipped from the three coal terminals in North Queensland in May, up 25% from 10.16 million mt a

year earlier.

• The Australian government has been buoyed by growing interest in thermal coal from Southeast Asian countries, saying the increased demand demonstrated how bright the future was for Australian coal. Australia’s Resources Minister Matt Canavan made the comments in the wake of a new 0report which showed Asia’s coal import demand was set to increase by 400 million tonnes (Mt) by 2030.

Indonesia: • After having fallen over the past two months, Indonesia’s benchmark thermal coal price managed to rebound in June 2018. The HBA, a monthly price that is determined by Indonesia’s Energy and Mineral Resources Ministry (and which is based on several global and domestic indexes), was set at USD $96.61 per ton in June 2018, up from USD $89.53 in the preceding month.

• The Indonesian government has urged thermal coal miners to supply at least 25% of their production to the domestic market in a bid to ensure sufficient supply to local utilities, as more suppliers turn to the export market to take advantage of higher prices.

• Indonesian coal miner Bumi Resources sees fullyear 2018 production at about 90 million mt, mainly boosted by the ramp-up in higher grade coal output at one of its mining units, an executive at the company said. The miner had produced 83.7 million mt of coal in 2017.

USA: • US coal exports totaled 10.1 million mt in April, the highest monthly total since March 2013, according to new US Census data. The monthly total was up 17.7% from March and 53.3% higher than the yearago month.

• US has estimated to produce 756.2 million st of coal in 2018, up 0.7% from the previous monthly forecast of 751.2 million st and the highest since 760.4 million st was estimated in February, the US Energy Information Administration said.

• Weekly US coal production totaled an estimated 14.5 million st in the week ended June 23, down 3% from the prior week and 5.4% from the year- ago week, data from the US Energy Information Administration showed.

Pet Coke: • Green Petroleum Coke Market to reach around US$ 21 Bn by 2026. Rise in usage of Green Petroleum Coke in Aluminum & Steel Industry to drive market expansion.

• Petcoke markets seem to be torn in two as June ends, with the Pacific debating the possible impacts of a Chinese tariff for US petcoke and a global Ban in India, while the Atlantic market continues to show solid demand.

• The global production of petroleum coke has been increasing in the last few years, this is due to the rising supply of heavy crude oils in the global market. The market for the petroleum coke is classified between the green coke and the calcined coke.

Shipping: • Pakistan’s thermal coal importers will have to discharge all of their cargoes at Port Qasim from August, after the country’s Supreme Court banned the unloading of thermal coal at the nearby Karachi port, shipping sources said.

• Freight rates for shipping coal from northern China’s Qinhuangdao port to the ports of Zhangjiagang, Shanghai and Guangzhou in the east and south continued to fall in the week to June 26, Qinhuangdao Port operator said.

• The first-quarter increase took place amid a dramatic decline in shipments to the region from other major exporters, which allowed Russia to increase its share in the region’s coal imports by 11 percentage points to 53pc.

CCAI Monthly Newsletter June 2018

| 29

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

JUNE'18

APR'18 - JUNE'18

AAP TARGET

ACTUAL

% ACH

AAP TARGET

ECL

4.34

3.39

78

12.55

BCCL

2.97

2.3

77

8.9

7.67

86

12.2

CCL

5.5

3.74

68

15.22

11.44

75

12.4

ACTUAL

% ACH

% GROWTH

11

88

24.1

NCL

8.04

8.19

102

24.38

24.6

101

16

WCL

3.47

2.74

79

10.16

9.64

95

18.7

SECL

14.5

13.15

91

39.89

39.95

100

26

MCL

13.95

11.36

81

39.56

32.45

82

1.9

NEC

0.03

0.026

87

0.12

0.12

97

79.2

CIL

52.79

44.88

85

150.77

136.87

91

15.2

OFFTAKE (Figs in Mill Te) JUNE'18

SUB CO.

