DOMESTIC COAL

India to slash coal imports amid rising local output

India plans to substantially reduce its imports of thermal coal, a dominant source of energy in the country, in three years as local production gathers momentum, Coal Minister Pralhad Joshi says. Imports, which account for about a fifth of India’s coal usage, prove a drain on foreign exchange reserves and expose users to price volatilities.

The coal ministry is closely working with the railways – a key part of the coal supply chain – to ensure there are no shortages this summer and during the monsoon season when rains flood mines and hurt output. India expects to produce 880 million tonnes of coal during the current fiscal year ending this month, a 13% increase from a year earlier, Joshi said.

India’s coal output is expected to rise at a compounded annual rate of almost 9% during the five years to March 2026, against a growth rate of 2.3% in the prior five years, government data show. The nation has been auctioning mines at a rapid pace to shed its over-dependence on state miners Coal India Ltd and Singareni Collieries Co Ltd.

It has removed entry barriers for companies to bid for the mines, eased environment regulations, simplified regulatory approvals and is handing out incentives for early start of mining to lure investors.

Govt launches 7th round of coal mine auctions; offers 106 mines for commercial sale

India has launched the seventh round of auctions for commercial mining of coal blocks, putting 106 mines under the hammer. Of the total mines offered under the seventh round, 61 blocks are partially explored and 45 mines are fully explored. As many as 95 non-coking coal mines, 10 lignite mines and one coking coal mine are being offered in the latest round of auction.

Coal and Mines Minister Pralhad Joshi said the government will provide incentives to players who will start early production from the mines while inviting the players to participate in the latest round. He also noted that coal will be in use for the next 40-50 years. Meanwhile, the Ministry of Coal signed agreements for 28 coal mines auctioned under the sixth round of auction. The cumulative PRC (peak rated capacity) of the 28 coal mines auctioned under the previous round is 74 million tonnes per annum (MTPA) and these mines are expected to generate annual revenue of Rs 14,497 crore calculated at PRC of these coal mines. Upon operationalisation, these mines are expected to generate employment for 1 lakh people

India To Start Coal Export By 2025-26: Coal Minister Pralhad

Joshi

Asserting that India has adequate coal reserves, Union Coal Minister Pralhad Joshi said the country will start exporting the dry fuel by 202526. From a net importer of coal, India is moving towards becoming a net exporter of non-coking coal.

The minister also assured of an uninterrupted supply of coal in the approaching summer season -- when the peak demand is expected to be

229 GW during April. Domestic demand for coal is estimated to reach 1,087 million tonnes in the ongoing financial year. The industry meets some parts of its requirements through imports. According to the Coal Ministry, India's cumulative total estimated coal reserve as of April 1, 2022, was 3.61 lakh million tonnes.

The minister further said: "Record coal production has happened at nearly 900 MT in FY23, and we have coal stock of 116-117 MT at present. I assure the country of uninterrupted coal supply in summers or in rainy seasons." Both private and public companies have been directed to continue with their coal production during April and May

Coal India aims to supply utilities 156mn t in Apr-Jun

CIL said it is optimistic of supplying 156mn t of coal to the country's power sector during the April-June quarter amid concerns over a spike in coal demand. Even after selling the planned volume to power utilities in April-June, CIL said it expects to have a "healthy" 50mn t of coal inventories at its pitheads by the end of June.

CIL supplied a record 153.2mn t of coal to domestic utilities in April-June 2022, an increase of nearly 20pc compared with the year-earlier period. CIL is targeting 610mn t of coal supplies to utilities during the 2023-24 fiscal year ending 31 March 2024, when total demand from the sector is estimated at 821mn t. CIL supplied 554mn t of coal to utilities from 1 April 2022 to 13 March 2023 and is aiming to increase this to over 585mn t by 31 March, an increase of about 8pc on the fiscal year.

CIL, which meets more than 80pc of India's coal needs, said it will have 68mn t of coal at its pitheads by the end of this month, while utilities are estimated to have another 32mn t of domestic coal stocks. Another 12mn t of coal are at private washeries, ports and captive mines, while railway rakes hold around 3mn t of coal at a given point of time, it said. A total of 115mn t of coal will be at power plants by the end of March, compared with last year's corresponding availability of 92.7mn t, CIL said.

