June 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. 03 Published on : 28.06.2020
JINDAL STEEL & POWER LIMITED PARALLEL FLANGE BEAMS & COLUMNS | PLATES | RAILS ANGLES | CHANNELS | COILS | TMT REBARS CUT & BEND BARS | WELDED WIRE MESH | WIRE RODS CRANE RAILS | FABRICATED STRUCTURAL STEEL
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 nation’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
jsplcorporate
CCAI Monthly Newsletter December 2019
|3
From the Editor’s Desk Amid the adverse impacts of COVID-19 pandemic and the subsequent decline in demand-supply of fossil fuel across the globe, Ind ia’s coal sector is warming up to new challenges of augmenting nat ion al miner Coal India Limited’s production at one hand and drastically brin ging down country’s avoidable coa l imports by introducing commercial mining on the other. Coal & Mines Minister Pra lhad Joshi has recently dism issed the speculations regarding privat isation of CIL and assured that it will continue to be the country's leading coal producer, even afte r the sector is opened up for the private players. In order to increase its output, the maharatna coal company has identified a total of 15 greenfi eld projects to operate through Mine Dev eloper cum Operators and will engage MDOs with international rep ute, having state-of-the-ar t-technology through open global tenders, who shall excavate, extract and deliver coal to the coal companies of CIL. The coal behemoth currently holds 54 per cent of India’s coal reserve totalling upto 319 billion ton ne. It was also recently allocat ed 16 blocks by the Centre and given a tar get to produce one billion ton nes of coal by 2023. In order to make up for tep id demand in the Power sec tor, Coal India has also increased its supply to the NRS consumers sign ificantly in the second quarter of 2020 and is reaching out to Non-po wer sector including CPPs to replace imp orts by domestic coal. To fur ther liberalise country’s coal sector, Union Government has brought in coal linkage rationalisatio n for both Power and NRS consumers, which will help reduce the dist ance in transportation of coa l from the coal mines to the buyers. The introduction of the much anticipated commercial coal mining that offers 41 coal blocks in the first tranche, has also create d significant buzz among the Indian and global coal players. Centre is hop eful that this move will create 2.8 lak h jobs, to attract investment of Rs 33, 000 crore, while cutting down on the country’s coal imports rem ark ably. India imported 243 million tonnes of coal in 2019-20, about a third of its domestic output of 72 9 million tonnes.
Apart from throwing open the coal sector, India is also planning to set up its first Coal Exchange, an online platform where pri cing will be determined transparently thr ough demand and supply.
4 | CCAI Monthly Newsletter June 2020
Content Vol. XLIX No. 03 June 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
06
Consumers' Page
10
Power
16
Domestic
24
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.
30 Monthly Summary Of
Imported Coal &Petcoke
32 Overall Domestic Coal Scenario 33 Energy Generation Report 34
Production And Offtake Performance Of Cil And Subsidiary Companies
CCAI Monthly Newsletter June 2020
|5
CONSUMERS’ PAGE Present Coal Scenario: State-owned Coal India Limited has produced 39.20 million tonnes of coal in June-2020, slightly less than the figures of the previous month (May’20) as monsoon shower disrupted operations in various parts of the country. The June production figure registered a decline of 12.8% on a y-o-y basis compared to 44.95 million tonnes in June’2019. For the period of April’20-June’20, the national miner has produced a total of 121.01 million tonnes of coal, lower by 11.6% compared to 136.94 MT produced in the corresponding period of previous year. Total coal offtake of this month also dipped by 15% to 41.61 MT, compared to 48.98 MT in June-2019. Total offtake figures for the period of April’20- June’20 stands at 120.62 MT, which is more than 21% lower than the offtake quantity of 153.49 MT in the same period last year amid the dipping demand from the Power Sector.
Common Concerns faced by both Power and Non-power sectors: 1. Streamlining of all forms of refunds by CIL Subsidiaries: Considering the fi-
nancial crisis across all sectors amid the pandemic outbreak, Requests have been made by consumers from both sectors to consider im-
06 | CCAI Monthly Newsletter June 2020
mediate return of all kinds of refunds including security deposits, BGs, GST, CST, pending coal value etc. Consumers, who have surrendered linkages after the lock-in period, have requested their Bank Guarantees to be returned by the Coal Companies. Following the CIL directive, most of the Subsidiaries have started taking initiatives to streamline the refunds to the concerned companies.
2. Request for not imposing penalty for short lifting: Power demand has remained
low in the post lockdown period, enabling many power producers to function at low PLF. So representations were made to CIL for not penalising Power sector consumers for short lifting of allotted quantity under the FSA during this period of crisis. Necessary amendment to the FSA provisions is also requested so that coal companies not supplying coal through primary/ secondary sources may also attract penal charges.
Weighment related issues faced by both Power and Non-power sector: 3. Request for bi-directional weighment facility in the in-motion weighbridges: Many old weighbridges lack the fa-
cility of weighment in bi-directional mode. So instead of measuring tare weight of wagons before every transport, weight printed on the wagons is considered. However, the tare weight of wagons increases with time due to rusting, deposition of coal fines and other materials. Therefore, considering the printed tare weight led to consumers receiving less coal. Consumers across the board requested MoC and CIL to ensure that bi-directional weighment facility is provided in the in-motion weighbridges either by modifying them or by replacing the old weighbridges with latest RDSO approved newly designed weighbridges in a phased manner.
4. Request for processing refund for under loading of rakes based on Permissible carrying Capacity: Consum-
ers often have to pay large amount of punitive charges in case overloading of rakes. Though there is a provision of refund by coal companies in case of under loading of rakes, consumers do not get the full amount refunded as Coal Companies pay under loading charges limited to the difference of stencil capacity and actual weight of coal loaded in the wagon. But Railway charges freight as per Permissible Carrying Capacity/ chargeable weight, which is higher than stencil capacity.
Submission has been made to MoC and CIL requesting change in FSA provision of refund on account of under-loading in line with Railways circular based on PCC instead of stencil capacity / CC.
Issues faced exclusively by Power Sector consumers: 5. Appeal for reviewing FSAs for reassessment of ACQ for FY 2020-21: Due to persisting lockdowns in many parts of the country, power demand may continue to be low in the coming months. CIL is requested to kindly review the FSAs of the Power Utilities so that the consumers can reassess their present requirement and percolate the same appropriately for 2020-21. Reassessing of FSAs would also help the coal companies to cater to the demand of other Power plants / Industries running at higher PLF.
A committee has been formed in this regard comprising of CIL authorities, officials from the Subsidiaries and representatives of the major stakeholders from Power sector.
6. Issuance of credit notes against supply of ungraded coal: Though there is
a provision for issuing credit notes in case of ungraded coal in the FSAs for the Power sector consumers, but the refund is not being processed since long.
A new policy in this regard may be framed. Requisite respite is urgently required by the Power sector.
Issues faced by exclusively by Non-Power Sector consumers: 7. Request for not supplying coal beyond MSQ without buyers’ consent:
Pending rakes are often being sent to the consumers at one go in order to clear the backlog when coal is available in abundance. As a result, NRS consumers, who are already suffering from acute financial crunch due to lockdown CCAI Monthly Newsletter June 2020
| 07
and have abundant coal stock in the sidings, are forced to cancel the rakes. Request has been made to CIL by NRS consumers to make necessary policy amendments so that the Subsidiaries do not send coal of more than 20% above MSQ without buyers’ consent. CIL has taken the initiative and Railways has also consented to supply the coal rakes to the willing consumers and deferring the rakes of the unwilling consumers due to the pandemic situation.
sued for the NRS consumers in case of ungraded coal in line with the power sector.
11. Request for clubbing of FSAs for operational convenience: Many major
plants from the Non-regulated sector have large number of FSAs with a specific Subsidiary. This causes the plants to provide a substantial amount of working capital for payment of advances to the coal companies for existing FSAs.
8. Request for Continuing temporary CIL is requested to bring amendments in respecdispensation for change of mode of tive policy guidelines regarding FSA provisions supply from Road to Rail: The consumers for Subsidiary-wise clubbing of contracts so that having FSAs through linkage auction route, have requested for temporary dispensation from Road to Rail have requested the same to continue at least till September this year. As road transport is affected due to persisting lockdown in parts of the country. CIL had initially allowed change of mode form Road to Rail for orders booked under Special Forward E-auctions and FSAs through NRS Linkage Auction Route for three months (AprilJune2020), which has been extended for another three months (July-September 2020).
9. Request for keeping Notified price of coal for NRS consumers at par with Power sector: Notified price of coal to NRS
consumers is higher by 20% compared to Power sector consumers. This puts extra burden on Non-regulated sector which is already reeling under financial pressure. Request has been made to CIL for bringing the notified price of coal for NRS consumers at par with the price for Power sector consumers. The submission is still under consideration.
cash along with BG and LC are consolidated for operational convenience of these consumers.
