Domestic

Coal mining may be opened up to all sectors before next auction Coal mining may be opened up to firms other than those in steel and power sectors through a legal amendment. The coal ministry is considering amending the law, possibly through an ordinance, ahead of the first commercial mining auctions expected this month.

At present, companies other than steel, power and coal washing services firms are barred from bidding for coal blocks. The Centre proposes to open it up to all firms with offices registered in India. As per section 11A of the Mines and Minerals Development and Regulation (MMDR) Act, the Centre can auction coal and lignite mining licences to companies engaged in iron and steel, power and coal washing sectors. The official said the clause can impede the

endeavour to open up the sector through commercial mining. “The clause was earlier kept to ensure only serious players enter the sector, which was then restricted to only captive mining firms. We have to remove the condition mandating bidders to be already engaged in coal mining operations in India, to open up the sector in the true sense,” said the official The first tranche of coal auctions for commercial sale is likely to begin this financial year, with about 40 blocks with peak mining capacity in the range of one million tonnes to 50 million tonnes per annum, to cater to needs of all coal consumers. The coal ministry is expected to issue bidding rules for commercial mine auctions and hold stakeholder consultations this month.

The government hopes to stop coal imports by power plants by 2024

Govt earmarks Rs 937 cr for exploration of non-CIL blocks in FY'20

The Ministry of Coal aims to issue the Notice Inviting Tender (NIT) documents before the end of the current financial year to begin the process of commercial coal mining auctions. Centre decided to allow private companies to mine coal for commercial use in February 2018 and planned to begin auctioning coal mines with no end use restrictions by December 2019. But according to officials in the know, a change in law needs to be effected to allow private players sell coal in the open market. The earlier timeline to begin offering blocks for 100 per cent commercial coal mining was December 2019.

The base price for auctions was defined based on the Coal India notified price for the particular grade of coal that dominates the geology of the mine on offer. But industry watchers say that the Coal India notified price builds in the inefficiencies in production that the public sector undertaking is criticised for. After an inadequate response in bid rounds for end-use linked mining, the Centre decided to offer an added incentive and the winners have been allowed to sell up to 25 per cent of the total coal produced in the open market.

Cabinet okays Ordinance removing end-use restrictions in coal mine auctions

In a bid to attract investments and boost domestic coal production, the government on Wednesday approved promulgation of an ordinance to open up coal mining in the country to non-coal companies while removing restrictions on end-use of the fuel. The Union Cabinet headed by Prime Minister Narendra Modi also gave its nod for concluding auction of iron ore and other mineral mines before the expiry of their current mining lease on March 31, so as to avoid disruption in production. Briefing reporters, Coal and Mines Minister Prahlad Joshi said the Cabinet has approved promulgation of Mineral Laws (Amendment) Ordinance 2020 to amend Mines and Minerals (Development and Regulation) Act 1957 and Coal Mines (Special Provisions) Act 2015. The ordinance will amend the current provision in the law that allows only companies in coal mining to bid for coal mines.

Any company meeting the minimum criteria will now be allowed to bid for coal mines, the first auction of which under the liberalised rules will open within this month, Coal Secretary Anil Kumar Jain said. As many as 40 coal blocks will be put up for auction in the new round, he said.

Centre begins commercial coal auction process The government on Wednesday said it is initiating the process of coal auctions and the first round of sale of blocks under commercial mining is proposed to be launched in the ongoing fiscal. The announcement comes days after the government approved an ordinance to ease mining laws that will allow global players to enter the coal sector. A company or a joint venture company incorporated in India is eligible to participate in commercial coal auctions, the coal ministry said in a statement. “Moving ahead after the recent amendments in MMDR Act 1957 and the CMSP Act 2015, the Ministry of Coal is initiating the process for auction of coal mines for sale of coal. Expected to be held in multiple tranches, the first tranche is proposed to be launched in the current financial year,” it said. The bidders would be required to bid for a percentage share of revenue payable to the government. The floor price shall be four per cent of the revenue share, the statement added.

The government has released a list of 74 mines which it plans to auction under commercial mining. The ministry said it has urged interested stakeholders to view the discussion paper and the mine specific details and submit their views/suggestions, indicate their preferences for the mines to be considered for auction under

the first tranche. The ordinance approved by the Cabinet last week also enables auction of unexplored and partially explored coal blocks for mining through prospecting license-cum-mining lease.

