CCAI Newsletter March-21

March 2021 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. 12

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CCAI Monthly Newsletter 2021 1 Published onMarch : 28.03.2021

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From the Editor’s Desk

In a bid to rejuvenate India’s economy and fulfil its dream of achieving the production of one billion ton nes of coal by 2023-24 cou ntry coal sector is leaving no stones unturned.

National miner Coal India Lim ited has identified 15 new Greenfield projects wit h a capacity to produce 160 million tonnes per annum while another coal pro ducing company Singareni Coll ieries Company Ltd (SCCL) is planning to open 11 new mines, including two in Odisha’s Talcher.

Enhancing domestic coal pro duction has been top priority of the coal sector to help fulfil the vision of ‘Atm anirbhar Bharat. The Ministr y has also taken numerous measures to reduce coal imports, such as formatio n of an InterMinisterial Committee (IMC) with representations from Min istries of Power, railways, shipping, Steel, Com merce and MSME. Also, the Annual Contracted Quantity (ACQ) of coal for the power plants has been increase d up to 100 per cent of the normative require ment in those cases where the ACQ was earlier reduced to 90 per cent.

While supply of the much-cov eted dry fuel across the nation has been relentless even during the COVID induce d lockdown period last year, the quality of coal supplied by CIL has also improv ed significantly in recent month s. The company’s third-party analysis related coal grade quality during Apr il’20-February’21 has revealed considerable imp rovement compared to the sam e period last fiscal while instances of grade slip page at various CIL Subsidiarie s has also notably reduced during the first two months.

In order to address the Industr y’s concern over fixed coal cess which is making mining more expensive, the Coal Ministry is looking to rati onalize coal cess on the basis of grade. The Centre has also inserted a new clause into the Mines and Minerals (Development and Reg ulation) Amendment Bill, 202 1 to take control of the district mineral funds from the state governments.

With industrial activities pick ing up pace after the bleak period in 2020 and increased power demand dur ing the summer season, the requirement of coal is set to increase. The supply of improved quality of coal

by CIL will certainly enable consumers across the board to procure domestic coa l and reduce their dependence on the dry fuel from imported sources. The silver lining is evident as the coal behemoth has set a new record in terms of sing le day rake loading in March’21.

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Content Vol. XLIX No. 12 March 2021

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 E-mail : sec.ccai@gmail.com Website : www.ccai.co.in

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Consumers' Page

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Power

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Domestic

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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.

28 In Parliament 38 Monthly Summary Of

Imported Coal &Petcoke

41 Overall Domestic Coal Scenario 42

Production And Offtake Performance Of Cil And Subsidiary Companies

CCAI Monthly Newsletter March 2021

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CONSUMERS’ PAGE Submission by both Power and NRS Consumers: 1. Submission for providing relief through linear method of calculation of compensation against short-lifting

by WCL, NCL & CCL for FY 2019-20: As per CIL notification, linear percentage will be applicable uniformly for all coal companies for calculation of compensation from 01.04.2020.

However, the calculation of compensation for short-lifting till 2019-20 shall be done as per existing practices followed by the Subsidiaries. While CIL Subsidiaries such as BCCL, ECL, SECL and MCL are following linear method, different methods are followed by other Subsidiaries such as WCL, NCL and CCL which leads to huge differences in the amount of compensation charged by different Subsidiaries for the same amount of short lifting.

Request has been made to CIL so that the sub-

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sidiaries may charge compensation for shortlifting in the linear method for the FY 2019-20.

The consumers, who have ended up paying higher amount of compensation under different calculation methodologies, should be refunded the additional amount paid by them by the respective Subsidiaries at least till FY 2019-20.

2. Submission requesting roll-back of WCL mines from Specific mines category to General mines category: Price of coal in the specific mines category has already been increased by WCL back in November 2019. Recently, WCL has included 5 more mines under mines specific sources which have abruptly increased the price of coal from these mines. It is unviable for them to procure coal from the said collieries.

Request has been made to WCL to revoke the above mentioned notification so that these collieries may operate under general mines catego-

ry and consumers may continue procuring the allotted quantity of coal from these mines at the same price as before.

3. Submission regarding issues of Grade Slippage, short-receipt and overloading of coal from various sidings of ECL: Both Power and NRS consumers have repeatedly raised the issues of Grade Slippage, Shortreceipt and overloading of coal from Salanpur, Jhanjra and Sonepur Bazari area of ECL. The recurrent issues over coal quality impacts functioning of Utilities and Industries and increases the overall cost of operations.

Request has been made to CIL and ECL to reduce the instances of grade slippage, shortreceipt and over-loading from the above mentioned ECL sidings. ECL has informed that all necessary actions are being taken at the Head Quarter Level to resolve those concerns and all area offices of ECL have been advised to ensure proper quality and size of coal be made available in the stockyard/sidings. The calibration and stamping of Railway weigh bridge of POCP Siding, Jhanjra Area will be done by this month.

4. Submission to Railways for not including ancillary charges for direct debit through e-payments: As per a recent Railway notification, consumers have to sign a supplementary tripartite agreement for Inclusion of Wagon Registration Fee (WRF) and other ancillary charges such as Siding Charge, Shunting Charge, Demurrage Charge, Wharfage Charge, Re-booking Charge, Diversion Fee, Freight Under Charges to debit directly through E-Payment facility.

However, automatic deduction of these charges

by Railways even before reconciliation of bills may impact freight payment of bills. The responsibility of coal loading in rakes is with the Subsidiaries in which consumers do not have any control. Therefore, demurrage charges should not be levied upon consumers. Also, in many places, ancillary charges are paid by the

port handling agents to the Zonal Railways.

Hence, deduction of ancillary charges under e-freight will be an additional financial and operational burden.

Request has been made to Railway Board and Zonal Railways to continue with the current practice of accepting these charges through DDs/Cheques/RTGS and not to debit the ancillary charges directly from consumers’ accounts through e-payments.

Submission by Power Sector Consumers: 5. Submission by Power Sector regarding expediting supply of pending rakes from MCL’s Talcher Coalfields and SECL’s Korba area: Certain Power consumers procuring coal from MCL’s Talcher and SECL’s Korba have complained regarding the issue of pending rakes even after paying full coal value to the Subsidiary. A large number of rakes allotted to these Power houses since January’21 have been pending while the coal stock at many of their plants may have dropped to critical levels.

Request has been made to MCL and East Coast Railway to expedite supply of pending rakes to the Power utilities from Talcher area at the earliest in order to meet the daily coal requirements of the power houses. Submission has been given to SECL and South East Central Railway (SECR) for expediting supply of rakes from Korba area as well.

6. Submission regarding significant shortages in rakes loaded from SECL’s Dipka siding: Power houses procuring coal from SECL have raised concern over considerable amount of shortages received in linkage coal rakes loaded from Dipka siding during March'21, where the shortage ranges from 5% to more than 8% in

CCAI Monthly Newsletter March 2021

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some of the rakes dispatched from the siding.

SECL has been requested to corrective measures to arrest the shortages and arrange for recalibration of the weighbridges to eradicate the problem.

Submission by Non-power Sector Consumers:

cure coal by Road Mode during the nationwide lockdown period. Hence, submission has been made to SECL to allow the change of mode from Road to Rail at the earliest.

9. Request for not imposing penalty for short-lifting from Wani Siding for NRS FSA consumers: A number of NRS consumers procuring coal

7. Submission regarding discontinua- from WCL are not able to lift allotted quantity tion of supply under expired FSAs: from the Subsidiary’s Wani sidings as As per CIL’s notification, coal supplied to NRS consumers at notified price as per the MoU signed between them and the Subsidiary coal companies even after expiration of their erstwhile FSAs of pre linkage-auction regime is to be discontinued after 31st March 2021. This would stop the supply of coal till the next Tranche is held and the cost of coal under Exclusive auction will significantly increase as the auction floor price is 10-20% higher than the notified price. Also, there is uncertainty over the commencement of 5th Tranche of auction.

Request has been made to MoC and CIL to continue supply of coal at notified price as per the MoU signed between these consumers till the next Tranche of auction is held. Also, the reserve price of coal is requested to be kept the same as notified price in the coming auctions.

8. Submission regarding allowing change of mode of supply from Road to Rail by SECL: A number of CIL Subsidiaries have immediately ex- tended the facility for allowing the dispensation of change of mode of supply from Road to Rail under FSA through NRS linkage auction route to the NRS consumers since November'20. However, in spite of repeated requests made by the NRS consumers no notification has been issued by SECL in this regard.

Many SECL consumers have been penalised for short-lifting as they were not able to pro-

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a) The offered G13 grade of coal is not suitable for direct feed to the boilers and needs to be blended with high grade imported coal making it unviable for the plant. b) In order to lift 75% of ACQ from Wani siding as per the FSA clause, the consumers need to lift a huge number of rakes within less than 2 months which may not be feasible due to shortage in storage capacity. c) The coal price structure of Neeljay OCM, the newly introduced feeding source of Wani siding, is yet to be sent to the consumers.

Request has been to WCL for not penalizing the consumers for short-lifting as contracted grade of was coal was not available from Wani sidings during most of the FY2020-21.

CCAI CCAICCAI Monthly Monthly Monthly Newsletter Newsletter Newsletter September November March 2020 2021 2019

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POWER Power demand up 23% in March Even as the electricity demand has recorded an annual rise for the seventh straight month in March, power demand in FY21 is set to drop by 0.8% on a year-on-year (y-o-y) basis.

According to data from the National Load Despatch Centre, as much as 115.2 billion units (BU) of electricity were supplied in the first 29 days of March, translating into 3.9 BU per day.

Moody's expects OIL's leverage will weaken to around 16% for FY22 from 51% in FY20, which is significantly below the 20%-25% threshold required to maintain the 'baa3' BCA. Moody’s lowers Oil India’s credit assessment on Numaligarh refinery buyout With this, Wabag has successfully achieved the financial closure of its second HAM project within this financial year,” Rajneesh Chopra, global head, business development, VA

10 | CCAI Monthly Newsletter March 2021

Tech Wabag, said. WABAG secures financial closure of its second HAM project; partners with PTC India Financial Services.

At this rate, 123.2 BU of electricity will be supplied in March 2021, which is 22.9% higher than the monthly consumption in the same month last year, when the countrywide lockdown was first implemented to contain the coronavirus outbreak.

Electricity demand in the April-February period was lower by 2.8% on a y-o-y basis. Power consumption in the country fell 8.5% y-o-y to 625.6 BU in the first half of FY21 as industrial and commercial activities remained muted amid lockdowns. Demand started increasing from September. With the sharp rise in temperatures in northern India, the average daily power demand in the country increased 3.4% annually to 3.7 BU in February.