12. Issues with coal pricing in WCL mines: The sudden price hike in 11 major WCL
mines in early November’19, has made it difficult for NRS consumers to source coal from the Subsidiary as they had already paid a high price during Tranche IV auctions. NRS consumers have requested CIL and WCL to kindly resolve this long-pending issue as they are unable to bear burden price hike especially during the economic downturn. *Consumers have requested for ‘Safe Exit Clause’ to be provided to consumers willing to exit from their existing FSAs in view of the revised prices without any punitive actions/ charges immediately as promised by WCL in previous meetings. WCL authorities have allowed provision of safeexit to the unwilling consumers who wish exit from their respective FSAs. * Request has been made by consumers who are solely dependent on WCL coal, to roll back the elevated coal price or at least consider reducing the hiked price to the extent possible.
10. Issuance of credit notes for ungraded coal: There is no provision for issuing *Consumers have requested WCL to offer coal credit notes in case of ungraded coal in the FSAs for NRS consumers. Therefore, they are unable to get long pending refunds through credit notes against supply of ungraded coal. Request has been made to formulate a suitable policy framework so that credit notes can be is-
08 | CCAI Monthly Newsletter June 2020
from a mixed basket of sources comprising of mines with both higher and lower priced coal as promised by the Subsidiary in the previous meetings, in order to reduce burden of coal price hike considerably. The two above submissions are being considered by CIL but nothing concrete has been received by the consumers so far.
CCAI CCAI Monthly Monthly Newsletter Newsletter November June 2020 2019
| 09
POWER India plans power sector overhaul to discourage Chinese imports
prior government permission will be required before importing any equipment from there.
More tariff barriers, subsidised financing for encouraging domestic equipment usage, rigorous testing of foreign equipment and prior permission requirements for imports from adversary countries, are some of the focus areas of India’ proposed power sector overhaul currently in the works.
As the first step, starting 1 August all imported solar cells, modules and inverters will attract a basic customs duty (BCD) as reported by Mint earlier. This will make imports from China expensive and will follow after the safeguard duty on solar cells and modules imported from China and Malaysia, currently in place, expires on 29 July. This may result in a 20 paise increase in solar tariffs for new contracts.
This comes in the backdrop of India contemplating an economic response against China and is part of a wider decoupling exercise embarked on by the Indian government since the 15 June border clashes with China.
Also, to ensure that the already bid out projects and the electricity tariffs quoted are not hit, the government plans to ‘grandfather’ such projects and is collating details along with the tentative equipment import date.
Addressing the industry captains, power and new and renewable energy minister Raj Kumar Singh on Tuesday said that some countries who are adversaries or potential adversaries will be identified as “prior reference countries", and a
Singh added that whatever is made in India will not be imported and said that an Indian is willing to pay more for power provided it is made in India
10 | CCAI Monthly Newsletter June 2020
Power Ministry joins 'Make in In- Power dept resumes work on dia' pitch, calls for curbs on im- projects as Government eases ports COVID lockdown The Ministry of Power, in a discussion with the electricity industry and key stakeholders of the sector, has asked for a renewed focus on domestic manufacturing and announced curbs on imports. R K Singh, the Union minister of state for power, new and renewable energy, announced that a basic customs duty (BCD) would be imposed on imports of solar cells and modules. The minister said the duty would take effect in August. A BCD of 20 per cent on solar imports was proposed in the Union Budget 2020-21. However, the ministry said it would remain zero. Solar cells and modules are exempt from any BCD, according to a 2005 notification of the department of revenue. “A clear trajectory of BCD would be declared so that there is no uncertainty about government policy,” said the public statement by the power ministry. It said the department would also issue an approved list of models and manufacturers in renewable energy effective from October 1. The minister also urged the industry not to import any equipment/materials/ goods in which there was sufficient domestic capacity.He further said for those goods and services where domestic capacity was not available. The minister also said prior approval from the ministry would be needed for importing power sector equipment. The public sector units have relied on BHEL for supplying boiler-turbine-generator (BTG) for their power generation units. However, thermal power units of leading private players such as Essar Power, Adani Power, Reliance Power, GMR Energy, and Sterlite Energy have Chinese companies as their BTG suppliers, according to the data by the Central Electricity Authority.
As the government has partially lifted the COVID19 lockdown, Power Development department has resumed work on several development projects. A senior official said that work on several projects at over 200 locations was halted in April owing to the lockdown. Chief Engineer, Projects JavaidYousuf Dar said the department has been able to resume over 70 percent of the work. He said most of these projects will be completed by October end. “The development work that our wing is looking after is mostly related to enhancing power distribution system across Kashmir,” said Dar. These development works include project under centrally sponsored schemes like RAPDRP, IPDS, PMDP and DDUGJY. Most of the projects under these schemes are related to augmentation and creation of new receiving stations, installation of transformers and laying down new cabling network to enhance power distribution infrastructure across the Valley, Dar said. He, however said around 45 locations were the work was halted fall under COVID19 red zones where the work was yet to be started. Another official said over 1,200 labourers have been hired to complete the work. He said most of the work force hired was local. Managing Director, Kashmir Power Distribution Corporation Limited (KPDCL), AijazAsad said finishing the ongoing projects on time would help improve power scenario in Kashmir.
Power demand slump narrows marginally to 9.76% in third week of June Intense heat wave during the third week of June has helped further narrowing of power demand slump to 9.76 per cent from 10.5 per cent in the CCAI Monthly Newsletter June 2020
| 11
previous week, showing commercial and industrial activities are yet to reach optimum levels. The slump in power demand in the first week of the June was recorded at 19.7 per cent. However, the decline so far is still higher than 8.8 per cent recorded in May. In the third week of June, the power demand has improved due to intensifying heat wave, and it hovered around 162 GW from June 15 onwards, and further shot up to 164.64 GW on June 19, as per the power ministry data. The peak power demand met stood at 163.30 gigawatts (GW) on June 11 and remained slightly lower at 158.02GW on June 12, 157.79 GW on 13th and 156.88 GW on 14th.
ties for creation of new CTU Limited,” said the letter by power ministry. Business Standard has reviewed the letter. This follows hiving off the grid management function from Power Grid and creation of a separate company — Power Systems Operation Corporation (POSOCO) in 2014. Union petroleum minister Dharmendra Pradhan said the government is planning to unbundle state-owned GAIL into two companies for gas transmission and marketing business.
Power Ministry asks PGCIL to set up central transmission utility
Central transmission utility hived off from Power Grid Corporation
The power ministry has asked state-owned Power Grid Corporation to set up a central transmission utility with separate accounting and board structure. PGCIL is engaged in power transmission business with the responsibility of planning, implementation, operation and maintenance of Inter-State Transmission System.
In a landmark decision, the Centre has decided to hive off the Central Transmission Utility (CTU) function of state-owned Power Grid Corporation of India (PGCIL).
There have been allegations that PGCIL is at advantage as developer of power transmission projects because it is a central transmission unit (CTU).
Pending since 2015, this move has been taken to avoid conflict of interest while awarding power transmission projects. As PGCIL is also a power transmission construction company, it participates in tenders for competitive bidding for projects, alongside private players. This conflict of interest in PGCIL as both planner and participant in transmission projects has faced repeated criticism from the industry.
"PGCIL shall immediately set up a CTU, a 100 per cent owned subsidiary of PGCIL with separate accounting and board structure, which would be responsible for carrying out statutory functions, as identified for CTU under the Electricity Act 2003,” the Ministry said in a letter.
The peak power demand of 164.64 GW this week is 9.76 per cent less than 182.45 (GW) recorded in June last year.
In a letter to the chairman and managing director of PGCIL, the ministry of power has directed it to make CTU a 100 per cent subsidiary with separate accounting, board structure and carry out its statutory functions.
The subsidiary would be separated from the Power Grid Corporation of India Ltd (PGCIL) into a new CTU Ltd, a wholly-owned Government of India company, within six months or till the completion of formalities. As per the letter, the modalities of setting up of the subsidiary would be similar to those adopted during the formation of POSOCO as subsidiary company.
“The aforesaid 100 per cent subsidiary company would be separated into a new CTU Limited, a wholly-owned government of India Company within six months or till completion of formali-
Power System Operation Corp (POSOCO) was also set up as an independent company for ensuring neutrality of the transmission system operations.
