CCAI Newsletter September-19 by Sheikh Murad

September, 2019 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. XLVIII No. 06 Published on : 28.09.2019

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From the Editor’s Desk

Following its decision to allow 100 percent Foreign Direct Inv estment (FDI) in coal mining, the Centre has planne d a slew of measures includi ng car ving out larger coal blocks for the overseas investors, allowing auction of mines with less than three bidders and permitting the sale of 25 percent of tota l coal produced in the open market, to help enhanc e the move. The Government is also planni ng to hold its first round of auc tions for commercial mining by December end this year. According to Minister of Coal and Mines Pralhad Joshi, the move will usher in new investment and technological advances while addressing the current mismatch in demand-supply in fossil fuel sector. However, the recent rounds of auctions for captive coal block auction in the country does not look rosy as bidders have once again stayed away from coal mine auctions in September, turnin g the eighth, ninth and tenth rounds of bids into a non-event. Only six out of 27 received adequate bids to go under the hammer. Meanwhile, CIL, which accoun ts for over four-fifths of Ind ia’s coal output, has opined that the FDI will hav e limited impact on its produc tion as low domestic coal prices, inadequate infr astructure, issues regarding land availability and environmental clearances will take a while before first com mercial production from newer mines sees the ligh t of the day. The national min er has also informed the Government that coal is likely to remain in short sup ply until 2024 and projected the deficit figure to be around 168.45 million tonne in the current fiscal.

Amid the growing outcry ove r the environmental damage caused by emissions from coal, India has strived to grow its renewable energy capacity to 400 Giga Watts while also looking at ways and technologies in coa l gasification to ensure that coal, which will continu e to be the country’s backbo ne of power 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 Ind ia Ltd and Power Grid Cor p. of India Ltd (PGCIL) will be engaged in building mega renewable energy pow er parks (UMREPP) of 2,000 megawatts each in win d and solar resource rich stat es such as Jammu and Kashmir, Andhra Pradesh, Guj arat, Karnataka and so on. The nation is also laying its focus in the atomic energy segment. As per the Department of Atomic Ene rgy (DAE) 21 nuclear reacto rs are under various stages of construction and pla nning which will add around 15000 MW of power generating capacity.

As the battle to reduce carbon footprints intensifies across the globe, Australia, a major coal producing nation , has announced itself to be less reliant on it. Energy generation through brown coa l in Australia fell 17 per cen t in 2017-18, while natural gas and renewable bas ed energy has gone up by 7 per cent and 10 percent in the same fiscal.

Meanwhile, China’s decision to officially allow ‘Green Bon ds’ to fund clean coal projects which use enhanced technologies, has sparked up controversy as it will encourage investors to fund such projects as climate-warm ing coal fired power plants while claiming they are financing green develop me nt. It remains to be seen whether these moves by the country affect global effo rts in fighting climate change.

4 | CCAI Monthly Newsletter September 2019

Content Vol. XLVIII No. 06 September, 2019

Official Organ of the Coal Consumers’ Association of India. Disseminates News and Views on Coal and all other sources of Energy. 4, India Exchange Place - 7th Floor Kolkata - 700 001 Landline : +91 33 22304488 / 22621516 E-mail : sec.ccai@gmail.com Website : www.ccai.co.in

06 Consumers’ Page 10 Power

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14 Domestic

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.

20 Global 24 |In Parliament 30 |Monthly Summary Of Domestic Coal Monthly Summary Of Imported Coal & 32 | Petcoke

35 |Energy Generation Report 36 |Overall Domestic Coal Scenario And Offtake Performance 37 |Production Of Cil And Subsidiary Companies CCAI Monthly Newsletter September 2019

CONSUMERSâ&#x20AC;&#x2122; PAGE Present Coal Scenario Coal India has produced 30.77 mt of coal in September 2019, dropped by 23.5% compared to the same month (40.25 mt) last year. For the period April-September 2019, coal production declined 6% to 241.01 mt compared to corresponding period of previous year. Coal offtake was down by 20% to 35.18 mt in September this year as compared to last year. For the period April-September 2019, coal offtake declined 5.2% to 275.75 mt compared to same period last year.

Consumersâ&#x20AC;&#x2122; Concern 1. Coal Stock Position Coal stocks at domestic thermal power plants have steadily depleted from 33 mt at the end of May 2019 to around 22 mt at the end of September 2019. Due to lower coal supply, generation from coal-based thermal power plants fell by 4.0 % in August 2019 and 10.6 % in September 2019 compared to last year. As Coal India is attempting to make up for the lost volumes in the second half, the power sector is expected to be a much larger beneficiary and imports by the non-regulated sector are expected to remain elevated for the year as well.

2. Coal Quality issues Grade slippages have been observed from the sidings/collieries stated below:

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Coal Company Collieries/Sidings (Declared Grades)

ECL

DBCP-Siding (G-4) of Pandaveswar Area, Bankola -1 (G-4), Khandra (G-4), Kumardihi-A(G-4), Tilaboni (G-4) & Shyamsundarpur (G-4) of Bankola Area, Jhanjra (G-5) of Jhanjra Area, Madhabpur (G-4), Madhabpur-Patch (G-5) & Jambad OCP (G-5) of Kajora Area and Gourangdi (G-8), Bonjemahari (G-5), Dabor (G-7) & Mohanpur (G-7) and Gourangdi Begunia (G-7) collieries of Salanpur Area and Sankurpur (G-6) of Kendra Area, Chitra (G-6/G-8) , SP Mine Area

BCCL

Dahibari (G-6) & Dohibari OCP (G-8) of Chanch Victoria Area and Muraidih (G-9) & Phularitand (WIV) collieries of Barora Area, ENA(W-III) Kusunda Area, Rajapur OCP (W-III) Bastacola Area

SECL

Jampali Mines (G-12 & G-15) and Govinda (G-11) & Churcha Mines (G-8) of Korea Rewa field and Chirimiri Sidings, Katora Sidings

CCL

Magadh Mines (G-12) and Amrapali Mines (G-11), Gridih (G-8/G-10), Central Pit Area'

WCL

Tawa- 1 & Tawa- 2 Mines (G6) and Chhattarpur- 1 Mines (G-9) of Pathakhera Area and Neharia Mines (G-7) of Pench Area

Consumers have requested the Coal Ministry, Coal Controller, CIL & its Subsidiaries to kindly intervene into the matter so that actual grade of coal may be received as per the contracts from the said sources.

3. Request to formulate a suitable methodology and implement the approval of MoP regarding Non-lapsing of short supplies of coal to Power Plants in the lapsable category Power sector consumers have requested Coal Ministry, Railway Board and CIL for formulation of suitable methodology and implementation of the MoP approval (notice dated 08.03.2019) regarding Non-lapsing of short supplies of coal so that these consumers can maintain safe coal stock level at their plants and eventually be prepared for such difficult situation in future as well.

4. Deficit of coal and non-commitment of Auction Programme in SECL and MCL (New) Though cabinet has approved the recommendations of High Level Empowered Committee to offer minimum 50% of total e-Auction quantity as Special Forward e-Auction to address the issues of stressed power plants and to meet the demand of power sector but it is observed that

there has been an acute deficit and the situation has further deteriorated in SECL and MCL. Coal consumers in the power sector have requested the authorities to intervene into the matter.

