DOMESTIC

Centre says domestic coal production to touch 1.31 billion tonnes by FY25

The Coal Ministry has announced that the government has fixed a target of 1.31 billion tonnes (BT) of coal production for FY 2024-25, adding that the same will go up to 1.5 BT by FY30. This comes as India’s domestic coal production has increased by over 16 per cent in the current financial year as energy demand continues to rise. From April 2022 to January 2023, India produced 698.25 MT of coal, against 601.97 MT during the same period of the previous year. In

April last year, India’s power demand touched a record high of 216 GW, up 6 per cent year-onyear, as several regions in the North faced severe heatwaves.

In FY23 so far, Coal India’s production alone has increased by over 15 per cent to 550.93 MT against 478.12 MT last year. Meanwhile, production from captive and commercial coal mines has increased to 93.22 MT in April’2022 to Janaury’2023 period of FY 22-23. The government ramped up domestic production amid a sharp increase in power consumption last year in India, which is the world’s third-largest energy-consuming country.

Coal ministry auctions 10 coal mines with 1866 MT coal reserve

The coal ministry announced the auction of 10 coal mines, as a step forward for the auction process for 141 coal and lignite mines, launched in November last year. The ministry said that out the 10 mines, 6 were CMSP coal mines and 4 were MMDR coal mines. The total coal reserve of these 10 mines is a whopping 1866 MT, which presents a significant opportunity for commercial mining.

The Coal Ministry has stated that these mines have the potential for a capital investment of Rs. 1185 crore, which could help to create jobs and boost the economy.

Among the 10 mines were, Chendipana in the state of Odisha, Datima and Purunga in Chhattisgarh, KalambiKalmeshwar and North West of Madheri in Maharashtra, KhagraJoydev in West Bengal, Mandla North and Marwatola VII in Madhya Pradesh, and, Parbapur Central and Patal East in Jharkhand. Recently, the ministry had announced that 27 coal mines will be auctioned in the upcoming round of commercial mines auction that begins on February 27.

India's thermal coal imports stable at around 11 mnt in Jan'23

It should be noted that coal imports have been fairly strong despite the increase in domestic coal production. India's coal production increased by 10 mnt, or 13%, y-o-y to 90 mnt in January. Production witnessed m-o-m growth of around 7%. Moreover, in the first 10 months of FY23 (April 2022-January 2023), the country's coal production increased by 16% y-o-y to 693 mnt.

However, imports have surged despite growth in domestic production. India's coal imports increased by 15% in 2022 to 162 mnt despite growth in domestic production partly due to the government's mandate obligating operators of coal-based power plants to increase inventories by importing at least 10% of their coal demand and easing the restrictions on coal blending.

Buyers also ramped up imports of sharply discounted coal from Russia. India has been focusing on improving domestic coal production to achieve its FY23 target of 900 mnt. India's thermal coal imports from Indonesia stood at 4.30 mnt in January as against 6.24 mnt in December, down 31% m-o-m. Imports fell despite a 12% increase in domestic thermal power production in January. India imported around 107 mnt of coal from Indonesia in 2022. Shipments from Australia almost doubled to 2.30 mnt as against 1.16 mnt in December.

CIL seeks nod to raise investment cap in JVs

State-run Coal India Ltd (CIL) has sought government approval to raise the ceiling of investment for joint ventures from 30% of net worth to 50% as it seeks to diversify into aluminium production besides setting up a 1,200 MW joint venture power plant in Madhya Pradesh.

There is a condition that we cannot invest more than 30% of equity in JVs and others. We have already breached it because CIL also gets money through its subsidiaries. When our net worth increases, their investment also increases. So, in that way that 30% mark is already breached. We are seeking permission from the government. It should significantly increase. It is due to a structural problem. We should get at least 20% above that, CIL Chairman-cum-Managing Director Pramod Agarwal said.

We are thinking of two power plants. One at Mahanadi. Another plant in partnership with Madhya Pradesh Power Generation Co., in which we will have 50% share. Capacity of the Mahanadi plant is 1,200 MW. The other plant will also have a capacity of 1,200 MW. That will happen only after government has given permission (to increase investment cap beyond 30% of net worth).

“Apart from this Ammonium nitrate production may be an easy option because we consume 60-70% of the ammonium nitrate produced in the country. So, we can manufacture our own ammonium nitrate and consume it. That will derisk us (from supply concerns).”