12 | CCAI Monthly Newsletter June 2020
Govt aims to complete privatisation of UT discoms by January 2021 Efforts would also be made to privatise a number of discoms in major states such as Uttar Pradesh, Gujarat, Haryana, Karnataka, Madhya Pradesh, Jharkhand and Assam To usher in efficiency, the government is planning to privatise the electricity distribution companies (discoms) in Union Territories (UTs) by January 2021, sources said. Efforts would also be made to privatise a number of discoms in major states such as Uttar Pradesh, Gujarat, Haryana, Karnataka, Madhya Pradesh, Jharkhand and Assam to improve the governance of these state-run entities. The Centre had announced in May that power departments and distribution utilities in Union Territories (UTs) will be privatised. Finance minister Nirmala Sitharaman had then said that the Centre hopes the privatisation of UT discoms will “provide a model for emulation by other utilities across the country”. Among all the discoms which supply power in the UTs, the largest is located in Jammu and Kashmir, which owed Rs 5,443 crore to power generators as on March-end. The aggregate technical and commercial losses — an indicator of power pilferage — of the recently formed UT stands at 48% against the national average of 19%.
The Centre’s discom liquidity package comes with many strings attached Players in India’s power sector, who were in financial hot waters even prior to Covid, have sunk deeper into the quagmire lately with commercial buyers reducing their offtake during the lockdown. With revenues of State distribution companies (discoms) hit hard, their already large overdues to generation companies have mounted. An India Ratings report suggests that
overdues from discoms to generation companies had vaulted from ₹55,300 crore in March last year to over ₹91,700 crore by March 2020. In the circumstances, the announcement of a ₹90,000 crore liquidity lifeline for discoms as a part of the Atmanirbhar Bharat package is welcome both for its intent and timing. This package doesn’t entail any direct outlays from the Centre but envisages Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) tapping market borrowings to raise the required ₹90,000 crore. The package, if implemented in full, can ease liquidity across the power value chain and prevent immediate defaults.
Green certificate sales down 55 pc to 3.33 lakh in May Sales of renewable energy certificates dropped over 55 per cent to 3.33 lakh units in May compared to 7.5 lakh in the same month a year ago, according to official data. Renewable energy certificate (REC) is a type of market-based instrument. One REC is created when one megawatt hour of electricity is generated from an eligible renewable energy source. According to official data, a total of 2.78 lakh RECs were traded on the Indian Energy Exchange (IEX) in May, compared to 5.5 lakh in the same month of 2019. Power Exchange of India (PXIL) recorded sales of 0.55 lakh RECs in May as against around 2 lakh earlier. IEX and PXIL are engaged in trading of RECs and electricity. REC trading is conducted on the last Wednesday of every month. The IEX data showed that both non-solar and solar RECs witnessed higher supply, with sell bids exceeding buy bids. There were buy bids for over 2.8 lakh RECs against sell bids for over 31 lakh RECs in May this year. Similarly, the supply was high at PXIL. There were buy bids for over 0.55 lakh RECs and sell bids for over 16 lakh units for the month under review. Overall supply for RECs was high as the CCAI Monthly Newsletter June 2020
| 13
total buy bids at both power exchanges was over 3.33 lakh units against sell bids of over 47 lakh units in May this year.
Amendments in power policies by states pose regulatory risks to renewable energy developers: ICRA Renewable energy developers that have significant third-party power-purchasing agreements are prone to regulatory risks, as States continue to amend their power policies which withdraw or reduce incentives, according to a report by ratings agency ICRA. Various states have taken such decisions to help their distribution companies, which often suffer from cash flow issues. Recently, the Maharashtra Electricity Regulatory Commission (MERC) decided to levy additional surcharge on group captive projects, which were exempted earlier. Further increases in open access charges are expected as States will look to mitigate some of the damage caused by the covid-19 to the discoms, said GirishkumarKadam, sector head for power and renewables and VP at ICRA. Another factor that will affect the developers is the increasingly competitive tariff pricing of solar and wind projects. "With the improved tariff competitiveness for wind and solar energy against the conventional power sources, the open access charges for renewable energy projects are likely to remain aligned as that for conventional power sources, going ahead," said Kadam.
Power markets prefer renewable energy amid falling demand: Moody's The clean energy transition might be accelerated due to the covid-19 pandemic that has shown that power markets prefer renewable energy amidst falling demand, a Moody's report suggests.
14 | CCAI Monthly Newsletter June 2020
"Coal generation has continued to decline, while renewables have shown more resilience across major markets in the US, Europe, China and India," stated the report. The power demand in India has fallen by 20% due to the lockdown, with most of the impact on coal generation, they added. Both corporate as well as household power demand are expected to be heavily affected by recessionary growth and weaker long-term growth expectations. The production of conventional sources of energy such as coal and oil has also dropped, said the agency. Renewable energy made up the bulk of recent capacity additions both in India and the world over, which continues to displace thermal generation. With a sharp decrease in power demand due to the lockdown, this trend is expected to continue, said Moody's. "COVID-19 could have a ratchet effect, limiting any rebound in coal generation, and accelerating the decline of coal in the US and Europe by a few years," said the ratings agency.
Power ministry may consider extension of ISTS charges waiver beyond 2022 Union minster R K Singh said the power ministry may consider extending beyond 2022 the waiver of Inter-state Transmission System (ISTS) charges for renewable energy projects. Last year in November, the ministry had extended the ISTS charges waiver to wind and solar energy projects by nine months till December 2022. Under the waiver, all these projects commissioned by December 2022 are eligible for availing exemption of ISTS charges and losses on transmission of electricity for 25 years. Initially, the waiver was for the projects commissioned till March 31, 2022. Power minister Singh said his ministry "may consider to extend the ISTS waiver for renewable energy projects by at least six months", according to a statement issued by Ficci after a CEOs interactive session with the minster. Industry bodies are
pressing for the extension of at least one year beyond December 2022 in the wake of the COVID-19 pandemic.
About 15,000 MW of wind-solar hybrid capacity to come up in 5 years: Crisil As the government continues to focus on increasing the share of renewable energy in the country, nearly 15,000 MW of wind-solar hybrid capacity is expected to come up over the next five years, Crisil said. Out of this 15,000 MW, works on nearly 10,000 MW are already either under construction or are being tendered and are expected to start feeding the grid by fiscal 2024. In the hybrid option, the system is designed using solar panels and small wind turbines generators for generating electricity. According to the ratings agency, since generation of solar energy tends to peak during the day and that of wind energy at night, the resulting intermittence in supply impacts grid resilience, making discoms reluctant to buy power from standalone wind and solar projects. "In the hybrid option, however, these two energy sources complement each other, which could help overcome the problems of variability of generation and grid security, and thereby discoms' reluctance," Crisil said. As of March 2020, India had 37,690 MW of standalone wind energy capacity and 35,000 MW of solar capacity.
Adani wins world's largest solar project order; to invest Rs 45,000 cr Billionaire Gautam Adani's renewable energy firm Adani Green Energy on Tuesday said it has won the world's largest solar order to build 8 gigawatts of photovoltaic (PV) power plant along with a domestic solar panel manufacturing unit at an investment of Rs 45,000 crore. Under the offering of domestic manufacturinglined solar projects from state-owned renewable energy agency SECI (formerly Solar Energy Corp of India), Adani Energy will set up a domestic solar panel manufacturing capacity of 2 GW (2,000 megawatts) as well as built 8 gigawatts (GW) of generation projects. The firm will get a fixed tariff of Rs 2.92 per kilowatt-hour (per unit) from the power plant over a contract period of 25 years. With this contract, Adani Green now has a portfolio of 15 GW of renewable power generating assets. It hopes to win tenders for another 10 GW of capacity this year to help it achieve the 25 GW target, said Adani, who heads the USD 15-billion Adani Group -- a sprawling conglomerate with interests in energy, agri-business, real estate and defence, among others. The first 2 GW of generation capacity will start by 2022, with the rest installed in 2-GW annual increments through 2025, Adani said. While the company will build the projects at various locations, the solar manufacturing facility will be ready by 2022.
CCAI Monthly Newsletter June 2020
| 15
DOMESTIC Commercial mining to free coal sector from decades of lockdown: PM Modi Prime Minister NarendraModi launched the country’s first auction for commercial coal mining and sale in the open market. This is the first major auction by the government this year in midst of a looming slowdown. Modi said commercial mining would unlock the country’s coal sector from the “lockdown of decades”. “The country’s coal sector was entangled in a web of captive and non-captive. It was excluded from competition, (and) there was a big problem of transparency. Major scams had taken place in coal action earlier, but the system has been made transparent now,” he said. Speaking at the event, Union Minister for Coal Prahlad Joshi said state-owned Coal India (CIL) would continue to be the dominant player in the sector.