APR'18 - JUNE'18

AAP TARGET

ACTUAL

% ACH

AAP TARGET

ACTUAL

% ACH

% GROWTH

ECL

4.14

3.78

91

12.75

12.26

96

27.7

BCCL

3.61

2.83

78

11.13

9.08

82

16.5

CCL

6.9

5.3

77

21.25

17.68

83

10.7

NCL

8.16

7.78

95

25.13

24.35

97

11.9

WCL

4.85

4.56

94

14.93

13.61

91

22.2

SECL

13.85

13.71

99

42.63

40.59

95

8

MCL

13.72

11.6

85

42.25

35.69

84

7

NEC

0.04

0.04

93

0.15

0.17

112

-20.1

CIL

55.28

49.59

90

170.2

153.43

90

11.7

30 | CCAI Monthly Newsletter June 2018

COAL TESTING & INSPECTION SERVICES

INSPECTION SERVICES

SAMPLING

ANALYSIS

Vessel’s draft survey Load & discharge supervision Stack sampling Truck / rake weight assessments Visual inspection Weighing systems check Quality sampling, sizing and sample preparation Chemical Analysis Moisture determination

Systematic Sampling and Sample Preparation as per IS/ISO/ASTM standards Sampling both manual and by using auto-mechanical samplers Sampling from stationery bulk cargo - vessels, rakes, barges, trucks, stockpiles Sampling from moving streams

Third party analysis Bhubaneshwar, Mumbai, Chennai, Dhanbad, Gandhidham, Vizag, Korba laboratories ISO 17025 certified by NABL Kolkata, Vizag, Chennai ISO 17020

by NABCB for coal & coke inspections Technology capability: • Wet bench chemistry • Instrumental techniques

INSPECTORATE GRIFFITH INDIA PVT. LTD.

Bureau Veritas - Commodities Division: Vasundhara, 3rd Floor 2/7 Sarat Bose Road Kolkata - 700 020. INDIA Tel : +91 33 30516600, 24852901-02 calhq@inspectorate.co.in • www.bureauveritas.co.in

OVERALL DOMESTIC COAL SCENARIO Coal Production (in MT) Company

May, 2018

% Achievement

Target

Actual

CIL

51.2

47.1

SCCL

5.5

5.1

April- May, 2018

% Achievement

Target

Actual

92%

98.0

92.0

94%

92%

10.9

9.6

88%

Overall Offtake (in MT) Company

May, 2018

May, 2017

% Growth

April – May, 2018

April – May, 2017

CIL

52.9

46.5

14%

103.8

91.6

13%

SCCL

5.8

5.2

12%

11.6

10.6

10%

% Growth

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

May, 2018

May, 2017

% Growth

April – May, 2018

April – May, 2017

% Growth

CIL

41.7

36.2

15%

81.7

71.4

14%

SCCL

4.8

4.3

11%

9.6

8.85

9%

Spot E-auction of Coal (in MT) Company

Coal Qty. Allocated May, 2018

Coal Qty. Allocated May, 2017

Increase over notified price

Coal Qty. Allocated April - May, 2018

Coal Qty. Allocated April-May, 2017

Increase over notified price

CIL

3.49

4.22

87%

6.88

6.48

89%

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

Coal Qty. Allocated May, 2018

Coal Qty. Allocated May, 2017

Increase over notified price

Coal Qty. Allocated April - May, 2018

Coal Qty. Allocated April - May, 2017

Increase over notified price

6.75

6.32

99%

14.17

15.93

81%

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

Coal Qty. Allocated May, 2018

Coal Qty. Allocated May 2017

Increase over notified price

Coal Qty. Allocated April - May, 2018

Coal Qty. Allocated April - May, 2017

Increase over notified price

CIL

0.92

4.32

58%

1.88

4.32

44%

Company

Coal Qty. Allocated May, 2018

Coal Qty. Allocated May, 2017

Increase over notified price

Coal Qty. Allocated April - May, 2018

Coal Qty. Allocated April - May 2017

Increase over notified price

CIL

-

-

-

-

-

-

Special Spot E-auction (in MT)

32 | CCAI Monthly Newsletter June 2018

WELCOME TO A FUTURE OF SEAMLESS LOGISTICS

INDIA'S BEST COAL HANDLING AGENCY We handle by rail annually

20 million tonnes of coal

We transport annually

25 million tonnes of materials

We operate from

48 locations all over india

We employ

1700 experienced personnel

Equipment & machinery

456 trucks / 161 dumpers etc.

52 excavators 52 loaders 14 cranes

Our three stockyards handle

3 million tonnes of steel annually

We have

over 50 years of experience

We enjoy

a spotless reputation

NARESH KUMAR & COMPANY PVT. LTD. 9B, WOOD STREET (5TH FLOOR), KOLKATA-700 016, INDIA Phone: + 91-33-22838070/ 71 / 72 / 73 / 74 / 76 /77 Fax: + 91-33-2283 8079 E-mail: headoffice@nkcpl.com Website: http://www.nkcpl.com

REGISTERED

36