Captive, commercial coal mines output up over 30% during AprilJanuary

Coal production by captive and commercial mines rose by 30.70 per cent Y-o-Y to 93.22 million tonnes (mt) during the April-January period in the current financial year ending March 2023.

To encourage companies to increase output, under commercial mining scheme, a rebate of 50 per cent on final offer is allowed for the quantity of coal produced earlier than scheduled date of production. Besides, incentives on coal gasification or liquefaction (rebate of 50 per cent on final offer) have been granted.

The country’s domestic coal production has shown impressive growth during the past few years with output increasing to 778.19 mt in FY22, achieving an annual growth of 6.47 per cent, the Ministry said. The rising trend of coal production has further gained pace in FY23, and the country’s total coal production recorded an impressive growth of more than 16 per cent Y-o-Y with an output of 698.25 mt during the April 2022 to January 2023 period compared to 601.97 mt in the year-ago period.

Most of auctioned coking coal mines to start production by 2025

Most of the 10 coking coal blocks that have been auctioned to the private sector in the last two years are likely to start production by 2025, according to the Coal Ministry. To augment the output of raw coking coal, a key input in the production of iron and steel, in the country, the ministry has auctioned 10 coking coal blocks to the private sector.

These mines have peak rated capacity(PRC) of 22.5 MT. Domestic raw coking coal production is likely to reach 140 million tonnes (MT) by 2030. Also, CIL has offered eight discontinued coking coal mines, out of the total 30 discontinued mines, on an innovative model of revenue sharing to the private sector with a PRC of two MT.

The coal ministry has also identified four coking coal blocks and Central Mine Planning and Design Institute (CMPDI) also will finalise the geological report (GR) for four to six new coking coal blocks in the next two months. These blocks may be offered in the subsequent rounds of auctions for the private sector to further step up domestic raw coking coal supply.

India’s Reliance stops local petcoke sales, boosts imports –sources

Reliance Industries has stopped selling petroleum coke within India and boosted imports of the product to turn it into synthetic gas to power its refineries, according to two sources familiar with the matter and trade data.

Petroleum coke is a carbon intensive solid residue left over from coking units in oil refineries that break down residual oil into more highly valued products. Petcoke, as it is known, can be used as a coal substitute in both steelmaking and in power plants.

Reliance had been depending on liquefied natural gas (LNG) to run its refinery complex and selling the petcoke locally but it is now gasifying its petcoke amid rising LNG prices.

SCCL shipped 68 lakh tonnes of coal in January

Singareni Collieries Company Limited (SCCL) carried a record transport of 68.4 lakh tonnes of coal in January breaking the previous record of 64.7 lakh tonnes of coal shipment achieved in March 2016.

Similarly, the highest over-burden of 16.67 lakh cubic metres was removed. This new record was set when 14.83 lakh cubic metres of overburden was cleared by offloading and 1.84 lakh cubic metres of OB was removed with the help of departmental machinery.

“A total of 1216 pallets of coal was transported from 11 areas at an average rate of 39 rail cars per day,” stated a press release from the company. With the majority of the coal transported to thermal power stations situated in Maharashtra, Karnataka, Tamil Nadu, Telangana and Andhra Pradesh, Singareni surpassed the coal shipment of 1186 pallets in the month of January.

How coal gasification can help India reduce its oil & gas import

With India targeting net zero emissions by 2070, the future of coal depends on coal gasification as the process generates less CO2 and it is also easy to capture CO2 produced during the gasification process. Coal gasification strategies consist of four major components, such as — making coal available for coal gasification projects, identifying suitable coal gasification technologies, including Carbon Capture, Utilisation and Storage (CCUS) and setting up coal gasification projects and market dynamics for the end-products.

The measures taken by the Ministry of Coal are expected to make coal available to sectors other than power, including for coal gasification. With a view to incentivise the availability of coal for coal gasification, the Ministry of Coal has also issued directions to CIL/SCCL to create a separate window under NRS Linkage Auction Policy 2016 for coal gasification projects for long-term supply with desired quality and quantity. Further, to ensure the availability of coal at a reasonable price, provisions have been made for a 50 percent rebate in revenue share for commercial coal block allocatees when coal is supplied/ used for gasification projects.

Indian coal has inherent high ash and most of the gasification projects running outside the country, including in China, are based on lowash coal. Finding the right technology for coal gasification for Indian coal has been a challenge.