16 | CCAI Monthly Newsletter June 2020
“We have given CIL a target of 1 billion tonnes by 2023-24, for which they will spend nearly Rs 50,000 crore in the next three to four years on land acquisition, mine development, procuring machinery, and evacuation,” said Joshi. Modi said India should be the world’s largest exporter of coal.Pitching for the flagship scheme of the Centre to battle Covid-induced slowdown, the PM said “AatmaNirbhar Bharat” translated into saving foreign currency on imports. “It entails that India develop resources domestically so that the country does not have to rely on imports. It also means becoming the biggest exporter of commodities that we now import,” he said. Modi also said there would be employment opportunities with investment in the sector. “Eastern and Central India will benefit a lot from this reform. Regions rich in coal and minerals will progress due to these reforms. These are the areas which have aspirational districts. The coal blocks that are getting auctioned today will provide lakhs of jobs in these areas,” he said.
Commercial mining won't hit Coal India, says CMD even as unions plan strike
ing and sale process, the Ministry of Coal has liberalised the terms of qualification. However, the final decision on successful bidders will need government approval.
State-owned mining behemoth Coal India Limited (CIL) said it would continue to be the country's leading coal producer, even after the sector is opened up for the private companies. In a public statement, the company said commercial coal mining would not adversely impact the production or profitability of CIL.
In a tender document uploaded by the Ministry of Coal for commercial coal auctions, the preferred bidder who submits the highest bid in the auction could lose the race if it ceases to meet the qualification criteria.
“Key issues which will help us stay ahead of the competition include uniform quality of coal, cost efficiency in production and reliable timely delivery schedule, introduction of higher degree of mechanised mining and increased supplies are other focus points,” said Pramod Agarwal, Chairman, CIL. The statement comes at a time when its own labour unions and also state governments are protesting against commercial coal mining. CIL trade unions have announced they will go on a three-day strike from July 2 against Centre’s decision to open the coal sector for private players. BharatiyaMazdoorSangh, Hind MazdoorSabha, INTUC, AITUC and CTU have demanded that auction of coal blocks for commercial mining should stop. At the same time, Jharkhand state government has moved the Supreme Court against commercial mining, after its request to the Centre for delaying the process was denied. The Centre last week commenced India’s first auction of coal mines for commercial mining and sale in the open market by the private companies. This followed a Union Cabinet decision to ease the qualification criteria and auction methodology to attract industry interest in commercial coal mining.
There is effectively no strict eligibility criterion for participating in the auction. The companies/ joint ventures should be registered in India. Bidders who have won coal mine under captive auction and have been convicted of an offence relating to coal allocation are disallowed to participate. The auction is a two-part round — technical and financial. The nominated authority for the coal auction — who is joint secretary-level official from the Ministry of Coal — will evaluate the technical bids. Bidders are supposed to submit their eligibility criteria, along with an initial offer to the nominated authority. The financial bid round comprises two stages; the initial offer of technically qualified bidders is ranked in descending order for determination of qualified bidders. These qualified bidders are eligible to participate in the e-auction and submit their final offer. The highest bidder for a mine selected for evaluation by the government is declared a ‘successful bidder’. There is no restriction on the sale and consumption of coal. “The coal produced from the coal mine may be sold by the successful bidder in any manner as may be decided by the successful bidder, including sale to affiliates and related parties, utilisation of coal for any purpose, including but not limited to captive consumption, coal gasification, coal liquefaction, and export of coal,” said the tender document.
Auction for commercial coal mining begins with investor-friendly Coal block auctioning to create 2.8 lakh jobs, to attract investrules ment of Rs 33,000 crore Hoping to attract a slew of investors for India’s first auction of coal mines for commercial min-
Union Home Minister Amit Shah said the CCAI Monthly Newsletter June 2020
| 17
launching of virtual auction process for 41 coal blocks for commercial mining will create more than 2.8 lakh jobs and attract capital investment worth Rs 33,000 crore. In a series of tweets, Shah thanked Prime Minister NarendraModi and Coal Minister Pralhad Joshi for starting the process of auctioning the coal blocks and said it will help build a prosperous, corruption-free and selfreliant India. "This decision of Modi government will create more than 2.8 lakh jobs, attract capital investment worth Rs 33,000 crore and generate annual revenue of Rs 20,000 crore for the state governments," he said. Launching the virtual auction process for 41 coal blocks for commercial mining, expected to garner Rs 33,000 crore of capital investment in the country over next 5-7 years, the prime minister said it is a major step in the direction of achieving 'self-reliance'. He also said that the coronavirus pandemic has taught India to be self-reliant. The launch of the auction process not only marks the beginning of unlocking of the country's coal sector from the 'lockdown of decades', but aims at making India the largest exporter of coal, Modi said. Presently, despite being the world's fourth largest producer, he said, India is the second largest importer of the dry-fuel.
Combined, they have a total targeted capacity of around 168 million tonne/year (MTY). While the OC projects have a targeted capacity of 162 MTY, UG projects have close to 6 MTY. The contract period would be for 25 years or life of mine whichever is less. CIL’s board recently has given its nod in regard to standard bid document and request for bids for the engagement of MDOs. CIL is laying out plans to complete the formalities by 2021-22 so that all projects become operational and start yielding the output to contribute in 1 BT by 2023-24,” it said. It further informed that upcoming identified projects of Mahanadi Coalfields Limited, South Eastern Coalfields and Central Coalfields Limited will form major segments for the MDO mode with targeted capacities of 65.5 MTY, 52.4 MTY and 45 MTY, respectively. Eastern Coalfields Limited and Northern Coalfields Limited will have projects with targeted capacities of 3 MTY and 2 MTY, respectively. “Notice Inviting Tender (NIT) for 2 Projects, Siarmal OC of MCL (40 MTY) and Kotre-BasantpurPachmo of CCL (5 MTY) together having a targeted capacity of 45 MTY has been floated in 2019-20. While NIT for 5 Projects for a targeted capacity of 68 MTY will be floated in the ongoing fiscal, for the balance 8 projects NIT will be floated in the fiscal, 2021- 22,” the release said.
Facing tepid demand, CIL to What Coal India is planning to reach cement cos, CPPs to reboost output place imports by domestic coal MDOs will facilitate R&R issues, land acquisitions, green clearances and coordination with state and central pollution boards. Since contracts to them are on long-term basis, allied infrastructure will also be developed.
Coal India Limited (CIL) will engage mine developer cum operators (MDOs) to increase its coal output and reduce import dependency of the dry fuel in the coming years. The Maharatna coal mining behemoth in the process has identified a total of 15 greenfield projects to operate through MDO model of which 12 are open cast and 3 underground, a release by Western Coalfields Ltd (WCL) – subsidiary of CIL – said.
18 | CCAI Monthly Newsletter June 2020
"In order to interact with the consumers for substitution of import by the use of domestic coal, a meeting has been scheduled by Coal India Ltd to be held on 18th June, 2020 for consumers of cement sectors through video conference” the notice said. The move would result in curtailing forex outgo arising out of coal imports and help CIL expand its supply volumes. State-owned CIL will this week hold deliberations with the consumers of the cement sector and captive power producers (CPP) on substituting imports with domestic coal, amid the
PSU facing tepid demand for the dry fuel. Coal India (CIL) will hold discussions through video conference, the PSU said in separate notices to consumers of the cement sector and CPPs. The deliberations with CPPs will be held later this week, the PSU said in the notice. “In this regard, consumers (cement and CPP)….are requested to join the meeting to discuss & deliberate on the issue related to the substitution of coal import,” it added. CIL continues to be beset with tepid demand for coal, with most of its customers, like the power sector, shying away from lifting adequate quantities. During May, the power sector lifted 30.15 MT of coal from CIL sources, down 25 per cent from 40.38 MT in the same month last year. Coal India accounts for over 80 per cent of the domestic coal output.
Coal India plans to reopen abandoned mines Coal India plans to use mine developers and operators (MDO) to reopen mines it abandoned because of safety and viability concerns, company executives said. The company may offer these mines, many of which hold good quality reserves, to MDOs on contract. It will earn additional revenue without fresh investment even if the MDOs operate relatively small quantities ranging between 250,000 tonnes and 300,000 tonnes of quality coal a year profitably, executives said. “These are sunk investments as these mines don’t yield returns any more. CIL has been looking for ways to earn some revenue from them as large number of these pits, mostly underground, hold premium grade coal,” one executive said. Initially, 15-20 such mines would be offered, and the number would increase if the response is good, company executives said. Coal India first planned to reopen abandoned mines in 2011. “We had offered some 15 mines
abandoned due to unavailability of suitable technology at the time. The proposal was taken up by Coal India, however, private parties that had shown interest in these pits wanted at least 49% equity stake in them,” said Partha Bhattacharyya, former chairman of Coal India. “There were no such provisions then and stake sale in these mines were not agreed by the government.”
