CCAI Newsletter July-20 by Sheikh Murad

July 2020 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. XLIX No. 04 Published on : 28.07.2020

JSPL DEVELOPS HEAVY CRANE RAILS OF UPTO 150 KG PER METER

RAIL TRACKS

PARALLEL FLANGE BEAMS & COLUMNS

ANGLES

PLATES

FABRICATED SECTIONS

TMT REBARS

CUT & BEND

HOT ROLLED COILS

Our wide range of products demonstrates our capability to consistently add value in line with evolving customer aspirations, and be a part of the nationâ&#x20AC;&#x2122;s socio-economic development. Our products are a result of pioneering initiatives that have been made possible by deploying futuristic technologies blended with a culture of consistent innovation.

2 | CCAI Monthly Newsletter December 2019 jsplcorporate

Jindal Steel & Power Ltd.

jsplcorporate

CCAI Monthly Newsletter December 2019

From the Editor’s Desk As India continues its all-out battle against the coronavirus , analysts note that the mining sector is expected to play a crucial role in the revi val of the economy, dented by the pandemic. Coa l, the country’s most importa nt and abundant mineral, will play a pivotal role in this much needed econom ic recovery.

In spite of the ongoing crisis, a number of policy reforms and initiatives taken up by the ministry and the uptick in national miner Coal India Lim ited’s production since the lifting of nationw ide lockdown is showing sign s of encouragement. Apart from throwing the cou ntry’s coal sector open to fore ign investment for commercial mining, the cen tre is mulling extensive min ing reforms to adjust with the changing market scen ario. Formation of the National Min eral Index (NMI), in line wit h the National Coal Index, would perhaps be one of the most historic reforms for this sector. The Centre is also expected to tak e up proposal of the Ministry of Mines to remove a Section in the Mining and Min erals Development Act that pro tects miners’ right to own leases indefinitely wit hout developing the mines.

Government’s decision to hold joint auctions of bauxite and coal will be a big booster for the aluminium sect or where 60% of the country’s dem and is fulfilled from imports at present. A competitive domestic aluminiu m sector is likely to save annual forex outgo and encourage investors to tap in the growing aluminium demand. Though high pit-stock and less offtake is still impacting the production in a number of major CIL mines, with concentrated efforts, a growth of 16.7 per cent was registered in overbu rden (OB) removal during July as compared to the same period last year. Accord ing to CIL officials, supply of imp roved quality coal over committed grades and supply beyond annual contrac ted quantity (ACQ) have resulted in the large fina ncial gain for the company in the last financial year. As a silver lining to the Power sector, CIL has notified tha t the power plants which had signed sale agreements with discoms but wer e una ble to get enough coal from long-term contract auctions, can now use the fuel meant for other plants of the same gro up. Meanwhile, country’s rating agency ICRA has stated that the Cement demand in India is likely to go dow n by up to 25 percent this fiscal amid the lack of demand during lockdow n and subsequent specific rest rictions disrupting construction activities. However, India’s steel sector has star ted showing signs of improvement as the crude steel production in Jun e stood at 6.8 million tonne (MT), which is 17.7 percent higher over May, 202 0. Production of finished stee l in June stood at 5.9 MT, up by 15.6 percent com pared to 5.1 MT in May 202 0.

4 | CCAI Monthly Newsletter July 2020

Content Vol. XLIX No. 04 July 2020

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

Consumers' Page

Power

Domestic

Global

Editor : Subhasri Nandi Annual Subscription Rs. 400/(including postage) MO/DD to be made in favour of “Coal Consumers’ Association of India” CCAI do not necessarily share or support the views expressed in this Publication.

27 Overall Domestic Coal Scenario 28 Monthly Summary Of

Imported Coal &Petcoke

30 Energy Generation Report 31

Production And Offtake Performance Of Cil And Subsidiary Companies

CCAI Monthly Newsletter July 2020

CONSUMERSâ&#x20AC;&#x2122; PAGE

Issues commonly faced by both Power and Non-power sectors: 1. Issue of grade slippage at the CIL Subsidiaries: In spite of continuous monitoring and several measures taken up by MoC and CIL including reforms and policy changes to eradicate the issues with coal quality, instances of grade slippage still crop up in almost all the Subsidiaries at times. Certain suggestions have been made by the coal consumers to tackle this persisting problem:

A) Calculation of GCV on As Received Basis (ARB): Gross Calorific Value (GCV) of coal is calculated on equilibrated basis by CIL, which does not consider the presence of moistures other than inherent moisture. This causes a loss on account of GCV of coal for the consumers.

06 | CCAI Monthly Newsletter July 2020

It has been requested that Calculation of GCV on As Received Basis (ARB) may be introduced as per international coal trading practice.

B) Periodical regradation of coal mines: It is also requested to consider periodical re-gradation of coal mines on half yearly basis by the Coal Controllerâ&#x20AC;&#x2122;s Organisation in those areas where the issue of wide difference between declared grades and third party results are occurring on a continuous basis. C) Round the clock surveillance of Referee coal samples: Analysis results of

Referee Samples are the final determining factor in the entire 3rd Party Sampling & Analysis procedure in case of disputes. Therefore, it is suggested that there should be one central storage room for keeping referee samples of all areas under one Coal Company and the room has to be kept under 24*7 Hrs strict security with CCTV surveillance.

D) Variation between different parts of same sample should be within stipulated precision of BIS: As per BIS standard, precision of repeatability of analysis of same samples in 2 different labs should be within 65 kcal/ kg. So when a 3rd party agency is collecting and preparing lab samples for dividing into four different parts, if the variation between those four samples are beyond stipulated limits, it should be considered as a grade slippage and a policy revision is required in the FSA.

Issues faced exclusively by the Power sector: 2. Expedite supply of crushed coal to Power sector from alternate sources of Kusmunda & Junadih of SECL: Power

sector consumers procuring coal from SECL have been struggling due to lack of supply from the Subsidiaryâ&#x20AC;&#x2122;s Kusmunda and Junadih sidings since May, 2020. Though SECL is offering (-) 250mm coal from its New Kusmunda-2 and Old Kusmunda sidings temporarily to supplement the pending supply, the quality of coal there is not appropriate for usage in power plants without crushing. This lack of supply of required quantity may compel the affected Power plants to regulate their generation. Submissions were made to CIL and SECL to expedite supply of pending rakes with crushed coal to the Power sector consumers so that their generation schedule do not get hampered.

3. Request to increase coal supply from SECL to Power Utilities generating for Punjab during the paddy season: Power

demand has gone up in Punjab due to the high requirement of electricity by the farmers in the ongoing paddy season. As a result, the requirement of coal at the number of TPPs in the region has increased simultaneously. On behalf of a number of Power Utilities functioning in Punjab, SECL is requested to expedite the supply of coal to the Utilities generating Power in that region.

Issues faced exclusively by the Non-power Sector: 4. Request for waiving-off penalties by MCL for short-lifting during lockdown period: NRS consumers procuring

coal from MCL have stated that they were allotted large number of pending rakes during the COVID period. However, they were not able to lift such quantity due to several reasons and were forced to cancel the rakes. The rakes cancelled by them in April, May & June, 2020 (lockdown period) have been considered while calculating the penalty for short lifting for FY 2019-20 as they were scheduled for previous FY and hefty penalty was imposed on these companies. It is requested to CIL and MCL to waive off the compensation bills raised against cancellation of these rakes. Considering this issue may also crop up in other CIL Subsidiaries, the consumers have suggested that CIL may declare the lockdown period as general force majeure across the Subsidiaries.

