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From the Editor’s Desk
After the much-anticipated first phase of auction of coal blocks for commercial use witnessed conservative bidd ing from industry players par tially due to the type of blocks on offer and pot ential issues around land acq uisi tions and forest clearances, the Centre is plan ning to go for next round of com mer cial auctions at the beginning of next year. Minister of coal and Mining Shri Pralhad Joshi has appeale d to the states to cooperate with commercial mine allottees to facilitate ear ly operationalisation of the blocks as it would crea te a positive atmosphere and boo st confidence of investors.
The first tranche of commer cial coal auction failed to gar ner much interest from the foreign players as many of them are shying awa y from the dry fuel amid growing outcry by the environmentalists across Eur ope , US and Africa. However, the Minister exuded confidence that in the next rou nd of commercial auctions here would see par ticip ation from global players. In a silver lining to the countr y’s coal sector, national miner Coal India Limited is showing a promising tren d by overcoming the slump in pro duction caused by the pandemic outbreak dur ing the first four months of the ongoing fiscal. The coal behemoth has produc ed 46.8 MT of coal in Octobe r’20, recording a growth of 18.4 percent. The company had produced 39. 5 MT of coal in the same month of the previous fiscal. Amid growing concerns ove r the environmental damage caused by emissions from coal, India has strived to grow its renewable energy cap acity to 400 Giga Watts while also looking at way s and technologies in coal gasi fication to ensure that coal, which will continue to be the country’s backbone of pow er generation, can be used in a clean and env ironment-friendly manner. As par t of the country’s ene rgy security efforts, state-r un power companies such as NTPC Ltd, NLC India Ltd and Power Grid Corp. of India Ltd (PGCIL) will be engaged in building meg a renewable energy power par ks (UMREPP) of 2,000 megawatts each in win d and solar resource rich stat es such as Jammu and Kashmir, Andhra Prades h, Gujarat, Karnataka and so on. As the battle to reduce carbon footprints intensifies across the globe, Australia, a major coal producing nat ion, has announced itself to be less reliant on it. Energy generation through bro wn coal in Australia fell 17 per cen t in 201718, while natural gas and ren ewable based energy has gone up by 7 percent and 10 percent in the same fisca l. Meanwhile, China’s decision to officially allow ‘Green Bonds’ to fund coal projects which use enhanced technolo gies to cut air pollution but leav e carbon emissions, has sparked up controversy. According to latest reports, the country is also set to push for more coal output as NEA approvals are given for new mines in Inner Mongolia, Xinjiang and Shanxi provinces. It remains to be seen whe ther these moves by the country affect global efforts in fighting clim ate change.
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Content Vol. XLIX No. 08 November 2020
Official Organ of the Coal Consumers’ Association of India. Disseminates News and Views on Coal and all other sources of Energy. 4, India Exchange Place - 7th Floor Kolkata - 700 001 Landline : +91 33 22304488 / 22621516 E-mail : sec.ccai@gmail.com Website : www.ccai.co.in
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Consumers' Page
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Power
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Domestic
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.
22 Monthly Summary Of
Imported Coal &Petcoke
24 Overall Domestic Coal Scenario 25
Production And Offtake Performance Of Cil And Subsidiary Companies
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CONSUMERS’ PAGE Present Coal Scenario: Total coal production achieved by CIL was 51.7 million tonnes in November 2020 a growth of 3.3% compared to 50 million tonnes lifted in November 2019. For the period of April 2020- November 2020, the national miner has produced 334.5 million tonnes, registering a growth of 1.2% over 330.4 million tonnes produced in the same period last year. CIL’s Total offtake for November stood at 51.3 million tonnes. The offtake has grown by 8% compared to November 2019. Total offtake for the period of April 2020 to November 2020 was 357.2 MT.
Submissions made by both Power and NRS consumers: 1. Submission by both Power and NRS consumers for keeping the reserve price of coal same as notified price under various e-Auctions:
are keeping the floor price at 10% higher than the notified price in most of the cases against the various E-auctions being conducted for both Power and Non-power sectors. However, due to economic downturn due to the pandemic, Utilities and Industries are not in a condition to have such a higher percentage of add-ons on notified price.
Currently a number of CIL Subsidiaries
Request has been made to CIL to extend
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the facility of conducting Spot, Special Forward and Exclusive e-Auctions at respective notified prices till the end of current Financial Year.
2. Submission regarding issue of ungraded coal supplied to Power and NRS consumers: *Power sector have stated that in spite of the provision in their FSAs, refunds for supply of ungraded coal are still pending from different Subsidiaries even after two years or more in some cases. Request has been made to CIL by the Power sector so that the pending refunds on account of ungraded coal may be processed at the earliest. In case of Formulation of a new policy in this regard, it may be expedited as the fund is stuck for a long time. *The NRS consumers are unable to get long pending refunds through credit notes even when the quality of coal supplied is lower than the G-17 grade because unlike the Power sector there is no provision for issuing credit notes in case of supply of ungraded coal in the FSAs for NRS consumers. Request has been made to CIL to expedite the formulation of a suitable policy in line with the Power sector so that the NRS consumers can get their requisite refund in case of supply of ungraded coal.