Coal India production bounces back to growth, miner creates 18- day stock for power plants

Coal India Ltd (CIL), the world’s largest producer of the fossil fuel, has been able to create an 18- day stock at the country’s power plants at the beginning of the year, a significant improvement from that of a critical stock situation during September-October period. The period saw 47 thermal power plants with 6-day stock, 12 plants with 2-day stock and eight plants had a stock of barely one day. These power plants currently are flushed with 31.63 million tonne (MT) of coal, which is more than twice the stock which these units had during the same period a year ago. Although from CIL’s perspective, the stock situation during September-October was never critical since it supplied 90% of the assured contract quantity (ACQ) to some thermal power generators and 75% of the ACQ to most thermal generators, the power producers faced a shortage since it consumed more coal than the quantity meant to be supplied during a certain period calculated on a pro rata basis. CIL ended December with 58.02 MT of coal, a 7.2% growth, against 54.14 MT produced during the same month a year ago. This was the highest production for December since its inception and the month’s production witnessed 16% growth month on month, against 54.13 MT produced in November.

Two of CIL’s best producing firms, South Eastern Coalfields Ltd (SECL) and Mahanadi Coalfields Ltd (MCL), have come back strongly in December with production growth of 11.3% and 10.1%, respectively.

India looks to replace up to 135 mil mt of coal imports with domestic output: minister

India's domestic coal sector continues to undergo reform as the country looks to meet its growing energy demand with thermal coal, while simultaneously replacing imports with domestic production, union ministers said. Minister for coal and mines Pralhad Joshi discussed state-owned producer Coal India's ambitious production targets as well as the recent move to allow foreign direct investment (FDI) in the country's coal blocks -- a first for the country.

Joshi described the act as a "historic decision" which would "ramp up coal production and drastically reduce the coal imports over time." India's plan for its coal industry is to reduce the dependence in imports, Joshi said of the 235 million mt of coal, of which only 100 million mt was "non-substitutable." India is already the world's second-largest coal importer, behind only China, and is playing an increasingly pivotal role in the global seaborne market given solid import growth in recent years as Chinese import demand appears to have peaked.

Coal India’s 2019 shipments drop for first time in six years; key reasons

Coal India posted the first decline in annual shipments in at least six years as demand from power producers weakened and its production was hit by heavy rains earlier in 2019. Shipments fell 3.8% in 2019 from a year ago to 580.8 million tons. On a monthly basis, shipments rose 1.9% in December from last year to 53.63 million tons. Output climbed 7.2% to 58.02 million tons. Coal India is the biggest coal-producing company in the world. India’s power generation from coal is poised to shrink in 2019 for the first time in at least 14 years. The decline mirrors a global trend as nations embrace cleaner forms of energy in a bid to cut emissions and reduce air pollution. Further sapping India’s coal consumption is an industrial slowdown, which caused electricity use to slump for four consecutive months. Prolonged rains have also pushed up output from

Environment Ministry clears 10 coal mining projects The environment ministry has cleared 10 coal mining projects with a total capacity of 160 million tonnes a year and four washeries that can handle 31 million tonnes annually. These include Coal India s projects for seven mines and two washeries with an annual capacity of 141 million tonnes and 15 million tonnes respectively.

This is likely to help Coal India meet its targets of producing 750 million tonnes next fiscal requiring achievement of a 14% growth over current year’s 660 million tonnes target, and one billion tonnes target by 2024, a senior company executive said. The largest project cleared by the ministry was for Coal India subsidiary South Eastern Coalfields’ Kusmunda opencast coal mine in Chhattisgarh, which will touch 62.5 million tonnes at its peak capacity. Eastern Coalfields received clearance for the Rajmahal opencast coal mine project in Jharkhand with an annual production capacity of nearly 24 million tonnes. Other large projects of Coal India that received clearances from the environment ministry include subsidiary Mahanadi Coalfields’ Lakhanpur opencast project in Odisha’s Jharsuguda district. It has been allowed to produce 21 million tonnes of coal a year for 30 years to 2050.