Issues related to Railways: 5. Oversupply of rakes to unwilling consumers amid COVID-19 crisis: In-

dents are often being sent by the Railways to the consumers at one go in order to clear the backlog as it has surplus rolling stock. Request has been made for not sending indents to unwilling consumers as they are going through both financial and space constraints. It is also requested to ensure that the rakes coming in the seniority list do not get lapsed..

6. Requirement of bi-directional weighment facility in the in-motion weighbridges: Weighment of rake is done

by Coal Cos. on behalf of Railway in their in-motion weighbridges situated at the sidings. Both Utilities and Industries often complain about receiving less coal due to tare difference during weighment of rakes in the in-motion weighbridges. The Railways have been requested to consider CCAI Monthly Newsletter July 2020

| 07

the actual tare weight in place of printed tare weight for calculating the quantity of coal loaded in the wagons. While taking tare weight at the time of placement of wagons, bi-directional weighment facility needs to be provided in the in-motion weighbridges either by modifying them or by replacing the old ones with latest RDSO approved weighbridges in a phased manner.

This customer friendly initiative of distance based graded concession of 20% on Normal Tariff Rate (NTR) for transportation of coke & coal for distances above 1400 kms will only be beneficial to a handful of long-distance consumers. Hence, request has been made to provide the same concession for transportation coke & coal for a distance of more than 500 kms.

7. Issue of difference between Permis- 9. Payment of refund against freight sible Carrying Capacity (PCC) / and through e-payment: The consumers have to wait till the annual accounts reconciliation of Stencil Capacity (CC) of wagon: In case of under-loading of rakes , total amount do not get refunded to the consumers, because as per FSA provision Coal Companies pay under loading charges limited to the difference of CC / stencil capacity and actual weight of coal loaded in the wagon. But Railways charge freight as per Permissible Carrying Capacity (PCC). In most cases PCC is more than CC.

Requests have been made to bring in change in FSA provision of refund for under-loading based on Permissible Carrying Capacity instead of stencil capacity / CC.

Railways for receiving any payments arising out of diversion / refund /credit of the balance etc which leads to financial loss for them. Request has been made for considering immediate refund against freight through e-payment

10. High under-loading of rakes for imported coal transportation: Imported

coal cannot be loaded up to the full chargeable capacity of a wagon as it is low in density due to considerably lower ash content compared to domestic coal. This leads to huge under-loading charges in transportation of imported coal.

8. Revision of distance based concession for transporting coke & coal: At the The Railway authority is requested to undertake advent of pandemic situation, concession in rail freight rate for transportation of coal had been urged upon. Distance based concession has been allowed above 1400 kms.

08 | CCAI Monthly Newsletter July 2020

load ability test in case of imported coal and ensure that maximum possible weight of coal could be loaded based on the average density of imported coal. .

CCAI Monthly CCAI Monthly Newsletter Newsletter November July 2020 2019

| 09

POWER India-US announce new research areas on transformational power generation India and the US have announced new areas of research on transformational power generation based on supercritical CO2 (sCO2) power cycles and advanced coal technologies, including carbon capture, utilisation, and storage (CCUS), the Ministry of Science and Technology said. This emerged at a virtual ministerial meeting of the US-India Strategic Energy Partnership (SEP) to review progress, highlight major accomplishments, and prioritise new areas for cooperation. The meeting was co-chaired by Union Minister of Petroleum and Natural Gas Dharmendra Pradhan and US Secretary of Energy Dan Brouillette. The ongoing collaboration on smart grids and energy storage is being implemented by a con-

10 | CCAI Monthly Newsletter July 2020

sortium comprising 30 Indian and US entities with an investment of $ 7.5 million each by India's DST and US Department of Energy (DoE), with matching amounts provided by the consortium, Secretary of Department of Science and Technology (DST) Professor Ashutosh Sharma said. This project addresses essential issues related to the adoption and deployment of smart grid concepts along with Distributed Energy Resources (DERs), including storage in the distribution network for its efficient and reliable operation.

Power demand to decline 8% in FY21, discoms' revenue to fall 13.1%: Report Power demand is expected to decline by around 8 per cent in current fiscal due to the steep fall in demand from commercial and industrial

segments on the back of Covid-19 pandemicinduced nationwide lockdown, Emkay Global Financial Services said in a report. According to the agency, the fall in demand is likely to result in a 13.1 per cent year-on-year (YoY) decline in revenue of discoms (distribution companies) to Rs 6.8 trillion in FY2021. The nationwide lockdown to contain the spread of the deadly coronavirus during the first three months of the fiscal has significantly impacted economic activity, leading to 17 per cent fall in Q1FY21 power demand, it said. "Our analysis reveals that power demand will decline 8 per cent year on year in FY21 on a steep fall in commerical and industrial (C&I) demand," the agency said. Further, the gap between average cost of supply and average revenue realised in FY21 is expected to increase to Rs 0.95 per unit from Rs 0.50 per unit in FY2020, translating to an underrecovery of Rs 1.12 trillion.

India's power companies face cash crunch after PFC rating cut to junk A downgrade to junk for a state-run lender to electricity projects risks worsening the cash crunch faced by the nation’s power firms. Power Finance Corp, India’s top dollar bond issuer in 2019, was cut to BB+ from BBB- by S&P Global Ratings last week, becoming the latest so-called fallen angel that’s dropped below investment grade. Yield premiums on its 3.95 per cent dollar notes due April 2030 surged the most in two months following the downgrade, according to prices compiled by Bloomberg. Electricity projects, already reeling under precarious finances, could see borrowing costs soar if Power Finance isn’t able to access the dollar bond market or raises funds overseas at higher rates due to the rating cut. This threatens to have a knock-on effect on domestic consumers, who may see an increase in power tariffs even

as India’s economy is forecast to contract this fiscal year for the first time in more than four decades due to the coronavirus pandemic and a massive lockdown to contain it. The risk of Asia-Pacific corporate bonds becoming fallen angels has increased due to the pandemic, and Indian firms are closely watched because several are government-related issuers whose ratings are tied to the country’s, according to Fitch Ratings. India’s sovereign debt score was cut to the lowest investment level with a negative outlook by Moody’s Investors Service last month.

India will be looking at a demand drop in electricity between 7-17 percent by 2025: TERI Demand for electricity in India will be lower by 7 to 17% due to covid-19 by 2025, a new report by TERI has found. All 10 of India's largest powerconsuming states will see a demand drop between 5 to 15%, it said. However, Union Power Minister RK Singh said that he wasn't worried about the impact of the lockdown, and that he expected demand to pick up. The report, titled ‘Bending the Curve: 2025 Forecasts for Electricity Demand by Sector and State in the Light of the COVID Epidemic’, also suggests policy-makers, developers, distribution companies, and investors need to be better prepared for the future, if the decline in demand growth persists. "In particular, the financial health of Discoms and the sustainability of the prevailing crosssubsidy may be even more pressing issues in a mid-term scenario of sustained muted growth in commercial and industrial demand," said the report.