5. Non-receipt of Referee Analysis Report and reconciliation from different CIL Subsidiaries and request for formulation of a suitable policy for all Subsidiaries Consumers procuring coal from different CIL Subsidiaries have not received Referee Analysis Reports since long. Though they have already deposited the required amount to the Referee Laboratory for analysing the samples they have challenged but due to non-receipt of analysed reports entire reconciliation procedure is held up at the Subsidiary Coal Companies. Subsidiaries have asserted that they would release the reports shortly. CIL has been requested for formulation of a suitable policy so that such situation does not arise in future.

CCAI Monthly Newsletter September 2019

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6. Shortage of coal quantity in rakes Consumers both in the power and non-power sectors have witnessed shortage of 2 to 6% coal quantity in the rakes received by them from almost all the CIL Subsidiaries. In a few rakes, shortages have gone up to even 10%. Authorities should intervene into the matter in order to resolve it.

7. Huge backlog in issuance of Credit notes There has been enormous delay in issuance of credit notes mainly due to grade slippage by the Coal Companies and even no confirmation has been received by the consumers in this regard. Early issuance of Credit notes may provide desired relief to the consumers from financial burden.

8. Issues of Railways faced by the consumers zz Sick wagons: Due to supply of sick wagons the overall loadability of coal rake reduces. Coal companies does not take this in account while allocation. Thus the coal materialization reduces. zz Overloading Penalty: Coal quality and its density differs from the same siding. Thus during loading, coal companies are unable to judge the weighment of coal in specific wagon. Hence, in some wagons under loading and in some wagons overloading happen. Consumer does not have any role in weighment procedure. Overloading penalty should be removed as the same is recovered in RR from the consumers. zz Mix wagons: Now a days the rake comprises of Mix wagons i.e. N,NHL,NR. Thus in single rake the loadability of individual wagon differs. Hence, there is confusion during loading which leads to under loading/overloading of wagons. zz Mistake in RR preparation: Many times the Goods clerk makes mistake in RR preparation. If there is any under charge the same is

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recovered in Next RR, but if there is any over charge the consumer has to go through the lengthy procedure of asking Refund from the CCM office. Getting refund is time consuming & cumbersome process. Therefore overcharging should also be rectified in Next RR. zz Mis-match in Weighment sheet & RR: Multiple times it is observed that there is mis-match between the wagon details of Weighment sheet and RR. This results in overloading penalty to the customers in some wagons though in actual there is no overloading.

9. Cancellation of rakes due to nonavailability of coal from SECL & WCL and charging of wagon registration fees by Railways Number of rakes to the industries (including CPPs) have been cancelled from different Sidings of SECL and WCL as the loading did not commence within stipulated time due to nonavailability of coal. Railways are also charging wagon registration fees from the consumers for cancellation of these rakes. Consumers have requested for formulating a suitable policy so that the cancelled rakes are revalidated and seniority of such long awaited rakes do not get lapsed. Wagon registration fees should not be charged by the Railways as well for no fault at the consumers’ end.

10. Tender conditions of Coal Block Auction To generate more bidders’ interest and maximize participation in the coal block auction, consumers have requested Ministry of Coal if the Tender Documents are framed with unambiguous clauses and conditions by altering the present methodology of calculating Performance Security for schedule-II blocks.

CCAI Monthly Newsletter August 2019

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POWER Why demand for power is surging amid India’s growth slowdown Almost 7% growth in India’s electricity demand at a time when economic expansion has cooled to its weakest in six years may appear as a paradox at first glance. Clarity emerges with a closer look. Power requirement growth in the nation’s most industrialized states decelerated in the April-July period, as demand from businesses cooled in line with the broader slowdown in Asia’s third-largest economy. The overall jump in demand, on the other hand, came mostly because of a rise in demand from states that happened to add a large number of households to the electricity network for the first time. Tamil Nadu and Maharashtra, the nation’s hubs for making automobiles and ancillaries, witnessed demand grow 2.7% and 1.4%, respectively -- the slowest growth among large power

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consumers, data from the government’s Central Electricity Authority show. The states of Haryana and Gujarat, also manufacturing hubs, saw electricity requirement growing at a weaker 2.9% and 5.3% compared with the previous year’s 7.5% and 8.8%, respectively. Increasing demand from factories and commercial firms is the key to revival of India’s money-losing electricity distributors. These consumers account for about half of the power consumption and pay more, helping subsidize others including poor households and farmers.

Pilot project to cut power production cost to run till March 2020 The government’s pilot scheme to reduce power generation cost that saved about Rs 2.75 crore per day in the April-July period has been allowed to run till March 31, 2020.

The Central Electricity Regulatory Commission has extended the implementation period of the scheme to allow Power System Operation Corporation, the national load despatch centre, to fine-tune the operational aspects of the scheme for large-scale implementation in future. The pilot scheme, titled Security Constrained Economic Despatch (SCED), currently involves 49 power plants with a cumulative capacity of 55,940 MW, whose tariffs are decided on the ‘cost-plus’ basis (no competitive bidding) by the CERC. While most participating plants in the pilot belong to state-run NTPC, few private power units such as Reliance Power’s Sasan unit and Tata Power’s Mundra station are also part of it.

Coal shortage puts Rs 5 trillion investment in power plants at risk: Official Asserting that Rs 5 trillion investments in coalbased power plants was in jeopardy due to the dry fuel shortage, Power Secretary S C Garg said there is an urgent need to bring in large global players for commercial mining to boost output. While addressing a round table conference on coal at India Energy Forum in September, Garg also said Coal India should be made professionally more efficient as importing 20 per cent of the coal requirement of the country is "untenable". Terming the current situation "absolutely untenable" when India is not able to exploit annually even one per cent of its explored coal resources, Garg said there was an urgent need for commercial mining by big global players to augment output. "Let us get three to five global big players which can produce 100 million tonne of coal (each year)... that would require a very different way of allocating mines. Today, we allocate small mines... If we can get five of these (global players) who can produce 500 million tonne of coal in next two to three years or five years, situation would change," he said.

CIL drops plan to cut supplies to inefficient power plants Coal India has abandoned its move to cut supplies to inefficient power plants following resistance from customers. It had planned to cut the yearly quota by 80 million tonnes. A government panel had suggested introduction of an upper limit of coal supply for each megawatt of installed capacity, which reduces supply to old, inefficient plants on the basis of a formula it suggested. “We were first asked to revise the annual contracted quantities for each plant based on the recommendations by the panel,” a Coal India executive said. “However, following calculation for revised quantities, a number of plants were to receive less coal, which was not taken lightly by the power companies and we were later asked by the power ministry to abandon the initiative.” Coal India was to supply 560 million tonnes to these power companies going by their consumption norms. According to the new calculation, they were to receive 477 million tonnes, almost 83 million tonnes less.