Centre liberalises coal swapping regulations The Ministry of Coal has further liberalised the framework under which coal linkages can be swapped in the country. A linkage is a coal supply assurance from Coal India Limited to a consumer. These commitments are binding and the coal cannot be transfered to other consumers. The rigid nature of these commitments resulted in some players ending up with coal that had to be ferried much longer distances. This led to increasing costs and putting more burden on the Indian Railways. To untangle this situation, the Centre has been undertaking a coal linkage rationalisation exercise. "The coal linkages from coal companies have been rationalized in order to reduce the distance in transportation of coal from the coal mines to the consumer. The exercise shall help in reducing the load on the transportation infrastructure and easing the evacuation constraints," an official statement said. Till now, coal linkage rationalization exercises were limited to the power sector and have resulted into altering the movement of 63.12 million tonne of coal with an annual potential savings of around ₹ 3769 crore, the statement said. The new methodology announced on Tuesday for linkage rationalization, covers the power as well as Non-Regulated Sector (NRS), for all types of consumers and coal swapping with imported coal has also been permitted. The transfer of coal quantities will be permitted basis the gross Calorific Value (GCV) equivalence and is applicable for non-coking coal only. This arrangement shall be allowed only within the same sector. So the NRS (non-regulated CCAI Monthly Newsletter June 2020
| 19
sector) can swap linkages with NRS and power (regulated sector) with Power only.
slowdown followed by the Covid-19 outbreak and resultant shutdowns.
Plans afoot for India’s first Coal Exchange
“Unless all the stakeholders, including the mining industry, the processing industry, the furnace associations, the secondary steel sector or the integrated steel plants, come together, it will be difficult to take steel to another level,” Pradhan said.
India has decided to set up a coal trading platform, taking a giant leap towards completely throwing open the sector to market forces as the country gears up for commercial coal mining auctions, which will increase the number of sellers of coal. As per the proposal, entire coal produced in the country will be traded on a ‘Coal Exchange,’ an online platform where pricing is determined transparently through demand and supply. The exchange is being thought out on the lines of commodity exchanges, power bourses or the proposed gas exchange. This could mean the end of new Fuel Supply Agreements (FSA) regime of Coal IndiaNSE 1.24 % where the staterun miner signs contracts for coal supply with consumers. Coal India Ltd is expected to remain a dominant player in the sector given its production target of one billion tonnes by 2024 and will sell incremental capacity at market prices, a senior government official said. Coal consumers and traders welcomed the move but said the exchange should be started only when there are multiple buyers and sellers. The coal ministry is likely to begin auctions of about 50 coal blocks for commercial coal mining this week. The government official said that discussions have begun in the ministry and a coal exchange is certain to be set up after the government addresses all related concerns.
Push for domestic steel Union steel minister Dharmendra Pradhan urged all stakeholders of the sector to come together to ensure that industries use only domestically produced steel. In the last few quarters, domestic demand for steel has declined because of the economic
20 | CCAI Monthly Newsletter June 2020
He was addressing a virtual summit organised by Hyve India along with other steel industry associations. The minister further said there are many sectors which still do not use domestically produced steel because of various reasons. “The demand for steel in the domestic market is very low, and we will take up all the programmes that will boost the sector. “During the last six years, a majority of the reforms have been undertaken by the government to make the raw materials available for the sector. We all should work towards fulfilling our needs with steel completely made in India,” Pradhan said.
STEEL
India may impose anti-dumping duty on steel products from EU, Japan, US India may impose anti-dumping duty on imports of certain steel products from the European Union, Japan, the US and Korea for five years with a view to guard domestic players from cheap imports from these countries. JSW Vallabh Tinplate Pvt Ltd and The Tinplate Company of India Ltd have filed the application for imposition of anti-dumping duty on imports of coated/plated tin mill flat-rolled steel products. After conducting a probe, the commerce ministry's investigation arm Directorate General of
Trade Remedies (DGTR) has recommended imposition of the anti-dumping duty on the product from these countries.
shrink steel demand by 13-15 per cent this fiscal.
The duty recommended is in the range of $222 per tonne to $334 per tonne.
CEMENT
"The authority recommends imposition of antidumping duty equal to the lesser of the margin of dumping and the margin of injury, so as to remove the injury to the domestic industry. Accordingly, definitive anti-dumping duty...is recommended to be imposed for five years...," the DGTR said in a notification.
Pent-up demand, firm prices help cement firms partly offset covid-19 shock
Steel demand to nosedive 6065% in Q1, recovery unlikely before Q3 Steel makers have turned their focus on managing liquidity and cash flows in the near term, as demand is anticipated to contract 60-65 per cent in Q1 of this fiscal. Nearly 60 per cent of the respondents of a survey commissioned by Crisil expect demand to recover in Q3 as infrastructure and construction activities gain traction with the concomitant returning of migrant workers and fiscal measures taken up by the government to improve fund availability. Around 80 per cent of the participants in the survey feel that pent up demand from awarded or ongoing infrastructure activities, especially roads and railways will drive recovery for long steel and galvanised products. Despite the anticipated slowing of the pace of the construction of national highway from an average of 11 kilometres (km) per day in FY20 to nine km in FY21, roads are billed as the frontrunner to revive steel demand. Some uptick is also seen in real estate activity in the near term. Amid demand erosion, capacity utilisation of the steel industry is tipped to fall to 66-68 per cent in FY21. Respondents in the survey are grim on demand for revival of flat steel. By contrast, demand for long steel will gain momentum with pick up in construction activities. Overall, the weakness in end use industries will
The economy may be contracting and demand has been hit across sectors but the key ingredient that powers the construction sector has managed to defy logic. Channel checks by analysts at three domestic brokerage firms show continued strength in cement prices in June. Cement producers raised prices by a notable 6% in early May to make up for the sharp fall in sales and negative operating leverage. And as the government eased restrictions in May, demand returned, and as it turns out producers have maintained the price hikes. “Cement prices increased by 0.8% month-onmonth in June 2020," analysts at IDBI Capital Markets & Securities Ltd said in a note. “In FY21 so far (i.e. June 2020 vs March 2020), south region prices have increased by 11%, east region has witnessed a price increase of 7%, north by 6% and central/west by 5% each." Contrary to the expectation of a sharp fall, cement dispatches to retailers and sales are estimated to have declined 15-20% last month. This is far better than the massive 80-86% drop in sales in April. “Contrary to our earlier expectations, dispatches of cement companies saw a lower decline for the month of May. Pent up demand and restocking have helped companies post strong volume," IIFL Securities Ltd said in a note. Pent-up retail demand, resumption of construction at existing projects, and off-take ahead of the monsoon season helped sales in May. With a good rabi harvest, sales in rural areas may sustain.
CCAI Monthly Newsletter June 2020
| 21
RAILWAYS
Railways’ freight loading in June inches towards the same level last year Indian Railways’ freight loading in the first three weeks of June has recovered from the adverse impact of Cvid-19 triggered lockdown, according to its top officials. In the first 18 days of June, freight traffic by the Indian Railways recovered to the extent of 90 per cent on a year-on-year basis, Indian Railways’ Chairman Vinod Kumar Yadav said in a webinar. Demand for commodities such as coal, cement, fertiliser, steel and iron-ore has picked up, which clearly indicates that economic activity is picking up, he said. The foodgrain movement has almost doubled. He added that Indian Railway is now moving towards normal loading pattern. Indian Railways expects to clock more revenue through freight movement this (financial) year (as against last financial year), the Chairman said. In the passenger segment, we get around ₹50,000 crore, and in freight segment we get around ₹1,30,000crore (a year), he said. Indian Railways’ is planning and making effort to see that more and more commodities is brought to Railways (from other modes of transport), the Chairman said. In passenger segment, we are running only 230 trains (as of now), he said. The Railways is keeping a close watch. The revenue from passenger segment is uncertain, he added.
22 | CCAI Monthly Newsletter June 2020
Thermal coal imports at major ports decline 36 pc to 12.3 MT in Apr-May: IPA Amid the coronavirus pandemic, thermal coal imports at India’s major ports saw a 35.94 per cent decline to 12.29 million tonnes (MT) in the first two months of the current financial year, according to the Indian Ports’ Association (IPA). Coking coal imports witnessed a dip of 24.05 per cent to 7.47 MT in April and May this year. The ports had handled 19.19 MT of thermal coal and 9.84 MT of coking coal, respectively, in the April-May period of the previous financial year. The IPA, which maintains cargo data handled by these ports, in its latest report said “percentage variation from the previous year” in thermal coal handling was at 35.94 per cent and 24.05 per cent in coking coal. Thermal coal is the mainstay of India’s energy programme as 70 per cent of power generation is dependent on the dry fuel, while coking coal is used mainly for steel making. Ports, where operations have been hit due to the coronavirus pandemic, recorded a 22 per cent decline in cargo handling to 92.82 MT during the first two months of the current financial year. These ports had together handled 119.23 MT of cargo during April-May period of 2018-19. Ports like Chennai, Cochin and Kamarajar saw their cargo volumes nosedive over 40 per cent, while Kolkata and JNPT suffered a drop of over 30 per cent during April-May.Kamarajar port saw its cargo handling decline by 46 per cent to 3.22 MT in April-May, while Chennai port saw a massive 44.24 per cent fall to 4.56 MT, according to IPA data. Cargo handling at the Cochin port slipped 40.14 per cent to 3.41 MT, while the same at JNPT declined 33.13 per cent to 8.02 MT. The Kolkata port logged a fall of 31.60 per cent to 7.30 MT.