Railways

Railways adding 1,500 wagons every month to its fleet to carry coal

The railways has ramped up production of wagons, adding nearly 1,500 of them, or 30 freight trains, every month only for transportation of coal ahead of summer. Amid strong indications of early onset of summer and spike in demand for electricity, railway ministry officials said efforts are being made to ensure adequate and enough supply of coal to power plants and avoid situations like last summer when they had to cancel a large number of passenger trains for coal movement.

“The production of wagons has more than doubled and till January of the 2022-23 financial year, we have produced over 17,000 wagons and nearly 50% of these are meant for carrying coal. This is a priority area for railways. Besides accelerating the addition of more wagons in our system, there is a greater focus on giving approvals to all important projects related to coal movement expeditiously. We have adopted a corridor-based approach and ‘coal corridor’ is the most important one,” said a ministry official. India’s peak power demand is expected to touch 230GW in 2023 and it had touched 211GW in January, which was close to an all-time high at 216 GW in April, 2022.

Railways plans to create cement corridor

The Railways is planning to create a cement corridor to link factories manufacturing cement, clinker and fly ash for the seamless movement of these products, senior officials said. Officials said that the Railways is in talks with the Cement Manufacturing Association (CMA) to create a road map to link cement manufacturing factories in the eastern, central, Rajasthan and southern clusters.

According to the CMA, cumulative cement loading grew from 34.82 million tonnes in April-October 2020-21 to 45.38 million tonnes in AprilOctober 2021-22, a yearly growth of 30.33 per cent. Similarly, cumulative clinker loading also increased from 22.29 million tonnes in April-October 2020-21 to 31.09 million tonnes in AprilOctober 2021-22, a growth of 39.48 per cent.

During April-October 2021-22, the cement industry has been the fourth largest revenue generator for the Indian Railways. As of December 2022, Railways said that it has achieved the yearly milestone in freight transportation by crossing the 1,000 million tonnes (MT) mark.

Shipping

Critical port linking projects to get Rs 1 lakh croreGati Shakti push: Sarbananda Sonowal

The Centre has earmarked over 1 lakh crore for 100 critical port connectivity projects under the PM Gati Shakti Master Plan, according to minister for ports, shipping and waterways SarbanandaSonowal.

Sonowal's ministry is monitoring the progress of Sagarmala, an ambitious plan for improving port connectivity and developing coastal re- gions. The initial plan comprised 802 projects, at a budget estimate of 5.4 lakh crore. Additionally, 567 new projects with an estimated cost of 59,000 crore were added during the last Sagarmala Apex Body meeting held in May last year.

“There is 1 lakh crore PM Gati Shakti Master Plan, which has given us further opportunities by bringing 18 infra allied ministries together to work under one single banner. For this, 75,000 crore will be invested, wherein 15,000 crore will be from private players, which is very encouraging,” he said.

India steel imports from Russia rise to eight-year high in AprilJan

India's imports of Russian steel rose to an eightyear high during the first 10 months of the financial year that began in April 2022, government data compiled by Reuters showed. India, the world's second-largest crude steel producer, imported 281,000 tonnes of steel from Russia between April and January, nearly five times higher than the same period a year ago, the data showed.

The rising imports are the result of shift in Russian steel trade flows to Asia after Western sanctions were imposed on Russia after its invasion of Ukraine last year. The change is displacing some traditional suppliers and domestic steel producers are raising concerns about potentially losing market share to the lower priced imports.

Moscow was the fourth-biggest steel supplier to India during the April to January period, emerging as one of the top five steel exporters to the country for the first time since the 2016/17 fiscal year, the data showed.

Between April and January, about 72% of Moscow's steel shipments to India constituted hotrolled coil (HRC) and strips. Russia displaced Japan as the second-biggest supplier of HRC to India for the first time in at least eight years, the data showed.

Imports of steel minimal; domestic industry progressing tremendously, says government

The inbound shipment of steel is "very minimal", Steel minister Jyotiraditya M Scindia said amid industry flagging the issue of "cheap imports".

According to industry data, imports of finished steel rose by 21 per cent to 4.77 million tonnes (MT) in 2022 from 3.94 MT in 2021. AlokSahay, secretary general of Indian Steel Association (ISA), said the industry is undergoing the pressure of supply chain issues coupled with increasing raw material prices. ISA is the apex industry body of steel sector.

The prices of key raw material coking coal have registered a sharp increase of 55 per cent from USD 248 per tonne on December 1, 2022 to USD 345 a tonne on February 15, he said.