3. Request for amendment in over loading & under loading clause of FSA and e-Auctions: The responsibility of coal loading in rakes is with the Subsidiaries Coal Companies and the consumers do not have any control over quantity of coal being loaded in the rakes. However, various additional charges are levied on consumers from both Power and Non-power sector by the Indian Railways due to over loading of rakes i.e. punitive charges for load adjustment/detention, engine haulage charges etc. In case of under-loading, the full amount is not
refunded, because according to FSA provision, coal companies give under loading charges limited to the difference of CC / stencil capacity and actual weight of coal loaded in the wagon. But the Railway charges freight as per permissible carrying capacity (PCC ) / chargeable weight and in most cases PCC / chargeable weight is more than the stencil carrying capacity. Request has been made to CIL for amendment of the above-mentioned clause so that the sellers bear the penalty on overloading charges and consumers pay only the cost of excess coal quantity over the chargeable weight supplied by the Subsidiaries.
Submissions made by Power Sector Consumers: 4. Request for providing suitable date to the Power Sector consumers for signing of addendum for enhancement of ACQ upto 100 percent: SECL has recommended enhancement of ACQ upto 100% of the normative quantity from 90% previously which has been consented for by the consumers from Power sector. Request has been made to SECL regarding provide a suitable date for signing of addendum pertaining to enhancement of ACQ upto 100% of the normative requirement and issue a notice regarding the need to submit additional documents if any by the consumers. .
5. Significant variation between billed grades and received grades of coal in certain mines of ECL: The issue of grade slippage from various mines of ECL has been longstanding and rampant which has been impacting the operations of both Power and NRS consumers procuring coal from the Subsidiary. In spite of promise made by ECL authorities regarding significant improvement in the quality of coal supplied from various
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ECL sidings from September 2020 onwards, it has been noticed that quality of coal received by Power sector consumers from Salanpur and Bankola sidings of ECL has further deteriorated in September’20 compared to the previous five months of FY 2020-21.
Issues related to Railways:
Request has been made to CIL and ECL to immediately minimise the instances of grade slippage and ensure supply of declared grades of coal from ECL.
Submissions made by Nonpower Sector Consumers: 6. Submission regarding invoking of general Force Majeure allowing cancellation of rakes by NRS consumers during COVID period: Following the pandemic outbreak and subsequent decline demand by the Power sector, long-pending rakes even from the previous financial year was allotted to the NRS consumers in large numbers during by certain Subsidiaries like WCL and MCL which created havoc in these plants..
8. Request for issuance of E-invoice with IRN note QR codes for all zonal Railways: In spite of the notice issued by Ministry of Finance regarding issuance of E-invoice with IRN note QR code for the registered person under GST invoice having turnover of above 500 Cr.PA, several coal consumers informed that they are still not receiving RRs having IRN and QR code within stipulated time frame from the zonal Railways. Request has been made to the Railway Board to advise all zonal railways to comply with the requirement of E-invoices as per GOI guidelines. In case any special exemption is allowed to Indian Railways in this regard, suitable notification may be issued by the Railway Board.
7. Submission by NRS consumers to SECL regarding supply of inferior 9. Request to consider Actual Tare grade of coal from tertiary sources: Weight instead of Stenciled Tare NRS consumers procuring coal from SECL’s Weight for Weighment of Rakes: Mahan II colliery (primary source) were not able to lift the allotted G-12 grade of coal due to its unavailability. Hence, they were initially offered coal from Chhal as the secondary source. As the designated coal was not available there as well, the consumers were then allotted Balrampur OC as the tertiary source with a reduction of FSA grade from G-12 to G-13. However, the coal received from Balarampur OC was below the promised grade and not suitable for their requirements. Request has been made to SECL so that contracted grade of coal can be supplied either from the primary source or from the tertiary sources.
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The coal consumers are facing the issue of continuous shortages of coal which is mostly driven by the disparity between Stenciled and Actual Tare Weight which results in cumulative financial losses to many organisations getting supply of coal through older rakes. Request has been made to the Railways consider the Actual Tare weighment of the rake upon entry into the Siding instead of subscribing to the Stenciled Tare Weight for preparation of RR.
CCAI CCAIMonthly MonthlyNewsletter NewsletterSeptember November 2020 2019
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POWER Power sector imports from China to face drastic cuts under new Atmanirbhar Bharat plan The power ministry is set to establish three manufacturing hubs all over the country to produce critical energy and transmission equipment, which is currently fully imported from other countries including China, under the Atmanirbhar Bharat plan announced by Prime Minister Narendra Modi. According to authoritative government officials, the Indian power sector in 2018-2019 imported
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Rs71,000 crore of equipment, of which Rs 21,235 crore came from China, according to the Directorate General of Commercial Intelligence (DGCI). Yearly Chinese imports in the power sector have been worth Rs 17,289 crore (2009-2010); Rs 22,114crore (2010-2011); Rs 34,000 crore (2011-2012); Rs 29,062 crore (2012-2013); Rs 22,679 crore (2013-2014); Rs 19,658 crore (2014-2015); Rs 19,301 crore (2015-2016); Rs 19,757 crore (2016-2017), and Rs 19,682 crore (2017-2018). In order to be self-reliant and cut down imports,
particularly from China, the ministry has prepared two lists. The first or the mandatory list has 239 items in which India has zero capacity to manufacture and, hence, must rely on imports till such time the manufacturing hubs come up. The second or the embargo list contains 95 items which are being imported by the power sector despite being manufactured in India. It has been decided that no power sector company, PSU or private, will be allowed to import items on the embargo list. Both these lists will be annexures with the Atmanirbhar Bharat policy.