Power demand likely to touch 222MU per day soon: Energy minister As part of its summer action plan, the government is now focusing on providing uninterrupted power supply. At a review meet with officials, energy minister Balineni Srinivasa Reddy pointed out that the state was currently meeting its energy demand of 220.6 MU/day as on March 27 and that this demand is likely to go up to 222 MU/day over the coming days.

The minister said the government’s decision to supply nine hours of free power to the agriculture was one of the reasons behind the increase in energy demand. He directed officials to place special focus on effective implementation of free power to the sector. “AP is the only state successfully implementing artificial intelligence to forecast energy demand in summer. This will help avoid shortages and save money for power utilities,” he said.

eration, transmission, merchant power, deficit, regulatory changes and the recent rating actions by Ind-Ra. "The all-India energy demand is expected to be higher in 4QFY21 on a year-on-year basis, despite partial lockdowns in some of the states on account of an increase in COVID 19 cases," it said.

In February 2021, the all-India energy demand increased 0.2 per cent year-on-year to 104.6 billion units. The energy demand in April-February 2020-21 was lower by 2.8 per cent, the report said.

The short-term power price at Indian Energy Exchange continued its improving trend on a year-on-year basis with the prices breaching Rs 4/unit in March 2021 for the first time since October 2018. In February 2021, a 19.5 per cent increase (5,124 million units) in the traded volumes was witnessed in the day-ahead market.

In view of the huge demand, power utilities will have to utilise multiple sources to meet expected higher daily grid demand. “All long-term resources of power generation available with discoms would be utilised in full and power would also be purchased from power exchanges to meet additional demand,” he explained.

India can hold electricity-sector emissions by rising clean power capacity

All-India energy demand to be higher in January-March: India Ratings and Research

A new study recently published in the Proceedings of the National Academy of Sciences from researchers at Berkeley Lab, University of California, Santa Barbara, and University of California, Berkeley, shows India can aim even higher with its renewable energy goals.

The all-India energy demand is expected to be higher in March quarter of 2020-21 compared to same period a year ago despite the partial lockdown in some states due to a surge in COVID-19 cases, India Ratings and Research (Ind-Ra) said.

Ind-Ra has published the March 2021 edition of its credit news digest on the power sector.

The report highlights the trends in the power sector, with a focus on capacity addition, gen-

India can hold its greenhouse gas emissions from the electricity sector at 2018 levels by increasing its clean power capacity, according to a Berkeley Lab-led team of researchers.

"By increasing its clean power capacity from the current target of 450 gigawatts within the next decade to 600 gigawatts, the nation can hold its greenhouse gas emissions from the electricity sector at 2018 levels while nearly doubling the supply of electricity to meet economic development needs," according to a statement.

CCAI Monthly Newsletter March 2021

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The costs, the researchers demonstrated, would be comparable to those of a fossil fueldominated grid, the report said, noting that India had set ambitious targets for renewable power, with plans to quintuple its current wind and solar energy capacity by 2030.

India's transition away from fossil fuels will have a significant impact on global climate efforts since it is the world's third-largest greenhouse gas emitter, although its per capita emissions are below the global average, it said.

Power generators can exit loss making contracts with states The government has given freedom to the central sector power producers such as NTPC, NHPC and SJVN to sell power relinquished by state discoms to new buyers under long or short term contracts or place the surplus power on exchanges for discovery of price in the day ahead, term ahead and real time markets.

The move is expected to provide new avenues to central generating stations (CGS) who could now find buyers with better paying capacity for power relinquished by state discoms that have often been found to delay payment to power generators.

Total dues owed by electricity distribution companies to power producers have risen sharply to reach closer to Rs 1.40 lakh crore now, reflecting deep stress in the sector.

In a set of guidelines on distribution of power after the termination of power purchase agreements (PPAs), the Power Ministry has said relinquished power (the capacity that comes out of the PPAs existing with state discoms) could be sold by CGS under various avenues including tie up with another buyer willing to go in for long term, medium term (up to 5 years) or short term PPAs through competitive bidding route. This power could also be sold through power exchanges and also reallocated to willing buyers.

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Discom overdue increases 5.5-times in 5 states; disputes rising too Power distribution companies (discoms) in 26 of India’s 36 states and union territories (UT) have witnessed an increase in overdue since last year; with 30 territories having dues pending for more than two months.

The power ministry, in a written reply to Rajya Sabha, said that over a third of the Rs 1,35,497 crore of the loans sanctioned by Rural Electrification Corporation (REC) and Power Finance Corporation (PFC) has been released.

The government had announced a liquidity infusion scheme last year under its Atmanirbhar Bharat Abhiyan initiative to help discoms clear their dues. However, data shows that the discom overdue has increased by 24 per cent since 2020. Discoms owe Rs 1,23,341 crore to central public sector enterprises (CPSE), state generators, independent power purchasers and renewable energy generators till January 2021, compared to Rs 99,489 crore last year.

Dues jumped by 24 per cent despite the pandemic, whereas the increase for the corresponding period last year was 61 per cent.

Monthly data indicates that in the last one year it was only in three months that the payment by discoms (including the amount paid against outstanding) exceeded the amount billed to discom in that month.

Not just dues, even the disputed amount has been rising. Bills worth Rs 12,856 crore were in dispute till January 2020, the amount has risen to Rs 15,098 crore.

Discoms have been sanctioned Rs 1.35 trillion in loans, get Rs 46,000 cr Power distribution utilities or discoms in the country have been sanctioned loans of Rs 1.35 lakh crore and disbursed Rs 46,321 crore so far under the liquidity infusion scheme, Parliament was informed.

"So far, loans of Rs 1,35,497crore have been

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sanctioned and Rs 46,321 crore have been released to states/DISCOMs by REC and PFC (Power Finance Corporation)," Power Minister R K Singh said in a written reply to the RajyaSabha.

The central government had announced a liquidity infusion scheme as part of AatmaNirbhar Bharat Abhiyan on May 13, 2020, in the backdrop of the outbreak of global pandemic COVID-19 in the country.

Due to the consequent nationwide lockdown, the revenues of the power distribution companies (DISCOMs) nosedived, as people were unable to pay for electricity consumed, the minister told the House.

Under the scheme, PFC and REC have extended special long-term transition loans at concessional rates to DISCOMs against the receivables of the discoms from the state government in the form of electricity dues and subsidy not disbursed, to enable them to clear their outstanding dues as existed on June 30, 2020 towards Central Public Sector Undertaking (CPSU) Generation (Genco) & Transmission Companies (Transcos), Independent Power Producers (IPPs) and Renewable Energy (RE) generators.

Basic customs duty to cost Rs 9 billion annually for discoms: India Ratings The imposition of basic customs duty (BCD) on solar cells and modules with effect from 1 April 2022 would lead to an increase in solar tariffs, reducing the overall attractiveness of solar projects to off-takers and finally end-consumers, according to India Ratings and Research (Ind-Ra).

“The increase in tariffs will increase power purchase costs for solar off-takers by Rs 9 billion annually, considering that about 10 GW of solar capacity will come on stream in the next 12 months,” said Asmita Pant, senior analyst, IndRa.

14 | CCAI Monthly Newsletter March 2021

She added that this amount would increase exponentially with the commissioning of new projects, till the time the duty is in place or import costs and cost of local manufacturing achieve parity and is likely to also affect the government’s target of 280 GW solar capacity by 2030.

The BCD would also be applicable for already bid out projects. According to the research firm, the timeframe for which BCD would be applicable is uncertain, creating additional risk for domestic manufacturers in incurring significant capex.

Import duty won’t make solar tariffs go through the roof, say experts Tariffs for future solar auctions might not rise as exponentially as initially feared due to the proposed steep hike in import duties on solar modules and cells from April next year, industry executives told ET. The government had earlier this month announced basic customs duty (BCD) of 40% on solar modules and 25% on cells from April 1, 2022, in a bid to encourage domestic manufacturing of solar equipment.

Various industry players and research firms estimate that the BCD may lead to an increase in tariffs of solar projects by between 30 paise and 45 paise per unit. Terming the BCD a “nonevent”, an executive of a renewable energy developer said an internal analysis of his company predicted a hike of around 30 to 35 paise due to BCD. Research firm JMK Research and ratings agency ICRA have pegged the rise at around 40 to 45 paise while India Ratings and Research (Ind-Ra) has estimated the annual cost of the duty at Rs 900 crore for the solar industry.

At present, India levies a safeguard duty of 14.5% on solar components imported from abroad while there is no customs duty. India is chasing an aggressive target of building 175 gigawatts of renewable energy capacity — including 100 gw of solar energy — in the country by 2022.

The country’s solar industry is dependent on imports to meet its equipment requirements with China alone accounting for nearly 80% of solar modules and cells used in the country.

Solar tariffs expected to rise in near term: ICRA Ratings Policy support and tariff competitiveness factors were expected to drive investments in the renewable energy sector, while the risk of delays in signing of power purchase agreements (PPAs) and power sale agreements (PSAs) would be a key downside risk, said ICRA Ratings.

“Given the expected increase in solar tariff rates amid the imposition of basic customs duty (BCD) on imported solar PV cells and modules, the key downside risk for the sector in the near term arises from the risk of delays in signing of the PPAs and PSAs,” said Girishkumar Kadam, co-group head, ICRA. He added that about 20 GW capacity tendered by the central intermediate procurers such as the Solar Energy Corporation of India (SECI) and the NTPC was yet to tie up PPAs and PSAs. According to the research agency, the COVID-19 pandemic induced lockdown restrictions had slowed down the RE capacity addition during the initial months of FY21. However, the capacity addition picked up from October 2020, driven by the easing of lockdown restrictions and supply chain challenges. It saidthat the sector added 5.9 GW in the first 11 months of FY21, which was expected to increase to 7.5 GW to 8.0 GW

by March 2021.

170 GW of renewable energy capacity either operational or under development: R K Singh As much as 170.14 gigawatts (GW) of renewable energy capacity, excluding large hydropower units, has either been installed or under various

stages of development or bidding at Februaryend this year, Parliament was informed.

The statement assumes significance in view of India’s ambitious target of having 175 GW installed renewable energy capacity by December 2022.

“A total of 92.97 GW renewable energy capacity (excluding large hydro) has been cumulatively installed in the country as on February 28, 2021.

Further, a capacity of 50.15 GW is under various stages of under-implementation, and a capacity of 27.02 GW is under various stages of bidding.