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
GLOBAL European Union eyes tariffs on American coal, farm goods over trade dispute The European Union wants to slap tariffs on American industries that are politically near and dear to President Trump and congressional Republicans this election year, a new report says.
according to Bloomberg. House Minority Whip Steve Scalise’s Louisiana district could also be affected by tariffs on roughly $700 million in seafood exports, the news service reported.
The EU has asked the World Trade Organization for permission to impose tariffs on $11.2 billion worth of US exports that would hammer farmers, coal producers and fisheries, Bloomberg News reported Tuesday.
The EU’s request is reportedly the latest episode in a lengthy trade dispute with Washington over aerospace subsidies. The WTO gave the US a $7.5 billion award last year over the EU’s illegal subsidies for European planemaker Airbus. Europe now wants to retaliate with the new tariffs after the WTO found the US illegally subsidized Airbus rival Boeing, according to Bloomberg.
The move could reportedly hit parts of the US that are politically crucial for Trump and top GOP lawmakers. For instance, the EU’s coal tariffs may target Missouri — which has two Republican senators — while House Minority Leader Kevin McCarthy’s California district could be vulnerable because it produces fruits and nuts,
The US expects the WTO’s decision — which could come as soon as next month — to be more limited, “with only about $300 million at stake,” the outlet reported. The two sides could reportedly work out a deal to avoid the backand-forth tariff fight, but the EU’s chief trade negotiator recently indicated that’s unlikely.
24 | CCAI Monthly Newsletter June 2020
Coal supply adjustment limits US coal industry declining irreARA downside potential versibly The potential for a modest recovery in European coal burn and an accelerating supply-side adjustment in the Atlantic should offer countervailing support to the market in the near term, although prices continued to fall this week.
Nearly all of the coal produced in the United States goes for electricity generation, but its share has eroded in recent years by growing natural gas-powered generation and rising share of renewable energy generation.
Europe-delivered prices have rebounded from May's 17-year low of $38.67/t to over $45/t this month, with an August cargo trading at $45.50/t des AR today. Power-sector coal burn remains exceptionally low in Europe, but clean dark spreads suggest more coal-fired capacity will be needed in the third quarter.
According to the US Energy Information Administration, coal is one of the main sources of energy in the US, accounting for 14% of domestic primary energy production in 2019, Oil Price reported.
And the speed of the Atlantic supply adjustment has accelerated, with flows unlikely to recover soon, so any rise in western European coal burn would probably quicken the stock draw. Expected profit margins for German coal-fired plants with an efficiency of 46pc or more in July and August have recovered to above zero this month, after slumping deep into the red in May. The market is pricing in more fossil fuel-based generation in the second half of summer, as nuclear availability is expected to decline and as power demand recovers from Covid-19. French nuclear availability is scheduled to average 34.4GW in the third quarter — 3.7GW down on the year. And the decline will probably be steeper than available data suggest, as EdF says nuclear generation will decline to 300TWh in 2020, implying second-half output of 28.5GW. German nuclear availability will also slip because of maintenance. Around 7.2GW will be available in the third quarter, against 7.6GW in the same period last year. July-August typically sees Europe's lowest wind speeds, creating additional upside for fossil fuelfired output. This potential was visible this week, as German coal burn rose to a three-month high of 2.9GW to counter a 48pc week-on-week decline in wind generation to 4.3GW — a 2020 low.
Most of the coal produced in the US is used to power coal-fired power plants, while the industrial sector and the commercial sector account for small shares of coal consumption, the EIA said. EIA data shows that US coal production and consumption have been on a decline since peaking in 2008 and 2007, respectively. Last year, for example, US coal production hit its lowest level since 1978, while coal consumption dropped to the lowest since 1975. The rise of renewables and declining coal electricity generation resulted in energy consumption from renewables in the United States surpassing in 2019 coal consumption for the first time since 1885. Last year, total US renewable energy consumption increased by 1% compared to 2018, while coal consumption slumped by almost 15% year on year, the EIA said. The rise of renewable energy sources, especially wind and solar, marked a historic milestone for energy consumption last year. For the first time since the Industrial Revolution, renewable energy overtook coal as a source of energy.
US coal output forecast at 530 mil st in 2020, consumption at 394 million st: EIA The US Energy Information Administration forecast coal production of 530 million st in 2020, CCAI Monthly Newsletter June 2020
| 25
down 23.2% from the estimated 2019 output of 690 million st, the Energy Information Administration's Short-Term Energy Outlook reported June 9. The 2020 output projection rose 1.4% from the May outlook, the first month-on-month increase since the start of the year.For 2021, the EIA projected output of about 549 million st. Coal exports for 2020 were projected to total 63.6 million st, down 31.5% from last year's exports. The forecast also rose 0.6% month on month.Coal exports in 2021 are projected to be 70 million st. Power sector consumption was forecast to total 351 million st in 2020, down 35% from 2019 consumption and 4.6% below the May report. In 2021, consumption is forecast at 425 million st, down 6.5% from the previous report.Total US consumption was forecast to be about 394 million st in 2020, down 13.2% from the previous outlook and 33% below 2019. The EIA 2021 forecast was about 469 million st, down 5.9% from May's forecast. Compared with US coal-powered estimated generation share of 24% in 2019, the June EIA report projected coal generation share of 17% in 2020, down from 19.2% in May, and 20% in 2021, down from the previous projection of 21.3%. Natural gas generation share for 2020 was projected to be 41%, up from 37.3% in 2019, and the highest since S&P Global Platts began tracking the data in 2013. In 2021, gas generation was projected at 36%.
pressure on already sliding metallurgical coal prices. But Anglo has lost production at its 5mn t/yr Grosvenor coking coal mine, which has been closed following an explosion in May, and at its 4mn t/yr Dawson coking and thermal coal mine, where it is has suspended one shovel and excavator fleet because of lower demand. Anglo produced 3.83mn t of metallurgical coal in January-March, down from 4.16mn t in October-December and 6.28mn t in January-March 2019. The decline was driven by a fall in production at the Moranbah North mine to 451,000t in January-March from 2.33mn t in October-December, although it was up from a year earlier when an extended longwall move cut production to 240,000t. The production in the latest quarter all came in January before the roof collapse. Moranbah North produced 6.15mn t of coal in 2019, down from 6.76mn t in 2018. Anglo maintained its full-year 2020 production at 19mn-21mn t, after it reduced the target from 21mn-23mn t in February. Argus assessed the premium hard low-volatile coking coal price at $109.50/t fob Australia on 12 June, up slightly from a low of $107/t fob on 4 May but down from $163.05/t fob in midMarch. Argus assessed the non-premium hard mid-volatile coking coal price at $91/t fob Australia and semi-soft coking coal price at $67.50/t fob, down from $144/t fob and $104.60/t fob, respectively, in mid-March.
Glencore receives special status Anglo restarts Australia’s Moran- for QLD coal project bah coking coal mine The Queensland Government has recognised UK-South African mining firm Anglo American has restarted its 6.5mn t/yr Moranbah North coking coal mine in Queensland, Australia, four months after a seam collapse forced its closure. The return to production will add supply back into the seaborne market at a time when demand is weak because of Covid-19 restrictions in key markets such as India, Europe and northeast Asia. This could add further downward
26 | CCAI Monthly Newsletter June 2020
Glencore’s proposed billion-dollar coal mine, Valeria as a coordinated project.This is a major milestone for Glencore as it moves the Valeria project through its approval processes. Valeria will produce metallurgical and thermal coal, and support up to 1400 construction jobs and 950 full-time operational jobs over a 35-year mine life.The Valeria coal mine will replace production from other Glencore operations coming to the end of their mine lives, including the
Clermont coal mine in central Queensland. “Our Australian coal operations will continue to produce the high-quality coal required to meet expected levels of global steel production and energy demand in Asia,” Glencore coal assets Australia chief operating officer Ian Cribb said. “In Queensland, coal continues to be an important driver of the economy as a source of jobs, royalties, reliable energy and support for local businesses both in the city and the bush.” Glencore’s coal assets contributed more than $4 billion to the Queensland economy through investment in existing mines, royalties, community programs and spending capital on goods and services from regional suppliers. Queensland Treasurer Cameron Dick said the Valeria mine would be a valuable part of the state’s plan to unite and recover employment post-coronavirus.