Indian power regulator proposes uniform price discovery through pooling of bids CCAI Monthly Newsletter July 2020

| 11

Indian power regulator has proposed uniform price discovery through pooling of bids across power exchanges for optimal utilisation of transmission system besides stringent rules for electricity markets, including keeping a check on transaction fee of bourses. The industry, however, said stringent regulations and unnecessary interventions by regulatory commisson will impede deepening of electricity market in the country, which has just begun to evolve. It said regulator’s interventions pose questions on free-trade concept. The Central Electricity Regulatory Commission (CERC) issued elaborate draft power market regulations 2020, which provide for a new concept called ‘Market Coupling’, meaning a process of collecting bids from all the power exchanges and matching them to discover a uniform market clearing price. The job will be carried on by a ‘Market Coupling Operator’, an entity to be notified by the regulator.

CIL’s coal allocation to power sector under e-auction drops 29% in Q1 State-owned CIL’s coal allocation under special forward e-auction for the power sector declined 28.7 per cent to 4.74 million tonnes in the first quarter of the ongoing fiscal, official data showed. Coal India Ltd (CIL) had allocated 6.65 million tonnes (MT) of coal in April-June period of the last fiscal, according to coal ministry data. Coal allocation by the Maharatna firm under the scheme declined to 0.64 MT last month, from 0.88 MT in June 2019, the data showed. Coal distribution through forward e-auction is aimed at providing access to coal for such consumers who wish to have an assured supply over a long period, say one year, through e-auction mode so as to plan their operations. The purpose of the scheme is to provide equal opportunities to all intending coal consumers

12 | CCAI Monthly Newsletter July 2020

to purchase coal for own consumption through single window services and at a price determined by themselves through the process of online bidding. The state-owned miner produced 18.05 MT of coal during July 1 to July 16 against an output of 19.61 MT in the same period last year. Coal production in some of the major mines is still affected due to high coal stock and less offtake.Pithead stock of CIL as on July 16 was 72.88 MT as compared to 33.17 MT during the same period last year, it had said.

Only 1% coal power plant capacity has FGD, 72% yet to award bids Only 1% of the total coal-fired power plant capacity which is required to comply with the emission standards under the current phasing plan have installed the mandatory flue-gas desulphurisers (FGD), an equipment to control toxic sulphur dioxide emissions. Of the total 169.7GW coal capacity in the country, plants with only 27% capacity have awarded bids for FGD implementation. Around 72% capacity haven’t even awarded the bids. This data was presented by the Centre for Research on Energy and Clean Air (CREA) during a webinar on emission standards compliance for coal power plants organized by CREA and Climate Trends. CREA further pointed out that if bids for FGD installation were yet to be awarded for a majority of the coal capacity, recent claims by power plant operators that the China power equipment ban would delay their ability to comply with emission regulations, were redundant. “India is in a position to construct retrofits without depending upon China,” the organization stated. Experts present in the webinar also slammed the Association of Power Producers (APP) for demanding another extension for thermal power plants for implementation of emission standards.

Govt allows electricity derivatives, forward contracts Electricity will now be traded as other commodities with forward contracts and derivatives on exchanges as the government issued an order permitting this, a move experts say can transform power contracting in India. The power ministry issued the order on July 10 after consulting the Solicitor General on a decade-long jurisdictional spat between power regulator Central Electricity Regulatory Commission (CERC) and the Securities & Exchange Board of India (Sebi). The two regulators had earlier agreed to mutually settle the issue. The order is subject to a verdict by the Supreme Court that will hear the matter on August 28. Sources said delivery-based long-term contracts are likely to be traded on power exchanges under CERC’s jurisdiction, while the derivative contracts are likely to be traded on commodity exchanges under Sebi. Experts said power distribution companies (discoms) will have flexibility in long-term contracts. Currently, trading on power exchanges is restricted to11 days while long-term contracting by discoms is done through tendering. Once derivatives are introduced on commodity exchanges, the discoms will be able to lower their power procurement costs and hedge risks.

India to have 60% renewable energy by 2030: Power minister RK Singh India will have around 60 per cent of its installed electricity generation capacity from clean sources by 2030, Power and New & Renewable Energy Minister R K Singh said. The minister also exuded confidence that the renewable energy capacity would touch 510 GW by 2030, including 60 GW of hydro power. In September last year at the United Nations Climate Action Summit, Prime Minister Narendra

Modi had announced increasing the renewable energy target to 450 GW by 2030 from 175 GW by 2022. Participating in a webinar organised by The Energy Resource Institute (TERI), Singh said, “I would say that by 2030, 60 per cent of our capacity will be from renewables, and that is on a conservative scale.” About the progress on clean energy, he said that India’s clean energy capacity including under development projects and hydro electric power is around 190 GW, which is more than the targetted 175 GW by 2022.

India to set up solar power park in Sri Lanka India plans to build a solar power park in Sri Lanka as part of a strategy to project its presence in the Indian Ocean Region (IOR) amid Chinese attempts to lure nations into its ‘Belt and Road’ initiative, said two people aware of the development. Leveraging its solar expertize, India’s largest power generation utility NTPC Ltd plans to set up this project in the island nation under the aegis of International Solar Alliance (ISA). The move comes amid a growing Chinese presence in the Indian Ocean Region, which India considers its sphere of influence. Further flexing its muscle, the Indian Navy conducted joint exercises in the Bay of Bengal with the US Navy, which sailed in with an aircraft carrier battle group led by the USS Nimitz. “We are looking at setting up a solar park in Sri Lanka," said a senior Indian government official requesting anonymity. State-run Ceylon Electricity Board has an installed power generation capacity of around 35.8 gigawatts (GW). India has been working on improving the energy infrastructure in Sri Lanka.Petronet LNG Ltd had earlier announced its plans of setting up a liquefied natural gas terminal in Sri Lanka. CCAI Monthly Newsletter July 2020

| 13

India is also exploring laying an overhead electricity link with Sri Lanka as part of efforts to create a new-energy ecosystem in the South Asian neighbourhood. China is already one of the biggest investors in infrastructure projects in Sri Lanka.

Benchmark rates for solar rooftop projects decline 20% The government’s benchmark rates for solar rooftop projects have fallen about 20%, the fourth successive year of decline. Rates have fallen by 22% for projects between 1 kW and 10 kW, currently averaging at around Rs 42 per watt. For projects having a capacity over 10 kW, the rates have fallen by 20%. The ministry of new and renewable energy (MNRE) listed rates for projects having capacities for less than 1 kW, between 1 and 2 kW, and between 3 kW and 10 kW. Earlier, all these capacities came under the same umbrella. The two brackets above 10 kW (10kW to 100 kW and 100 kW to 500 kW) continued to be listed as well. Some regions of the country come under a ‘special’ category, and attract a higher cost, due to the lack of an operational network at present. These include the northeastern states, Sikkim, Uttarakhand, Himachal Pradesh, Jammu and Kashmir, Ladakh, Andaman and Nicobar Islands, and the Lakshadweep Islands. On an average, the costs for the special states were Rs 4 to 5 per watt more expensive than the other states. However, the rooftop solar programme (RTS), a big focus of the MNRE, has been lagging behind its target. Per industry sources, the current installed capacity of rooftop solar projects is less than 3 GW. The stated target for 2022 is 40 GW.