“Therefore, a total of 170.14 GW capacity has either been installed or under various stages of implementations/bidding,” Power and New & Renewable Energy Minister R K Singh said in a written reply to a query in the LokSabha.

ReNew Power commissions 300MW wind farm in Gujarat ReNew Power, India’s leading renewable energy firm said it has commissioned a 300-megawatt (MW) wind power generation facility at Kutch, Gujarat.

The project would provide clean power to Haryana and Orissa at a rate of Rs 2.44 per unit. According to the company press release, the project would also provide direct employment to over 200 people.

“The team worked hard to put together one of the largest wind farms in Gujarat with 120 turbines, 73 km of extra high voltage transmission lines and over 330 km of medium-voltage transmission lines despite major disruptions due to the COVID-19 pandemic,” said Sumant Sinha, founder, chairman and chief executive officer, ReNew Power.

The project was awarded to ReNew’s subsidiary ReNew Wind Energy in an e-reverse auction conducted by the Solar Energy Corporation of India.

CCAI Monthly Newsletter March 2021

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DOMESTIC Govt offers 67 blocks in second tranche of commercial coal mine auction The government offered 67 coal mines for sale, launching the second tranche of commercial coal mining auction and termed it a step towards ‘Aatmanirbhar Bharat’. This is the highest number of mines on offer in a particular tranche after commencement of the auction regime in 2014. “India launched its 2nd tranche of auction for commercial coal mining, offering 67 mines for sale of coal, today.

Union Coal Minister Pralhad Joshi launched the auction process in a programme held in New Delhi,” Ministry of Coal said in a statement. NITI Aayog CEO Amitabh Kant and Coal Secretary Anil Kumar Jain were also present in the function.

Out of the total 67 mines offered by the ministry, 23 are under Coal Mines (Special Provisions) Act and 44 under Mines and Minerals (Development and Regulation) Act. The blocks on offer are a mix of mines with small and large reserves, coking and non-coking mines and fully and partially explored blocks spread

16 | CCAI Monthly Newsletter March 2021

across 6 states – Chhattisgarh, Jharkhand, Odisha, Madhya Pradesh, Maharashtra and Andhra Pradesh.

In many countries including India, second or third COVID wave has led to partial or localised lockdowns delaying the pace of recovery, said D K Srivastava, Chief Policy Advisor, EY India. Lockdown anniversary: Worst behind, Indian economy poised for bounce back but rising virus cases a big risk according to the reply, the Ministry of Statistics and Programme Implementation has issued a circular in this regard on March 17, 2021.Govt to release pending funds of 2019-20 under MPLADS.

To enhance coal output govt identifies 15 new projects: Joshi To enhance coal production and reduce imports, Coal India Ltd (CIL) has identified 15 new projects with a capacity to produce 160 million tonnes per annum, Parliament was informed. Coal India Ltd (CIL) aims to achieve 1 billion tonnes of coal production by 2023-24.

"The focus of the government is on increasing domestic production of coal and to achieve these targets through the allocation of more coal blocks, pursuing with the state government for assistance in land acquisition and co-ordinated efforts with railways for movement of coal... 15 greenfield projects identified with a capacity of about 160 MTPA (Million Tonnes per Annum) to be operated by mine developer cum operator mode," Coal and Mines Minister Pralhad Joshi told Lok Sabha.

sultation with stakeholders and state governments.

In order to enhance domestic production, 25 per cent of coal production has been allowed for the sale of coal for the newly-allocated captive coal blocks, he said and added that commercial mining, with a provision for 100 per cent foreign direct investment, has been allowed by the government.

Besides, as part of the Centre’s plan to usher in structural reforms in the coal sector, state-run Coal India Ltd is looking to merge e-auction windows to move toward a ‘one price for one coal grade’ system. Coal and mines minister Pralhad Joshi announced the proposed initiatives at the launch of the second tranche of commercial coal mine auctions.

In order to enhance coal production and achieve coal production targets, CIL has initiated a number of steps, including introduction of mass production technology in underground coal mines.

Another coal producing company Singareni Collieries Company Ltd (SCCL) is planning to open 11 new mines, including two in Talcher in Odisha, the minister said.

Coal mining norms to be eased further India seeks to further liberalize its coal mining regime to ensure greater participation of all stakeholders, by allowing bidders to submit preferences for future mine auctions.

The moves assume significance considering that India has the world’s fourth largest reserves and is the second-largest producer of coal. With global shift to green energy to address growing environmental concerns, the Indian government is trying to harness coal reserves within the next three decades.

The so-called ‘rolling auction’ mechanism announced by the minister will ensure that coal blocks are always available for auction.

Changes in mines act to gener- The initiative comes at a time when the global winate jobs, allow private sector with dow for future coal mining is getting shorter. enhanced tech in mining: Pralhad Joshi Coal Ministry seeks rationalisaMines Minister Pralhad Joshi said the amendments tion of coal cess in the mines and minerals act will help create employment opportunities and allow private sector with enhanced technology in mining activities.

Moving the Mines and Minerals Development (Amendment) Bill, 2021, in the LokSabha, Joshi said India produces 95 minerals and has same potential like South Africa and Australia, but still import minerals like gold and coal.

"The reform in the mining sector would generate 55 lakh direct and indirect employments. To enhance mining activity, we will allow private sector with enhanced technology in mineral exploration," Joshi added. Mining sector is the biggest employment generator, but still we are underexplored.

The minister said the bill has been drafted after con-

The Coal Ministry is looking to rationalize coal cess on the basis of grades, CNBC-TV18 learns that the ministry has written to the finance ministry to restructure coal cess to ad-valorem from currently fixed cess. Coal Miners have to pay Rs 400 per tonne as coal cess which is utilized by the central government to compensate states on account of revenue shortfall under the Goods & Services Tax (GST).

This move comes on the back of industry concerns on fixed coal cess which is making coal mining expensive, also the next round of commercial coal auction is expected soon.

Ad-valorem basis of coal cess will reduce some burden on high-grade coal miners and also translate CCAI Monthly Newsletter March 2021

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some benefit to consumers. “ The ad-valorem basis coal cess will be revenue neutral for the government and also help make the coal auction attractive as the prospective bidders have been seeking for this change from fixed to ad-valorem cess on coal,” said a source from the coal ministry.

CNBC-TV18 learns from government sources that the Ministry of coal is likely to issue tender for about 70 coal mines for the second round of commercial coal auction. The tender for auction is expected by the end of March and e-auction expected in the month of May 2021.

Centre seeks to control district mineral funds The Centre has inserted a new clause into the Mines and Minerals (Development and Regulation) Amendment Bill, 2021, to take control of the district mineral funds from the state governments. The amendment, part of many changes to the relevant Act cleared by the Cabinet last week and introduced in Parliament, could spark a political storm.

As per the MMDR (Amendment) Act, 2015, state governments must establish district mineral foundations (DMFs) in all districts affected by mining-related operations; lease holders are required to contribute to these not-for-profit foundations as a defined percentage of royalty, in addition to the royalty paid to state governments. The DMFs are needed to use these funds, total collections stood at over Rs 45,000 crore in September 2020, for the welfare of persons and areas affected by mining-related operations, the tribal population being the principal intended beneficiaries.

The scheme is called Pradhan Mantri Khanij Kshetra Kalyan Yojana.

While the sub-section 3 of Section 9(B) of the MMDR Act brought in through the 2015 amendment, says, “The composition and functions of the District Mineral Foundation shall be such as may be prescribed by the State Government”.

CIL says coal grade slippage in Q3 down to 34% State-owned Coal India (CIL) said coal grade slippage

18 | CCAI Monthly Newsletter March 2021

in the third quarter of the ongoing fiscal was down to 34 per cent and clarified that provisional bills of customers later get adjusted once the actual quality of coal is tested.

Grade slippage implies that the fuel’s grade during the sampling is found inferior than the declared grade.

CIL’s coal is divided into 17 grades. Each grade of coal depending on its heat content is assigned a Gross Calorific Value (GCV). If any reduction is found in the GCV of a particular grade of coal supplied then it is termed as ‘grade slippage’.

The statement comes in the wake of reports saying there were discrepancies in coal quality and the billed amount by Coal India.

“Grade slippage during the third quarter of FY’21 was down to 34 per cent compared to 41 per cent the same period year ago,” the company said.

During first two months of the current fiscal’s fourth quarter (January-February), grade slippages declined further to 23 per cent compared to 42 per cent of in the same period last year.

India's coal import drops 14% to 196.13 million tonne in Apr-Feb FY21 India's coal import dropped 13.6 per cent to 196.13 million tonne (MT) in the April-February period of the ongoing fiscal year. The country had imported 227.23 MT of coal in the year-ago period, according to a report by mjunction services.

A joint venture between Tata Steel and SAIL -- is a B2B e-commerce company and also publishes research reports on coal and steel verticals.

"For April-February 2020-21, total coal and coke imports stood at 196.13 MT, about 13.69 per cent lower than 227.23 MT imported during April-February 2019-20," it said.

During April-February 2020-21, non-coking coal import was at 128.91 MT, against 157.59 MT during the year-ago period. Coking coal import was recorded at 43.98 MT, lower than 45.17 MT imported during the same period a year ago.

Coal import in February 2021 stood at 15.29 MT as

against 22.68 MT in the year-ago period. Of the total imports in February, non-coking coal was at 9.07 MT, against 16.94 MT in the same month last year. Coking coal import was at 4.82 MT, as against 4.02 MT imported in February last fiscal.

railways

Indian Railways defies Covid challenges! Freight in FY21 poised to surpass FY20 level Defying Covid challenges, the Railways have carried 1,145.68 MT of freight till March 11 in the financial year 2020-21, marginally higher than the loading achieved in the corresponding period last year, official data released showed.

The freight performance has been improving on month-to-month basis in recent months. IR’s loading in the first 11 days of March 2021 was at 43.43 MT, which is 10 % higher than in the year ago period.

IPO, Rossari biotech, Happiest minds, Burger kingListing gains: 16 out of 21 IPOs so far in FY21 list at premium; will the bull run continue next year?IRCTC share price, IRCTC, Indian railwaysIRCTC share price hits all-time high, surges three times from IPO price; stock may rally up to 40%

Modest coking coal prices and high steel prices to support profitability for steel makers Primary steel producers are expected to reduce debt by around 15 per cent or Rs 35,000 crore between 2020-21 and 2021-22 using higher operating profits generated for prepayment, rating agency CRISIL said.

“Rising volumes and moderate coking coal prices would mean healthy operating margins of 23 per cent next fiscal, compared with 25 per cent likely this fiscal,” Manish Gupta, Senior Director, CRISIL Ratings said.