South Africa consults with industry on nuclear power plans South Africa’s energy ministry began consultations with industry on preparations for a proposed 2,500 megawatt (MW) nuclear power plant building programme, which has faced opposition from environmental campaigners. South Africa wants to supplement its power capacity because of problems at state utility Eskom’s fleet of coal-fired power plants, some of which will be decommissioned over the next two decades. The energy ministry aims to use the consultation process - known as a Request for Information - to get some idea of the cost, possible ownership structures, cost recovery, the enduser cost and sustainability of the nuclear programme, it said in a statement. “Given the long lead-time of building additional new nuclear capacity, upfront planning is necessary for security of energy supply to society into the future,” the energy ministry said. Earthlife Africa Johannesburg and the South-
ern African Faith Communities’ Environment Institute earlier this month wrote to the energy minister threatening to take legal action if he moved to build new nuclear power plants without proper consultation. Three years ago, the same groups succeeded in persuading a court to block a nuclear power agreement with Russia, signed under then-president Jacob Zuma. South Africa, which operates the continent’s only nuclear power plant near Cape Town, said last month that it planned to procure 2,500MW of new nuclear capacity by 2024. South Africa’s long-term energy plan, released in October, listed nuclear power
Indonesia’s $300m geothermal play risks being undercut by cheap coal A newly secured loan of $300 million for Indonesia to boost its geothermal energy generation will be wasted amid a glut of cheap coal power, and also could contribute to environmental degradation, observers say. On May 28 the Asian Development Bank (ADB) announced the approval of the loan to PT Geo DipaEnergi (GDE), a state-owned company that was initially set up as a joint venture of state utility PT PLN and state oil and gas firm PT Pertamina. The loan will finance the addition of 55 megawatts of generating capacity each at existing geothermal plants in Dieng, in Central Java province, and Patuha, in West Java. The projects are expected to be completed by 2024. But clean-energy observers say these plants may be unable to compete with existing and new plants running on coal, which the government subsidizes for power generation. They will feed into the Java-Bali grid, which already has a glut of idle electricity due to low demand, effectively meaning the geothermal power could go to waste, said SatrioSwandikoPrilianto, renewable energy campaigner at Greenpeace Southeast Asia. CCAI Monthly Newsletter June 2020
| 27
Farmers work a potato farm near a geothermal plant on the Dieng Plateau, on the Indonesian island of Java. Image by RadityaMahendraYasa. “This is a key point that needs to be addressed, because there’s currently already about 40% overcapacity in the Java-Bali grid,” Satrio told Mongabay. “Coupled with the pandemic that has caused lower electricity consumption, it isn’t impossible that the growth at PLN will be lower than the company projected in its latest planning.”
energy-use efficiency, China intends to cap total energy consumption to within 5 billion tonnes of standard coal (7,000 kcal/kg) and further lower coal as a percentage of energy use to 57.5% this year, according to a post by the National Energy Administration (NEA) on June 22. By reducing reliance on coal, China will continue developing its non-coal energy, with NEA setting higher production guides for oil and natural gas for this year. More power generating facilities fuelled by non-fossil energy will also be constructed, according to the NEA release. Table 1: NEA non-coal energy output and development guidance
Indonesia's 2020 coal exports seen at 435 million Tonnes - energy ministry China strengthens logistics, storIndonesia, a major global thermal coal producer, age capabilities for thermal coal, exported 175.15 million tonnes of coal in Janu- LNG ary to May and exports for the full year are expected to be 435 million tonnes, the Energy and Mineral Resources Ministry said in a statement recently.
The country exported 458.8 million tonnes of coal in 2019, data from Indonesia Coal Miners Association (APBI) showed. The coronavirus crisis "significantly impacted" global coal markets, including Indonesia, PanduSjahrir, chairman of APBI, said in an industry webinar Coaltrans. He said 2020 global seaborne demand, which was estimated at 980 million tonnes before the crisis, had now been revised down to 895 million tonnes. Shipments from Indonesia had been hit by the lockdown in China this year and ongoing coronavirus restrictions in India and the Philippines, he said. "Indonesian thermal coal has been majorly impacted given around 65% of Indonesia thermal coal exports are to those three countries," Sjahrir said, adding he did not expect global demand for coal to recover to the 2019 level until 2022.
China to lower coal as percentage of energy use to 57.5% As part of the plan to reduce atmospheric pollution and carbon emissions while improving
28 | CCAI Monthly Newsletter June 2020
China is enhancing its logistics and storage capabilities for thermal coal and LNG in a bid to maintain stable supply of generating fuel, China's National Energy Administration and National Development and Reform Commission said in an official statement published June 18. China plans to add a total of 30 million mt in coal storage facilities across power plants in 2020 in order to ensure normal coal stock levels are maintained at above 15 days' supply for coaldriven power plants in the main coal-consuming regions, the statement said. "Coal companies are encouraged to collaborate and build storage at transportation centers [in] coal consuming regions in order to improve the flexibility in coal supply," it added. Chinese railway transportation capabilities for coal will be boosted by more than 40 million mt in Shaanxi province and more than 20 million mt at Xinjiang in northwest China in 2020 in order to fulfill Chinese coal demand, it added. In the statement, China urged utilities to improve energy-generating efficiency and eliminate inefficient facilities and coal mine sites. "China has been eliminating its less efficient mines and consolidating its supply. Hence in the long run, China will improve coal supply domestically," a Singapore-based trader said.
MONTHLY SUMMARY OF IMPORTED COAL & PETCOKE
Coal Price Index COAL
(kcal/kg)
Weekly Price - FOB
Weekly Price - FOB
Weekly Change (USD)
South Africa
6000 NAR
USD 57.36
INR 4351
2.55
South Africa
5500 NAR
USD 40.39
INR 3064
-0.41
Australia
5500 NAR
USD 40.45
INR 3068
-2.39
Indonesia
5000 GAR
USD 37.82
INR 2869
-0.71
Indonesia
4200 GAR
USD 25.43
INR 1929
-1.70
USA
6000 NAR
USD 49.93
INR 3787
0.29
Indicative Pet Coke Price PET COKE
Sulphur
Price
Weekly Change (INR)
India-RIL(Ex-Ref.)
-5%
INR 5697
-195.00
Saudi Arabia (CIF)
+ 8.5%
INR 4893 ($65)
6.50
USA (CIF)
- 6.5%
INR 5045 ($67)
7.50
Exchange Rate
Change (Weekly)
INR 75.86
0.22
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
FOB Aus
CFR India
FOB N China
MET COKE 62% CSR
FOB
CFR China
FOB Aus
111.00
120.57
90.75
100.56
59.66
69.60
67.10
256.88
272.13
-3.00
-1.50
0.44
2.44
-2.15
2.04
3.32
6.13
17.38
South African Coal News: * South African coal loadings rebounded in May but the outlook for exports remains challenging. Policy and seasonal obstacles could hamper demand from India, even as the country emerges from lockdown, while recent stock building in Vietnam and Pakistan could weigh on near-term buying interest from these markets, which have acted as key sources of flexible demand during the second quarter. *South Africa’s state utility Eskom's coal-fired stations are struggling to meet the electricity demand in the country. The power stations
30 | CCAI Monthly Newsletter June 2020
which produce more than 80 percent of South Africa's electricity, have long been unable to supply adequate power to the continent’s most developed economy, culminating in rolling blackouts that last year hobbled industries in the country.
Australian Coal News:
* Glencore's Rolleston coal mine in Queensland, Australia, has stopped production for two weeks starting June 2, Analyst told. The coal mine was heard to be making losses at the prevailing market price. The move comes weeks before the upcoming 59-day closure of Peabody's
Wambo underground thermal and semi-soft coking coal mine in New South Wales, Australia, starting June 19 amid weaker demand, sources said. *Australia, which is the world's top exporter of iron ore and metallurgical coal and the second biggest shipper of thermal coal, has seen its employment rate in the mining sector during March-May fell to its lowest since December 2017-February 2018 as Covid-19 impacted some part of the sector.
Indonesian Coal News:
* The Indonesian government has raised its 2020 thermal coal export target and says it expects to meet its annual production goal this year, although the sector will still decline on the year as a result of weakening global demand driven by the coronavirus pandemic. * The Indonesian government set its coal benchmark price (HBA) for June at $52.98 per tonne, down from $61.11 per tonne last month, the Energy and Mineral Resources Ministry said in a statement. The June benchmark price COAL-HBA-ID, the lowest since 2016, dropped due to lower demand linked to coronavirus disruptions in major markets such as China and India.
