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Domestic
Coal India planning to tap nonpower sectors for incremental coal
Mining major Coal India Ltd is keen to tap nonpower consumers to feed its incremental production post the monsoon period, a senior company official has said. The miner is looking to ramp up production to meet its targets for the current fiscal at a time when the economic slowdown is impacting demand for the dry fuel by power plants. Coal despatch to the power sector in the first nine months of the current fiscal was down by 8.1 per cent at 334.27 million tonnes as against the figure in the corresponding period a year ago.
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In December 2019 alone, the decline was close to 2 per cent, officials said. Coal alloted for spot e-auction, however, was 5.07 million tonnes in December, nearly a 50- per cent jump over the same month a year ago. The miner is banking on sectors like cement and sponge iron for incremental coal. Coal India had set a production target of 660 million tonnes for 2019-20, but company officials said the figure is likely to be in the range of 625-635 million tonnes.
Coal India Exploration arm ties up with IIT-KGP for coal analysis
Central Mine Planning & Design Institute Limited (CMPDIL) has roped in Indian Institute of Technology, Kharagpur (IIT-KGP) for carrying out analysis of coal samples from different exploration camps. On Saturday, CMPDIL & IIT-KGP signed a mem
orandum of understanding for a period of two years wherein CMPDI will entrust IIT-KGP with 3000 m of coal-cores annually to carry out different analytical tests to determine the quality of coal samples for incorporating in geological reports. Additionally, the center will pay CMPDIL Rs 1,240 crore between 2019 and 2021 for expediting exploration on blocks that would be auctioned to commercial coal miners.
This year CMPDIL Is expected to add 16 billion tonnes of proven reserves to the national resource base this year by March 2020. Proven resources of coal in India have increased from 21 billion tonne in 1976 to 156 billion tonnes in 2019 which is mainly due the efforts of CMPDI. Six billion tonnes of coal were added to the proven category through preparation of 12 geological reports till December, 2019 and it is estimated that another 10 billion tonnes of coal will be added to this category covering an area of about 350 square kilometers during 2019-20.
Foreign companies likely to skip commercial coal block auctions Commercial coal block auctions are likely to receive a lukewarm response from foreign players as big companies are losing interest in a sector which has been widely seen as polluting and avoided by top banks and financial investors, experts said.
The Centre is in the process of inviting global players for commercial mining, following 100% foreign direct investment in the sector. Mining major Rio Tinto sold off its last coal assets in Queensland, Australia in 2018, while BHP recently said it would exit coal if presented with opportunities. The company operates mines in Australia and Colombia. Anglo American, a large British mining company, has decided to reduce coal production over the next two years. Australia’s largest miner Glencore said in a statement that it aims to limit coal output capacity broadly to current levels. Murray Energy Corporation (MEC), America’s largest underground coal mining company, has filed for bankruptcy.Partha Bhattacharyya, former chairman, Coal India, said large miners are facing pressure to quit coal and be more environmentfriendly. A senior Coal India executive said the company is finding it difficult to find bankers to assess foreign assets as they are shying away from the sector. “Early last year when Coal India invited global tenders, merchant bankers like Goldman Sachs and Merrill Lynch had already exited the dry fuel segment.”
Players like ANZ, BNP Paribas, JP Morgan joined this list later during the year,” the executive said
India plans to raise coal imports from US, move to deepen bilateral energy partnership In what could deepen Indo-US bilateral energy partnership, New Delhi is planning to increase import of coal from the US. India has a shortage of coking coal, used for steel production. “We are having business and policy-level interactions for long-term engagement with the US for sourcing coking coal,” steel and petroleum minister Dharmendra Pradhan said.
Given India’s plan to raise domestic steel output from the current level of 140 million tonne (MT) to 300 MT by 2030, the requirement of coking coal is seen to rise 190% to 175 MT. Pradhan asserted that though the country is gradually moving towards increasing the share of gas and renewables in the energy basket, it will continue to use coal due to its affordability. In the first nine months of this fiscal year, the country imported 52.5 MT (11.2% of total requirement) of thermal coal for producing electricity. Australia is the country’s largest coking coal supplier, with supplies of $7.4 billion — 72% of India’s coking coal import by value — of the metallurgical fuel in FY19. In FY19, India imported 4.1 MT of coking coal from the US, worth $850 million.
Open acreage coal mining will create level-playing field for investors
Opening the coal sector to private and foreign participation, a landmark reform initiated by the Narendra Modi government, marked the end of coal nationalisation and dubious captive mining era. In future, blocks will be awarded without any end-use restrictions. However, this may not trigger a rush for investments in the coal sector.
This is partly because, India was too late in opening the sector and, thereby, missed the era of coal rush that ended last decade. During that period, ground conditions for mining became more challenging in India, due to environmental and land acquisition-related concerns, impacting the potential return on investment. To add to the problems, the government is in the mood to auction the same blocks that were once created for captive use. This might help speed up the process.