Coal India’s supplies to non-regulated sectors seen up 16.6% during Jan-Mar

Coal production by captive and commercial Coal India Limited will likely see its despatches to non-regulated sectors increase 16.6% sequentially during January-March. Coal despatches to customers in non-regulated sectors, including cement, steel and aluminium industries, have been averaging 3.67 lakh tonne per day so far in Q4 FY23.

CIL will likely close the current quarter with 33 million tonne (MT) supply to the sector, as per a company statement. It would lead to 4.7 million tonne more coal, or a jump of 16.6%, from the 28.3 MT supplied in the third quarter of fiscal 2022-23.

Supplies to the non-regulated sector during January-March, expected at 33 MT, would be 3.1 MT more from the comparable quarter of FY22, representing a growth of 10.4%. CIL supplied 29.9 MT to non-regulated sector (NRS) in the final quarter of FY22. Improved supplies to NRS were due to inventory build-up CIL’s pitheads. In March so far, coal stock increase at CIL has been to the tune of 6 kakhtonne per day despite higher supplies to power utilities.

GST reimbursement, assured supply likely for coal gasifiers

Companies that respond to the government’s plan to gasify coal may be reimbursed the goods and services tax that they pay on buying the fossil fuel, said two people aware of the development amid a cool response by investors. In 2020, Centre announced an ambitious plan to gasify 100 million tonnes of coal by 2030, but it is yet to gain momentum because companies do not see it as economically viable.

Another factor behind the development is that three proposed joint ventures of Coal India that were to produce gas from coal have not progressed as anticipated. Coal India had signed three separate MoUs in October with state-run Bharat Heavy Electricals Ltd (BHEL), Indian Oil Corp. Ltd (IOCL) and GAIL (India) Ltd.

The high ash content found in Indian coal is also a technical barrier to large-scale coal gasification. Coal gasification, the process which turns coal into fuel gas, is considered as a cleaner option than burning coal to produce energy. The gas produced through the process can be used to produce gaseous fuels such as hydrogen, methane, methanol and ethanol. Having committed to achieving net- zero carbon emission by 2070, the government has set itself ambitious goals to tap coal for cleaner uses such as gas

BCCL signs 1st MDO contract for coking coal extraction with 3 companies

Aiming to augment the production of coking coal in India, Bharat Coking Coal Limited (BCCL) awarded the work of re-opening, salvaging, rehabilitating, developing, constructing and operating three areas of the PSU for excavation and extraction of coal and its delivery to the authority to three private companies.

RK Transport Co was awarded for Katras Area for a period of 25 (Twenty-Five) years @ 9 percent Revenue share to BCCL. Likewise, M/s Vensar Constructions Company Ltd was awarded for Sijua Area for a period of 25 years @ 7.29 percent revenue share and M/s Eagle Infra India Ltd for a period of 25 years @ 6 percent revenue share for PB area has also been awarded.

Coking coal is a crucial input for the iron and steel industries. India has limited reserves of coking coal. However, in order to reduce its dependence on imports, the government has set the target of 140 MT of coking coal by 2030. While Coal India Limited (CIL) has been given a production target of 105 MT by 2030, others including captive coking coal blocks are to contribute 35 MT.

Domestic stainless steel demand will continue to see healthy growth till FY25: Crisil

The domestic stainless-steel demand is expected to grow at a compound annual growth rate (CAGR) of rate of 9 percent in the three fiscals through 2025, double the 4.5 percent pace of the past five fiscals, according to Crisil Ratings. The domestic demand for stainless steel was at four million tonnes (MT) in fiscal 2021-2022, the rating agency said in a report. The demand will be driven by the increasing adoption of stainless steel in railways which is a focus area for government infrastructure spending, and rising application in the automobile and construction sectors.

Adoption of stainless steel is increasing because of its higher durability and lower maintenance. Demand from railways is expected to more than triple by fiscal 2025 and constitute 20 percent of incremental demand for the metal over fiscal 2023-2025.

Demand from other major sectors with the application of stainless steel, including consumer goods (45 percent of demand) and the process industry (25 percent), is also expected to grow at a healthy clip of 7-9 percent over the next 3-5 fiscals given higher consumer spends and recovery in consumption.