India looking at technology in coal gasification to get clean energy: PM Modi Prime Minister Narendra Modi told a global business forum that his government is looking at ways and technology in coal gasification to ensure the natural resource is used by the country in a clean and environment-friendly manner to meet its energy requirements. “This is right that the world’s third largest coal reserves is in India. In a poor country like India, we cannot ignore it but there is a solution to it,” he said during a Q&A session at the Bloomberg Global Business Forum here. “…we will have to change the ways of mining and we have to carry out underground mining so that it does not damage the environment,” Modi said. “The other solution is coal gasification. By doing CCAI Monthly Newsletter September 2019

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coal gasification we can get clean energy. We are inviting other countries to come with their technology for use in coal gasification, whether it can be used in mobility,” he said. “We cannot deny the resources and assets that India has but we want to see how we can make use of these assets in an environment-friendly way. That is what we are focusing on,” he said

Letter of credit system making discoms more disciplined, says Power Minister RK Singh The government is banking on the recently implemented letter of credit (LC) mechanism to compel state-owned electricity distribution companies (discoms) to become more disciplined and improve their revenue collection. Union power minister RK Singh said that since it is now mandatory for discoms to issue LCs in advance to receive power, “the system will ensure that the discoms are also encouraged to collect the dues (from customers) diligently”. The power ministry has mandated discoms to open and maintain adequate LCs as payment security to power plants from August 1. However, the minister said since some of the power purchase agreements for renewable energy projects do not have the provision of LCs, the Union government cannot enforce this payment security measure for these projects. Singh said the “LC mechanism has already stopped the creation of new dues” and the issue of legacy dues would be addressed by one of the provisions in the upcoming tariff policy which would make it compulsory for the discoms to pay the 18% delayed payment surcharge for pending dues.

India Ratings assigns ‘stable to negative’ outlook to power sector India Ratings & Research has maintained a stable-to-negative outlook on the power sector for the remaining FY20 despite an increase in electricity demand and rise in thermal plant load

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factor (PLF). The stable-to-negative outlook reflects mounting receivables by state distribution companies due to inadequate improvement in operational parameters, uncertainty on some discoms honouring PPAs and continued dependence on imported coal. Ind-Ra expects the power demand growth to remain at 6-7 per cent despite the likelihood of slowing demand. IndRa notes that the growth in power demand from States such as Haryana, Gujarat, Tamil Nadu and Maharashtra, which are main manufacturing hubs, has been lower than the all-India demand growth of 6.7 per cent in April-July 2019. The new consumer addition of around 26.4 million under the Saubhagya scheme supports the all-India growth. The agency maintained a stable sector outlook for wind and solar power for the remainder of FY20. The agency has also revised the rating outlook for the solar sector to stable (from positive) while maintaining a stable outlook for the wind sector.

Solar installations in first half of 2019 at 3.2 GW, down 35% Solar installations in India, during the first half (H1) of 2019 dropped 35 per cent at 3.2 Giga Watts (GW) as compared with that of same period last year when it was 5.1 GW, according to Mercom India. Roof top installations grew by 11 per cent quarter-over-quarter (QoQ) in Q2 2019, totalling 292 MW compared to 263 MW installed in Q1 2019. The report attributed the drop in solar installations to a slowdown in roof top solar installations and partial commissioning of solar projects. Tariff caps imposed by government agencies have slowed down the solar auctions. Developers are reluctant to bid at the levels prescribed by State agencies, instead of a marketbased auction in which the lowest bid wins. Land acquisition, transmission, and acquiring approvals remain a challenge to commission large-scale projects on time. Developers have also raised concerns about charges for forecasting and scheduling power during drastic

changes in weather conditions..

and viability of these projects as total cost of the project is incurred upfront with no variable cost,” Kumar said.

NTPC, NLC India and other staterun companies to make green en21 new nuclear reactors to add ergy parks across the country 15000 MW capacity: DAE secy As part of India’s energy security efforts, staterun companies present in the conventional power space such as NTPC Ltd, NLC India Ltd (earlier known as Neyveli Lignite Corp. Ltd) ,and Power Grid Corp. of India Ltd (PGCIL) are being roped in to build massive green energy parks.

Setting up such parks will provide heft to India at the world stage specifically in the view of a rapidly evolving global energy landscape and a fundamental change in the global investment culture. These proposed ultra mega renewable energy power parks (UMREPP) of 2,000 megawatts (MW) involving a cost of around $2 billion each, are to be set up in wind and solar resource rich states such as Jammu and Kashmir, Andhra Pradesh, Gujarat, Karnataka, Madhya Pradesh, Maharashtra, Rajasthan, Tamil Nadu and Telangana.

Renewable Power Projects: Clear energy dues, MNRE tells states In the wake of rising dues from state-owned electricity distribution companies (discoms) to renewable power projects, the Centre has asked the states to clear their outstanding amounts as soon as possible. “The Ministry of New and Renewable Energy (MNRE) has constantly taken up the issue of timely payments with state governments and will continue to do so,” Aanand Kumar, secretary, MNRE told. On September 2, power minister RK Singh had written to the chief ministers of Andhra Pradesh, Tamil Nadu, Telangana, Karnataka, Madhya Pradesh, Rajasthan and Maharashtra — the top seven defaulters to renewable energy projects — asking them to clear dues at the earliest to save these assets from becoming NPAs and preventing the possibility of discoms getting dragged to the NCLT. “Timely payments by discoms to renewable energy generators are critical for the success

Department of Atomic Energy (DAE) Secretary KN Vyas said nearly 21 nuclear reactors are under various stages of construction and planning which will add around 15000 MW of power generating capacity. "India has a plan for capacity addition in nuclear power generation and presently we have 21 reactors under the stage of construction and planning. This will help in achieving an additional capacity of about 15,000 MW," he said.At present, there are nine nuclear power reactors at various stages of construction that are targeted for completion by 2024-25.

Wind energy tariffs in SECI auction remain flat Wind tariffs were little changed from earlier this year in a 440mw auction conducted by the Solar Energy Corporation of India (SECI) on Friday. SECI is the ministry of new and renewable energy's arm through which it holds wind and solar auctions. CLP (China Light and Power) won 250MW at Rs 2.83 per unit while Italian energy company Enel got 190MW at Rs 2.84 per unit. In the last wind auction conducted by SECI in May, tariffs were in the range of Rs 2.79 to Rs 2.83 per unit. The ceiling tariff for this auction was set at Rs 2.85 per unit. The original size of the tender was 1800mw but since only two developers participated, allotment was reduced to 440mw. Experts attributed the poor participation to the fact that projects cannot be connected to existing substations. Also, challenges in getting capital for a wind project and availability of land contributed to the lukewarm participation. "People have also become cautious of bidding because they know there is a large pipeline of auctions, so they don't want to take on unnecessary risk," an expert said. CCAI Monthly Newsletter September2019

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DOMESTIC CIL: limited impact from FDI in coal mining, stock may take time to recover Coal India Ltd seems to be in a quagmire. The government’s move to allow 100% foreign direct investment (FDI) in coal mining has dented the market’s enthusiasm in the stock. Its shares tanked 3.7% after the announcement. That said, the stock has been sliding since June 2019 and is near its all-time low now, despite having what can be said to be a decent dividend yield. FDI is not the only concern though. International coal prices have fallen by 20-30% in the past year, note analysts. Both low realizations and the 100% FDI in coal mining are seen as factors that could keep domestic coal prices