Power ministry makes it mandatory for all discoms to comply with Energy Conservation Act The power ministry today announced it has made it mandatory for all the distribution entities in the country to comply with the provisions of the Energy Conservation (EC) Act. The power ministry had issued a notification in September stating all the entities having issued distribution license by State or Joint Electricity Regulatory Commissions under the Electricity Act 2003 are notified as Designated Consumers. After this notification, all the DISCOMs will be governed under the provisions of EC Act, such as appointment of energy manager, energy accounting & auditing, identification of categorywise energy losses and implementation of energy conservation & efficiency measures. Earlier, discoms with annual energy losses above 1,000 million units were only covered as designated consumers. With this notification, the number of discom covered under the EC Act will increase from 44 to 102.
The ministry said the decision will facilitate energy accounting and auditing as a mandatory activity for all the discoms leading to reduced losses and increased profitability.
Power demand revival energises coal output India’s coal production rose over 21 per cent year-on-year (YoY) in September 2020, according to the index of eight core industries compiled by the Ministry of Commerce and Industry. Sector watchers point to increased power consumption in States such as Himachal Pradesh (6 per cent YoY growth), Punjab (8 per cent), Uttar Pradesh (18 per cent), Uttarakhand (5 per cent), Gujarat (5 per cent), Madhya Pradesh (25 per cent), Bihar (12 per cent) and Jharkhand (18 per cent). “Peak demand is up due to a variety of other factors, too — agriculture pump-sets being used forirrigation (this is the rabi season), and employees from service hubs such as Bengaluru, Delhi, Chennai and Hyderabad moving back to their hometowns (due to the lockdown and continued closure of offices) leading to increased residential electricity usage,” said Deepak Krishnan, Associate Director for WRI India’s Energy Programme. “Another possibility, especially in States like Uttarakhand, Himachal and Gujarat, is the increased operation of pharmaceutical industries for drug production to fight Covid,” he added. The higher coal output is led by Coal India’s production of 40.51 million tonnes (mt) in September 2020 compared to 30.78 mt in September 2019, up 31.6 per cent. Coal India also said offtake was 46.46 mt in September 2020 (35.28 mt). Output decline in 2019.
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Interregional electricity trade in India can boost solar at coal's expense - EIA With more than 1.3 billion people, India is the second-most populous country in the world and has the third highest energy consumption level after China and the United States. To help meet the country’s energy needs, India is expanding its electric transmission infrastructure to improve electricity movement between regions of the country. In the International Energy Outlook 2020 (IEO2020), the US Energy Information Administration (EIA) considers how interregional electricity grid connections could influence India’s future electricity generating fuel choices. EIA’s modelling shows that greater levels of grid connectivity and electricity trade between regions result in more electricity generation from solar and less from coal. In the past, EIA modelled India’s power market as one region with a single load shape, meaning EIA assumed electricity customers across the country consumed electricity at the same hourly, daily, and seasonal rates. For IEO2020, EIA modelled India’s power market as five distinct regions, representing the country’s five regional power grids. Modelling the power market using five regions better captures the effect of regional electricity transmission interconnections on capacity expansion decisions and longer-term fuel demands for India’s power sector.
High coal prices a dampener for gencos Irregular payments by state-owned distribution companies (discoms) to power generation companies has been the problem most commonly cited in context of the power sector. Re-
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ceiving less attention is the issue of high prices of domestic coal, which accounts for up to 80% of power production costs and impacts the balance sheet of power producers. Experts point that domestic coal prices are high not due to the cost of coal at the pitheads but owing to steep railway freight charges and an assortment of taxes and levies. Thus, conflicting with the Centre’s agenda of reducing coal imports by 100 MT, it is cheaper for a few power plants in the coastal areas to use imported coal than buy the domestic product. To take one example, the price of coal of 4,200 gross calorific value jumps from Rs 995 per tonne at the Mahanadi Coalfields Ltd mines to Rs 4,365 per tonne when it reaches a power plant at Tuticorin. The same grade of imported coal whose FOB (free on board) value at Indian ports is $50.19 or Rs 3,287 per tonne, costs only Rs 3,779 per tonne when it reaches the same power plant in Tamil Nadu. While the average price of imported thermal coal in FY19 stood at Rs 5,388/ tonne — with international prices pegged at around $75/tonne — the higher average calorific value of imported coal (about 5,500 kcal/kg) also means it takes a lesser quantity of the imported fuel to generate the same amount of energy as the domestic product. Sutirtha Bhattacharya, chairman of the West Bengal State Electricity Regulatory Commission, says on average the high freight rates charged by the Indian Railways account for 65% of the cost of coal at a plant. Besides, there are statutory levies like 14% royalty, 2% royalty for national mineral exploration trust and 30% royalty for district mineral foundation fund, which further jack up prices, says a Coal India (CIL) source.
PM Modi says India added more renewable energy capacity than coal-based power in last three years
India's renewable energy growth is unparallel in the world with continuous support from states, Union Minister R K Singh said on Friday asserting that renewables are becoming cheaper in the country.
Prime Minister Narendra Modi on Thursday said India’s annual renewable energy capacity addition has been exceeding that of coal-based thermal power since 2017. He claimed that in the last six years, the country has increased its installed renewable energy capacity by two-anda-half times.
The renewable energy minister was speaking at the Chief Ministers' Plenary session of the virtual 3rd Global RE-INVEST Summit.