Gas-based power plants seek to bid under renewable bundling scheme 14 | CCAI Monthly Newsletter July 2020

According to industry sources, about Rs 50,000 crore of investments in gas-based power projects are in the doldrums due to the policy lacuna. Gas-based power plants seek to be included in an ongoing scheme which proposes to sell renewable energy and thermal power together in a bundle. In the existing format, the scheme does not allow gas-based plants to supply power even though sector experts feel that these power stations are better suited than their coal counterparts for balancing renewable energy. In a letter written to Union power minister RK Singh, the association of power producers (APP) said that about 25,000 megawatt (MW) of gas-based power plants are currently lying idle, adding that this fuel form causes less harm to the environment compared to thermal power generation. “Therefore, out of the ongoing 5,000 MW round-the-clock (RTC) renewable energy plus thermal tenders, a portion may be carved out for gas-based power to test the market,” APP wrote in the letter, reviewed by FE. State-run Solar Energy Corporation of India (SECI) has already invited bids from wind and solar plants to supply 5,000 MW power under the round-the-clock scheme, where 49% of the power supplied can come from coal-based power plants so that buyers are not put off by the intermittency of renewable-based generation can get the assurance of receiving uninterrupted electricity supply.

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

DOMESTIC Competitive pricing of coal to help cut imports, bring efficiency in sector: Official The participation of private players in the coal mining sector will bring efficiency and lead to competitive pricing of the dry fuel, Coal Joint Secretary M Nagaraju said recently. He also said that non-competitive pricing of coal has seen imports of dry fuel rising constantly over the last five to six years. "One reason why imports have been rising regularly in the last 5-6 years is not very competitive pricing in the coal industry in the country," Nagaraju said during the second stakeholders'' consultation on auction of coal mines for commercial mining, organised by Ficci. With the private sector, he said, there will be efficiency and lowering of prices of fossil fuel, which may lead to either completely stop coal imports or drastically reduce it. "There is no reason why we should be importing thermal coal into the country, spending huge amount of money," he said.

16 | CCAI Monthly Newsletter July 2020

He noted that India is a country which has fourth largest reserves of coal and still it is importing dry fuel. The country imported about 247 million tonnes of coal last fiscal, spending almost around 1.57 lakh crore of foreign exchange, the official said. Nagaraju said once the proposed coal blocks on auction are operationalised, almost 220 million tonnes of dry fuel will be produced every year. Launching the auction of mines for commercial mining, that is expected to garner Rs 33,000 crore of capital investment in the country over next 5-7 years, Modi had said India will win the coronavirus war and turn this crisis into an opportunity, and the pandemic will make India selfreliant.

Better quality, supply resulted in gains of over Rs 3,125 cr: Coal India State-owned CIL has said supply of improved quality coal over committed grades and supply beyond annual contracted quantity have resulted in the PSU gaining over Rs 3,125 crore. "Coal India Ltd's (CIL) concentrated efforts on

supply of improved quality coal over committed grades and supply beyond annual contracted quantity (ACQ) have paid off as the company on whole gained a tidy amount over these twin attributes," the maharatna firm said in a statement. An amount of around Rs 1,365 crore provisioned under coal quality variance in the earlier years has been withdrawn, in the last fiscal, which is the net gain to CIL on whole, it said. The PSU's coal supplies, above agreed ACQ to its customers, having fuel supply agreement (FSA), also netted the company a substantial amount of over Rs 1,760 crore under performance incentive during the previous two fiscals combined, it said. CIL arms Eastern Coalfields and Northern Coalfields bagging Rs 408 crore and Rs 358 crore, respectively were major contributors towards the performance incentive for 2019-20. Both the arms together accounted for around 88 per cent of the company's total incentive gain. Now, with Covid-19 induced slowdown when the demand for coal is low and the floor prices for coal are relatively lower some of the customers are moving away citing reasons that are not sound. Coal India might consider stopping further FSAs for a period with such customers, who renege on committed agreements and decide to terminate their contracts on frivolous grounds, it said.

Coal India launches special category of e-auction for coal importers State-owned coal miner Coal India Limited (CIL) has launched a special category of e-auction of coal for those companies and traders which import coal to meet their requirements. This is in line with the government’s declaration to bring down coal imports to zero.

tonne for a company which uses road transportation. For those using rail transportation, it is 50,000 tonne, which is equivalent to 12 rakes. One rake is equivalent to 59 rail wagons. The company said customers can bid for further incremental quantities of coal if they so require. “This move is a bid to realise the government’s thrust on reducing coal import dependency of the country under Aatma Nirbharta plan. It would also open a new avenue for our coal companies to step up their sales,” said a CIL executive. The e-auction would take place on the website of MSTC Limited and Mjunction Services Limited. CIL will soon announce the auction calendar for August 2020-March 2021 period.

Commercial mines auction: Government devising single window clearance mechanism The coal ministry is devising a single window clearance mechanism for faster online application processing for various approvals, including environmental clearance, required for operationalisation of coal blocks. On queries related to standard tender document for coal block auction for commercial mining, the coal ministry said, "A single window clearance is being devised for faster online processing of applications for clearances". However, it will be the responsibility of the bidders to obtain clearances and approvals as per applicable laws, it added. According to an official, the coal ministry is planning to take state government departments on board for single window clearance. Delays in getting approvals, including environment and forest clearance, by the successful bidder after winning coal mine often leads to deferment in production.

Any coal buyer, who imported coal during the current and any of the last two financial years, is eligible for participating in this new version of e-auction, CIL said.

In order to attract bidders in auction of commercial mines, the Centre recently announced the launch of a project monitoring unit to facilitate early operationalisation of coal blocks.

The minimum bid quantity is pegged at 25,000

The government move aims to promote ease of CCAI Monthly Newsletter July 2020

| 17

doing business in India as it will facilitate coal mines allocatees to obtain timely approvals for operationalising the mines. KPMG has been appointed as the consultant in project monitoring unit (PMU) through a transparent bidding process.

Coal Ministry withdraws Bander mine of Maharashtra from auction list of 41 coal blocks The coal ministry has withdrawn Bander mine in Chandrapur district of Maharashtra from the list of 41 coal blocks put up for auction for commercial mining as the mine lies in the eco sensitive zone of Tadoba Andhari Tiger Reserve. In the withdrawal notice dated July 21, the coal ministry said, "bidders may kindly note that Bander coal mine is now part of the Tadoba-Andhari Tiger Reserve as per the notification declaring the area as eco sensitive zone issued by the Ministry of Environment, Forests & Climate Change." Accordingly, the Ministry of Coal has decided to withdraw the Bander coal mine from the auction process under the Coal Mines (Special Provisions) Act, 2015, it said. "In view of the above,Bander coal mine is withdrawn from the 11th tranche of auction....," it said. The block having geological reserves of 126.105 million tonnes has tentative peak rated capacity of two million tonne per annum.

NGT asks CPCB to ensure states, UTs ban use of petcoke, furnace oil The National Green Tribunal (NGT) has asked the Central Pollution Control Board (CPCB) to ensure that states and Union Territories (UTs) ban the use of petcoke and furnace oil as fuel to prevent damage to the environment and public health. A bench of the NGT, headed by its chairperson AK Goel, has sought an action taken report (ATR) from the CPCB within four months and listed the matter for further hearing on January 15, 2021.