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under pressure, going forward. However, that might not be the case. Domestic coal prices are already quite low than landed prices. Besides, CIL’s realizations from fuel supply agreement sales are about 37% lower than e-auction realizations. Additionally, low domestic coal prices are a reason why foreign firms may not find coal mining that attractive at this point, noted analysts. “Even after international prices coming off 20–30% over the past one year, e-auction prices are still at a discount of 20–30% to the landed price of imports from Australia. Additionally, compared to the price of Indonesian coal (4200kcal), e-auction prices are at only 4% premium. Hence, we expect returns for any international players to be stretched, and prof-

itability constraint to not to attract meaningful investments," said analysts at Edelweiss Securities Ltd in a note to clients. Additionally, inadequate infrastructure and issues regarding land availability may take a while before 100% FDI production kicks off. To top it, bidding and environmental clearances will take some time before the first commercial production from newer mines sees the light of the day.

Centre to invite bids for commercial coal mining in December: Pralhad Joshi The centre aims to begin the process of holding the first round of commercial coal mining auctions December end, Minister for Coal, Mines and Parliamentary Affairs, Pralhad Joshi said. Foreign Direct Investment has been approved in the coal mining sector. This will lead to more investments and technology. This will also be a big boost to address the shortcomings we have in the coal mining sector. By December or so, we are planning to offer blocks for a 100 per cent commercial coal mining.” In a bid to boost production, the centre allowed private companies to mine coal for commercial use in February 2018. Till now coal mines were auctioned with a prespecified end-use for the coal to be mined. After inadequate response in subsequent bid rounds, the centre decided to offer an added incentive and the winners have been allowed to sell up to 25 per cent of the total coal produced in the mine in the open market. For mines being auctioned till now, it is still mandatory to use at least 75 per cent of the total coal production for the specified end-use.

Block winners can use coal at any plant now Successful bidders of the current round of coal block auctions can use extracted coal at any of their plants including those at subsidiaries, provided the end-use plant is similar to the one specified during the auction. Earlier, operators

were tied to the plant specified during the auction. The Centre, however, has rejected prospective bidders’ request of selling coal to Coal India at notified prices for the non-regulated sector, which is almost 20% higher than notified. They asked for a higher price as this round of auction was for the non-regulated sector — for which Coal India charges higher. Utilisation of coal at any other plant by the bidder would, however, be subject to the ministry’s scrutiny and prior approval from the Centre. “The block operator needs to inform the government at least 30 working days before it starts to divert coal to any other plants,” a senior executive from a prospective company said. Under the current round of auction, the government has offered to auction 27 blocks under three tranches — 8th, 9th and 10th — and successful bidders can sell 25% of the produce in the open market. Out of the 27 blocks on offer, 20 mines are estimated to hold an extractable reserve of 1 billion tonnes. Financial biddings are to be held between October 10 and November 8. Final allotments are likely to happen by November 11.

Coal likely to remain in short supply until 2024, CIL tells govt Coal is likely to remain in short supply until 2024, Coal India has informed the ministry of coal in a recent note. Considering the current fuel supply agreements (FSAs) and several MoUs for coal supply, Coal India said the current year will witness a deficit of 168.45 million tone, the next year’s shortfall will be 71.25 million tonne. Coal India also said the deficit may widen to 262.4 million tonne in the current financial year if the Centre brings in more schemes. And if such a scenario prevails, the deficit will be 111.27 million tonne for the next financial year. In the current financial year, Coal India has set a CCAI Monthly Newsletter September 2019

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production and sales target of 660 million tone.

Coal India signs MoUs with Russia for coking coal Coal India signed MOUs with two Russian entities in the areas of coking coal mining in the Russian Far East and the Arctic Region. Coal India signed the first MoU with Far Eastern Agency for Attracting Investments and Supporting Exports (FEAAISE), an autonomous nonprofit organization in Russia, for cooperating in their activities for mining coking coal in the Russian Far East and Arctic Region. The second MoU was signed between Coal India and Eastern Mining Company (FEMC) of Russian Federation for exploring, identifying, sourcing, negotiating and consummating mutually beneficial investment opportunities in the mining sector in the Russian Far East.

Plans to boost mineral output by 200% in next 7 years: Mines minister Aiming to boost India's mineral output by 200 per cent in the next seven years, Union Minister Pralhad Joshi said about Rs 1,500 crore lying in exploration trust, could be used for accelerating this work. He said the mining industry is undergoing reforms through transformative investor friendly interventions like the Mines and Minerals (Development and Regulation) Amendment Act 2015 that introduced transparent and competitive auction process for grant of mineral concessions besides setting up of National Mineral Exploration Trust (NMET) to accelerate mineral exploration activity.

like financial package, right of first refusal at the time of auction etc. The Minister said that since the search for the near surface deposits have reached a point of saturation, the country now faces the challenge of finding deep seated and concealed mineral resources by applying state-of-the-art technologies. Railways

defers 15% freight surcharge, ups number of rakes for auto sector

The railways has deferred its busy season surcharge of 15 per cent on freight and hiked the number of rakes to be provided for the auto sector in a bid to increase freight loading, which is likely to take a hit due to the economic slowdown. The national transporter announced that it was suspending its busy season surcharge of 15 per cent, which is levied between October 1 and June 30, for the current season. Additionally, a further waiver of 5 per cent will be given on loading mini rakes or smaller parcel size. For the beleaguered auto sector, which is looking to cut costs, the railways has decided to offer more rakes for the transportation of automobiles. In fact, the railways is hoping that this would increase its present share of two per cent in loading auto freight to around 8-10 per cent by end of this fiscal, successfully moving part of the sector away from roads to railways.

Mines and Coal Minister Joshi urged the geo-scientists to come forward to unearth deep-seated minerals as demands on mineral resources in the country are at an all-time high.

Indian Railways longest electrified tunnel helps save up to Rs 7.5 lakh per rake – a gamechanging project!

He said to boost mining, National Mineral Policy 2019 has been unveiled that proposes to attract private investment through various incentives

India’s longest electrified rail tunnel built by Indian Railways is not just an engineering marvel but also a game-changer for freight operations

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CCAI Monthly Newsletter August 2019

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across the railway network. The longest electrified railway tunnel â&#x20AC;&#x201C; 6.7 kilometres long â&#x20AC;&#x201C; in the new 112-km long broad gauge (BG) line between Obulavaripalli-Krishnapatnam is expected to result in major monetary benefits. Indian Railways is saving almost Rs 7.5 lakh per coal rake, since the commercial operations on this route began, a railway official said. According to CH Rakesh, Chief Public Relations Officer, South Central Railways, four commodities namely coal, iron ore, limestones, and fertilizers are being loaded on the freight trains from the Krishnapatnam port and deported to the western parts of the country. The official explained that this difference in cost saving for the freight operations of each these commodities is because of the new BG line between Obulavaripalli and Krishnapatnam port which now enables the freight trains to directly come straight from Venkatachalam. Now, with the tunnel in line, the distance has been reduced by 72 km between Venkatachalam and Obulavaripalli. For coal, the difference in freight per rake varies from Rs 3 lakh to Rs 7.5 lakh, for fertilizer, the difference in freight per rake varies from Rs 1.5 lakh to Rs 2.5 lakh, for iron ore, the difference in freight per rake is about Rs 6 lakh, for limestone, the difference is about Rs 5.25 lakhs.