Speaking at the RE-Invest 2020 conference, the prime minister highlighted his government’s efforts towards renewable energy and invited global investors to join the sector. “There are huge renewable energy deployment plans for the next decade,” he said, adding that these are likely to generate business prospects of around $20 billion (approximately Rs 1.52 lakh crore) per year. Modi said that India’s renewable energy capacity will rise to 220 Giga Watts by 2022 from the current 136 Giga Watt, and that at present it forms about 36% of India’s total electricity generating capacity. “Today, India’s renewable power capacity is the fourth largest in the world,” Modi claimed. “It is growing at the fastest speed among all major countries.” The prime minister also said that his government has decided to give production linked incentives to high efficiency solar modules, following the scheme’s success in electronics manufacturing.
India's renewable energy growth unparallel in world, says R K Singh
"India has done an exemplary work in the space of renewable energy and running the largest energy access expansion plan. We have connected every household, connected whole country into one integrated grid and we are the only G20 nation which has been able to keep the temperatures within 2 degree by its actions," Singh said in a statement. He was of the view that renewable energy is becoming cheaper in India and lauded all the chief ministers for the great work. Singh also informed the session that India has attracted USD 64 billion foreign investment in Indian renewable industry in the last 4 years. He added that India has emerged as one of the most attractive investment destinations in the world with all major pension funds investing here. Highlighting the achievements of his state, Gujarat Chief Minister Vijay Rupani said Gujarat has been a pioneer in the space of renewable energy (RE) and in the last 3 years, the capacity of RE has increased considerably despite challenges.
Advances in energy storage tech needed for renewable energy to take off: Former Union Minister Suresh Prabhu Efficient energy storage technology can help meet the challenges in India's renewables programme, former union minister Suresh Prabhu CCAI Monthly Newsletter November 2020
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has said. India has set an ambitious target of having 175GW of clean energy by 2022 including 100GW of solar and 60GW of wind power. "India has embarked upon an ambitious target (of adding renewable energy). However, challenges are there, and it can be met with efficient energy storage technology," Prabhu said while speaking at virtual event India Energy Storage Week (IESW). He was speaking at a pre-conference workshop held on 2 November. The IESW, organised by the India Energy Storage Alliance (IESA), is scheduled from 2-6 November. In his keynote address, Prabhu said, "Storage is going to be a new thrust area. I am happy that we will be discussing energy storage in-depth with industry pioneers, think-tanks, policymakers, global Leaders at the IESW."
ficiency solar photovoltaic modules’ among the sectors covered by its production linked incentive (PLI) scheme has drawn mixed responses from the industry. While some greatly welcomed the decision, others felt the amount allocated was too small. As part of its Make in India drive, the cabinet on Wednesday had approved an additional Rs 4,500 crore for the ministry of new and renewable energy (MNRE) to boost manufacturing of such modules. The MNRE held a meeting with industry stakeholders on Thursday, where it clarified that the scheme would be applicable only to new investments. "They told stakeholders that they would award incentives based on the extent of valueadd, capacity and technology," said a source close to the development.
Renewable Energy Secretary Indu Shekhar Chaturvedi said,"The renewable energy (RE) sector is quite fragmented. It involves numerous sectors within itself. We are moving towards a major share of RE in the electricity mix and will only accelerate further."
"The Union Cabinet’s decision to introduce the PLI scheme for solar PV modules and ACC batteries will go a long way in boosting domestic manufacturing of these critical components," said Sumant Sinha, Chairman & Managing Director of ReNew Power, largest renewable energy IPP.
Government's move to boost solar industry garners mixed reactions
However not all felt that way. "It is a well constructed scheme with the intent of incentivizing localisation of the supply chain but the budget needs to be enhanced to make a meaningful impact in the industry," said Sujoy Ghosh, Vice President, APAC and India Region of First Solar
The Union Cabinet’s decision to include ‘high ef-
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DOMESTIC Coal India records 18% increase in coal production in October Coal India Limited, an Indian public sector coal mining and refining firm, has reportedly announced the production of 46.8 MT of coal last month, recording a growth of 18.4 percent. The company had produced 39.5 MT of coal in the same month of the prior fiscal year. The state-owned firm said in the statement that the increase in coal production in absolute terms was 7.4 MT. With its coal production hindered by the COVID-19 pandemic induced slowdown during the first four months of the current fiscal, the company started recording positive growth from August onward on a month-on-month basis. For the first time in the current fiscal, it posted a positive growth of 0.9% in cumulative production till October thus far. Sources cite that the company produced 282.9 MT of coal during April-October, which was 2.5
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MT more than that during a similar period the previous year. Though the positive growth in coal production was nominal, the company could wipe off the negative trend and is looking forward to consolidating the positive growth pattern for the rest of the fiscal, a senior official of CIL said.
SC grants time to Centre to file report on impact of commercial coal mining on environment The Supreme Court has granted time to Central government to file a report explaining how commercial coal mining in Jharkhand would not have an adverse impact on the environment. The court expressed its intention to formulate a committee of experts and put an interim stay on the auction of coal blocks. The court was hearing the plea filed by
Jharkhand government challenging the Centre's decision to auction 41 coal blocks for commercial mining. The Jharkhand government has approached apex court as 9 of the 41 coal mines are in Jharkhand and the state alleges that it would destroy forests and tribal culture and customs. Further the auction would also not fetch adequate price as per the Jharkhand government. The bench headed by Chief Justice SA Bobde expressed the court’s intention to formulate a committee of experts to ascertain the ecological impact of the commercial coal mining project. Attorney General KK Venugopal, representing Centre, opposing the stay contended that a stay would impact the bidding process across the country and sought some time to place material on record clarifying that the animal corridors would not be disturbed by the mining project. .