18 | CCAI Monthly Newsletter July 2020

The tribunal was hearing two petitions, filed by Sumit Kumar and Amarjeet Kumar, seeking regulations and to control the use of petcoke and furnace oil as fuel to prevent damage to the environment and public health. The tribunal has observed that the Supreme Court, in its order dated October 24, 2017, banned the use of petcoke and furnace oil in the national capital. On November 17, 2017, the top court had suggested other states and UTs take similar measures. The green tribunal had noted there are huge emissions of SO2 (sulphur dioxide) and other pollutants on account of the use of petcoke and furnace oil by the industries. It also noted that some states are continuing using it. The tribunal has directed the industries to switch over to alternatives and cleaner fuels.

Cabinet to consider changes in Mining Act The Union Cabinet is expected to soon take up the Ministry of Mines proposal to repeal a Section in the Mining and Minerals Development (Regulation) Act that protects miners’ right to own leases indefinitely without developing the mines. The amendment will cancel leases of about 500 mines which will then be put under auction to facilitate the government’s ‘Atmanirbhar Bharat’ mission, said sources. The mines, which are largely held by Merchant Miners, have been lying idle for the last few decades. Despite having huge reserves, Indian companies import huge quantity of raw material such as iron ore, bauxite, limestone and manganese ore. The industry suggested the government insert a sunset clause for mandatory development of a mine within a certain period of time. However, that did not find favour with the Government as getting necessary statutory approvals itself is a time-consuming process. Following this, sources said the Ministry of Mines decided to repeal the Sections 10A2(b) of MMDR Act. If auctioned, the mines will not only unlock one billion tonnes of mineral reserves but also add over ₹40 lakh crore to the exchequer and ₹5 lakh crore revenue to State governments. As

per the Mines Ministry Auction summary report, 97 mineral blocks have been auctioned since 2015, adding a revenue of ₹8 lakh crore to the State exchequer.

STEEL

India's crude steel production at 6.8 MT in June, says Steel Ministry The steel sector in India has started showing signs of improvement and in the month of June the country's crude steel production stood at 6.8 million tonne (MT), according to the Ministry of Steel. At, 6.8 MT, the production was 17.7 per cent higher over May, 2020, but on a year-on-year basis it was lower by 27.2 per cent over June 2019, the ministry said in an update. It noted that economic activities, after hitting the nadir in April 2020 due to spread of COVID-19 pandemic and nationwide lockdown, have started showing signs of improvement from May 2020. "This was reflected in the performance of eight core industries (with a weight of 40.27 per cent in IIP) which as against a decline of 37 per cent in April 2020 registered a decline of 23.4 per cent in the month of May 2020. Similarly the Index of steel production which fell sharply by 83.9 per cent in April 2020 registered a decline of 48.4 per cent in May 2020," the ministry said. The ministry further said the production of finished steel in June 2020 at 5.9 MT, was up 15.6 per cent compared to 5.1 MT in May 2020. However, on year-on-year basis, the output of finished steel in June 2020 was lower by 33.3 per cent.

India's large steel export volumes not sustainable in near term: Icra Though weak domestic demand has prompted Indian steel producers to look at exporting the commodity, rating agency Icra is of the view that large volumes of steel exports from India

are not sustainable in the near term. India’s finished steel exports grew 76 per cent during April-May 2020 and stood at 1.71 million tonne, as against the domestic demand, which contracted by 69 percent during the same period. In fact, export of semis from India has also risen significantly by 281 per cent to 1.29 million tonne during April-May 2020 with China being the largest beneficiary (78 per cent share). If both finished steel and semis are combined China became the largest export destination for India during Apr-May 2020 with a nearly 48 per cent share, said Icra. Lack of domestic demand following the countrywide lockdown amid the Covid-19 pandemic has prompted Indian steelmakers to look at the export markets, it said. Meanwhile, when compared with China’s average import purchase price of $972 per tonne, India’s export realisation to China remain much lower at $357 per tonne, implying low valueadded products such as semis being majorly exported by India. Despite low export realisations, domestic steel mills have remained profitable due to low iron ore prices, said Icra.

CEMENT Cement demand likely to de-grow by up to 25% in FY21, says Icra Cement demand is likely to de-grow by up to 25 per cent this fiscal on account of the coronavirus lockdown and subsequent specific restrictions disrupting construction activities, ratings agency Icra said. It further said cement manufactures may witness a compression in operating profitability by 150-200 basis points (bps) in the current financial year. While rural housing and infrastructure projects in remote areas would support cement consumption, urban-led demand is headed for a slowdown, it said. “ICRA expects cement demand to de-grow by CCAI Monthly Newsletter July 2020

| 19

22-25 per cent in FY2021 given the prolonged nationwide lockdown and subsequent state/ city specific restrictions disrupting construction activities,” the credit rating firm said in its quarterly update on the sector. However, it added that despite the expected decline in demand, cement prices are likely to remain stable or get only marginally corrected. As per estimates, housing, including the lowcost and affordable housing segment, accounts for around 65-70 per cent of the cement demand, followed by infrastructure at 20-23 per cent and rest by commercial and industrial capex. The residential real estate sector, which has already been under stress for a prolonged period due to weak affordability, subdued demand conditions, a high inventory overhang and more recently, a liquidity crisis, has been further impacted by the pandemic.

pared to Rs 32,403 crore in the year-ago quarter, a sharp drop of 31%. Freight receipts stood at Rs 1,13,481 crore in FY20, which was 64% of total revenue of the transporter during the year. The target for freight earnings for the current financial year is Rs 1,47,000 crore, apparently a tall order owing to the Covid-19 outbreak, but officials say the target is still achievable. Official sources also claim that last fiscal year’s tonnage level could be exceeded in the current year. On its part, the railways is taking a number of steps aimed at boosting freight movement and revenues with focus on transportation of essentials, especially food grains. Loading of food grains during the April-June quarter of this year shot up 83% year–on-year to 13.63 MT.

Paradip Port dislodge Deendayal Port as top state-owned cargo handler in Q1

RAILWAYS

Paradip Port caters to the vast industrial hinterland of Orissa, Chhattisgarh, Jharkhand, West Bengal and the entire northeast.

Tonnage at 95% of normal: Rail freight loading stages recovery

Central government-owned Paradip Port Trust has overtaken Deendayal Port Trust to wrest the top slot by cargo handled during the April to June quarter among the 12 government-run ports in the country.

After a steep fall in April, Indian Railways’ freight loading recovered smartly in May-June, reflecting the resilience of core industries like coal, cement, iron ore & fertilisers and the undisrupted food grain supply chain. Goods loading by the transporter fell steeply from 103.1 million tonne (MT) in March to just 65 MT in April, but with the easing of lockdown curbs, the tonnage improved to 82 MT in May, and further to 93.3 MT in June. With the June cargo being 92% of the goods transported via the rail network in the year-ago month (101.3 MT), it appears normalcy has nearly been restored. In the April-June quarter of FY21, railways carried 241.5 MT of cargo against 307.4 MT in the same quarter of FY20. The first quarter of FY21 saw freight earnings of Rs 22,266 crore as com-

20 | CCAI Monthly Newsletter July 2020

The port located in Orissa’s Jagatsinghpur district, close to the coal belt of Orissa, handled 25.734 million tonnes (mt) of cargo in the first quarter of FY21. The Q1 cargo volumes were 8.76 per cent lower than the 28.205 mt handled during the same period last year, according to the Shipping Ministry. Yet, it edged past Deendayal Port Trust (formerly Kandla Port Trust) which handled 25.049 mt of cargo during the first quarter, a drop of 19.51 per cent from the 31.120 mt it handled during the corresponding period last year. Paradip Port Trust and Deendayal Port Trust are two of the three ports in the country that handle over 100 mt a cargo a year. The third is the privately-run Mundra Port, which was the first to reach the three-figure mark in FY14, a milestone for ports.