CEMENT

Sharp fall in cement demand likely due to lower government spending Cement demand this fiscal is set to more than halve to 5.5 per cent from 12 per cent logged in last year largely due to lower spending by the government which accounts for about 40 per cent of the demand. This apart, real estate sector, which adds up to 5-8 per cent of demand, is hit by liquidity crunch, labour shortage, sand and water availability in

18 | CCAI Monthly Newsletter September 2019

key states. All India cement demand fell two per cent in the first quarter of this fiscal with the east and north logging a fall of 4-5 per cent and 1.5 per cent, respectively. However, chunky price hikes in the first quarter will drive revenue growth. All India cement prices had increased by Rs 56 per bag (January to May) to Rs 380 per 50 kg bag as of May before falling to Rs 355 in August. .

STEEL

Weak demand to hit steel cos profit this fiscal: Report The profitability of steel companies is expected to take a severe hit this fiscal, with slowing domestic demand and a challenging external environment. Official statistics indicate that the domestic steel consumption growth had weakened to 3.5 per cent in July from 6.4 per cent in June, and this is expected fall further, putting pressure on steel companies profitability in September-quarter, said an ICRA study. Operating profit margins of the domestic steel industry have been on a slippery ground, declining steadily to 18.2 per cent in the June-quarter, from 22.6 per cent logged in same quarter last year. According to the ICRA report, the downward trend in profitability for steel companies is expected to continue as their margins get further squeezed between falling domestic steel consumption and a weak outlook for global growth, amid escalating trade war-related tensions. Jayanta Roy, Senior Vice-President & Group Head, ICRA, said that steel prices have been retreating southwards across most steel consuming hubs globally. On the positive side, seaborne coking coal spot prices dipped 25 per cent between May and August. The benefit of price drop is expected to fully flow in the margins of domestic steelmakers from third quarter.

Domestic steel inventory at alarmingly high level of 35 days: INSDAG chief With global steel price forecast getting revised downward, the picture isn't too rosy for domestic makers of the alloy, as they battle a high inventory scenario amid weak demand. “It is a depressing scenario (for domestic steel producers) as inventories are at alarming levels of 35 days, compared to the usual 21 days. Increasing inventory is also putting pressure on fresh production, which is another issue for primary producers,” Sushim Banerjee, director general at Institute of Steel Development & Growth (INSDAG) said. Currently, steel inventory of all primary producers put together stands at 2 million tonnes, up from a normal level of a million tonnes, said industry officials. Due to this, domestic steel prices have already declined 15-20 percent since April.

Local companies in a fix as steel imports surge A sharp increase in steel imports from partner countries under Free Trade Agreements (FTA) last month has sent alarm bells ringing, with local mills approaching New Delhi to exclude the infrastructure alloy from the list of items to be favourably covered by a wider trade pact. The increase comes at a time when overall steel imports showed a decline of 6.5% in July 2019. India now has FTA with 13 countries, but recent talks under the proposed Regional Comprehensive Economic Partnership (RCEP), a 16-country pact that would include China, has raised the likelihood of higher steel imports at zero duty. Shipments at zero duty from FTA countries have shot up by 67% in April-July 2019, according to the latest available industry data, against a 58% increase in the same period last year (April-July 2018).

Imports climbed from 586,000 tonnes in April to 856,000 tonnes at the end of August. Of this, in August alone, FTA imports climbed 0.8% even as shipments from non-FTA countries attracting 7.5% duty have declined.

Steel Ministry assures raw material supply to steel manufacturers after mining leases expire in 2020 The Steel Ministry would ensure that raw material demands of steel manufacturers, especially secondary steel producers, are met when the mining leases expire in 2020. Minister of Petroleum & Natural Gas and Steel, Dharmendra Pradhan said that the Steel Ministry is working with Ministry of Mines for least disruption in the process and is developing a roadmap for auction of mines. Pradhan said that the Ministry is also exploring ways to build in clearances along with the leases so that the new lease holders need not go for clearances again.

Import of 215 iron, steel items need compulsory registration under SIMS The government has made it mandatory for traders to register themselves with Steel Import Monitoring System to import 215 iron and steel products, according to a notification issued last month. These items include certain flat-rolled products; some stranded wire, ropes, cables; certain items of springs and leaves for springs of iron and steel; tubes, pipes and hollow profiles; diesel-electric locomotives; and some parts of railways. “The importer can apply for registration not earlier than 60th day and not later than 15th day before the expected date of arrival of import consignment. The registration number will be valid for a period of 75 days,” the notification said. CCAI Monthly Newsletter September 2019

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GLOBAL China plans new coal mines despite curbs China has sent conflicting signals on environmental and economic policies with increases in coal production, rising imports and plans for new mines. Reuters report raised concerns that China may be planning a push for more coal output, based on an examination of documents from the National Energy Administration (NEA). The news agency found a surge in NEA approvals for new mines in coal producing regions, including Inner Mongolia and Xinjiang, as well as Shanxi and Shaanxi provinces. China’s coal use rose 0.9 percent in 2018, marking the third annual increase in a row.

20 | CCAI Monthly Newsletter September 2019

China’s coal consumption accounted for 50.5 percent of the world’s total last year. Consumption will rise again in 2019 to 3.89 billion tons from 3.87 billion tons in 2018, the China National Coal Association (CNCA) said in a February forecast.

China expected to allow green bonds to fund clean coal projects in potential blow to climate change fight China’s central bank is expected to take the controversial decision to include clean coal projects in the official catalogue of items that are allowed to be financed by green bonds, a technical but significant move that could put its environmental financing standards at odds

with the European Union and even affect global efforts in fighting climate change. The People’s Bank of China (PBOC), which oversees green bond issuance on the interbank market in China, is expected to officially allow coal projects which use enhanced technologies to cut air pollution but leave carbon emissions largely unaccounted for to be financed by green bonds, according to several people who have been briefed on the matter. The designation is important because it will encourage investors to fund such projects as climate-warming coal fired power plants while claiming they are financing green development.

China to open $30bn coal railway by end of month The Haoji line will carry up to 200 million tonnes of coal a year from Haole Baoji in the Inner Mongolia autonomous region to the city of Ji'an in Jiangxi province, a distance of around 1,800km. China Railways has been working on the line for the past seven years, and is now completing work on the last section, which intersects with the Shanghai–Kunming Railway in Jiangxi’s Xinyu City. The line will fuel China’s network of coal-fired plants – officially capped at 1,100GW – as well as what one recent report described as a “tsunami” of plants under construction, which may add another 259GW of installed capacity. Although China has suffered severe air pollution, and is working to develop renewable energy, some 60% of its power is still generated from coal. Bloomberg reports that the aim of the line is to reorientate the country’s coal distribution infrastructure, which is predominantly moves coal from western mines to eastern ports, where it is moved by ship to plants in the south. The new line is set to cut the 20 days required by

the seaborne route to three.