Auctions for commercial coal mining: Conservative bidding in phase 1; low revenue sharing welcomed The first phase of auction of coal blocks for commercial use witnessed conservative bidding from industry players due to the type of blocks on offer and potential issues around land acquisitions and forest clearances, according to experts. Auctions of 18 coal blocks for commercial use have been completed, with experts noting that the revenue share offered by bidders was lower than expected. The government is set to announce the results on November 11. A number of the mines put up for auction were in forested lands and that issues around obtaining forest clearances and land played a role in lack of interest for the mines the government had offered. The revenue share offered by bidders for large coal blocks with annual peak rated capacity of over 3.0 million tonnes has ranged from 12.5 to 25 per cent, with the Urma Paharitola block in Jharkhand attracting the highest bid of 26.5 per cent from Aurobindo Realty and Infrastructure Pvt Ltd. among the larger coal blocks on offer.
The auctions have not garnered the level of interest that the Centre had indicated while announcing the first set of 38 coal blocks to be offered for commercial mining. Only 23 of the blocks received bids, with only 19 which received two or more bids being put up for auction. It may be also noted that there was little interest from international players as they were moving towards reducing their coal investments.
Next round of commercial coal mine auction in Jan: Coal Minister Coal Minister Pralhad Joshi on Thursday said the Centre is planning to go for next round of auction of blocks in January and also appealed to the states to cooperate with commercial mine allottees to facilitate early operationalisation of the blocks as it would create a positive atmosphere and boost confidence of investors. The statement assumes significance as of the total 35 coal mines successfully auctioned in the last 10 tranches of auction, only 14 blocks could begin operations. He said, "Allow the 19 bidders which have been allotted blocks to operationalise the mines. Rest will also get confidence. So we will have to create such atmosphere. Cooperation means you (state) should get them (allottees) earlier clearances for the blocks...We want cooperation from state governments with regard to land acquisition, pollution control board." The minister further said that before the sale of blocks began, the Jharkhand government was of the view that if the auction took place during COVID-19 times, not much revenue would be generated. But in contrast, he said the Jharkhand government will be receiving the highest revenue amongst all states, of Rs 2,690 crore per annum from the auctioned blocks. Joshi had said 42 companies participated in the auction, out of which 40 were private players. Total 76 bids were received for 23 mines, wherein 19 mines had received two or more bids and were found eligible for opening of technical bids.. CCAI Monthly Newsletter November 2020
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On fast track: Railways’ freight earnings, loading rise in October RAILWAYS
Railways freight earnings as well as loading saw a significant rise in October 2020, reflecting a trend of economic revival on the back of five rounds of unlocking of the economy.
100 rakes of coal, 70 with fertiliser lying idle: Railways
While Railways freight loading was up 15 per cent at 108.16 million tonnes (93.75 million tonnes), its freight earnings for October grew 9 per cent to 10,405.12 crore (9,536.22 crore), an official release said.
Nearly 230 trains loaded with essential goods are waiting idle outside Punjab for the last nearly one month due to protests by farmers in the state, according to Railways officials. Coal for power plants, petroleum products meant for the state as well as for Ladakh and J&K, and fertiliser for the farmers are the main items in these rakes. Chief among them are 100 rakes of coal meant for the five power plants in the state. With the blockade stretching to over a month, they have been moved away and kept in various loop lines in Delhi and Haryana, a Northern Railway official said. Around 10-12 rakes of coal service these power plants every day. Punjab has expressed concern that if coal stock of the power plants is not replenished in time, the state will face power crisis in the winter. Around 70 rakes of fertiliser are also lying idle at various places in Northern Railway zone awaiting clearance, official data show. Railways officials said that as per annual routine, rakes loaded with fertiliser are prioritised across India to service Punjab in the kharif and rabi (October to March) seasons. Thirty rakes of petroleum product meant for the state as well as supplies to Ladakh and J&K are alsoawaiting clearance. Ladakh’s fuel requirement is crucial to be fulfilled before the winter, and this is the time for supply. The rest are containers with various kinds of goods meant of multiple places, records show. Officials said an estimated 5,000 containers loaded with woolens and hosiery from the industrial belt in Punjab are awaiting clearance to go to the ports for export.
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In September, the Railways earned 9,896.86 crore in freight earnings and loading was at 102.12 million tonnes (mt). This latest Railways freight earnings and the strong show in GST collections for October is a clear pointer that economy has normalised to a large extent, say economy watchers. In October, the public sector behemoth’s loading was 108.16 mt which includes 46.97 mt coal, 14.68 mt iron ore, 5.03 mt foodgrain, 5.93 mt fertilisers and 6.62 mt cement (excluding clinker). It is worth noting that a number of concessions/discounts are also being given in Indian Railways to make Railways Freight movement very attractive. The Ministry of Railways had held meetings with top leadership of iron & steel, cement, power, coal, automobiles and logistics service providers.
DFC project: By 2021, Indian Railways’ freight trains can ply on 40% of Dedicated Freight Corridors; details The Dedicated Freight Corridor Corporation of India Limited (DFCCIL) recently announced that Indian Railways will be running its freight trains on 40% of the dedicated freight corridor (DFC) by next year. The DFC project is one of the Indian Railways’ largest infrastructure projects, undertaken by the government at a cost is Rs 81,459 crore, according to a PTI report.