He added that the realization next fiscal may still be higher than the average of past five years. The domestic steel demand recovered strongly in the second half of this fiscal, growing 10 per cent between October and January versus 30 per cent fall in the first half.

Higher infrastructure spending by the government and recovery in the residential state are expected to improve steel demand by 10-12 per cent next fiscal.

“The five steel makers could cut Rs 25,000 crore of debt this fiscal. Next fiscal, despite capex rising 15 per cent, they can slice debt by another Rs 10,000 crore,” Naveen Vaidyanathan, Associate Director, CRISIL Ratings said.

“There was a 70 MT year-on-year deficit in freight loading in the April-July period of 2020 but with a steady pick up in transportation of goods from August onwards, IR achieved incremental loading of 70 MT in the August-March 11 period, thus wiping out the shortfall,” said Railway Board Chairman & CEO Suneet Sharma. This has been possible despite 50 MT deficit in loading of coal, the main cargo and revenue stream of IR.

Ind-Ra revises fiscal year 2022 steel sector outlook to stable

Though the freight revenue figures till March 11 are not immediately available, the freight earnings in February this year was Rs 11,097 crore, up 7.7% on year.

In a statement, Ind-Ra said it "has revised its outlook on the steel sector to stable for FY22 (financial year 2021-22) from negative.

STEEL

Ratings agency India Ratings and Research (Ind-Ra) has revised its outlook on the domestic steel sector from negative to stable for the fiscal year beginning April 1, 2021. The agency also expects the prices of iron ore, a raw material used for steel making, to increase in the coming financial year.

"Ind-Ra expects FY22 steel volumes to improve yearon-year and compensate for a likely moderation in per tonne margins, as steel prices gradually moderate over FY22 from the high levels witnessed over 2HFY21."

CCAI Monthly Newsletter March 2021

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In FY22, demand and supply are also expected to be strong and recover from the slowdown in FY20 and the COVID-induced demand and supply disruptions in FY21.

Besides, the agency expects domestic iron ore prices to gradually correct in FY22, as iron ore supply improves, although remaining elevated till the domestic iron ore output increases to FY20 levels.

Indian steel firms to cut Rs 35,000 cr debt between FY21, FY22: Crisil Primary steel producers in India are expected to reduce debt by Rs 35,000 crore, between FY21 and FY22, using the higher operating profits generated for prepayment, according to Crisil.

This reduction in debt and a partial deferral of capex this fiscal will strengthen the balance sheets and credit metrics of five primary steel producers, which account for 55 per cent of domestic production.

The outstanding debt of steel makers is pegged at Rs 2.15 trillion at end of March 2020. The reduction in debt is expected to be Rs 25,000 crore in this fiscal and about Rs 10,000 crore in fiscal 2022.

Rating agency Crisil said domestic demand recovered strongly in the second half of this fiscal, growing nearly 10 per cent between October and January versus a 30 per cent on-year fall in the first half. Consequently, demand contraction will be less than 10 per cent for the whole of this fiscal.

The higher infrastructure spending by government, and recovery in residential real estate are expected to improve steel demand by 10-12 per cent next fiscal, it added.

Arcelor Mittal’s Rs 50,000-crore Odisha steel plant plan hinges on quick land acquisition Industry watchers, however, are apprehensive, particularly because apart from Tata Steel’s Kalinganagar plant, greenfield steel plants have rarely come up in India in recent times and the main hurdle is issued

20 | CCAI Monthly Newsletter March 2021

related to land acquisition.

A senior industry leader, however, said, “I am sure the state will help the company in acquiring land.”

Though rich in mineral resources, Odisha’s chequered past of letting go big-ticket investment proposals for its failure to arrange land is the challenge before Arcelor Mittal-Nippon Steel India (AM/NS India) as it revisits a plan to set up Rs 50,000 crore steel plant in the state.

The unit requires 4,000 acre land and the state government will have to facilitate the acquisition of the land on time.

Pursuant to the deal structure, a-iTrust will provide funding towards the development of the project.

(Website image) a-iTrust to buy industrial park leased by iPhone maker Lombard board approves Rs 4/ share interim dividend for FY21 While the memorandum of understanding (MoUs) signed between the Odisha government and the company is just an expression of intent, a binding agreement will be signed only after the land and mining leases are transferred to the world’s largest steel maker.

CEMENT

Cement Sector Stocks To Strengthen In Q1FY22 Due To Sharp Price Hike As hopes of normalcy returning to the economy get strengthened, there is an increased business activity in the construction and infrastructure sector. Due to this, the demand for construction materials like steel and cement shot up in February and March. The demand, along with the expected hike in cement prices, has led to brighter prospects for top cement stocks in the sector.

In this backdrop, leading brokerages have undertaken channel checks and have concluded that based on the increased activity, the cement sector stocks will perform better in the fourth quarter 2020-21 and are

expected to continue better performance in the first quarter (April-June) of the new financial year 202122.

Prabhudas Lilladher (PL), the brokerage house, has stated in its channel check report released last week that February 2021 was the best month for the cement sector since September 2020. All-India cement demand is estimated to grow by 8 per cent in February on a base of +4 per cent.

PL has rated the quality of growth in cement demand as far better than September-November’20, where growth was largely led by pent-up demand and a weak base. Among regions, North and East maintained outperformance over other regions with demand growth at 15 per cent Year-on-Year (YoY) each.

Demand in the Central region is estimated to have grown by 7 per cent. Western region’s demand grew by 4 per cent on the back of a mild recovery in Maharashtra. While demand in the South remained muted with flattish growth, it said.

The cement price recovery is delayed due to intense competition in wake of strong demand. Cement dealers across regions expect sharp price hikes in March.

Channel checks undertaken by Motilal Oswal Financial Service Limited (MOFAL), another brokerage house, suggested that the much-anticipated price hikes have materialized in March, with prices up by Rs 20–30 per bag Month-on- Month (MoM) in South and East and Rs 10–15 per bag in other regions. Demand remains strong, with growth in the high single digits in most regions (except South), which should help absorb these hikes.

These hikes should also alleviate concerns on nearterm margins from the sharp cost inflation seen in the last few months – petcoke, coal, and diesel prices are up 74 per cent, 24 per cent, and 34 per cent YoY, respectively.

However, PL remained doubtful of the price rise in March due to year closing led volume push. Factoring flattish prices MoM in March, “We estimate realisations to fall Rs 80-100/t QoQ in fourth quarter 2020-21. However, this trend will reverse in April with a steep price increase of Rs20-30 per bag on the back of tight discipline, higher costs, and lessened competition intensity”, PL said.

Outlook on the cement sector strengthened signifi-

cantly due to revival in the housing market, government's strong focus on spending, and pick-up in the industry wide capex cycle. This is visible via flattish demand in 2020-21, against estimates of a 5-10 per cent decline. “Given the weak demand base over the last eight years, compounded annual growth rate (CAGR MOFSL expects earnings before interest, tax, depreciation, and amortisation (EBITDA) of cement stocks under its coverage, to grow more than 25 per cent YoY in 4QFY21, driven by ~20 per cent YoY growth in volumes (low base due to covid induced lockdown in Mar’20).

Ultratech Cement (NSE closing price 10th March, Rs 6,715) is the most favourite stock of both the brokerages, which is expected to outperform its peers.

Among the other preferred stocks include ACC (Rs 1,836.15) from the large cap space and among the mid-cap category, Dalmia Bharat (Rs 1,469.25, BSE) and JK Lakshmi Cement (Rs 429) are expected to perform better.

MOFSL does not expect much upside in Shree Cement (Rs 27,580), Ramco Cement (Rs 1,017), and Ambuja Cement (Rs 291.70), whose potential market share gains are already priced in.

Shree Cement's new cement grinding unit in Odisha commences commercial production Shree Cement on Monday said its new cement grinding unit in Odisha with a manufacturing capacity of 3 million tonnes per annum (mtpa) has commenced commercial production.

The company has commenced commercial production at its new cement grinding unit having capacity of 3.0 MTPA set-up at Athagarh Tehsil in Cuttack District of Odisha, Shree Cement said in a regulatory filing.

Shree Cement had posted over two-fold jump in consolidated net profit to Rs 631.58 crore for the third quarter ended December 31, 2020, as against a net profit of Rs 311.83 crore in October-December period a year ago.

Shares of Shree Cement Ltd were trading 1.41 per cent lower at Rs 27,334.55 apiece on BSE. CCAI Monthly Newsletter March 2021

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GLOBAL U.N. chief urges wealthy nations to phase out coal use by 2030 U.N. Secretary-General Antonio Guterres called on wealthy nations to end coal use by 2030 so the world can meet its goals to curb global warming, urging G7 nations to make that commitment before or at a leaders' summit in June.

In a video message to a virtual gathering of the "Powering Past Coal Alliance", Guterres said emissions- cutting pledges by governments fell far short of what is needed to limit climate heating to 1.5 degree Celsius above preindustrial levels.

But if immediate action were taken to end use of what he called the dirtiest, most polluting and increasingly costly fossil fuel in power generation, "then we have a fighting chance to succeed", he added.

22 | CCAI Monthly Newsletter March 2021

"Phasing out coal from the electricity sector is the single most important step to get in line with the 1.5- degree goal," the U.N. chief said.

Scientists estimate that coal use in electric power generation must fall by 80% below 2010 levels by 2030 to meet the 1.5C warming limit, which is the more ambitious goal set by more than 190 nations in the 2015 Paris Agreement.

Guterres said all 37 countries in the Organisation for Economic Co-operation and Development (OECD) - a group of mainly high-income nations - should promise to stop using coal by 2030, and the rest should do so by 2040.

China economic blueprint signals more coal investment China will invest more in coal to power its economy over the next five years, according to a

government plan that only modestly increased renewable ambitions.

Environmentalists had been hoping China’s five-year national development plan, unveiled at its annual parliamentary session, would give a roadmap for its goal of carbon neutrality by 2060.

However the plan, announced by Premier Li Keqiang, had few details and signalled little urgency in cutting the greenhouse gas emissions that cause global warming. The lack of a cap on total energy consumption was one of the notable exclusions.

“Without the energy consumption control target, there’s even less in this five-year plan to constrain emissions growth than in the previous ones,” Lauri Myllyvirta, from the Centre for Research on Energy and Clean Air, told AFP. “As a result, there’s no guarantee that emissions growth will slow down, let alone stop, by 2025.”

Instead the plan aims to reduce the amount of carbon emitted per unit of GDP by 18 per cent.

However this is the same target as for the previous five years, and economic growth was set for 6 per cent in 2021 – meaning a net increase in carbon emissions for this year. .