GLOBAL Atlantic coking coal: Prices flat on supply limitations

half closed last week but results are not expected for a few weeks at least, participating mining and trading firms said.

US coking coal prices have held steady at the end of this week, supported by mining firms with limited inventories focusing on term sales and turning away buyers seeking discounts.

Colombian coking coal availability is rising again, with mining outfits starting to resume operations but none are willing to accept prices of below $100/t fob Colombia, a trading company said. Met coke offers from Colombia have risen to about $230/t fob Colombia on the back of improved demand from China, Brazil and Mexico, from $210-215/t fob at the start of the Covid-19 pandemic in Europe.

The production cuts in the second quarter and mills looking to bring forward and even increase term deliveries have meant that few mining companies appear have ready spot availability for August and September. The Argus daily low-volatile price is flat today at $104/t fob Hampton Roads, as are the high-volatile A price, at $109.50/t fob Hampton Roads, and high-volatile B price, at $103.75/t fob Hampton Roads. Brazilian tenders for deliveries in the second

22 | CCAI Monthly Newsletter July 2020

"Most US producers would not be making money at current levels unless they are in the lowest-cost quartile. We see some producers further curtailing production this year," one US mining company said. "We have turned away a mill seeking a discount as we are largely booked out for this quarter, with possibly capacity to offer low-volatile."

US invests $118m to develop carbon neutral coal products The US Government has announced investment totalling $118 million (£93m) to develop technologies to generate carbon-neutral electricity and hydrogen using coal. It will support Coal FIRST (Flexible, Innovative, Resilient, Small, Transformative) power plants that will convert coal, biomass and waste plastics to generate clean and affordable electricity and hydrogen. These plants will be capable of flexible operations to meet the needs of the grid, use innovative components that improve efficiency and reduce emission and will be small compared to the current conventional utility-scale coal-fired plants. Coal FIRST plants will incorporate carbon capture, utilisation and storage (CCUS) technologies and will be flexible to provide affordable electricity and hydrogen. Energy Secretary Dan Brouillette said: “Coal is one of our nation’s most abundant natural resources and has been providing well-paying jobs and powering the US for decades. “That’s why, as the global energy mix evolves, we’re investing in the next-generation of coal technologies that will lay the groundwork for clean, reliable 21st century coal-to-energy plants. The Trump Administration sees a bright future for the new, next stage of coal.”

Renewables output outpacing coal and nuclear in US The fastest growing energy sources during this period were wind and solar, according to analysis by renewables advocacy group the Sun Day Campaign. Wind generated 11.1% more electricity (144.8GWh) than it did in the same period one year earlier , and accounted for 9.4% of the United States' total generation between January and May — up 1.4 percentage points from the first five months of 2019.

According to Windpower Intelligence, the research and data division of Windpower Monthly, the US’ wind power fleet reached nearly 109.3GW by the end of May 2020 — an increase of 11.7% year on year. Meanwhile, solar generated 23.1% more electricity in the first five months of 2020 (50.6GWh) than it did in the same period one year earlier, and accounted for 3.3% of the US’ total electricity generation in this time — up half a percentage point from January-May 2019. Combined, renewable energy sources — also including hydropower, biomass and geothermal — generated 331.2GWh in the first five months of the year. This is more than both coal (258.9GWh, down 33.9% year on year) and nuclear (327.6GWh, down 1%).

South Africa reveals recovery plan for mining and energy sector Government has tabled a recovery plan to restore business confidence, stimulate investments, safeguard and create jobs in the mining and energy sector. “The Mining and Energy Recovery Plan intends to restore and restructure the industry within the context of a renewed, sustainable minerals and energy complex, pivotal in the reindustrialization of the country, while transforming the mining and energy industry,” said tourism minister MmamolokoKubayi-Ngubane. LPG is the most efficient form of energy for cooking, space heating as well as water heating, yet its contribution is below par. We will set a target to double consumption of LPG in South Africa over the next five years. “This will alleviate pressure on the Eskom power supply. To ensure orderly development, all role players in the value chain will have to be registered with the department,” the minister said. The energy sector will work with the Department of Trade, Industry and Competition to localise the manufacturing of gas cylinders and appliances. CCAI Monthly Newsletter July 2020

| 23

With regard to the mining sector, KubayiNgubane said mining sector’s economic recovery plan will focus on the implementation of the Small Scale Mining (SSM) Framework; forming partnerships with aligned departments and entities to leverage on their resources and experiences for maximum impact.

Demerger of mines is “quickest route” for Anglo American to exit South African thermal coal ANGLO American has given itself two to three years to dispense with its South African thermal coal export mines. This is in line with a response to questions at a virtual annual general meeting this year in which the group also disclosed that the divestment would be partial; that is, through a demerger with the new company floated on the JSE. In reality, however, the intention is to get on which the job in a much shorter time-frame than three years. “Once you’ve made the decision, you’re better off getting on with it and the demerger route was the quickest route from our point of view,” said Mark Cutifani, CEO of Anglo American in an interview in June 19. According to Cutifani, one benefit of the demerger is that it cuts down on red tape compared to a trade sale. “You’re handing back a share, so shareholders can make their own decisions about what they want to do with that share. It’s got less government issues, and the government is pleased to see a local listing.” Cutifani is perhaps mindful of the route taken by South32, the Australian headquartered company which announced the sale of its South African coal assets in 2018, but has yet to complete the transaction. (It’ll be done by way of trade sale to Seriti Resources). Or the 12 months taken to sell his firm’s domestic assets, which was also to Seriti.

BHP sees limited met coal output rebound in 2020-21 on weak market outlook 24 | CCAI Monthly Newsletter July 2020

Miner BHP sees potential for a slight recovery in met coal output amid weaker demand in global economies hit by the COVID-19 pandemic, even as China's steel output grows on the back of a fast recovery. Receive daily email alerts, subscriber notes & personalize your experience. BHP expects to produce up to 44 million mt of me coal in the 2020-21 financial year, after production fell 3% to 41 million mt in the year earlier period through June 30, 2020, the company said in an operations report released July 21. BHP expects met coal production over July 2020-June 2021 to be between 40 million and 44 million mt (71 million-77 million mt on a 100% operating basis). BHP operates and markets coal for several Queensland met coal mines, which it owns in separate joint ventures with Mitsubishi Corp. and Mitsui & Co. A slowdown in major importing regions of Europe, India and Northeast Asia have been a major influence on the met coal market as shipments fell, BHP said.