The 1,504 kms long Western DFC is from J N Port in Mumbai, Maharashtra to Dadri in the state of Uttar Pradesh and the 1,856 kms long Eastern DFC is from Sahnewal near Ludhiana in Punjab to Dankuni in the state of West Bengal. DFCCIL MD, R N Singh was quoted in the report saying that 40% of the DFC route km is expected to be completed in the financial year 2020-2021. According to Singh, from Khurja, Kanpur, Rewari, Dadri, Ajmer, Palanpur to Gujarat ports will be connected by the end of 2021. This will give a boost to the region’s industrial scenario. He further said, by March 2022, most of the sections will be commissioned and the remaining Eastern DFC and Western DFC will be commissioned by June 2022. According to the officials, once the Dadri to Rewari section of the DFC is completed, the ‘Roll-on Roll-off (Ro-Ro)’ services of the national transporter can begin, leading to a significant reduction in pollution in the Delhi-NCR region.
STEEL
Q3 recovery in steel demand better than expected The post-lockdown recovery in steel demand has been stronger than initially anticipated, for mostcountries. As a result, the PMI readings for the majority of nations showed considerable improvement, during the July/September period. Many returned above 50 – indicating an expanding economy. Several individual country PMIs even surpassed pre-pandemic figures, most notably Brazil. In China, the first country to be hit by the pandemic, the resumption in activity started towards the end of the first quarter. The country’s Caixin General Manufacturing PMI only dropped below 50 during two months of this year – February and April. Nevertheless, output in most countries remains below pre-pandemic volumes, most notably, in
Europe, Japan and the US, where some of the most drastic cuts in steelmaking were recorded, in the second quarter. MEPS estimates that finished steel production, in the EU, fell by 18.4 percent in the July/September period, year-on-year. Despite Japan’s ability to effectively control the virus, finished steel output in that country is forecast to decline to around 71.3 million tonnes in 2020 – a reduction of approximately 17 percent, compared with the previous year’s total. In the US, capacity utilisation rates have improved but remain at around 70 percent. Many steelmakers are reluctant to resume full operations, while the world still battles to control the virus.
Arcelor Mittal-Nippon Steel lays out large expansion plan, seeks support Sanguine about India’s high growth potential in the steel sector, AM/NS India has approached the government, seeking specific policy support to an ambitious plan to expand its steel-making capacity in India with “significant investments”, according to a senior company executive. The company is primarily evaluating the option of a large green-field facility in eastern India, but may also opt for further expansion through the inorganic route. AM/NS India, a 60:40 joint venture between world’s largest steelmaker ArcelorMittal and Japan’s Nippon Steel Corporation, had acquired Essar Steel’s 9.6 million tonne Hazira plant for `42,785 crore in December. This was the country’s largest stressed-asset deal and marked Arcelor-Mittal’s entry into India’s potentially fastgrowing steel industry. Senior representatives of AM/NS India have recently made a presentation to Union steel minister Dharmendra Pradhan on the firm’s likely investment proposals in the country. They also explained to the minister the support that the company would be requiring, from the Centre and the concerned state governments for the plans to materialise. Despite the Covid-19 pandemic, AM/NS India CCAI Monthly Newsletter November 2020
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did well compared to peers in India in first three full quarters of 2020 since the Hazira unit acquisition – it clocked $423 million as earnings before interest taxes depreciation and amortisation (Ebitda) in the January-September period. India’s current installed capacity is around 140 mtpa. The country aspires to have 300 mt installed capacity by 2030-31. India’s per capital steel consumption is still around a third of the global average.
CEMENT
Seeing better demand from small towns, rural areas: Shree Cement Demand is good from tier-II, III and rural India, said HM Bangur, MD of Shree Cement, said in aninterview with CNBC-TV18. He added that demand in North and East India was very good. “Tier-I cities are having some problem as far as builders are there. They are not getting as gooddemand,” Bangur said. “But overall, I can say as East there is less urbanization, the demand was better. North India the demand was good. South India we are seeing very good demand because it was a plant which was being matured. So, overall in future quarters also such demand should be there,” he said. On sales volume, Bangur said that the growth has come from new plants. “South India our volume is 85 percent or so because south last year was a new plant only taking its roots. Similarly in East India. So, now about 25 million will be our volume,” he said. Bangur said that EBITDA per tonne has to be more than Rs 1,500 for plants to be viable. “In the commodity industry, we can talk more about our cost. EBITDA is a matter of sales price which will be fluctuating up and down. We are taking 4
20 | CCAI Monthly Newsletter November 2020
percent price hike year-on-year (YoY).
Cement to remain strong in 2HFY21 on expected pricing strength The Covid-19 pandemic changed the trend in cement pricing this year. Contrary to historical trends of the lower cement prices QoQ in the third quarter of the calendar year due to softness in the demand owing to the festive season (Diwali) as well as the lower exit prices in Q2 on account of the Monsoon, cement prices have surprised by rising this year. In the third quarter of FY21, average cement price is up 0.8 per cent QoQ so far across India as against a decline of 1.1 per cent - 0.7 per cent QoQ seen in the past 5-10 years. The same is up 7 per cent YoY to Rs 360/bag. According to the cement report from Motilal Oswal Financial Services, cement volumes are growing over 10 per cent YoY in North, East and Central India. While demand has remained weak in the South and Maharashtra, it has recovered strongly from the 15-20 per cent YoY decline seen in 2QFY21. Prices in South India have been particularly strong and are up 18 per cent YoY (flat QoQ). Prices in North/West/Central are up 7 per cent/6 per cent/5 per cent YoY and 3 per cent/1 per cent/2 per cent QoQ. Non-trade prices have also recovered, particularly in the North where it had fallen sharply, as institutional demand (from urban real estate, infrastructure, etc.) has been improving. The brokerage said that Even as variable costs rise, cement spreads (price minus power and fuel and freight costs) are expected to remain strong in 2HFY21 on expected pricing strength. Volume recovery post the lifting of Covid-19 led restrictions has continued to gain strength. After growing by five per cent YoY in 2QFY21, Motilal Oswal Financial Services expects volumes for its coverage universe to grow 12 per cent YoY in 2HFY21E.