But on the flip side, these blocks are too small to attract global miners which have access to modern technology. A better option would be to delimit the blocks and introduce open acreage system, as in the oil and gas sector, allowing bidders to decide on the size and kind of mines. For long-term gains, the government should insist on introducing modern practices, which are clearly lacking in the coal sector.
India aims to stop thermal coal imports from FY 2023-24 India will stop importing thermal coal from the financial year 2023-24 as part of a perspective plan for the coal sector, union minister of coal and mines Prahlad Joshi stated at a brainstorming session at Kevadia in Gujarat.
1 billion tonne coal production target by Coal India Limited (CIL) by the 2023-24 financial year. The ministry of coal will coordinate with Indian Railways and the ministry of shipping and enable CIL, captive and commercial miners evacuate more coal by 2030. Stressing on the need for diversification of the coal sector, the minister said that ideas have also been mooted that CIL could think of coming up with the state of the art pithead thermal power plants to transform it into an integrated energy company. It was also proposed that CIL could generate 5 GW of solar power by FY2023- 24 and could diversify into coal gasification with a target of 50 million tonnes by 2030, enabling a sustainable energy mix for the country. All these ideas will be deliberated, studied and examined for their feasibility in detail and based on that, they could be implemented.
Prospective coal block bidders seek bundled approvals
Large Indian coal-consuming companies planning to enter commercial coal mining have asked the government to bundle mandatory approvals before putting up blocks for auction. The companies made a presentation at a recent meeting where government sought input from various stakeholders on best practices to be adopted and auction rules to ensure the highest participation from domestic and foreign investors. The meeting was attended by large Indian coalconsuming companies and prospective investors in coal mining, like steel producers Tata Steel, JSW, Jindal Steel and Power, as well as thermal power producers Adani Power and GMR Power.
The stakeholders made a case for the government to bundle prior approvals along with coal blocks that would be put up for bidding, including environmental and forest clearances. With the government planning to hold auctions of the first tranche of coal blocks before the end of the current financial year on March 31, 2020, the stakeholders have also requested that gov
ernment offer large contiguous coal blocks rather than truncated small ones entailing a number of mining projects. The companies pointed out that development of fragmented coal blocks would not enable investors to achieve economies of scale and would require a larger gestation period in putting up a number of small mining projects. The government has earmarked 74 coal blocks to be put up for bidding and aimed to identify a total of 200 blocks to be offered to private miners over the coming years, the officials said.
Despite coal production being hampered at Dipka mines due to prolonged rains, Coal India Ltd will exceed last year’s production figures, a top coal ministry official said here on Tuesday. In 2018-19, Coal India produced 606.89 million tonnes (MT),while dispatch was at 608.14 MT. “Coal India’s production was nearly minus 8 per cent till October. So in the last few months the coal production has caught up. Now it has just minus 3.5 percent. And it will go on to be plus at the end of the year. It is going to be healthy percentage over last year’s (figures),” Secretary of Coal Ministry, Anil Kumar Jain told PTI on the sidelines of Energise 2020 a biennial conclave. CIL, which accounts for over 80 per cent of the domestic production, saw its output decline by six per cent to 241 MT in April-September on account of monsoon.
“In fact it would be the highest ever in the country,” Jain added. Replying to a query on the spinning of Coal India Ltd subsidiaries into five entities, Jain said though there were some discussions held earlier in that direction, there is no fresh development. “At the moment that is the decision (Coal India remains as it is),” he said. On the overall coal scenario in the country, the official said the production this year will exceed that of last year, though there was some impact due to rains, by the end of the current fiscal it will be covered up.
Cargo volume at 12 major ports up marginally in April-January The country’s 12 major ports recorded a marginal 1.14 per cent growth in cargo volumes at 585.72 million tonnes (MT) during the AprilJanuary period of the current fiscal, according to the Indian Ports Association (IPA). The ports had handled 579.10 MT of cargo during the corresponding period of the last fiscal. India has 12 major ports -- Deendayal (erstwhile Kandla), Mumbai, JNPT, Mormugao, New Mangalore, Cochin, Chennai, Kamarajar (earlier Ennore), V.O. Chidambaranar, Visakhapatnam, Paradip and Kolkata (including Haldia). While the handling of iron ore saw 39.02 per cent jump to 45.05 MT during the period, thermal coal shipments declined 14.98 per cent to 74.60 MT, the IPA data showed.
According to the figures, Deendayal port handled the highest traffic volume at 101.96 MT during April-January 2019-20, followed by Paradip at 93.38 MT, Visakhapatnam at 60.73 MT, JNPT at 56.64 MT, Kolkata (including Haldia) at 53 MT, and Mumbai at 51.34 MT. Chennai port handled 39.80 MT of cargo, while New Mangalore handled 30.91 MT. The volume of seaborne cargo is mostly like derived demand and is mainly shaped by the levels and changes in both global and domestic activity.
