Domestic

COAL

Why India needs to focus on unlocking underground reserves of coal

India accounts for 12.5% of global coal consumption. Close to 70% of the country's electricity generation is coal-based. India's dependence on coal will continue for a few more decades. Phasing out coal abruptly will be difficult due to the lack of cheaper and cleaner alternatives. Although cleaner renewable energy sources are on the rise (108.5 billion units), coal-based power generation (574.2 BU) still outweighed them by 5.3X in the first half of FY23. Environmental interests, among other concerns, push Coal India Limited (CIL) to unlock its trapped underground (UG) reserves as a green mining option. If untapped, these resources would be lost forever. UG coal is superior in quality compared with OC and reduces the import burden for higher grades of coal. UG mining is minimally invasive on land, detours land acquisition, avoiding its degradation, environmentally clean, and is society friendly. The silver lining is that several new mass pro-

duction technologies (MPT) are now available that makes UG production economically viable and eco-friendly. In an encouraging sign, in FY22 four UG mines of SECL and one from ECL turned profitable due to the deployment of MPT.

Transition refers to minimising greenhouse gas emissions: Coal India chief

Coal India Chairman Pramod Agrawal on Tuesday said India will continue to depend on coal to meet its power demand in the coming decades and stressed that energy transition means transition to a world where greenhouse gas emissions are reduced to a minimum. He also called for a transition to a world where energy is equitably used. “Today, more than 70 per cent of our energy is produced by coal… So, coal is there and coal will survive in the country for decades to come. When we are talking about transition, it is not from non-renewable sources to renewable ones.”

He stressed on the need for improving efficiency of coal use to make the value chain more sustainable. India’s per capita consumption is 1,208 units in a year, while it is about 5,900 units in China. The world average is more than 3,000 units, he said.

Government offers Coal India flexibility to levy mine closure costs

Coal India Ltd has been given freedom to pass mine closure costs on to consumers. The Maharatna PSU may consider "levying an additional fee on per tonne basis to be paid by the coal consumers to meet the cost of mine closure with the approval of the board and to provide funding for those subsidiaries which are not able to fund the closure of these mines, an official said. However, the company has not taken any decision about levying such charges on coal sales as of now.

The Kolkata-headquartered company has created a provision of Rs 7,238 crore as on March 2022 and incurred Rs 494 crore on mine closure during 2021-22, its annual report stated. The miner had produced 622 million tonnes of coal in 2021-22 and was pursuing a target of 700 million tonnes in the current fiscal.

"As per guidelines, typically mine closure cost is around Rs 9 lakh/hectare for open cast mines and Rs 1.5 lakh/hectare for Under Ground (UG) mines. Adequate provisions are made in the mining plan and the closure cost is deposited in an escrow account opened for the purpose. It is utilised during the life period of the mine," a CIL official said.

India-Australia FTA exempts coking coal import duty

India's imports of coking coal from Australia will be exempt from a 2.5pc import duty with a free trade agreement (FTA) between the two countries finalised on 22 November.

India last week announced that it will roll out a 2.5pc import duty on coking coal, at the same time the country removed taxes on steel exports. The revisions came six months after the country had removed the import duty on coking coal because of a record rise in prices that weighed on steel mills' margins. Australia accounted for 67.5pc of India's coking coal imports during January-September this year against 81pc share in the same period last year. Cheaper Russian cargoes and tighter supplies from Australia this year has brought down the share of Australian coal among Indian buyers.

Coal India clocks 400 MT production in record time

Coal India Limited (CIL) has clocked its quickest 400-million-tonne coal production for any fiscal year in the state-run company's history, it said on November 25. CIL also added that it expects coal production to further increase in the coming months to hit its target of 700 MT in FY23. Nationally, the coal ministry has projected a production of 900 MT in this fiscal, a feat which has not been achieved until now. This comes at a time when India has renewed its thrust on using coal for electricity generation as globally cost of oil and gas has skyrocketed owing to the Ukraine-Russia war and global inflation. The company’s accelerated production brought down the asking annual growth rate to 6.9 percent from 12.4 percent at the year’s start. All the subsidiary companies of CIL sustained doubledigit production growth since the beginning of FY23 compared to preceding fiscal.

Coal imports up 25% despite high output

Despite coal production hitting a new high in the first half of FY23 and international prices remaining elevated, coal imports grew 25 per cent. Between April and August, coal imports went up to 115.9 mlliontonnes against 92.5 mt in the same period last year, registering a 25.3 per cent growth. The increase is mainly driven by noncoking coal, which forms more than 65 per cent of India’s coal imports. Non-coking coal imports grew to 80.6 mt against 60.9 mt, as per Care Ratings data. Coal imports have increased despite the surge in international coal prices. As of July 2022, the global benchmark had crossed its all-time high price of around $300 per tonne in April and had reached $329 per tonne in July, before settling at $321 in September. The prices are expected to remain elevated owing to the heightened geopolitical tensions.Domestic coal production too hit a fresh high. Production in the first half crossed 380 million tonnes, a jump of 21 per cent.