Icra revises domestic steel demand outlook to 8 pc for FY24

Icra has revised its outlook for domestic steel demand to 7-8 per cent for the next fiscal. Earlier, the ratings agency had estimated the demand to grow in the range of 6-7 per cent.

In 2023-24, the capital expenditure is budgeted at Rs 10 lakh crore which will constitute 3.3 per cent of GDP. In the ongoing fiscal also, the domestic steel consumption growth has remained strong supported by the government's push for infrastructure-led economic growth. The consumption of finished steel in India was 107.20 million tonne during April-February of FY23.

"With steel consumption expected to grow in high-single digits next year, we expect the industry's capacity utilisation rate to improve to around 80 per cent in FY2024, despite the commissioning of some new expansion projects." ICRA has noted.

Steel prices may soften on lower China demand: JSW Steel

The upward trend in steel prices may halt and could even reverse in the coming weeks if the market's expectations of a likely demand revival in the biggest global consumer China remain not met, said a senior official of JSW Steel.

Global prices of steel have been on the rise in recent weeks on expectations of higher demand from China as the country eased its strict Covid-19 curbs. Indian steel mills also hiked prices in tandem, reaching around ₹61,000-62,000 per tonne for benchmark hot-rolled coils of steel. The domestic prices were around ₹55,75057,000 in January.

Demand from the Chinese infrastructure segment, which was on a debt-funded growth frenzy over the past several years, is also slowing down. Chinese local government bodies, which led the construction boom, have found themselves under tremendous pressure to repay debt maturities and lenders are not keen to bankroll them anymore, as per reports. This will result in lower demand for steel from China, Rao said. A correction in global prices could happen as early as April.

India to tap new coking coal markets in Mongolia, ramp up production in Mozambique

India is exploring coking coal sourcing options beyond Australia, its largest supplier, as it taps into new markets like Mongolia; while it firms up plans to ramp up production at its own mines in Mozambique in Africa, says NagendraNath Sinha, Secretary, Steel Ministry adding that Discussions are on to increase sourcing of coking coal sourcing from Russia too.

Coking coal imports saw a near 9 per cent rise year-on-year for the April – February period to around 52 mt, with steel mills resorting to sourcing from nations – like Indonesia, Russia, the US, Mozambique and Canada — to counter price fluctuations and supply issues faced with Australian coking coal.

Discussions are on to increase coal supplies from Russia too, which generally come at an up to 20-30 per cent discount. Trade sources suggest Russian coking coal supplies to India saw a 130 per cent increase, year-on-year, to 2.64 mt (1.15 mt). The International Coal Ventures Private Ltd (ICVL) – a JV of SAIL, NMDC, RINL, CIL and NTPC — owns three coal mines in Mozambique that include Benga, Zambeze and Tete East. Currently, only Benga mine is operational. The total saleable coal (low ash and thermal) production was 1.74 mt in FY22 and it will be around 1.70 mt, this fiscal.

Indian cement sector to grow to 715 - 725Mt/yr in 2027

Credit rating agency Crisil expects the Indian cement sector's capacity to expand at a compound annual growth rate (CAGR) of 4 - 5% over the four-year period up to the end of the 2027 financial year on 31 March 2027.

It would thus begin the 2028 financial year at 715 - 725Mt/yr in installed capacity, compared to 570Mt/yr at the end of the 2023 financial year. The industry's total investment in the expansion is expected to be US$14.5bn. Major multi-state producers are expected to contribute over US$7.25bn (50%) of investments towards the total sum.Over the same period, Crisil expects all-India cement demand to rise at a CAGR of 6 - 7%.

Railways

Cement Cos. may hike price in April, fuel costs go down

India’s cement manufacturers are expected to announce discounts and schemes to meet their year-end volume targets and price hikes could be there early April 2023, said MotilalOswal.

The cement players attempted price hikes in Feb-Mar'23; however, a significant portion of the hikes was reversed by offering discounts, incentives and price cuts. As a result, the all-India average cement price appears to be flat to marginally negative in 4Q v/s 3QFY23, MOFS said.