Grid emissions hit record low, as both coal output and prices plunge Australia’s main electricity grid achieved a remarkable trifecta in the last three months: The level of greenhouse gas emissions fell to a record low in the June quarter, even as the level of both coal production and wholesale market prices plunged at the same time. Australians are often taught that coal is essential to the country’s prosperity, and the only source of cheap energy, and that cutting emissions doesn’t really achieve much. And besides, wind and solar are unreliable and don’t work. It’s nonsense of course, on all four fronts. And gradually, despite policy inertia and downright interference from the federal government, the energy transition marches on, and the Quarterly Energy Dynamics Report issued by the Australian Energy Market Operator has emerged as a

key reference point for the state and pace of the energy transition in Australia. There are several major – and many minor – takeaways from the latest report, issued on Wednesday. Top of the pile is the fall in emissions from the National Electricity Market (the grid encompassing NSW, Queensland, Victoria, Tasmania, the ACT and South Australia.

EU coal imports inch up from May's low European coal imports inched up from April's three-decade low, but were still sharply down on the year in May. Net imports by EU 27 members fell by 3mn t on the year to 3.3mn t in May according to Eurostat data. This was up from net imports of 2.6mn t in April. Net imports into the bloc, excluding the UK, were 20.9mn t lower on the year in JanuaryMay, at 18.6mn t. The UK imported around 1.2mn t, down from 2.6mn t. Receipts in May were down on the year for the 15th consecutive month and the trend is likely to persist in the second half of the year. Net imports into the bloc averaged 5.8mn t/month in June-December 2019, but recent low prices and a soft demand outlook driven by weak power consumption and fierce competition from gas will probably keep imports below that level in 2020. Month-ahead average clean dark spreads for 46pc-efficient plants dropped to as low as minus €6.47/MWh in April and have remained negative since then, despite a gradual recovery. Base-load margins are positive for September onwards and the first-quarter 2021 clean dark spread was €6.36/MWh, which may drive a modest increase in coal burn in the third quarter.

Ukraine Plans to Close Coal Mines in Stagesseen at 435 million Tonnes - energy ministry

IUkrainian Energy Acting Minister Ms OlhaBuslavets said that Energy Ministry plans to close mines in stages. She said 'We are finalizing the methodology for assessing coal enterprises. The closure process should be phased. The order of priority of cities and regions most in need of the support program is being determined. We have analysed the social and economic situation in the regions subject to transformation. Approaches are being developed to diversify the local economy to create new jobs." the acting minister said. She noted that work is underway to reduce the dependence of local communities in such regions on the coal industry. According to her, all this is happening within the framework of the development of the National Program for Fair Transformation of Coal Regions. She said "The Energy Ministry has been entrusted with the task of developing a program for reforming the coal industry. A concept and a plan of measures for reforming the coal industry need to be approved. The concept is being developed and will be presented in the near future.” Also, according to her, there should be a plan for the transformation of coal regions until 2030.

Flood precautions may restrict Chinese coal output A coal mine in southwest China's Sichuan province has flooded despite renewed calls by the authorities for stricter flood precaution measures during the peak rainy season. This is likely to trigger stricter mine inspections that may potentially slow any coal output increases to meet summer restocking needs. A coal mine in Sichuan's Dazhucounty was flooded yesterday morning. Although local authorities clarified that the flooding had caused no casualties, it came just days after China's national coal mine safety administration issued reminders to coal producers to take flood precautions during the nation's most serious flooding CCAI Monthly Newsletter July 2020

| 25

season in over 30 years. This is expected to trigger stricter mine safety inspections, especially as heavy rains that have battered south China since early June are gradually moving north, where most of China's coal is produced.

Oil and gas trade booked a deficit of US$3.55 billion during the January-June period this year, while non-oil and gas trade booked a surplus of $9.05 billion in the same period, Statistics Indonesia (BPS) data show.

Floods in south China continue to disrupt economic activities in large swathes of the country, and authorities had to blow up a dam in the southern province of Anhui to relieve flood waters. Beijing warned that the water levels held by the Three Gorges dam along the Yangtze river have risen to near-maximum levels. The floods have claimed at least 140 lives and 38mn people are affected, with economic losses estimated at over $8bn.

Vietnam imports first U.S. coal shipment, state coal miner says

Indonesia to mix coal-based DME, LPG as cooking gas to reduce imports The government is looking to mix coal-based dimethyl ether (DME) and liquefied petroleum gas (LPG) as cooking gas in an effort to reduce Indonesia’s dependence on imported LPG. The country has long sought to replace the LPG with DME as a cooking fuel, but new official studies have revealed a key limitation with the plan. The studies found that, compared to LPG, burning DME was less pollutive but also much less hot, which meant the cooking time was up to 20 percent longer, Energy and Mineral Resources Ministry research and development head DadanKusdiana told reporters at a press briefing. Thus, mixing 80 percent LPG with 20 percent DME was the ideal ratio to maximize retail economics, he said, summarizing the studies that were carried out between 2017 and 2020. Switching to DME is among Indonesia’s many plans to cut consumption of LPG, a fuel the country has been heavily importing at the cost of widening its trade deficit, a key vulnerability for Southeast Asia’s largest economy.

26 | CCAI Monthly Newsletter July 2020

Vietnam has imported the first shipment of coal from the United States, state-owned coal miner Vinacomin said on Wednesday, days after the two nations marked the 25th anniversary since they established diplomatic relations. The 21,700 tonnes of coal bought from IMI Fuels LLC arrived at a port in northern Vietnam, Vinacomin, formally known as Vietnam National Coal-Mineral Industries Corp, said in a statement on its website. The Southeast Asian country, which has become more reliant on imported coals for power generation in recent years, said this week its imports of the fuel surged by more than 50% in the first half of 2020 from a year earlier to reach a record high. Most of the coal imported in the January-June period came from Indonesia and Australia. “The delivery of the first coal shipment will pave the way for more coal imports from the United States in the future,” Vinacomin said, saying the second batch was scheduled to arrive in September. Vietnam has been seeking to import more U.S. goods, including coal and liquefied natural gas (LNGO, to help narrow a trade gap after President Donald Trump threatened tariffs on its products amid the Chinese-U.S. trade war. Vietnam’s trade surplus with the United States, Vietnam’s largest export market, widened to $24.46 billion in the first half of this year from $20.58 billion a year earlier, according to Vietnam’s customs data.