Union Minister Prahlad Joshi to Push for Coal Mining in Northeast India

Prahlad Joshi, the Union Minister of Mines, Coal and Parliamentary Affairs was present for the 1st Northeast Geology and Mining Ministers' Conclave and made some announcements regarding the mining sector in the region. The meeting was held in the Niathu Resort of Chümoukedima. And the Union Minister announced the release of an amount of Rs 5 Crs. This fund will be utilized for exploration of coal and to add strength to this department. He mentioned that he has an expectation of good performance and results from the Northeastern states in the direction of coal exploration. He also announced further financial support to states which can submit reports of exploration and needs more money to continue. He asked the state governments to take up necessary steps towards proper land acquisition and compensation towards the goal. He also mentioned the rising demand for power and its doubling till the year 2040. He also mentioned the top priority for development of Northeast under the Prime Minister's agenda with the focus point of India's 'Act East Policy'.

Coal ministry launches biggest ever coal mine auction of 141 mines

Union Finance Minister NirmalaSitharaman on November 3 launched India’s biggest ever coal mine auction comprising 141 mines in as many as 11 states with a cumulative peak rate capac-

ity (PRC) of 305 million ton (MT).Sitharaman, however, urged investors to also focus on coal gasification simultaneously as the Government of India is set to release aRs 6,000 crore production linked incentive (PLI) scheme. Coal gasification is a process in which coal is partially oxidised with air, oxygen, steam or carbon dioxide to form a fuel gas (syngas). It is a cleaner option than burning coal. As per the coal ministry, of the 141 mines that were put up for auction in the sixth round of commercial auctions, 71 are new coal mines, 62 were rollovers from the previous tranches, and eight were a second attempt of the fifth round of commercial auctions as they had earlier received single bids. Union Coal Minister Pralhad Joshi said that since June 2020 till November 2, the government has auctioned 64 coal mines having a PRC of 152 MT and that a few of them will start operations from this year itself. He, however, did not cite the number of captive coal mines that would be commissioned this year. These 64 mines are expected to bring investments of Rs 22,862 crore and has generated direct or indirect employment to about 200,000 individuals, he said.

Coal India surpasses FY'23 green cover target

In the last five years till March this year, 4,392 hectares of greening inside the mine lease area has created a carbon sink potential of 2.2 lakh tonne per year, the PSU said. Coal India, the world's largest miner, which is scrambling to meet an optimistic coal production target of 700 million tonnes, has said it exceeded the annual target of green coverage by mid-November. Coal India's plantation of 1,526 hectares as of November 15 has exceeded the FY'23 annual target of 1,510 hectares achieving 101 per cent target satisfaction, it said. The plantation area of Coal India grew by 77 per cent so far over 862 hectares of FY'21. In the last five years till March this year, 4,392 hectares of greening inside the mine lease area has created a carbon sink potential of 2.2 lakh tonne per year, the PSU said. ''Coal India supports India's commitment of Intended Nationally Determined Contributions and aims to become a net-zero company by FY 2027,'' company chairman Pramod Agrawal said. The company has planted over 30.42 lakh saplings during FY'22 expanding the green cover in mining areas to 1,468.5 hectares.

SHIPPING

Port infrastructure may get Rs. 2 lakh crore upgrade to ease logistics pain

India is eyeing an about 2 lakh crore upgrade of its port infrastructure, in a major push to ease bottlenecks in logistics. As many as 298 projects, including for road and rail connectivity to ports, have been identified under the plan. Under the port connectivity master plan, 63 non-major ports, 13 major ports (including the under implementation Vadhavan port), and 11 multimodal terminals and river ports are being considered. Of the total projects, 161 are road projects and 132 are rail connectivity projects. Out of these, 60 road and 42 railway projects have been identified as critical infrastructure gap projects. These supplement the 191 projects under the Sagarmalaprogramme, a port connectivity improvement exercise started in 2015. The road projects entail a cost of 75,432 crore while the cost of rail connectivity projects is pegged at 76,713 crore. The ports of Paradip, Visakhapatnam, and Kolkata have been accorded the highest priority with most projects in these connectivity plans.

Paradip Port witnesses surge in coal handling

Paradip Port has witnessed a surge in coal handling on the back of an increase in coastal ship-

ping of thermal coal and imports of thermal and coking coal from other countries due to higher demand. According to P L Haranadh, Chairman of Paradip Port Authority, coastal shipping of thermal coal is up by nearly 60 per cent so far this year and expected to cross 40 million tonne (mt) as against 28 mt during last year. Coal imports from countries such as Australia, Indonesia and South Africa has also been happening in a big way. A massive jump in coastal shipping of thermal coal because our rates are cheaper and we have been able to create the necessary operational ease. The capacity to handle at our terminals has increased to close to around 55 rakes now as compared to around 20 rakes earlier.Paradip Port has brought about substantial improvement in operations, thereby enabling better traffic handling. The overall productivity of the port has gone up to around 30,000 tonnes a day as against close to 25,000 tonnes a day earlier.