China's coal consumption share falls to 56.8% at end-2020 China cut its coal use to 56.8% of energy consumption at the end of 2020, maintaining its target of below 58%, but overall coal consumption continued to rise amid record industrial output and the completion of dozens of coal-fired power plants.

The rapid rollout of renewable-energy capacity and the growing use of natural gas has helped reduce the share of coal consumption from around 68% over the last decade and 57.7% a year earlier, but overall coal use has not peaked.

Coal consumption in the world's biggest coal

user and greenhouse gas emitter grew 0.6% last year, the fourth consecutive increase, the National Bureau of Statistics said.

The share of "clean" energy - including natural gas, hydropower, nuclear and wind power - rose 1 percentage point to 24.3% of consumption, it said.

Energy consumption increased by 2.2% to 4.98 billion tonnes of standard coal equivalent last year, with crude oil demand growing by 3.3% and natural gas by 7.2%. China has pledged to halt the rise in its carbon emissions before 2030 with targets to control energy consumption, especially coal-burning, and improve energy efficiency.

China expected to favour green tech over coal in new five-year plan China, which long targeted rapid industrial growth despite its environmental consequences, now aims tobecome the global leader in "lowcarbon tech for a carbon-constrained world" as it unveils its new five-year plan this week, China analysts said.

That shift is likely to include an accelerated pullback from its role as a major financier of new coal-fired power plants at home and abroad, Isabel Hilton, founder of China Dialogue, a nonprofit news organisation, told an online event.

China is today the world's largest emitter of planet-heating gases, responsible for about 28% of total global emissions.

Its 2021-2025 economic and social development plan is expected to reinforce a strong signal to Chinese industry to move away from fossil fuels and is likely to mean national emissions start falling within five years, predicted Li Shuo, a senior policy advisor for Greenpeace East Asia.

In a country that normally sets targets it can achieve or over-achieve, major industries this CCAI Monthly Newsletter March 2021

| 23

year must deliver plans on how they will cut emissions in line with China's commitment last year to become "carbon neutral" by 2060, Li said.

yr of saleable coal to export and domestic customer. The expansion includes a larger mining footprint, as well as an upgrade to the coal handling and preparation plant and the rail loop that loads coal for delivery to the port of Newcastle.

Coal terminal facing export slump amid Australia-China trade bans

The proposal is a show of confidence in Australia's thermal coal industry, which was largely unprofitable in July-December when high-grade thermal coal prices slumped to around $50/t fob

The owner of one of the nation’s largest coal ports says the Chinese government’s ban on Australian coal has triggered a realignment of global trade flows that is sending more of the commodity from local shores to Europe and elsewhere in Asia.

Dalrymple Bay Infrastructure chief executive Anthony Timbrell said coal volumes shipped from its Hay Point terminal in Queensland had dropped to 55 million tonnes in 2020, down from 67 million tonnes, as it reported a maiden net loss of $113 million.

Australia’s coal producers have been hit hard since COVID-19 restrictions slashed demand for the commodity and worsening diplomatic ties between Canberra and Beijing led to China unofficially black-listing Australian coal imports.

The federal government, which has described coal as being in a “state of flux”, is forecasting the nation’s exports of metallurgical coal – used in steel-making – will fall by around 8 million tonnes to 169 million tonnes this year due to lower demand, while thermal coal – used in power generation – will fall from 213 million tonnes to 199 million tonnes.

Indonesia's Salim plans Australian coal mine growth The Indonesian owners of Australia's 8mn t/yr Mount Pleasant high-grade thermal coal mine in New South Wales (NSW) have applied to expand the mine to 17mn t/yr and extend its life to the end of 2048 from 2026.

Indonesian conglomerate Salim's MACH Energy Australia subsidiary has applied for environmental approvals to increase run-of-mine capacity to 21mn t/yr from 10.5mn t/yr, to deliver 17mn t/

24 | CCAI Monthly Newsletter March 2021

Newcastle. Many coal mining companies, including UK-Australian firm BHP, are looking to exit their thermal coal businesses in NSW, with Chinese-owned Yancoal buying up many of the coal assets already sold.

MACH acquired the Mount Pleasant project in January 2016 for $224mn plus royalties as part of UK- Australian mining firm Rio Tinto's plan to divest all of its coal assets.

Indonesian coal exports stutter in January Indonesia exported another record-high volume of coal to China in January, but overall shipments stuttered amid weather-related disruptions and fewer loadings for other key markets.

Indonesia, the world's largest thermal coal exporter, shipped 38.2mn t in January, which was broadly unchanged from a year earlier, customs data show. But exports were down from 40.59mn t in December, representing the first month-on-month decline since September 2020.

This drop came amid steep price rises, suggesting that there were some supply-side constraints alongside the strong Chinese demand.

Argus' GAR 4,200 kcal/kg and GAR 5,800 kcal/ kg fob Indonesia price assessments both rose by more than a third on the year to 30-month highs of $47/t and $80/t in January, respectively.

Indonesian coal production slipped to around 47.2mn t in January, from 51mn t a year earlier and 48.2mn t in December, provisional govern-

ment data show, although data reporting lags mean that the final January total could be higher.

panies operating in the thermal coal value chain.

Inclement weather in January may have slowed production and hampered internal logistics.

Average daily rainfall in Banjarmasin, South Kalimantan, was double the 2016-20 seasonal average in January at 30 mm/day, according to Speedwell Weather data (see chart).

US coking coal exports fall

The Indonesian government has set an unchanged 550mn t target for coal production this year, although 2020 output exceeded this at 563mn t, according to government data.

Institutional Investors Hold US$1.03 Trillion Investments In Coal Despite the ongoing ESG push, institutional investors around the world held as of the end of January 2021 as much as US$1.03 trillion in companies operating in the thermal coal value chain, a group of NGOs, including Urgewald, said in a recent report.

U.S. investors hold the largest share, 58 percent, of the world’s institutional investments in the coal industry, Japanese banks are the top lenders to coal businesses, while Chinese banks are the top underwriters, according to the report, which analyzes financial flows to all 934 companies operating in the thermal coal value chain.

The world’s largest institutional investor in the coal industry is U.S. Vanguard with holdings of almost US$86 billion, closely followed by BlackRock, which holds investments of over US$84 billion in the coal industry, said the report published by Urgewald, Reclaim Finance, Rainforest Action Network, 350.org Japan, and 25 other NGOs. U.S. investors hold the largest share, 58 percent, of the world’s institutional investments in the coal industry, Japanese banks are the top lenders to coal businesses, while Chinese banks are the top underwriters, according to the report, which analyzes financial flows to all 934 com-

US coking coal exports fell to their lowest since August 2020 in January, as US suppliers focused on securing sales with Chinese buyers willing to pay a premium for US coals amid the ongoing unofficial ban on Australian coal. But Australian shipments rose to Brazil and Asian markets outside of China.

Total exports fell by 15pc year on year and by 21pc on a monthly basis to 2.95mn t in January, after several US miners cut production in the fourth quarter because of low prices and weak demand in the Atlantic earlier in the year.

China overtook Brazil and Canada — key export destinations for US coking coal — for the second month running in January, as US suppliers shipped 614,164t to China, compared to 75,000t a year earlier. Shipments edged down by 7.6pc from December.

Shipments to Asian markets outside of China continued to fall, as US low-vol were supported by strong Chinese demand, while Australian prices were deflated by the lack of Chinese demand. US exports to India fell by almost 40pc on a monthly and an annual basis to 236,845t, while shipments to Japan fell by 32.5pc from a year earlier to 147,877t. The US shipped no coking coal to South Korea for the second month in a row, compared to 442,485t in January 2020.

Despite the decline in export volumes to ex-China destinations, the rise in US low-vol and even some high-vol A coking coal prices on the back of Chinese demand has given US miners an unexpected lifeline.

US weekly coal carloads jump to 13-month high: AAR US coal carload originations jumped to a 13-month high 65,632 in the week that ended March 6, up 11.9% from 58,634 a week earlier CCAI Monthly Newsletter March 2021

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and the most since 69,261 in the week ended Feb. 1, 2020, according to a March 10 report from the Association of American Railroads.

The latest week was also up 11.8% from the year-ago week, which was the first yearly increase in 11 months. However, the 65,632 was 11.3% lower than the five-year average for the corresponding week.

Coal carloads represented 12.7% of all the traffic on US railways, up from 12.1% a week earlier but down from 13% in the year-ago week.

Since Jan. 1, cumulative coal carloads are at 530,902, down 10.2% from the same period a year ago. Coal originations on Canadian railroads – including the US operations of Canadian National, which serves several mines in the Illinois Basin – fell to 6,781 carloads, down 0.3% from a week earlier and 19.4% lower than the year-ago week. It was the lowest carloads for the corresponding week since 6,216 in the week ended March 3, 2018.

For only the sixth time in the last six years, all four major Class I railroads -- Norfolk Southern, CSX, Union Pacific and BNSF – saw weekly increases and year-on-year growths.

BNSF reported 28,462 coal carload originations and interchanges in the latest week, up 15.8% from the prior week and 11.5% higher than in the year-ago week, according to rail-reported data.

It was the first year-on-year increase since rising 16.2% in the week ended March 28, 2020.

UK coal mine plan pits local needs against global green ambitions The UK’s first new deep coal mine for more than 30 years has opened up old divides. People in Whitehaven, the depressed town where it could be built, are excited. Global climate activists, including Greta Thunberg and Sir David Attenborough, together with a significant portion of the British public are appalled.

26 | CCAI Monthly Newsletter March 2021

The agonised debate is a familiar one for governments cutting carbon emissions: is it fair for a single community to sacrifice prosperity for the good of all?

Cumbria county council, the local authority, approved the mine in October, and the UK government confirmed the decision in January.

But on February 9 the council said it would reexamine the decision. This followed a wave of protests from green groups and a letter to the government from its advisory body, the Climate Change Committee (CCC), warning that the mine would leave a “negative impression” of the UK when it chaired the COP26 UN climate talks in November and make it harder to hit carbon reduction targets.

Mike Starkie, the Conservative mayor of the town, which is on the Cumbrian coast in northwest England, says the 500 promised well paid jobs, with at least as many in the supply chain, are vital to a remote town that has not recovered from pit closures in the 1980s.

Glencore's Oaky Creek coal mine achieved certification for its progressive land rehabilitation Former open cut mine in Central Queensland has been transformed back to natural and productive land, following the success of an extensive rehabilitation program.