US thermal coal exports forecast 44 million mt in 2019, will be down by another 8.6 million mt in 2020: Platts Analytics US thermal coal exports are expected to be 44 million mt in 2019, down 10 million mt from 2018, with another drop of 8.6 million mt in 2020 given uncompetitive US coal, according to S&P Global Platts Analytics. US exports continue to slow this year, Platts Analytics said in a report, "with 1H19 US thermal exports falling 4.3 million mt y-o-y and preliminary vessel tracking data showing that they likely came in lower in July as well." March-June, the report noted, exports came in lower "as high river levels and rumored contract defaults continue to impact vessel loadings on the Gulf Coast."

Coal use declines in Australian energy mix Australia is now less reliant on coal than at the beginning of the century even as energy consumption steadily climbs with a growing population. As the population grew by 1.6 per cent in 2017/18 to 25 million, energy consumption rose by 0.9 per cent, compared with average growth of 0.6 per cent over the past 10 years. Of this, brown coal-fired generation fell 17 per cent in 2017/18 and the decline was only party offset by a three per cent increase in black coal use, the latest Australian Energy Update has found. Together the share of coal was 60 per cent of total energy generation compared with 80 per cent at the beginning of the century.

SA Coal is burning out quicker than expected A report on the export outlook for South African coal published by the Institute for Energy CCAI Monthly Newsletter September 2019

| 21

Economics and Financial Analysis (IEEFA), a respected international energy think-tank, warns that new energy technologies will replace coalfired power faster than most predict. Eskom and Sasol, which together take nearly two thirds of the 250 million tonnes of coal produced by South African mines each year, are planning to curb their use of the fossil fuel. And there are signs that major coal importers like India, Pakistan and South Korea – which together take more than half of South Africa’s coal exports – are either transitioning away from coal or have limited growth potential. As the overall market shrinks, South Africa is expected to face increased competition from other coal exporters such as Indonesia, Australia and Russia. Waning export demand will hit South African coal miners hard, as thermal coal exports accounted for R73-billion in 2018 – half of the value of the industry’s sales, although only a third of its production. The growing uncompetitiveness of coal-fired power, increased awareness of its social and environmental costs, and pressure worldwide by climate change activism, has forced many top lenders – including three commercial banks in South Africa – to stop financing new coal projects.

S Africa coal price must surge 20% to spur exports South African thermal coal exports via the Richards Bay export hub will continue to languish at around 73m tonnes/year unless benchmark export prices rise at least 20% from current levels, the CEO of miner Canyon Coal said on Wednesday. Shipments from Richards Bay Coal Terminal (RBCT) – which account for more than 90% of the country’s exports – will likely total 73m tonnes this year, compared with 73.5m tonnes in 2018 and 76.5m tonnes in 2017, said Vuslat Bayoglu, at a Coaltrans conference in Johannesburg.

22 | CCAI Monthly Newsletter September 2019

Since 2013, RBCT loadings have averaged just over 73m tonnes/year. The total is well below the export terminal’s capacity of 91m tonnes, in part due to a lack of investment in new coal production capacity, but Bayoglu told Montel a free-on-board price of at least USD 75/t, for benchmark 6,000 kcal/ kg-grade material, could spur some increase in shipments. The Global Coal Richards Bay index has plunged 35% so far this year, with a latest assessment at USD 61.69/t, thereby resulting in high domestic stockpile levels, with exporters reluctant to sell.

Russia expands its largest coal port, sends cargo to India Russia has launched the third export line at its largest coal terminal in the Far East region, loading the first cargo for Indian company JSW Steel, Vostochny Port said. Russia and India are forging closer ties amid chilling relations between Moscow and the West over the Ukrainian crisis, Moscow's alleged meddling in the elections in the United States and other issues. The two nations are targeting $30 billion of annual trade by 2025. Indian investors are interested in investing in Russia's coal industry, the head of Russia's RDIF sovereign wealth fund said.

With Best Compliments From:

Sharda Ma

( )

COAL MERCHANTS, IMPORTERS & HANDLING AGENTS INDIA SOUTH AFRICA INDONESIA SINGAPORE HONG KONG NIGERIA

UGF 1& 2, Kanchenjunga Building, 18 Barakhamba Road, New Delhi-110001, India P : +91 11 23354046/47 F : +91-11-23354047 E : corporate@shardamaa.com W : www.shardamaa.com

IN PARLIAMENT GOVT. OF INDIA MINISTRY OF COAL LOK SABHA

Q. No. 344. COAL SUPPLIES TO POWER PLANTS 17.07.2019 DR. SUJAY RADHAKRISHNA VIKHE PATIL: SHRI UNMESH BHAYYASAHEB PATIL:

(b) if so, the details thereof; (c) whether the Government has decided to use dedicated rail transportation for coal movements; and (d) if so, the details thereof?

Will the Minister of COAL be pleased to state: (a) whether the Government has taken up serious measures to improve coal supplies to power plants after hike in electricity prices at energy exchanges;

24 | CCAI Monthly Newsletter September 2019

ANSWER (a) to (d): A Statement is laid on the Table of the House. Statement, referred to in reply to parts (a) to (d) of Lok Sabha Starred Question No.344

for answer on 17.07.2019, asked by DR. SUJAY stock at Thermal Power Plants end increased RADHAKRISHNA VIKHE PATIL and SHRI UN- from 10.09 Million Tonnes (MT) on 31.10.2018 MESH BHAYYASAHEB PATIL: to 30.95 MT on 31.03.2019. On account of the above measures and enhanced coal supply to (a) & (b): A number of important steps have TPPs, the average price of power in the spot exbeen taken by the Government to augment and change has reduced considerably. monitor coal dispatches to the power houses. Some of the steps taken are as under: (c) & (d): Highest priority is accorded by the Indian Railways to transportation of coal, especially i. The power plants in close vicinity of coal fields coal for power plants. In 2018-19, all commodihave been advised to move coal through road ties loading by the Indian Railways was 1223.29 mode. MT, out of which coal loading was 605.82 MT, ii. The power plants have been advised to move which is almost 50%. coal through road-cumrail mode by utilizing of Goods shed sidings of Railways.

iii. Optimal utilization of the captive modes of transport like, MGR, Belts, Ropes to move coal to the concerned power plants.

Q. No. 3883. REVISED COAL PRODUCTION TARGET 17.07.2019

iv. Priority is given to supply of coal to Power SHRI SUDHEER GUPTA: plants through rail mode. SHRI BIDYUT BARANMAHATO: SHRI SANJAY SADASHIVRAO MANDLIK: v. Coal supplies to Power sector are monitored SHRI GAJANANKIRTIKAR: regularly by an Inter- Ministerial Sub Group, comprising representatives from the Ministries Will the Minister of COAL be pleased to state: of Power, Coal, Railways and Shipping, the Central Electricity Authority (CEA), Coal India Lim- (a) whether Coal India Limited has revised coal ited (CIL) etc. This Sub Group has been meeting production target from fiscal year 2023 to fiscal periodically, at times twice every week, in order year 2025; to take various operational decisions for meet(b) if so, the details thereof and the reasons for ing any contingent situations relating to Power the same; Sector including critical coal stock position for power plants. (c) whether the CIL is planning to invest 10,000 crore in the next few years; and vi. A committee, comprising of the Secretary (Coal), the Secretary (Power) and Member (Traf- (d) if so, the details of the areas where funds fic), Railway Board, reviews the coal transpor- would be invested and the source of funds tation and supply on a regular basis. The coal raised by CIL for this purpose?