STEEL

Export duty removal will boost business sentiments of steel industry: Union Minister

Duty-related measures taken by the government will boost the business sentiments of the domestic steel industry, Union Minister Faggan Singh Kulaste said on Thursday. Six months after the imposition of the export duty on May 21, the government has removed the levy on steel items to nil with effect from November 19, 2022. "The move will boost business sentiments of the steel makers. It will also boost the demand and investments in the sector," the Minister of State (MoS) for Steel said. Kulaste, who is also the MoS for Rural Development, said the players will now utilise their capex (capex expenditure) without any "fear" as they have opportunities in the local and global markets. The minister recently directed the steel companies to invest in research and development activities to make new special-grade products in the country. The move will help boost the domestic consumption of various grades of steel, he added.

Govt preparing 'coking coal mission' to diversify raw material sources: Steel minister

The government is preparing a 'coking coal mission' to diversify the sources of key steel making raw material, for which the country is heavily dependent on imports, according to Union ministerJyotiradityaScindia. The mission is part of the government's efforts to reduce dependence on imports for coking coal and increase use of locally available coal in the steel making through gasification process, the steel minister said. On coal gasification, he said the government is eyeing to set up a coal gasification plant with an annual capacity of 100 million tonnes (MT). India imports around 90 per cent of its coking coal requirement. The coal produced within the country has high ash content, the minister said. Coal with high ash content is not suitable for steel making through the blast furnace route. The steel ministry held several discussions with the ministries of coal, mines, home, and commerce and industry, and finally the finance minister pursuant to which the government has taken the judicious decision, he said.

Tata Steel bets on strong demand for better H2 margin

Tata Steel’s profit slumped 90 per cent in Q1FY23 but Koushik Chatterjee, executive director & CFO of the company, tells The Telegraph that margin improvement in the second half is possible in India. He also talks about energy transition in the UK and Netherlands, the future of British Steel Pension Scheme, the deleveraging journey and the benefit from expansions.

Tata Steel faced headwinds both in India as well as Europe, resulting in sharp drop in profit. How do you expect the third and fourth quarter to play out in terms of margins? Tata Steel’s India business is one of the most competitive in the global steel industry. In the quarter gone by, we have sold a record 4.73 million tonnes(mt), which also demonstrates the strength of our distribution and market reach in a challenging market. So at the operating level we had a good quarter in India. However, there was a confluence of adverse factors as we had an opening inventory which had high embedded costs because of coal imported in the previous quarter; and the price realisation on steel sales in the market was significantly lower than the previous quarter.

CEMENT

Cement firms hope for better demand, price after dismal Q2

After a forgettable second quarter when margins dipped to multi-quarter lows, respite is on the horizon for cement manufacturers as cost pressures ease. However, pickup in cement demand and sustenance of price hikes are key to earnings improvement, analysts said. Still, cement prices and demand hold the key to earnings prospects of manufacturers. October saw some impact of the festive season and, hence, cement price improvement was limited. October demand was down 3-4% year-on-year and 7-8% month-on-month, but up 5% on a three-year compound annual growth rate, according to MotilalOswal. Cement prices improved in south, east and west but remained flat in north and central parts of India in October. Manufacturers have announced further price hikes of ₹15-20/bag across regions in November, said analysts; however, absorption of these price hikes by consumers needs to be monitored. Demand data for December will be scrutinized, though analysts believe that the improved availability of labour after the end of the festive season should help. Prospects over the medium term also are seen in a positive light. Government infrastructure investments are also expected to drive cement demand, since calendar year 2024 will be an election year

Cement companies to attempt price hike of Rs 10-30/bag

Cement companies are likely to increase the price between Rs 10 and Rs 30 per bag in November, said Emkay Global Financial Services Ltd.The cement prices were increased by nearly Rs 3-4/bag last month. Emkay Global in a recent sectoral report said the average pan-India cement price increase was about Rs 3-4/bag in October 2022.On a monthon-month (MoM) basis, prices rose by 2-3 per cent in the East and South, and about one per cent in the West; while declining 1-2 per cent in the northern and central regions, the report said. "Cement companies are attempting price hikes of Rs10-30/bag across regions in November 22. Absorption of these price hikes will be uncovered over the next few days," IANS quoted Emkay Global as saying. Industry volumes likely to have declined by a high single-digit YoY and a low double-digit MoM, in October 22, owing to a high base, as the festive season was spread across OctoberNovember last year.According to the report, a delayed exit of monsoons and labour shortage owing to festive holidays impacted demand in October 22. The cost pressure is expected to ease in coming quarters for the industry players and the industry margins are expected to bottom out in Q2, with peaking of costs, higher exit of cement prices and pick-up in construction activities in coming quarters, said Emkay Global.The international petcoke prices are down by about 30 per cent from the peak of $195/tonne. Further the dip in the fuel prices are expected to provide cost savings of at least Rs 150-200/tonne from Q3FY23, Emkay Global said.