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 68.19
INR 5060
8.21
South Africa
5500 NAR
USD 51.81
INR 3845
6.73
Australia
5500 NAR
USD 40.52
INR 3007
-0.05
Indonesia
5000 GAR
USD 43.31
INR 3214
2.43
Indonesia
4200 GAR
USD 29.90
INR 2219
1.48
Indicative Pet Coke Price PET COKE
Sulphur
Monthly Change
Price
India-RIL(Ex-Ref.)
-5%
INR 8851
Saudi Arabia (CIF)
+ 8.5%
INR 7050 ($95)
INR 0.00 0.00
USA (CIF)
- 6.5%
INR 7347 ($99)
0.00
Exchange Rate
Change (Monthly)
INR 74.21
0.61
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
102.13
158.56
94.47
143.13
63.00
72.19
69.19
306.50
332.88
-23.38
21.00
-14.04
23.19
-3.54
-6.26
-6.26
24.00
30.75
South African Coal News:
CFR India FOB N China
Australian Coal News:
* The energy sector in South Africa remains one of the major thermal coal users in the G20 even though the country is at greater risk of the fallout from climate change if the emissions of greenhouse gases are not controlled immediately. Fossil fuels still account for 92% of South Africa’s total energy mix, with more than 85% of electricity coming from coal.
*China's unofficial ban on coal imports from Australia is starting to take its toll on volumes, with departing cargoes down sharply so far in November. The price is down by 25.1 per cent from the recent peak of $140 a tonne on Oct. 5and reports have started emerging of Chinese officials giving unofficial verbal instructions to traders and steel mills to halt purchases of Australian coal.
* South African coal exports have dropped by 3.4 percent in October following low demand and availability of cheaper alternative fuels. The country wise thermal coal export has been showing an upward trend since August after the price nosedived since April 2020 following the spread of coronavirus in the continent. However, the coal export data has deteriorated in October ’20.
*Australian Prime Minister Scott Morrison sees no impact on Australian thermal coal exports to its largest customer Japan from its plan to reach carbon neutrality by 2050, as coal will continue to be used to generate electricity in Japan for some time. But the two countries are also working together on strategies to reduce greenhouse gas (GHG) emissions. Australia exported around 75mn t
22 | CCAI Monthly Newsletter November 2020
of thermal coal to Japan in 2019.
Indonesian Coal News:
*November thermal coal reference price -- also known as HBA at $55.71/mt, down 15.9% year on year, but up 9.2% from October. The HBA price was at $67.09/mt in March and has been on a downtrend since then, slumping to its lowest of $49.42/mt in September amid the coronavirus pandemic. * Indonesia's energy ministry (ESDM) has drafted initial regulations setting out the legal framework for implementing a royalty exemption for coal producers entering into the downstream coal industry. All coal producers will be eligible for consideration of a royalty exemption if they carry out coal development or utilisation activities for downstream purposes.
US Coal News:
* The US is estimated to produce 520.6 million st of coal in 2020, lowering its estimate from a month ago by roughly 4.3 million st, or 0.8%. The year-end output estimate would be 26.2% below the 705.3 million st produced in 2019, Meanwhile, 2021 production is estimated at 626.9 million st. * US mining firms expect Joe Biden’s presidency to raise some obstacles for the coking coal industry, but there is confidence that infrastructure investment and a different approach to diplomatic relations will foster more favourable market conditions. Job losses and mine closures in the last year or more meant that the Donald Trump administration failed to significantly raise coal employment as the sector had hoped. *US third quarter coking coal exports recovered from the second quarter but fell from a year earlier as global demand made a partial recovery from its lowest points. The US exported 9.24mn t of coking coal in the third quarter, a quarterly increase of 13pc but an annual decrease of 21.4pc.
Pet Coke News: * The price of Green Petroleum Coke (GPC) from US gulf coast has gone up last month as its supply has continued to be remained tight in the US Gulf area especially after the Hurricane in last August. Meanwhile, order for high-sulphur pet coke was also on the higher side in recent months causing its price
to remain steady. * The high price of US petcoke is being faced with steep resistance from the buyers. This is pushing the market closer to its ceiling as the end-users continue to choose alternative fuels over petcoke. Chinese demand for US petcoke has kept prices high on the US WestMCoast but according to the analysis, demand is still tepid at that price level presently. *Amid subdued demand and lack of steady bids, petroleum coke trade in India continues to remain thin. The domestic petcoke price also remained flat as import deals for both petcoke and thermal coal remained scarce amid the ongoing festive season in the country.