The MOFS said cement manufacturers consuming imported coal in the overall fuel mix will report higher reduction in fuel cost than players with higher usage of petcoke in the coming months.

"Imported (South African and Australian) coal price has dipped sharply in the past few months with a 34-54 per cent decline from Dec'22-exit and 28-33 per cent QoQ drop in 4QFY23 QTD. Imported Petcoke price has remained rangebound over the past few months at $165-185/t. Average petcoke price dipped 3-7 per cent QoQ in 4QFY23 QTD," MOFS said.

How freight corridors can make India into a global industrial hub

As some parts of India reeled under massive power outages in April 2022 due to a sharp decline in coal stocks at some of the country’s biggest thermal power plants, one of the government’s recent infrastructure projects—dedicated freight corridors (DFCs)—came to the rescue. Using the DFCs, the government rushed coal from mines in the eastern part of the country to places in the North and West, saving the day. This incident, among others, has firmed up the government’s resolve to expedite work on the under-construction DFCs.

“About 90 per cent of the construction work on the western and eastern dedicated freight corridors will be completed by December 2023,” Ravindra Kumar Jain, MD of Dedicated Freight Corridor Corporation of India (DFCCIL) said. The DFCs are not only an alternative to roads and the Indian Railways, but also complement the existing modes of freight transport. Effective use of these corridors will help reduce logistics costs and accelerate the development of new industrial hubs.

Railways are about 12 times more efficient in freight traffic and three times more efficient in passenger traffic compared to road transport. Per estimates, the logistics sector is required to grow by 25 per cent to meet the requirement of moving goods. Since 1951, the railway sector’s share as a transporter of freight traffic has declined from 86.2 per cent to 27 per cent. DFCCIL proposes to reclaim the railway’s share in freight traffic by running faster, heavier, higher and longer trains on the upcoming corridors.

Shipping

Govt aims to bring down logistics cost to 9% by 2024: Gadkari

The country’s logistics costs, which at present is 16% of India’s GDP, will reduce to 9% by the end of 2024 aided by India’s growing infrastructure, Road Transport and Highways Minister NitinGadkari said.

Logistics cost is around 12% in major European countries and the United States while it is around 8% in China. Lower logistics cost helps optimise cost across the supply chain and makes Indian products competitive in global markets. To accomplish this (reduction in logistics cost), the government is focusing on improving both roadways and railways. It is building green highways and industrial corridor with focus on reducing the distance between major cities and hubs.

Gadkari said that if the logistics cost were to reduce by 7% from 16% to 9%, the country’s will rise by one and a half time.

Coal, crude oil spike lead port cargo charge in FY23, shows govt data

India’s state-owned ports have registered a strong growth during the 11 months of the ongoing financial year due to enhanced supply of imported coal, increased coastal shipping of domestic coal, and rising crude oil imports.

Data released by the government shows that cargo growth in FY23 has been 9.4 per cent, with total volumes at 711 million tonnes (mt). Overseas cargo handled at major ports increased by 10.2 per cent to 546.88 mt during April-February 2022-23 from 496.45 mt during April-February 2021-22, according to data from the ministry of ports, shipping, and waterways (MoPSW).

Coastal cargo handled at major ports increased by 7.1 per cent to 164.67 mt during FY23, from 153.70 mt during April-February, 2021-22. So far, in this financial year, imported and other unclassified coal has seen a spike of 89 per cent during the fiscal, while domestic thermal coal volumes grew by 21 per cent. Crude oil cargo also saw a growth of 13 per cent.

Green Port policy soon with focus on carbon neutrality

India will soon roll out a green port policy to encourage local ports to adopt emerging global standards on carbon neutrality, helping attain the broader long-term national goal of net zero emissions.

Officials said the policy will define the parameters for green port categorisation besides incentives for undertaking the transition toward less polluting fuels and improving efficiency to lower overall emissions.

Indian ports are already proposing to reduce carbon emissions per ton of cargo handled by 30% by 2030. India will be the first country under IMO Green Voyage 2050 project to conduct a pilot project related to Green Shipping.

India's Nationally Determined Contributions (NDC) under the Paris Agreement for the Period 2021-2030 include goals to reduce the emissions intensity of its Gross Domestic Product by 33 to 35% by 2030 from 2005 level.