Located 90km North-west of Emerald in the heart of Queensland's Bowen Basin, Glencore's Oaky Creek coal mine has rehabilitated more than 133 hectares of land now verdant landscape with native vegetation.

The mine is now on track to being safely and sustainably passed on for the next land use.

Glencore's General Manager of Environment and Community, John Watson, said the certification covered two areas on the site that now supported native vegetation and had potential

for cattle grazing.

"This is the fifth successful certification application in the past three years by a Glencore site in Queensland and the seventh across Glencore's Australian coal business," Mr Watson said.

A "deformation of [the] mast structure" of shiploader 1 was identified, according to an NCIG letter to its clients, forcing a halt to shiploading activities as of 11:00 Newcastle time.

"Achieving Government sign-off on these areas of rehabilitation is reward for many, many hours invested by our workforce in returning mined land to the agreed post-mining purposes."

The incident comes several months after NCIG's other shiploader was taken off line in November because of storm-related damage. That shiploader is expected to return to service in October-December this year, with the latest work having "no impact" on its recovery, NCIG said.

Resources Minister Scott Stewart said areas of Glencore's Oaky Creek coal mine had achieved certification for its progressive land rehabilitation.

Loading schedules are likely to be delayed or reshuffled because of the latest disruption, market participants said. The previous incident caused spot prices to rise because of reduced shipments.

"In 2018 the Palaszczuk Government passed important mining rehabilitation legislation to ensure land no longer used for mining is returned to its original state, or better," Mr Stewart said.

Australian NCIG coal loadings in two-week suspension Australia's Newcastle Coal Infrastructure Group (NCIG) has suspended ship loading for the next two weeks, after a structural assessment showed that immediate work was necessary to repair its operational shiploader.

As of 10:30 London time, Newcastle April 2021 coal futures traded through the Ice exchange had risen to $94/t, from $90/t yesterday. Argus' weekly Australian NAR 5,500 kcal/kg high-ash coal assessment fell by 52¢/t on the week to $55.09/t fob Newcastle today, as high freight rates dampened demand.

NCIG loaded vessels with a combined capacity of 1.7mn deadweight tonnes (dwt) on 1-15 March, compared with 2.4mn dwt a year earlier.

Fellow Newcastle operator Port Waratah Coal Services has loaded ships with a combined capacity of 5mn dwt in the first half of March this year, down from almost 6mn dwt a year earlier.

CCAI Monthly Newsletter March 2021

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IN PARLIAMENT GOVT. OF INDIA MINISTRY OF COAL LOK SABHA Q. No. 2668. Coal Production 10.03.2021 SHRI MANOJ TIWARI: DR. NISHIKANT DUBEY: Will the Minister of COAL be pleased to state: (a) the total estimated coal stock in the country; (b) the percentage of coal produced by public sector Companies and private sector companies along with percentage share of coal produced by private companies private owners or parties who got Government lease; and (c) the amount of coal imported along with quantum of foreign exchange involved in import

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of coal during each of the last three years?

ANSWER : MINISTER OF PARLIAMENTARY AFFAIRS, COAL AND MINES (SHRI PRALHAD JOSHI) (a): The total estimated coal stock with the coal companies in India as on 31.03.2020 was about 81.431 Million Tonnes. (b) : Company wise coal production by public sector and private sector during 2019-20 and 2020-21 (up to January’2021) is given in Annexure-A (c) : Import of Coal in India and its value during last three years and current years up to December, 2020 is as below:

(Quantity in Million Tonnes & Value in Million Rs.) Total Coal Year Quantity

Value

2017-18

208.249

1384770

2018-19

235.348

1709205

2019-20

248.537

1527321

2020-21 (Upto Dec 20)

156.496

813136

Annexure A COAL PRODUCED BY PUBLIC AND PRIVATE SECTOR DURING 2019-20 AND 2020-21 (UPTO JAN.21) (Quantity in Million Tonnes)

Company

Coal Production 2019-20

Share(%)

Coal Production 2020-21 (Up to Jan’21)

Share(%)

ECL

50.401

6.90%

34.460

6.32%

BCCL

27.729

3.79%

19.870

3.64%

CCL

66.889

9.15%

46.830

8.59%

NCL

108.053

14.78%

94.630

17.35%

WCL

57.636

7.89%

34.830

6.39%

SECL

147.125

20.13%

103.665

19.01%

SECL (GP- IV/2&3) 2.659

0.36%

2.605

0.48%

SECL (GP-IV/1)

0.10%

0.000

0.00%

0.762

CCAI Monthly Newsletter March 2021

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MCL

140.358

19.20%

116.350

21.33%

NEC

0.517

0.07%

0.040

0.01%

CIL

602.129

82.38%

453.280

83.11%

SCCL

64.044

8.76%

38.612

7.08%

JKML

0.014

0.00%

0.010

0.00%

DVC

0.000

0.00%

0.000

0.00%

IISCO

0.534

0.07%

0.162

0.03%

SAIL

0.000

0.00%

0.000

0.00%

JSMDCL

0.068

0.01%

0.061

0.01%

RRVUNL

15.000

2.05%

11.322

2.08%

NTPC

11.151

1.53%

8.333

1.53%

WBPDCL

2.112

0.29%

4.213

0.77%

CSPGCL

0.509

0.07%

1.204

0.22%

TSPGCL

1.659

0.23%

1.689

0.31%

OCPL

1.003

0.14%

1.071

0.20%

NLCIL

0.000

0.00%

0.614

0.11%

Total Public

698.223

95.53%

520.571

95.45%

TSL

6.210

0.85%

4.894

0.90%

BALCO

1.000

0.14%

0.002

0.00%

30 | CCAI Monthly Newsletter March 2021

CESC

1.958

0.27%

1.685

0.31%

GMR

0.000

0.00%

0.000

0.00%

HIL

0.729

0.10%

0.264

0.05%

JPVL

2.800

0.38%

2.642

0.48%

SIL

0.270

0.04%

0.034

0.01%

SPL

18.700

2.56%

14.909

2.73%

RCCPL

0.182

0.02%

0.149

0.03%

TUML

0.286

0.04%

0.095

0.02%

OCL

0.115

0.02%

0.000

0.00%

AMBUJA

0.400

0.05%

0.169

0.03%

Total Private

32.650

4.47%

24.843

4.55%

ALL INDIA

730.873

100.00%

545.414

100.00%

Q. No. 2681. Demand of Coal ANSWER : 10.03.2021 SHRI S. JAGATHRAKSHAKAN:

MINISTER OF PARLIAMENTARY AFFAIRS, COAL AND MINES (SHRI PRALHAD JOSHI)

Will the Minister of COAL be pleased to state:

(a) The outbreak of pandemic COVID-19 and imposition of subsequent lockdown resulted in subdued demand by power and non-power sector which adversely affected coal dispatch during the first quarter. The all India dispatch of coal during 1st quarter i.e. April-June of 2020-21 was 143.98 MT as compared to 185.11 MT with a negative growth of 22.2%.

(a) whether the demand for domestic coal was subdued in the second quarter of the current financial year due to lower demand from end-user industries amid the Covid-19 pandemic along with high inventory at power stations; and (b) if so, the steps taken/being taken by the Government in this regard?

However, during the second quarter of the curCCAI Monthly Newsletter March 2021

| 31

rent financial year i.e. July – September, 2020, all India domestic supply (offtake) increased by 5.4% compared to the corresponding period of the previous year which indicates an increase in demand during this period. (b) In the light of nation-wide lock-down and restrictions imposed by Central/State Governments in the wake of Covid’19 pandemic, the following strategies have been adopted by CIL in the current fiscal to generate demand in power as well as non- power sectors and for improving its dispatch and liquidating the stock further: �

�

To help improve Plant Load Factor (PLF) of power plants, minimum assured level of supply under Fuel Supply Agreements(FSAs) increased from 75% to 80% of Annual Contracted Quantity (ACQ).

To reduce financial stress, levy of Performance Incentive for Power Sector under FSAs waived off 2020-21. Now, the same dispensation has been extended from October’20 to entire fiscal year 2020-21.

32 | CCAI Monthly Newsletter March 2021

�

To address liquidity crunch, Usance LC facility has been introduced for Power and Non-Power Sector consumers.

�

Flexibility given to consumers for change of mode from Road to Rail and Rail to Road.

�

Quantity up to 120% of ACQ has been offered in the current FY 2020-21 to all power utilities (except power plants having linkage under auction in terms of SHAKTI Policy).

�

As recommended by Standing Linkage Committee (Long-Term) coal companies have been directed to enhance the ACQ for the hinterland power plants

�

In order to meet the coal requirements of the coal importers through domestic coal, CIL has launched a new special spot e-auction scheme exclusively for the coal importers. As of April- February’21 such auctions were held in all the coal companies of CIL where against the offer of 327.50 LTe about 75.29 Lte was booked with around 18% percent increase over notified price.

RAJYA SABHA Q. No. 2886. Shakti Scheme 22.03.2021 Smt. Priyanka Chaturvedi: Will the Minister of COAL be pleased to state: (a) the main features of the Scheme for Harnessing and Allocating Koyala Transparently in India (SHAKTI) and the current status of its implementation in the country; (b) the list of States, currently eligible under the SHAKTI scheme; (c) whether SHAKTI scheme has been transparent and has helped to address the coal linkage problems of all the stressed power plants; (d) if so, the details thereof along with the reaction of Government thereto; and

LoA fulfilled within specified time frame and where nothing adverse is detected against the LoA holder.

Further, it has allowed continuation of the existing coal supply to the capacities of about 68,000 MW at the rate of 75% of Annual Contracted Quantity (ACQ), which may further be increased in future, based on coal availability. The policy has enabled coal supplies at 75% of ACQ against FSA to about 19,000 MW capacities, which have been delayed in commissioning, provided these plants are commissioned within 31.03.2022. The medium term Power Purchase Agreements (PPAs) to be concluded in future against bids invited by DISCOMS have also been made eligible for linkage coal supply.

B (i). The Coal India Limited (CIL)/ the Singareni Collieries Company Limited (SCCL) may grant coal linkages to State/Central Gencos/Joint Ventures at notified price on the recommendations of the Ministry of Power.

ANSWER

B (ii). Linkages to Independent Power Producers (IPPs), having Long Term PPAs based on domestic coal, where IPPs, participating in auction, will bid for discount on the tariff (in paise/unit). The bidders, who could not participate in the linkage auction under B (ii) due to any reason, may be allowed to participate in the B (ii) auctions of this policy. Further, the bidders, who could not secure linkage for full ACQ, may obtain linkage for the balance quantity by participating in future auctions at a later stage under B (ii) after bench marking discount.