Ease of mining coal needs to be accompanied by regulatory overhaul In an effort to boost domestic coal output and curb imports, the Cabinet has resolved to throw open coal mining auctions to all entities, as against permitting only entities already invested in coal. To facilitate wider participation, it has done away with so-called end-use restrictions, or the condition that coal be mined for specific uses, such as making power or steel.

Therefore, commercial mining is expected to receive a boost, with foreign majors who are not invested in coal in the country being able to mine coal for the purpose of sale to other parties. The backdrop to this push for investment in coal comes from the fact, as mentioned at Wednesday’s Cabinet meet, that coal imports in 2018-19 were 235 million tonnes (₹1.71 lakh crore), of which 130 million tonnes were substitutable in nature — in other words, of a calorific content readily available in India. At the same time, of the 204 coal block licences that were cancelled by the Supreme Court in 2014, only 29 have been auctioned, with the Minister for Coal attributing this disinterest to end-user restrictions. Meanwhile, public sector Coal India, which employs about three lakh people, has been given an output target of one billion tonnes by 2023-24, against its current level of about 650 million tonnes. However, to invite investor interest in coal, a regulator for the sector is essential, overseeing issues such as pricing, conduct of auctions and allocations to government entities. Mining practices need an overhaul, and hazardous mines should be shut down.

India is in talks with Mongolia and Russia for importing coking coal: Pradhan Union Minister Dharmendra Pradhan has said India is in talks with Mongolia and Russia for importing coking coal to reduce dependence on few countries for supplies of the commodity.

The minister said the Centre is looking to import coking coal, a raw material for making steel, at a reasonable price as the country has set a target to produce 300 million tonne of the metal by 2030-31. "India has been importing coal from Australia, which is good, but high-quality coking coal is also available in Mongolia. We are looking to bring that coal at a reasonable price. We are in talks with the Mongolian government," Pradhan said at a programme here on Saturday evening. In 2016, a delegation comprising senior officials of the Steel Ministry and state-run Steel Authority of India (SAIL) went to Mongolia's capital Ulaanbaatar for securing a deal with the east Asian country for importing of coking coal.

The initial plan was to bring the fuel through Chinese ports but it could not be materialised, sources said, adding that the Centre is trying to bring coal through Russia's Vostochny Port which is known for handling the commodity.

RAILWAYS

purpose vehicle of CIL’s Bilaspur-based subsidiary South Eastern Coalfields Ltd (64 per cent), the Chhattisgarh government (10 per cent) and IRCON (26 per cent).

STEEL

Key Jharkhand rail link lies almost idle as CIL fails to implement peripheral project For decades, Coal India Ltd (CIL) officials blamed the Railways for not laying a key rail link in Jharkhand that could help unlock the country’s richest coal reserves.

The Narendra Modi government gave it a push. The 44-km Tori-Shivpur electrified double-line was completed more than a year ago, at roughly Rs. 1,500 crore, to facilitate two mega mines — Magadh and Amrapali — which can together produce up to 100 million tonnes (mt) of coal. But the coal is not moving. The Modi government completed two more key links to ensure the optimal utilisation of domestic reserves. The 53-km single-track Sardega-Barpali-Jharsuguda rail link was rolled out in September 2018 for the evacuation of 20-25 mt of coal annually from the resource-rich Ib Valley area in Odisha. Per project estimates, the Rs. 1,000-crore raillink was expected to boost production from the Basundhara and Siarmal project areas of Mahanadi Coalfields Ltd (MCL), a Sambalpur-based subsidiary of CIL, by over three times, from 10 mt to 34 mt. As of December 2019, the line was underutilised with barely six rakes (approximately 8.5 mt) moving daily. This is largely due to a delay in implementing a mega project, with a peak capacity of75 mt a year, at Siarmal. The third critical rail project, from Kharsia to Dharamjaygarh in Chhattisgarh, which will unlock new areas of the Korba reserves, is half way through. The 44-km line between Kharsia and Korichapar was opened for commercial use last October. The rail link will help evacuate coal from the vast Mand Raigarh fields. The project is implemented by East Rail Corridor, a special

Steel Ministry looks at $ 70 bn investments in eastern region Union Minister Dharmendra Pradhan said the Steel Ministry is looking at an aggregate investment of $70 billion in the eastern region of the country through accelerated development of the sector.