ANSWER MINISTER OF PARLIAMENTARY AFFAIRS, COAL AND MINES (SHRI PRALHAD JOSHI) (a) to (b): Coal production target for Coal India Limited (CIL) upto 2024-25 is as follows:

CCAI Monthly Newsletter September 2019

| 25

(In Million Tonnes) Company

19-20

20-21

21-22

22-23

23-24

24-25

CIL

660.00

710.00

765.00

822.00

880.00

940.00

There has not been any revision of target from fiscal year 2023 to fiscal year 2025.

(c) & (d): CIL has set its Capex target of Rs. 10,000 Crs for FY 2019-20 for investment during the current year and beyond. The major head-wise Capex distribution is as under: (in Rs Crs) HEADS

Overall

Land

1904.79

Building

436.57

Plant & Machinery

Heavy Earth Moving and Machinery 2283.61

Other Plants & Machinery

Underground, Safety, Coal Handling 1584.28 Plants, Washery, Power etc

Rail Siding

373.05

Mine Development

1021.71

Others

Furniture, Fixture, Office equipment, water supply, Enterprise Resource 1812.79 Planning, Master Action plan Research & Development

Exploration/Prospecting

583.21

Grand Total

10000

The fund earmarked for Capex of CIL is managed through its own internal resources.

26 | CCAI Monthly Newsletter September 2019

Q. No. 5055. COAL TRANSPORT BY ROAD AND RAIL 24.07.2019 DR. HEENA GAVIT: DR. SUBHASH RAMRAO BHAMRE: SHRI MOHANBHAI KALYANJI KUNDARIYA: SHRI SUNIL DATTATRAY TATKARE: DR. AMOL RAMSING KOLHE: Will the Minister of COAL be pleased to state: (a) whether the road as well as the rail mode of coal transport are not performing upto the expectations which is leading to inadequate coal stock at power plants that are located at far distances from mines; (b) whether road transportation of coal faces significant issues including environmental concerns and resistance from local population; c) if so, the details thereof along with the action taken by the Government to tackle the problem and to ensure efficient transportation of coal; (d) whether it is also true that the coal companies should focus on increased use of conveyor belts of overhead ropeways; and

resistance from local population for movement of coal through road mode due to various issues including environmental concerns. Ministry of Environment, Forest & Climate Change vide notification dated 02.01.2014 has specified norms for use of coal with ash content not exceeding 34% for certain distances (beyond 500 km with effect from 05.06.2016) and sensitive locations such as urban area, ecologically sensitive area or critically polluted industrial area irrespective of its distances from pithead. In addition to the above, it is mandatory to obtain consent under Air (Prevention & Control of Pollution) Act, 1981 from the concerned State Pollution Board. (d) & (e): Coal companies have planned to minimize movement of coal through road mode in a phased manner and substitute the same by conveyor belts, ropeways etc. Ministry of Power in a meeting on 25.01.2018 has directed for use of captive mode of transport for coal movement like elevated closed belt conveyors for Power plants within 20 kilometers from pithead, MerryGo-Round (MGR) for plants located within 40 Kms from pithead and the option of MGR based on financial viability for power plants upto 100 Kms.

(e) if so, the reaction of the Government thereto?

ANSWER MINISTER OF PARLIAMENTARY AFFAIRS, COAL AND MINES (SHRI PRALHAD JOSHI) (a): As per Central Electricity Authority (CEA), total domestic coal receipt to the power plants in 2018-19 has been 582.1 Million Tonne (MT) registering a growth of 8.1% over the receipt of 538.6 MT in 2017-18. Dispatch of coal to long distance power plants is mainly catered through rail mode. As on 17.07.2019, the coal stock at power plants end is 25.59 MT which is equivalent to 15 days consumption requirement. (b) & (c): There have been sporadic instances of CCAI Monthly Newsletter September 2019

| 27

RAJYA SABHA Q. No. 1581. DELAY IN COAL PROJECTS 08.07.2019 SHRIMATI AMBIKA SONI: DR. T. SUBBARAMI REDDY: Will the Minister of COAL be pleased to state : (a) whether Government has reviewed coal projects costing more than â&#x201A;š 500 crore and capacity more than 3 million tonnes; (b) If so, the details thereof; (c) the reasons identified for delay in the projects; and (d) whether the problems have been resolved to expedite those delayed projects and if so, the details thereof?

ANSWER MINISTER OF PARLIAMENTARY AFFAIRS, COAL AND MINES (SHRI PRALHAD JOSHI) (a) to (b) : Ministry of Coal reviews coal projects costing more than Rs 500 Crores or of capacity 3 MTY & above through Quarterly Project Review Meeting chaired by Secretary (Coal) in respect of projects of Coal India Limited (CIL), Singareni Coal Company Limited (SCCL) and NLC India Limited (NLCIL). The last review meeting was held on 21.06.2019 wherein 57 such projects were reviewed. (c): Main reasons identified for the delay of projects are: (1): Physical possession of tenancy land due to issues like land records and noncooperation

28 | CCAI Monthly Newsletter September August 2019 2019

from land owners. (2): Delay in grant of Forest Clearance and handing over of forest land. (3): Law & Order issues at site hampering preliminary work. (d): The issues of project implementation are taken up with the concerned Administrative Ministry and State Government to resolve them. As a result of such measures, following projects (costing more than Rs. 500 crore and capacity more than 3 million tonnes) were completed during 2018-19. 1. Konar OCP (3.5 MTY), Central Coalfields Limited. 2. Nigahi OCP (5.0 MTY), Northern Coalfields Limited..

Q. No. 3174. INCREASE IN PRODUCTION OF COAL 22.07.2019 SHRIMATI AMBIKA SONI: DR. T.SUBBARAMI REDDY: Will the Minister of COAL be pleased to state: (a) whether Coal India Limited (CIL) was able to meet the target of increased production to fulfill the demand; (b) if so, the details thereof; and (c) if not, the efforts made by the Ministry and CIL to increase the production of coal and the outcome thereof?