MINISTER OF PARLIAMENTARY AFFAIRS, COAL AND MINES (SHRI PRALHAD JOSHI)

B (iii). Linkages to IPPs/ Power Producers without PPAs shall be on auction basis.

(e) the details of the sanctioned/ongoing projects that are being undertaken by various State Governments and the funds transferred under the said scheme?

(a): The Government approved the fading away of the existing Letter of Assurance (LoA) - Fuel Supply Agreement (FSA) regime and introduced Scheme for Harnessing and Allocating Koyala (Coal) Transparently in India (SHAKTI), 2017, which was issued by the Ministry of Coal on 22.05.2017. The Government also approved amendments to the SHAKTI Policy, 2017, which was issued by the Ministry of Coal on 25.03.2019.

A. FSA may be signed with pending LoA holders after ensuring that the plants are commissioned, respective milestones met, all specified conditions of the

34 | CCAI Monthly Newsletter March 2021

B (iv). Coal linkages may also be earmarked for fresh PPAs, by pre-declaring the availability of coal linkage with description, to the States. The States may indicate these linkages to DISCOMS/State Designated Agencies (SDAs).

B (v). Power requirement of group of States can also be aggregated and procurement of such aggregated power can be made by an agency, designated by the Ministry of Power or authorized by such States on the basis of tariff based bidding.

B (vi). Linkages shall be granted for full normative quantity to Special Purpose Vehicle (SPV) incorporated by nominated agency for setting up Ultra Mega

Power Projects (UMPPs) under Central Government initiative through tariff based competitive bidding under the guidelines for determination of tariff, on the recommendation of the Ministry of Power.

B (vii). The Ministry of Coal, in consultation with the Ministry of Power, may formulate a detailed methodology of a transparent bidding process for allocating coal linkages to IPPs, having PPAs, based on imported coal with full pass through of cost savings to the consumers.

B (viii). (a) Power plants with no PPAs are allowed coal linkage under B (iii) & B (iv) for a period of minimum 3 months upto a maximum of 1 year for sale of power generated through the linkage in Day Ahead Market (DAM) through power exchanges or in short term through Discovery of Efficient Energy Price (DEEP) portal. (b) Use of the existing coal linkage for sale of power through short term PPAs using DEEP portal or power exchange by the generator, which terminates PPA in case of default in payment by the DISCOM for a maximum period of 2 years or until they find another buyer of power under long /medium term PPA, whichever is earlier. (c) Coal linkage under B (v) is also applicable in cases, where the nodal agency designated by the Ministry of Power aggregates/procures the power requirement for a group of States even without requisition from such States. (d) Central and State generating companies can act as an aggregator of power of stressed power assets. (e) Mechanism to ensure servicing of debt.

As of now, coal linkages to the following capacities have been granted under various Paras of the policy: I.

Clearance has been given for signing of Fuel Supply Agreement (FSA) for 9 LoA holders with a total capacity of 7,210 MW under provisions of para A(i) of SHAKTI policy.

II. 23 Thermal Power Plants (TPPs) have been granted linkage for a total capacity of 25340 MW under provisions of para B (i) of SHAKTI policy.

III. First round of linkage auction under B(ii) of SHAKTI policy was conducted in September, 2017, whereby 27.18 Million Tonne Per Annum (MTPA) of annual coal linkage was booked by ten successful bidders for about 9,045 MW ca-

pacity. In the second round conducted in May, 2019 quantity of 2.97 MTPA of linkage has been booked by eight bidders for about 874.9 MW capacity. In the third round, auction has been conducted by PFC Consulting Limited (PFCCL) during May, 2020, where, 2.8 MTPA linkages have been booked by 5 successful bidders.

IV. The linkage auction for SHAKTI B (iii) was conducted in February, 2020, where out of the total offer of 11.8 MTPA, 6.5 MTPA was booked by 7 successful bidders.

V.

Coal linkage have been earmarked from CIL for the States of Gujarat, Uttar Pradesh and Madhya Pradesh for a capacity of 4000 MW, 1600 MW and 2640 MW respectively for linkage under B(iv) of SHAKTI Policy.

VI. Coal linkage earmarked from CIL for a capacity of 2500 MW for linkage under B(v) of SHAKTI policy.

VII. 4 tranches of Linkage Auction for 4 quarters of 2020-21 have been conducted by Coal India Limited under B(viii)(a) of Shakti Policy. Out of total offered quantity of 22.54 MT of Coal, 2.96 MT have been booked by successful bidders.

(b): All the States and Union Territories are eligible under SHAKTI policy, subject to terms and conditions mentioned in the policy. (c): SHAKTI policy is a transparent way of allocating coal to the Power Plants including stressed power plants. (d): The Cabinet Committee on Economic Affairs (CCEA) on 07.03.2019 had considered the Note from the Ministry of Power on the recommendation of Group of Ministers (GoM) Constituted to examine the specific recommendation of High Level Empowered Committee (HLEC) constituted to address the issues of Stressed Thermal Power Projects and has approved the amendments in the SHAKTI Policy issued by Ministry of Coal on 25.03.2019 and para B(ii) (i), B(ii) (ii) and Para B(viii) (a) to (e) have been added to the SHAKTI policy. (e): There is no Provision of fund transfer under the SHAKTI Policy.

CCAI Monthly Newsletter March 2021

| 35

Q. No. 1443. DOWNGRADING OF COAL MINES 22.03.2021 SMT. CHHAYA VERMA:

Will the Minister of COAL be pleased to state: (a) whether grades of 177 out of 386 mines of Coal India Limited (CIL) have been downgraded as compared to grades declared in 2016-2017; (b) whether coal being sold through e-tenders in many coal mines is sold in collusion with the contractors, who show the coal as down grade, causing huge loss to the income of the Ministry; and (c) the number of times surprise inspection has been conducted in last three years by various agencies for the inspection of the grade of coal, being sold through e-tenders and the enquiry reports thereof, agency-wise?

ANSWER MINISTER OF PARLIAMENTRY AFFAIRS, COAL AND MINES (SHRI PRALHAD JOSHI) (a): Variation of grade of seam of a coal mine takes place as the face of coal mine advances every year.

Hence, in every financial year grades of seam/s of a coal mine has been declared by the Nominated Owner of the mine as per laid down procedure of Coal Controller under Rule 4 of Colliery Control Rules 2004. Thereafter, after due verification/ examination of proposals, Coal Controller approved the effective grades for the succeeding year and after that Nominated owners of the mines declared the grades of the seam/seams of mines w.e.f. April of the ensuing year.

During verification for proposals of 2017-18, there was downgradation in 177 mines out of 386 operating mines of all eight Subsidiaries, when compared with declared grades of mines in 2016-17 as per table below:

Approved grade 2017-18 vs 2016-17

Total mines down graded

Total mines upgraded

Sl.No.

Name of Coal Company

No. of Mines

1

ECL

92

7

1

2

BCCL

52

22

11

3

CCL

48

26

12

4

NCL

10

1

0

5

WCL

79

57

0

6

SECL

80

51

11

7

MCL

21

12

3

8

NEC

4

1

2

Total CIL

386

177

40

Source: Coal Controller’s Organization (CCO) (b): In declaration of grade of coal, there is neither role of any contractor nor they are authorized to modify grade of coal seam. CCO is the only Independent Government Organization & Coal Controller is only approving and final authority of grade verification of a seam of coal mine as per Rule 4 of Colliery Control Rules 2004. Coal Controller’s decision is final and binding to the Coal Company. (c): CCO is the only Independent Government Organization & Coal Controller is only approving and fi-

36 | CCAI Monthly Newsletter March 2021

nal authority of grade finalization of a seam of coal mine as per Rule 4 of Colliery Control Rules 2004.

Coal Controller or his authorized representative may carry out surprise inspection of any mine and draw coal samples and get them analysed as per laid down procedure. Based on the analysis of coal samples and observation, Coal Controller may revise grade of coal seam and his decision is final and binding. No other organization/agency is authorized to carry out surprise inspection for verification of grade of a coal seam.

Q. No. 2082. NEW GUIDELINES ISSUED FOR COAL PROJECTS 15.03.2021

of the state for early operationalisation of coal mines allocated.

Dr. Bhagwat Karad: Smt. Priyanka Chaturvedi:

7. Establishment of new washeries to enhance clean coal.

Will the Minister of COAL be pleased to state:

In addition to above, Coal India Limited has taken following specific steps:

(a) whether any new guideline has been issued for coal projects; (b) if so, the details thereof and if not, the reasons therefor; (c) the details of the steps taken by Government to achieve the target of augmentation of coal production capacity per year; and (d) the details of coal production in India especially Vidarbha and Marathwada region and the State of Maharashtra?

6. Improving evacuation efficiency & capacity and construction of new railway lines.

i. Capacity addition through approval of new & expansion PRs. ii. Capacity addition through special dispensation in EC under clause 6(2) of EIA 2006. iii. Enhancing capacity through marginal schemes and OC patches. iv. Capacity augmentation through deployment of MDO. v. Use of state-of-art technology in OC mines

ANSWER MINISTER OF PARLIAMENTARY AFFAIRS, COAL AND MINES (SHRI PRALHAD JOSHI) (a): No. Sir. (b) : All Coal projects are reviewed by the Government periodically through various mechanisms. As such no new guideline needs to be issued. (c) : Government has taken the following steps to achieve the target of augmentation of coal production capacity: 1. Single Window Clearance System has been launched.

2. Guidelines for procedure and approval of mining plan has been simplified.

3. Auctioning of coal mines for commercial sale of coal started.

4. Regular review and monitoring of allocated coal mines in the past.

5. Holding of Monitoring Committee meetings headed by Secretary (Coal) and concerned Chief Secretary

vi. Use of Mass Production Technology (MPT) in UG mines wherever feasible. vii. All out efforts are being made at all levels for overcoming constraints like possession of non-forest land, diversion of forest land and other statutory clearances. (d) : The information regarding coal production especially of Vidarbha and Marathwada region of Maharashtra is not maintained separately. However, the total coal production from 2017-18 to 2019-20 (Provisional) of Maharashtra state is given below.

[In Million Tonnes]

State

Year

Production

Maharashtra

2017-18

42.219

Maharashtra

2018-19

49.818

Maharashtra

2019-20 (Provisional)

54.746

CCAI Monthly Newsletter March 2021

| 37

MONTHLY SUMMARY OF IMPORTED COAL & PETCOKE Indicative Imported Coal Price COAL

(kcal/kg)

Monthly Price - FOB

Monthly Price- FOB

Monthly Change (USD)

South Africa

6000 NAR

USD 93.28

INR 6781

5.56

South Africa

5500 NAR

USD 66.66

INR 4846

6.18

Australia

5500 NAR

USD 57.46

INR 4177

1.43

Indonesia

5000 GAR

USD 61.02

INR 4436

-5.65

Indonesia

4200 GAR

USD 38.38

INR 2790

-1.36

Indicative Pet Coke Price PET COKE

Sulphur

Price

Monthly Change

India-RIL(Ex-Ref.)