STEEL
Green steel: Tata Steel develops climate-friendly method of production Tata Steel has piloted a new process for production of steel, one it says “results in enormous efficiency gains” and reduces energy use and carbon dioxide emissions by a fifth of that in the conventional blast furnace route.
The company has tested this “completely new technology for producing steel” in five pilot plants in Europe; the next step is to bring a commercial scale plant to India. The process, called HIsarna, is a combination of Isarna and Hismelt, the Celtic words for iron and melting vessel, respectively. The company has spent $75 million in developing the technology at its steel plant in Ijmuiden, The Netherlands.
“The technology removes a number of pre-processing steps and requires less stringent conditions on the quality of the raw materials used,” says a Tata Steel note on the technology. A spokesperson of Tata Steel, said that the company is “currently in the process of upscaling the design towards commercial scale”. He said the company intends to have the first scaled-up plant in India, and subsequently build a commercial plant in Ijmuiden. The steel industry is among the largest emitters of carbon dioxide, the prime culprit in global warming. A recent report by The Energy and Resources Institute (TERI), one of India’s leading research bodies, noted that the Indian steel sector would likely triple its carbon footprint by 2020, given the need to produce more steel.
Steel Minister seeks Japanese investment in fast-growing Indian steel market Union Steel Minister Dharmendra Pradhan on Monday urged Japanese investors to invest in India's steel sector, saying the country offers a fast-growing market and steel consumption will more than double in the coming years. Pradhan also assured investors that India will provide necessary support to facilitate them in setting up businesses. He was speaking at a 'Workshop on Enabling Procedures for Increase of Steel Usage for the Growth of Economy' event organised by jointly ministry of steel, industry body CII and Ministry of Economy, Trade and Industry, Japan.
ic growth. ... we (India) aim to become a USD 5 trillion economy by 2024-25. India would spend about Rs 100 lakh crore on infrastructure. All this will result in increased use of steel," he said while addressing the participants Indian steel sector is a fast-growing steel market, he said adding that besides setting up 300 steel making capacity by 2030, the country is also aiming to increase its per capita steel consumption to 160 kg from about 70 kg at present.
By 2022, he said, government's ambitious housing scheme Pradhan Mantri Awas Yojana will be completed. Steel in huge quantity will be required to build the houses under the scheme.
Ind-Ra revises outlook on steel sector to ‘stable-to-negative’ Ratings agency India Ratings and Research (Ind-Ra) has revised its outlook on the steel sector to ‘stable-to-negative’ for the remainder of the ongoing fiscal due to sluggish steel demand growth expectations. Ind-Ra has revised downwards its FY2019-20 steel demand growth expectations to around 4 per cent from the previous forecast of 7 per cent. “Ind-Ra has revised its outlook on the steel sector to stable-to-negative from stable for the remainder of FY20 given sluggish steel demand growth expectations owing to mix of structural and cyclical concerns in end-user sectors, primarily auto and real estate construction. Hence, Ind-Ra has (also) revised downwards its FY20 steel demand growth expectations to around 4 per cent from the previous forecast of 7 per cent…,” it said in a statement. The outlook, Ind-Ra said, also factors in increased import risks especially from Free Trade Agreement (FTA) countries such as Japan and South Korea due to adverse impact of the slowing global growth and continuing trade frictions. Furthermore, raw material availability and price risks may escalate in the fourth quarter if the uncertainty over iron ore mine auctions prolongs. Ind-Ra also expects overall steel sales volumes and margins to weaken further in the second quarter of FY20 after industry witnessed margin correction in the fourth quarter of FY19 and the first quarter of FY20.
Steel prices have been continuously softening, while raw material cost have only seen partial declines, thereby squeezing the gross spreads for steel producers, it said. “However, Ind-Ra expects steel demand to recover in H2FY20, supported by pickup in government investments, fiscal stimulus measures, improvement in market sentiment and H2FY19’s lower base,” it said.
CEMENT
Govt's budgetary push for infra to boost cement industry: CMA Cement manufacturers association (CMA) on Monday said the government's budgetary push for infrastructure, logistics and warehousing will boost the industry. Finance minister Nirmala Sitharaman in her over two-hour long speech announced the plans to set up five new smart cities on PPP model and 100 more airports to be set up by 2024 to support UDAN scheme and allocated Rs 1.7 lakh crore to transportation. "The emphasis on highways and roads development is well placed. This captures the priorities of economic development and an aspirational India. We would hope that rural demand gets revived and it assists in job creation," CMA President Mahendra Singhi said. He further said the emphasis on infrastructure development, new 100 airports and focus on roads will go a long way to revive cement demand.
The association has also welcomed the strong push in the budget for doubling farmers' income by 2022, saying strong rural sector will boost the cement sector. According to CMA, the decision on abolishing the dividend distribution tax (DDT) will also benefit corporate India and will give a big boost to investment. The cement industry is committed towards playing a strong role in the government's aspirational agenda for transformative economic growth," CMA Vice President and CEO and MD of ACC Neeraj Akhoury said.