Launching the ‘Purvodaya’ programme here, Pradhan said the underdeveloped districts in West Bengal, Chhattisgarh, northern Andhra Pradesh, Jharkhand and Odisha have to be taken forward for development of the steel sector. The eastern region with rich mineral resources has a great potential for development of the steel industry, he said, adding that Bihar needs to be included in the list. According to the National Steel Policy announced in 2017, the government is aiming at a total production capacity of 300 million tonne by 2030 and out of which, around 200 million tonne is envisaged from the five eastern states, he said. Addressing an event organised by CII, Pradhan, minister of petroleum, natural gas and steel, said the region has rich deposits of coal, iron ore and bauxite. “As much as 90 million tonne of steel is produced in the east, out of the total production volume of 140 million tonne in the country,” he said. SAIL chairman A K Chaudhary said the company has a strong presence in the east with five steel plants having production volume of 20 million tonnes while Indian Oil Corporation chairman Sanjiv Singh said the expansion of the gas and oil pipelines will boost demand for steel consumption.

Steel producers raise prices by Rs 1,000-1,500 a tonne as demand perks up

Responding to cost pressure and greater demand, domestic steel producers have raised prices by Rs 1,000-1,500 a tonne across products for January. “Iron ore miners have increased prices by Rs 600 per tonne and so this increases the cost of production by Rs 1,000 a tonne,” V R Sharma, managing director, Jindal Steel & Power (JSPL), said. With this, domestic steel players have raised prices for the fourth consecutive month in a market in which consumption is expected to pick up after the government announced a mega push for infrastructure projects. JSPL recorded 30 per cent sales growth in the December quarter at 1.66 million tonnes compared with the same period in the previous financial year. “We are most likely to cross our production guidance of 6.5 million tonnes for FY20 and produce around 7 million tonnes,” said Sharma. Demand for domestic iron ore has gone up after the increase in global ore prices, said industry officials.

Domestic iron ore prices are estimated at around $65 a tonne as against $85-90 a tonne for imported ore. Odisha-based miners have raised iron ore prices by around 10 per cent even as supply from the state hit an all-time high as steelmakers stocked the mineral in anticipation of a disruption when multiple mine leases expire at the end of this financial year.

Higher local demand may hurt steel exports in FY21

India’s steel exports are likely to decline in the next fiscal year starting April 1 on higher domestic demand from automotive and infrastructure companies, analysts said. Exports of finished steel during the April-December period of the ongoing fiscal year increased marginally to 6.5 million tonnes from 6.36 mt in the same period last year, according to provisional figures released by the Joint Plant Committee, an authoritative and independent source of information about the Indian iron and steel industry. In December, however, steel exports fell 11.5% to 767,000 tonnes, according to the report. Iron ore exports grew 132% in April-December to 26 mt, according to the JPC data. Analysts, however, said the numbers are likely to come down marginally this year.

Iron ore exports should fall in FY2021 because of an interim disruption due to license expiry and auctions of iron ore mines in Odisha, Nevatia said. “A tight domestic market should elevate domestic iron ore prices and inflate costs for steel companies,” he added.

CEMENT

Cement demand may rise by up to 6% on govt’s mega infra push As India seeks to build infrastructure that can undergird its ambitions of expanding into a $5-trillion economy by the middle of this decade, consumption of cement is set to increase by up to 6% immediately in the country which is the world’s second biggest market for the primary building material.

The Centre’s proposal to invest Rs 102 lakh crore to build ports, airports, motorways or irrigation canals is expected to drive demand for the commodity, of which India is also the world’s second-biggest producer after China but trails the global average in per capita consumption. Data over the past two decades show that cement volumes are roughly 1.2-1.3 times the rate of percentage increase in gross domestic product (GDP). Data over the past two decades show that cement volumes are roughly 1.2-1.3 times the rate of percentage increase in gross domestic product (GDP).

Last year witnessed flat growth, but better monsoons this year could help revive demand from the rural hinterland, which contributes significantly to the industry’s IHB (individual home builder) segment.