-5%

INR 10662

INR 150.00

Saudi Arabia (CIF)

+ 8.5%

INR 8941 ($123)

6.00

USA (CIF)

- 6.5%

INR 9377 ($129)

7.00

Exchange Rate

Change (Monthly)

INR 72.69

-0.21

Indicative Coking Coal Price Premium Low Vol Current Month

Monthly Change (USD)

HCC 64 MID Vol

Semi Soft

CFR China FOB Aus

Low Vol PCI

Mid Tier PCI

FOB Aus

FOB Aus

MET COKE 62% CSR

FOB

CFR China

FOB Aus

116.16

218.06

111.00

205.06

95.51

105.44

104.06

415.13

393.50

-24.91

-3.06

-20.91

-2.25

-1.91

-0.75

-0.63

-22.25

-60.25

South African Coal News: *South African mining major ANGLO American said that the demerger of its South African thermal coal business was the top option towards executing plans to exit the business, although a trade sale would also be considered as it announced lower production due to Covid-19 disruptions during the year ended December 2020. * China usurped India as South Africa's largest

38 | CCAI Monthly Newsletter March 2021

CFR India FOB N China

coal export market last month, although railing difficulties cut overall shipments from Richards Bay. Richards Bay Coal Terminal (RBCT) exported 4.6mn t last month, the lowest February figure since 2014. Shipments recovered from the 2.7mn t record low in January but were still down by 13pc year on year. * South African coal supply remains tight this month due to significantly reduced coal transport to Richards Bay Coal Terminal as Transnet’s maintenance is ongoing. The Indian

buyers are interested in South African coal as its price has come down by 10$-15$ compared to Australian coal.

Australian Coal News:

*Australian thermal coal exports dropped to a four-year low last year, largely because of a30pc slide in shipments to China after Beijing started restricting coal imports from Australia as trade tensions between the two countries increased last year. Australian coal exports in calendar 2020 were down by 6pc from 2019. * Despite the tag of war with China, coal boom in Australia stokes $2bn budget boost. Australian thermal coal exports have held up in defiance of China’s import restrictions, with surging global prices set to deliver an additional $6bn in annual export earnings. * A prolonged ban on Australian imports has caused China’s imported coal supplies to be under pressure. The ban on Australian coal – now in its sixth month – remains in force, with analysts not expecting any Australian shipments to be allowed into Chinese ports this month.

Indonesian Coal News:

*Indonesia exported another record-high volume of coal to China in January, but overall shipments stuttered amid weather-related disruptions and fewer loadings for other key markets. The country shipped 38.2mn t in January, which was broadly unchanged from a year earlier. But exports were down from 40.59mn t in December, representing the first month-on-month decline since September 2020.

reference price at $84.49/mt, down 3.8% month on month, but up 26% year on year. The two fellow coal rich nations in Asia, India and China both are also focused on boosting their own domestic production, which has also impacted demand for Indonesian thermal coal. * The Indonesian government has controversially declared coal ash as no longer being a hazardous waste product through a new regulation issued on 2 February 2021 that was part of the country’s omnibus law on job creation. The move was made despite the fact that coal ash does indeed contain hazardous material including heavy metals such as mercy, lead and arsenic.

US Coal News:

* The US is estimated to produce 581.2 million st of coal in 2021, the Energy Information Administration said in a report, lowering its monthly estimate for the fourth straight month, or by roughly 8 million st, or 1.4%, from February.

However, the 2021 production would be 7.8% higher than the 55-year low 539.1 million st produced in 2020, while the 2022 production estimate rose 2.7% on the month to 610.3 million st. * The Energy Information Administration has reported that in 2020, US coal exports declined to 69 million short t, a 26% decrease from 93 million short t in 2019. Steam coal exports, which accounted for 40% of the total, declined by more than one-third, dropping 34% from the previous year to 27 million short t. Metallurgical coal had a smaller, but still significant, decrease of 20%.

* Indonesia’s Ministry of Energy and Mineral Resources has set its March thermal coal CCAI Monthly Newsletter March 2021

| 39

Pet Coke News: *Amid scarce seaborne supply and limited petcoke deals due to poor buying interest from China and India, Petcoke prices from India’s domestic refineries have gone up this month. Meanwhile, the US Gulf petcoke market remained subdued in the week as the region began its recovery from a major winter storm. * Demand for petcoke delivered into the Mediterranean region continued to remain low last week, as consistently rising freight rates and petcoke prices aided the ongoing switch to alternative fuels. All origins of petcoke have risen; USGC and Spain material are at all- time highs.

Shipping Update: *India’s dozen state-owned ports handled a combined 600.625 million tonnes (mt) of cargo during April to February of FY21, 6.61 per cent lower than the 643.104 mt handled during the same period last year. Except Paradip Port Trust and Mormugao Port Trust, the other 10 port

40 | CCAI Monthly Newsletter March 2021

trusts continue to suffer from volume declines triggered by the coronavirus-induced demand destruction. *At least five maritime operators are in talks with the Indian government to buy a majority stake in the country’s biggest shipping company, which could be among the first public entities to be sold in the country’s biggest ever privatization drive. The sale of the state-run Shipping Corp. of India, which controls up to a quarter of the country’s waterborne tonnage, is seen as a test case for bigger privatizations down the road as India’s government attempts to replenish depleted state coffers after Covid-19 imposed lockdowns. * Responding to February 2021 export figures, FIEO President, Sharad Kumar Saraf said that the monthly exports rose marginally by 0.67 per cent to 27.93 billion dollars, mainly on account of container shortages across the country and limited supply disruptions in the last week of the month due to increasing COVID cases in certain states. He said that all the major sectors of export, which during the previous month were in positive territory, continued with a similar positive growth trend during February also.

Overall Domestic Coal Scenario Coal Production (in MT) Company CIL SCCL

February, 2021 61.87 5.59

February, 2020 66.24 5.63

% Growth -6.6% -0.8%

April- February, 2021 515.10 44.20

April- February, 2020 517.76 58.10

% Growth -0.5% -23.9%

Overall Offtake (in MT) Company

February, 2021

February, 2020

% Growth

April- February, 2021

April- February, 2020

% Growth

CIL SCCL

51.23 5.22

54.61 5.46

-6.2% -4.4%

514.06 42.60

528.01 57.44

-2.6% -25.8%

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

February, 2021

February, 2020

% Growth

April- February, 2021

April- February, 2020

% Growth

CIL

40.182

42.419

-5.3%

397.530

421.98

-5.8%

Spot E-auction of Coal (in MT) Company

Coal Qty. Allocated February, 2021

Coal Qty. Allocated February, 2020

Increase over notified price

Coal Qty. Allocated April- February, 2021

Coal Qty. Allocated April- February, 2020

Increase over notified price

CIL

4.41

3.31

30%

37.21

27.30

26%

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

Coal Qty. Allocated February, 2021

Coal Qty. Allocated February, 2020

Increase over notified price

Coal Qty. Allocated April- February, 2021

Coal Qty. Allocated April- February, 2020

Increase over notified price

CIL

5.69

5.51

13%

33.01

26.23

8%

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

Coal Qty. Allocated February, 2021

Coal Qty. Allocated February, 2020

Increase over notified price

Coal Qty. Allocated April- February, 2021

Coal Qty. Allocated April- February, 2020

Increase over notified price

CIL

3.83

1.20

17%

25.75

8.03

11%

Special Spot E-auction (in MT) Company

Coal Qty. Allocated February, 2021

Coal Qty. Allocated February, 2020

Increase over notified price

Coal Qty. Allocated April- February, 2021

Coal Qty. Allocated April- February, 2020

Increase over notified price

CIL

0.03

0.00

8%

2.37

0.96

13%

Special Spot E-auction Scheme 2020 For Import Substitution Company CIL

Coal Qty. Allocated February, 2021 0.00

Coal Qty. Allocated February, 2020 0.00

Increase over notified price 0%

Coal Qty. Allocated April- February, 2021 7.53

Coal Qty. Allocated April- February, 2020 0.00

Increase over notified price 18%

CCAI Monthly Newsletter March 2021

| 41

PRODUCTION AND OFFTAKE PERFORMANCE OF CIL AND SUBSIDIARY COMPANIES COAL PRODUCTION (Figs in Mill Te) MAR'21

SUB CO. ACTUAL THIS YEAR ECL

6.00

BCCL CCL

APR'20 - MAR'21

ACTUAL SAME % PERIOD GROWTH LAST YEAR

ACTUAL THIS YEAR

ACTUAL SAME PERIOD LAST YEAR

% GROWTH

6.50

-7.20

45.00

50.40

-10.70

2.80

3.40

-18.50

24.70

27.70

-11.10

8.70

11.50

-24.00

62.60

66.90

-6.40

NCL

11.10

10.00

10.90

115.00

108.10

6.50

WCL

8.40

10.60

-20.80

50.30

57.60

-12.80

SECL

26.40

23.00

14.80

150.60

150.50

0.04

MCL

17.70

19.30

-8.00

148.00

140.40

5.50

0.00

0.50

596.20

602.10

NEC CIL

0.10 81.20

84.40

-3.80

-1.00

OFFTAKE (Figs in Mill Te) SUB CO.

MAR'21

APR'20 - MAR'21

ACTUAL ACTUAL THIS SAME % YEAR PERIOD GROWTH LAST YEAR

ACTUAL THIS YEAR

ACTUAL SAME PERIOD LAST YEAR

% GROWTH

ECL

5.00

5.10

-2.40

42.00

49.30

-14.70

BCCL

2.80

2.70

5.40

23.20

28.80

-19.40

CCL

7.50

5.50

35.60

65.30

67.30

-3.00

NCL

10.40

8.40

24.10

108.70

107.40

1.20

WCL

5.80

5.20

12.40

49.70

52.60

-5.50

SECL

14.30

13.20

8.10

138.80

141.90

-2.20

MCL

14.00

13.20

5.60

146.00

133.50

9.40

0.10

0.60

573.80

581.40

NEC CIL

0.10 59.70

42 | CCAI Monthly Newsletter March 2021

53.40

11.90

-1.30

CCAI Monthly Newsletter March 2021

| 43

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44