Shipping Update: * As governments come together at the UN International Maritime Organization (IMO) to consider important next steps to decarbonise maritime transport, the global shipping industry urgently calls on them to take forward its proposal for an industryfinanced, USD 5 billion research and development programme to catalyse the transformation of the industry from dependence on fossil fuels. * India’s imports of coal collapsed to the weakest in at least five years in May, as the economic lockdown in the world’s second-biggest importer of the polluting fuel took its toll. Imports were estimated at 9.17 million tonnes in May, according to vessel-tracking and port data compiled by Refinitiv, the lowest result since Refinitiv started collating data in January 2015. While the numbers are still subject to revision, it’s clear that May’s imports will come nowhere close to the 14.64 million tonnes in April, or the 21.2 million tonnes in May last year. *The shipping industry is faced with more stringent environmental measures around the world, while also having to cope with a slowdown in seaborne trade, which is having an adverse effect on revenues. In fact, it is estimated that the industry’s freight rates won’t rebound for the next 12 months. The elevated market and investment uncertainty caused by looming regulatory restrictions coupled with the COVID-19 pandemic have significantly slowed down global seaborne trade.
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OVERALL DOMESTIC COAL SCENARIO Coal Production (in MT) Company CIL SCCL
October, 2020 October, 2019 46.84 3.89
April-October, 2020 282.86 22.02
April- October, 2019 280.38 35.59
% Growth
April-October, 2020
April- October, 2019
% Growth
25.0% -18.3%
305.67 21.87
316.34 35.42
-3.4% -38.3%
% Growth
39.45 5.07
18.7% -23.1%
% Growth -0.9% -38.1%
Overall Offtake (in MT) Company CIL SCCL
October, 2020 October, 2019 50.53 4.01
40.41 4.91
Coal Despatch to Power (Coal and Coal Products) (in MT) Company
October, 2020
October, 2019
% Growth
April- October, 2020
April- October, 2019
% Growth
CIL SCCL
38.50 3.32
33.91 4.19
13.5% -20.7%
236.97 18.47
253.76 29.82
-6.6% -38.0%
Company
Coal Qty. Allocated October, 2020
Coal Qty. Allocated October, 2019
Increase over notified price
Coal Qty. Allocated April- October, 2020
Coal Qty. Allocated April- October, 2019
Increase over notified price
CIL
5.06
1.35
23%
21.79
12.60
17%
Spot E-auction of Coal (in MT)
Special Forward E-auction for Power (in MT) Company
Coal Qty. Allocated October, 2020
Coal Qty. Allocated October, 2019
Increase over notified price
Coal Qty. Allocated April- October, 2020
Coal Qty. Allocated April- October, 2019
Increase over notified price
CIL
6.51
1.97
0%
16.48
12.90
1%
Exclusive E-auction for Non- Power (in MT) Company
Coal Qty. Allocated October, 2020
Coal Qty. Allocated October, 2019
Increase over notified price
Coal Qty. Allocated April- October, 2020
Coal Qty. Allocated April- October, 2019
Increase over notified price
CIL
3.36
2.53
7%
16.80
4.84
6%
Company
Coal Qty. Allocated October, 2020
Coal Qty. Allocated October, 2019
Increase over notified price
Coal Qty. Allocated April- October, 2020
Coal Qty. Allocated April- October, 2019
Increase over notified price
CIL
0.28
0.00
28%
2.29
0.66
13%
Coal Qty. Allocated AprilOctober, 2019
Increase over notified price
Special Spot E-auction (in MT)
Special Spot E-auction Scheme 2020 For Import Substitution Company
Coal Qty. Allocated October, 2020
Coal Qty. Allocated October, 2019
Increase over notified price
CIL
0.28
0.00
28%
24 | CCAI Monthly Newsletter November 2020
Coal Qty. Allocated AprilOctober, 2020
2.29
0.66
13%
PRODUCTION AND OFFTAKE PERFORMANCE OF CIL AND SUBSIDIARY COMPANIES COAL PRODUCTION (Figs in Mill Te) NOV'20
SUB CO. ACTUAL THIS YEAR
APR'20 - NOV'20
ACTUAL SAME % PERIOD GROWTH LAST YEAR
ACTUAL THIS YEAR
ACTUAL SAME PERIOD LAST YEAR
% GROWTH
0.30
25.80
28.40
-9.10
ECL
4.30
4.30
BCCL
2.50
2.50
3.00
14.80
15.90
-7.20
CCL
6.40
5.80
10.30
32.50
32.80
-0.80
NCL
10.00
9.60
4.10
73.70
69.90
5.40
WCL
3.20
5.40
-41.60
23.20
27.10
-14.30
SECL
12.40
11.60
6.60
76.70
81.20
-5.50
MCL
12.80
10.70
19.70
87.70
74.09
17.20
0.00
0.20
334.50
330.40
NEC CIL
0.00 51.70
50.00
3.30
1.20
OFFTAKE (Figs in Mill Te) SUB CO.
NOV'20
APR'20 - NOV'20
ACTUAL ACTUAL THIS SAME % YEAR PERIOD GROWTH LAST YEAR
ACTUAL THIS YEAR
ACTUAL SAME PERIOD LAST YEAR
% GROWTH
ECL
3.70
4.20
-12.50
26.40
29.90
-11.80
BCCL
2.30
2.40
-4.10
15.00
18.20
-17.60
CCL
6.30
5.90
5.30
39.30
43.50
-9.70
NCL
9.70
9.50
1.60
69.60
70.20
-0.80
WCL
4.70
4.40
7.00
28.30
31.80
-10.90
SECL
12.20
11.00
10.70
85.80
88.10
-2.70
MCL
12.50
10.00
25.10
92.70
81.90
13.20
0.10
0.30
357.20
363.90
NEC CIL
0.00 51.30
47.50
8.00
-1.80
CCAI Monthly Newsletter November 2020
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Note
26 | CCAI Monthly Newsletter November 2020
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