"Steel is exported to India by FTA (free trade agreement) countries at lower than their domestic prices, which is nothing but dumping. We have been repeatedly raising the issue of cheap imports with the ministry," Sahay said. Coking coal is a key raw material used in manufacturing of steel and India remains dependent on imports to meet over 85 per cent of its coking coal requirement.

Agreements with 26 companies signed under PLI scheme for specialty steel, says JyotiradityaScindia

Agreements have been signed with 26 compa- nies for 54 applications under the production linked incentive (PLI) for specialty steel, Union Steel Minister Jyotiraditya M Scindia said.

“We had a PLI for speciality steel and that includes steel products with zinc. I report we have awarded 54 applications submitted from close to 26 companies (which will lead to) an investment of…Rs 30,000 crore, a capacity addition of 26 million tonne and employment generation potential of about 25,000 people,” Scindia said.

The top five steel companies — Tata Steel, JSW Steel, JSPL, AMNS India and SAIL — dominate the list of qualifiers under the PLI scheme for specialty steel. Besides, there are a few others like Gallant Metalliks, Kalyani Steels, ShyamMetalics Flat Products and Sunflag Iron and Steel who have been selected under the PLI scheme. The Union Cabinet in July 2021 approved a Rs 6,322-crore PLI scheme to boost the production of speciality steel in India.Some of the categories of specialty steel included in the scheme are coated/plated steel products, high strength/ wear-resistant steel, specialty rails, alloy steel products, and steel wires, and electrical steel.

India's Jindal Stainless expects exports to hit five-year high

India's Jindal Stainless Ltd expects its exports to reach a five-year high in the next fiscal year, buoyed by buoyed by increased shipments to Russia and its plans to enter markets in South America and the Middle East. India's biggest stainless steel manufacturer expects its exports to jump to 25%-30% of overall sales in the fiscal year beginning April, from an estimated 12% in the ongoing fiscal year.

Russian steel demand is recovering after Western sanctions over Moscow's invasion of Ukraine caused buyers difficulty in securing supplies. Jindal Stainless expects Russia's share in its overall exports to rise to 25% from between 15% and 20% now, he said, with 90% of payments for Indian steel made in euros and some in the U.S. dollar. It had tried to persuade Russian steel buyers to trade in rupees. Apart from boosting its shipments to Russia, Europe and the United States, the company aims to enter markets in South America and the Middle East in the coming fiscal year.

Since Europe accounts for 40% to 50% of the company's total exports, the company said it has asked the Indian government to urge the European Union to review its import quotas and high tariffs that cur India's steel exports to Europe. Expressing concerns over Chinese dumping, or sales at an artificially low price. The Indian market is small, and there is severe dumping happening from China.

Cement

Cement demand to continue uptrend with 7-9% rise next fiscal: Crisil

The cement demand in the country is set for a third straight year of growth with a 7-9% jump to about 425 million tonne (MT) in fiscal 2024, while the outlook for operating margins remain clouded. The operating margins, which were under pressure due to elevated prices of key inputs such as coal and petcoke, will have a bearing on the credit risk profiles of players, according to a report by Crisil Market Intelligence & Analytics.

Cement demand grew 11% on year in the first 10 months of this fiscal, led by rapid execution in infrastructure projects and strong traction in the real estate and rural affordable housing segments. The momentum is likely to stay healthy in the remaining months of this fiscal as it is a seasonally strong period for construction activity across regions.

The next fiscal would again see the infrastructure and affordable rural housing segments propelling growth. The highest traction is expected from roads, where the total outlay for the ministry of road transport and highways has risen by 25% on a year-on-year basis and the National Highways Authority of India by 14%. The outlay for affordable rural housing under the Pradhan MantriAwasYojana – Gramin (PMAY-G) has also grown 12.5% in a pre-election year.

Govt to look into cement sector plea to cut GST

Finance minister NirmalaSitharaman told the industry that suggestions for lowering the 28% goods and services tax (GST) on cement will be looked into as a step toward easing construction costs.

The minister said this in response to a suggestion made at a post-budget interaction organised by the Confederation of Indian Industry (CII). The industry suggestion was that lowering GST on cement could help both government infrastructure projects as well as projects by the private sector and by individuals.

A fitment committee is a panel of officers that reviews rate revision proposals for the federal indirect tax body before the Council members take them up. The suggestion comes at a time the Central government has scaled up its capital expenditure from ₹7.28 trillion in FY23 to ₹10 trillion in FY24 in the Union budget presented on 1 February.