US Coal News:
* US coal imports totalled a 10-year low 121,259 mt in April, down 42.9% from March and 71.5% lower than the year-ago month, according to US Census Bureau data published June 4. Year-todate thermal imports are at 921,836 mt, down 50.1% from the first four months of 2019. Coal imports from Colombia tumbled to over a 10year low 33,274 mt in the latest month, down 74.7% from March and 90.8% lower than the year-ago month. Despite the overall lower imports, US coal imports from Indonesia rose to 59,955 mt in April, up 14.4% from March and 11.4% higher than a year ago. *The US may not need to completely shun coal but rather shift to clean coal as the dry fuel is extremely essential for uninterrupted supply of power across the country, experts believe so.
Russian Coal News:
* Russian coal production fell 13.5% on the year to a near four-year low in May as poor generation economics eroded international demand, provisional government estimates showed. Production totalled 990,000t/day – its lowest since July 2016 – while exports also dropped 13.3% on the year to 500,000t/day..
Pet Coke News: * Subdued petcoke demand has resulted in reduced coke supply for the past 2 months. Market experts opine that petcoke supply may rise in the third quarter as COVID restrictions are relaxed in USA. The benchmark fob US Gulf coast 6.5pc sulphur coke price has remained in the $33-34/t range after 1st week of April. *The seaborne petcoke prices are edging up following a slight growth in cement demand from India after the lockdown. However, some experts based in Asia presume that, the freight market needs to stabilise further before serious deals start to take place as buyers are cautiously monitoring the present situation.
Shipping Update: * India’s imports of coal collapsed to the weakest in at least five years in May, as the economic lockdown in the world’s secondbiggest importer of the polluting fuel took its toll. Imports were estimated at 9.17 million tonnes in May, according to vessel-tracking and port data compiled by Refinitiv, the lowest result since Refinitiv started collating data in January 2015. While the numbers are still subject to revision, it’s clear that May’s imports will come nowhere close to the 14.64 million tonnes in April, or the 21.2 million tonnes in May last year. * Key stakeholders from throughout the international shipping industry are raising concerns about mounting pressures associated with traffic jams at ports, stranded crew members, and rising unemployment. According to recent reports, over 400,000 shipping workers are currently stuck at sea or unemployed due to COVID-19-related travel restrictions. CCAI Monthly Newsletter June 2020
| 31
OVERALL DOMESTIC COAL SCENARIO Coal Production (in MT) Company
May, 2020
May, 2019
% Growth
April-May, 2020
April-May, 2019
% Growth
CIL
41.43
46.69
-11.3%
81.81
91.99
-11.1%
SCCL
3.23
5.87
-45.0%
6.23
11.37
-45.2%
% Growth
Overall Offtake (in MT) Company
May, 2020
May, 2019
% Growth
April-May, 2020
April-May, 2019
CIL
39.95
52.10
-23.3 %
79.02
104.52
-24.4%
SCCL
2.55
5.75
-55.6%
5.59
11.32
-50.6%
Coal Despatch to Power (Coal and Coal Products) (in MT) Company
May, 2020
May, 2019
% Growth
April-May, 2020
April-May, 2019
% Growth
CIL
30.15
40.38
-25.3%
61.84
81.29
-23.9%
SCCL
2.15
4.73
-54.7%
5.00
9.40
-46.7%
Spot E-auction of Coal (in MT) Company
Coal Qty. Allocated May, 2020
Coal Qty. Allocated May, 2019
Increase over notified price
Coal Qty. Allocated AprilMay, 2020
Coal Qty. Allocated AprilMay, 2019
Increase over notified price
CIL
1.20
2.40
11%
3.21
5.35
18%
Special Forward E-auction for Power (in MT) Company
Coal Qty. Allocated May, 2020
Coal Qty. Allocated May, 2019
Increase over notified price
Coal Qty. Allocated AprilMay, 2020
Coal Qty. Allocated AprilMay, 2019
Increase over notified price
CIL
1.06
2.72
0%
4.09
5.77
1%
Exclusive E-auction for Non- Power (in MT) Company
Coal Qty. Allocated May, 2020
Coal Qt. Allocated May, 2019
Increase over notified price
Coal Qty. Allocated AprilMay, 2020
Coal Qty. Allocated AprilMay, 2019
Increase over notified price
CIL
2.19
0.00
6%
6.10
1.20
2%
Special Spot E-auction (in MT) Company
Coal Qty. Allocated May, 2020
Coal Qty. Allocated May, 2019
Increase over notified price
Coal Qty. Allocated AprilMay, 2020
Coal Qty. Allocated AprilMay, 2019
Increase over notified price
CIL
0.38
0.00
7%
0.53
0.00
5%
32 | CCAI Monthly Newsletter June 2020
CCAI Monthly Newsletter June 2020
| 33
45,699.22
HYDRO
60.69
Source CEA
NUCLEAR
14
74.70
47.92
13
66.76
ACTUAL*
MAY- 2020
1,330,000.00
7,230.00
140,357.00
43,880.00
1,138,533.00
PROGRAM
283,048.44
THERMAL
Category
TOTAL
0.00
6,780.00
BHUTAN IMP
230,569.22
2
1
NUCLEAR
TARGET APR 2020 TO MAR 2021
Monitored Capacity (MW)
THERMAL
Category
SUMMARY- ALL INDIA
96,273.24
801.63
14,022.42
3,768.27
77,680.92
4
ACTUAL*
74.98
63.63
15
ACTUAL SAME MONTH 2019-20
117,046.96
344.80
14,081.23
3,782.30
98,838.63
5
ACTUAL SAME MONTH 2019-20
77.55
107.17
108.34
124.94
72.31
59.21
66.49
16
76.85
45.09
17
PROGRAM ACTUAL*
6
% OF PROGRAM (4/3)
71.22
63.38
18
ACTUAL SAME PERIOD 2019-20
APRIL 2020 - May-2020
PLANT LOAD FACTOR (%)
124,142.00
748.00
12,943.00
3,016.00
107,435.00
3
PROGRAM
MAY-2020
AN OVERVIEW
82.25
232.49
99.58
99.63
78.59
7
% OF LAST YEAR (4/5)
240,258.00
1,274.00
22,659.00
5,790.00
210,535.00
8
PROGRAM
GENERATION (GWH)
177,318.44
1,059.63
24,143.83
7,628.34
144,486.64
9
ACTUAL*
226,310.40
584.50
25,153.84
7,069.62
193,502.44
10
ACTUAL SAME PERIOD 2019-20
PERIOD : MAY, 2020
73.80
83.17
106.55
131.75
68.63
11
78.35
181.29
95.98
107.90
74.67
12
% OF LAST % OF PROGRAM YEAR (9/10) (9/8)
APRIL 2020 -May-2020
ENERGY GENERATION REPORT
PRODUCTION AND OFFTAKE PERFORMANCE OF CIL AND SUBSIDIARY COMPANIES COAL PRODUCTION (Figs in Mill Te) SUB CO.
JUN'20
APR'20 - JUN'20
ACTUAL ACTUAL THIS SAME % YEAR PERIOD GROWTH LAST YEAR
ACTUAL THIS YEAR
ACTUAL SAME PERIOD LAST YEAR
% GROWTH
ECL
3.22
3.59
-10.5
10.05
11.54
-12.9
BCCL
1.57
2.08
-24.8
4.83
6.47
-25.4
CCL
3.37
4.32
-21.9
8.54
11.64
-26.6
NCL
8.55
8.63
-1.00
26.48
26.22
1.0
WCL
3.02
3.58
-15.6
10.41
11.91
-12.5
SECL
8.92
11.33
-21.3
27.36
34.33
-20.3
MCL
10.56
11.40
-7.4
33.31
34.78
-4.2
0.04
0.07
121.01
136.94
NEC CIL
0.02 39.20
44.95
-12.8
-11.6
OFFTAKE (Figs in Mill Te) SUB CO.
JUN'20
APR'19 - JUN'20
ACTUAL ACTUAL THIS SAME % YEAR PERIOD GROWTH LAST YEAR
ACTUAL THIS YEAR
ACTUAL SAME PERIOD LAST YEAR
% GROWTH
ECL
3.09
3.99
-22.4
10.16
12.88
-21.1
BCCL
1.54
2.35
-34.3
3.79
7.75
-51.1
CCL
4.45
5.61
-20.8
11.32
17.77
-36.3
NCL
7.86
8.14
-3.4
23.19
25.17
-7.9
WCL
3.48
4.62
-24.7
9.36
14.20
-34.1
SECL
10.34
11.74
-12
29.98
37.76
-20.6
MCL
10.84
12.49
-13.3
32.73
37.64
-13.5
NEC
0.01
0.03
-59.8
0.09
0.13
-32.5
CIL
41.61
48.98
-15
120.62
153.49
-21.4
34 | CCAI Monthly Newsletter June 2020
CCAI Monthly Newsletter June 2020
| 35
REGISTERED
36