OVERALL DOMESTIC COAL SCENARIO Coal Production (in MT) Company

June, 2020

June, 2019

% Growth

April-June, 2020

April-June, 2019

% Growth

CIL

39.2

44.95

-12.8%

121.01

136.94

-11.6%

SCCL

3.27

5.71

-42.7%

9.50

17.08

-44.4%

% Growth

April-June, 2020

April-June, 2019

% Growth

Overall Offtake (in MT) Company

June, 2020

June, 2019

CIL

41.61

48.98

-15.0%

120.62

153.49

-21.4%

SCCL

2.88

5.52

-47.8%

8.47

16.84

-49.7%

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

June, 2020

June, 2019

% Growth

April-June, 2020

April-June, 2019

% Growth

CIL

30.94

38.19

-19.0%

93.5

119.5

-21.7%

SCCL

2.27

4.60

-50.5%

7.28

13.99

-48.0%

Spot E-auction of Coal (in MT) Company

Coal Qty. Allocated June,2020

Coal Qty. Allocated June,2019

Increase over notified price

Coal Qty. Allocated AprilJune, 2020

Coal Qty. Allocated AprilJune, 2019

Increase over notified price

CIL

3.68

2.07

13%

6.89

7.42

15%

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

Coal Qty. Allocated June, 2020

Coal Qty. Allocated June, 2019

Increase over notified price

Coal Qty. Allocated AprilJune, 2020

Coal Qty. Allocated AprilJune, 2019

Increase over notified price

CIL

0.64

0.88

4.74

6.65

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

Coal Qty. Allocated June, 2020

Coal Qty. Allocated June, 2019

Increase over notified price

Coal Qty. Allocated AprilJune,2020

Coal Qty. Allocated AprilJune, 2019

Increase over notified price

CIL

0.56

1.00

6.66

2.20

Special Spot E-auction (in MT) Company

Coal Qty. Allocated June, 2020

Coal Qty. Allocated June, 2019

Increase over notified price

Coal Qty. Allocated AprilJune, 2020

Coal Qty. Allocated AprilJune, 2019

Increase over notified price

CIL

0.95

0.00

14%

1.48

0.00

11%

CCAI Monthly Newsletter July 2020

| 27

MONTHLY SUMMARY OF IMPORTED COAL & PETCOKE

Coal Price Index COAL

(kcal/kg)

Weekly Price - FOB

Weekly Change (USD)

South Africa

6000 NAR

USD 54.76

INR 4104

-2.60

South Africa

5500 NAR

USD 38.49

INR 2884

-1.90

Australia

5500 NAR

USD 38.09

INR 2854

-2.36

Indonesia

5000 GAR

USD 36.69

INR 2749

-1.13

Indonesia

4200 GAR

USD 24.37

INR 1826

-1.06

USA

6000 NAR

USD 49.70

INR 3725

-0.22

Indicative Pet Coke Price PET COKE

Sulphur

Price

Weekly Change (INR)

India-RIL(Ex-Ref.)

-5%

INR 6750

1053.00

Saudi Arabia (CIF)

+ 8.5%

INR 5606 ($75)

9.80

USA (CIF)

- 6.5%

INR 5785 ($77)

10.20

Exchange Rate

Change (Weekly)

INR 74.94

-0.92

Indicative Coking Coal Price Premium Low Vol Current Week

Weekly Change (USD)

HCC 64 MID Vol

Semi Soft

CFR China FOB Aus

Low Vol PCI

Mid Tier PCI

FOB Aus

CFR India

FOB N China

MET COKE 62% CSR

FOB

CFR China

FOB Aus

112.73

124.38

90.57

101.83

61.16

69.66

67.41

254.60

270.60

1.72

3.81

-0.18

1.26

1.50

0.06

0.31

-2.28

-1.52

South African Coal News: * South African coal suppliers are repositioning themselves to focus on domestic supply in the wake of the declining demand for seaborne thermal coal, owing to shifting global energy needs, which has been compounded by the Covid-19 outbreak. Following record prices in 2019, where coal traded at almost $100/t, the price of South African high calorific value coal dropped to a 14-year low in April this year because of the pandemic. Experts say some smaller miners have responded by reducing exports and increasing supplies to the local market.

28 | CCAI Monthly Newsletter July 2020

Australian Coal News:

* Australian thermal coal production cuts ahead. Higher costs and lower thermal coal prices are likely to see Australian thermal coal mining firms report a loss for January-June, with some expected to cut production guidance to try to conserve weakened balance sheets. Most Australian thermal coal mining firms saw profits slide in July-December last year with some, including BHP's New South Wales Energy Coal (NSWEC) division, slipping to a loss. Profitability has decreased further since January, with more firms expected to report loss-making operations.

* Australia will need billions of dollars of new transmission lines tied to wind and solar farms and back-up power sources to keep the lights on as coalfired plants shut over the next 20 years, the nation's energy market operator said.

Indonesian Coal News:

* Seaborne demand of Indonesian thermal coal remained lukewarm. During the rainy season the thermal coal producers are baffled with high production cost and low export activity. * The government is looking to mix coal-based dimethyl ether (DME) and liquefied petroleum gas (LPG) as cooking gas in an effort to reduce Indonesia’s dependence on imported LPG. The country has long sought to replace the LPG with DME as a cooking fuel, but new official studies have revealed a key limitation with the plan.

US Coal News:

* The US Government has announced investment totalling $118 million (£93m) to develop technologies to generate carbon-neutral electricity and hydrogen using coal. It will support Coal FIRST (Flexible, Innovative, Resilient, Small, and Transformative) power plants that will convert coal, biomass and waste plastics to generate clean and affordable electricity and hydrogen. These plants will be capable of flexible operations to meet the needs of the grid, use innovative components that improve efficiency and reduce emission and will be small compared to the current conventional utility-scale coal-fired plants. * US coal rail rates came under pressure from low coking coal prices in the second quarter and weaker coal demand in regional and export markets, according to rail operators and suppliers. According to industry sources, export coal transportation pricing has fallen compared with early in the first quarter and 2019 for hauling met coal from Appalachian mines to export ports on the US East Coast.

spread of COVID-19 in H1 that affected global coal demand.

Poland Coal News:

* Poland's biggest coal producer, state-run PGG, is likely to announce within days deep cuts in coal output and the closure of a number mines as part of a restructuring plan that is expected to prompt protests by miners, industry sources said. Poland generates almost 80 percent of electricity from coal and is the only member of the European Union that has not pledged to become carbon neutral by 2050.

Pet Coke News: * Petroleum Coke trading activities in India were bleak in monsoon season as the cement production has reduced. Spot market in the US has also remained weak in the 2nd week of July.

Shipping Update: * State-owned port operator PT Pelabuhan Indonesia (Pelindo) III has recorded a decline in ship traffic in this year’s first half as the COVID-19 pandemic disrupts global trade and decimates the sea freight and logistics industry. Pelindo III president director Saefudin Noer said that the company’s ports had seen an 8 percent year-on-year (yoy) decline in overall ship traffic and 10 percent annual slump in freight ship traffic in the first half of 2020. * Storms along the New South Wales (NSW) coast in east Australia have disrupted coal shipments from the port of Newcastle and Port Kembla at Wollongong, leading to longer vessel queues. Heavy rain, strong winds and powerful surf conditions has forced vessels waiting to access Newcastle and Port Kembla to leave their anchorage for the second time in two weeks. Access to the port of Newcastle has been restricted since 24 July, with storms expected to continue tomorrow before returning to milder conditions on 29 July. The closure follows similar restrictions over 13-18 July because of bad weather.

Russian Coal News:

* Russia, the world’s third-largest coal exporter, posted a notable 6.3% on-year decline in total coal exports over this year’s January-June period to 88 million tonnes, according to recent data from the Russian Federation’s Ministry of Energy (MoE). Analysts ascribed the lower coal exports to the CCAI Monthly Newsletter July 2020

| 29

30 | CCAI Monthly Newsletter July 2020

45,699.22

HYDRO

71.05

Source CEA

64.52

75.79

49.52

NUCLEAR

ACTUAL*

JUNE- 2020

1,330,000.00

7,230.00

140,357.00

43,880.00

1,138,533.00

PROGRAM

283,318.44

THERMAL

CCAI Newsletter July-20

Articles inside

Global

Power

Monthly Summary Of Imported Coal &Petcoke

Domestic

Production And Offtake Performance Of Cil And Subsidiary Companies

Consumers' Page