ANSWER

 Surface Miners have been introduced in opencast mines in a big way to improve operational MINISTER OF PARLIAMENTARY AFFAIRS, efficiency & to cater environmental needs by CIL. COAL AND MINES (SHRI PRALHAD JOSHI) During 2018-19, in CIL, around 50% of the opencast coal production was through Surface min(a) & (b): During the year 2018-19, Coal India ers and is likely to further increase in subsequent Limited (CIL) produced about 607 MT of coal years. against a target of 610 MT.  In underground mines, basic thrust is on (c): In order to augment supply, a total of 84 coal mechanization of coal winning/loading system, blocks have been allotted under Coal Mines coal drilling & supporting system, coal evacua(Special Provision Act, 2015) so far. Further, tion system etc. High capacity Load Haul dumps the focus of the Government is on increasing (LHDs), Side Discharge Loaders (SDLs) & Univerthe domestic production of coal which includes sal Drill Machines (UDMs) in conjunction with pursuing with State Government for assistance belt conveyors have been introduced wherever in land acquisition and coordinated efforts with possible. There has been a consistent effort to Railways for movement of coal. In addition, CIL increase domestic coal production. The all India has taken the following steps to increase doraw coal production has increased from 565.77 mestic coal production: MT in 2013-14 to 730.35 MT (Provisional) in  CIL and its subsidiaries are going for higher 2018-19. Absolute increase in all India coal procapacity mega mines (Capacities > 10 MTY) duction from 2013-14 to 2018-19 is 164.58 MT as compared to an increase of coal production with high mechanization. of 73.01 MT between 2008-09 and 2013-14. CIL  CIL has already introduced state of the art has also increased its production from 462.41 technology to improve its work efficiency. MT in 2013-14 to 606.89 MT in 2018-19. AbsoHigh capacity Heavy Earth Moving Machinery lute increase of 144.48 MT as compared to in(HEMMs) like 42 cum Shovel with 240 T Rear crease of coal production of 58.68 MT between Dumper have been introduced for this purpose. 2008-09 and 2013-14.

CCAI Monthly Newsletter September 2019

| 29

MONTHLY SUMMARY OF DOMESTIC COAL Comparative Price of Domestic Coal: Power/Non-power. *The price shown in the Chart below is without: (a) Surface Transportation Charges. (b) State specific taxes. (c) Coal company or area wise charges if any. (d) Evacuation Facility Charges INR 50 per tonne w.e.f. 00:00 of 20.12.2017 GCV (Kcal/kg) (Mid-value)

G3-6400-6700

G5-5800-6100

G7-5200-5500

G10-4300-4600

G11-4000-4300

G12-3700-4000

Basic ROM price (Rs./te)

3144/ 3144

2737/2737

1926/2311

1024/1228

955/1145

886/1063

Tentative Ex-Mine Price*

4447/4447

3941/3941

2932/3411

1809/2063

1724/1959

1638/1858

COAL * Successful bidders of the current round of coal block auctions can use extracted coal at any of their plants including those at subsidiaries, provided the end-use plant is similar to the one specified during the auction. Earlier, operators were tied to the plant specified during the auction. The Centre, however, has rejected prospective bidders’ request of selling coal to Coal India at notified prices for the nonregulated sector, which is almost 20% higher than notified. They asked for a higher price as this round of auction was for the non-regulated sector — for which Coal India charges higher. * Coal is likely to remain in short supply until 2024, national miner Coal India has informed the ministry of coal in a recent note. Considering the current fuel supply agreements (FSAs) and several MoUs for coal supply, Coal India said the current year will witness a deficit of 168.45 million tonne; the next year’s shortfall will be 71.25 million tonne. Coal India also said the deficit may widen to 262.4 million tonne in the current financial year, if the Centre brings in more schemes. And if such a scenario prevails, the deficit will be 111.27 million tonne for the next financial year.

30 | CCAI Monthly Newsletter September 2019

* To ramp up domestic coal production and cut import bills, the government is planning to relax a host of environmental and land usage norms to help mine owners receive clearances faster and more easily. A committee of secretaries met earlier this month under the chairmanship of Cabinet secretary Rajiv Gauba to discuss coal supply to the power sector, where the Union environment and coal ministries were suggested to come up with new measures to facilitate early operationalisation of allotted coal blocks.

RAILWAYS * Railways defers 15% freight surcharge, ups number of rakes for auto sectorThe railways has deferred its busy season surcharge of 15 per cent on freight and hiked the number of rakes to be provided for the auto sector in a bid to increase freight loading, which is likely to take a hit due to the economic slowdown. The national transporter announced that it was suspending its busy season surcharge of 15 percent, which is levied between October 1 and June 30, for the current season.

POWER * Amid a deepening slowdown in the economy, power demand has stood out, growing almost 7 percent on the back of the world’s largest new consumer addition programme that has taken electricity to almost every doorstep. In an interview with PTI, Power Minister R K Singh said, “Now, we are at a stage where there is universal access to electricity in India. We have left some houses in Chhattisgarh and some hamlets in Rajasthan and Uttar Pradesh. That has led to this growth in electrical industry sector (manufacturing of equipment).” * The government’s pilot scheme to reduce power generation cost, which has saved about Rs 2.75 crore per day in the April-July period, has been allowed to run till March 31, 2020. The Central Electricity Regulatory Commission (CERC) has extended the implementation period of the scheme to allow Power System Operation Corporation (Posoco), the national load despatch centre, to fine-tune the operational aspects of the scheme for largescale implementation in future. * Coal India has abandoned its move to cut supplies to inefficient power plants following resistance from customers. It had planned to cut the yearly quota by 80 million tonnes. A government panel had suggested introduction of an upper limit of coal supply for each megawatt of installed capacity, which reduces supply to old, inefficient plants on the basis of a formula it suggested.

CEMENT * Cement demand this fiscal is set to more than halve to 5.5 percent from 12 per cent logged in last year largely due to lower spending by the government which accounts for about 40 per cent of the demand. This apart, real estate sector, which adds up to 5-8 per cent of demand, is hit

by liquidity crunch, labour shortage, sand and water availability in key states. All India cement demand fell two per cent in the first quarter of this fiscal with the east and north logging a fall of 4-5 per cent and 1.5 per cent, respectively. * The cement sector has emerged as the latest casualty of the slowdown that the Indian economy finds itself in. Demand for cement will stagnate further due to peaking out of the rural housing scheme, high inventory in urban housing, and the slowdown in infrastructure spending by the government, analysts said. Like steel, the demand for cement generally outpaces growth in the broader economy by about 100120 basis points. India's GDP growth during AprJun fell to a 25-quarter low of 5.0%, significantly below expectations.

STEEL * A sharp increase in steel imports from partner countries under Free Trade Agreements (FTA) last month has sent alarm bells ringing, with local mills approaching New Delhi to exclude the infrastructure alloy from the list of items to be favourably covered by a wider trade pact. The increase comes at a time when overall steel imports showed a decline of 6.5% in July 2019. India now has FTA with 13 countries, but recent talks under the proposed Regional Comprehensive Economic Partnership (RCEP) — a 16-country pact that would include China — has raised the likelihood of higher steel imports at zero duty. * Steel Minister Dharmendra Pradhan said that in the next two-three years, India will be in a position to remain a net exporter of steel for years. The minister was speaking at an event 'Chintan Shivir', organised by the steel ministry. The event had a theme of making the domestic steel sector "vibrant, efficient and globally competitive". Currently, India has a production capacity of about 140 million tonne (MT) capacity and produces over 100 MT of steel annually, he said. CCAI Monthly Newsletter September 2019

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MONTHLY SUMMARY OF IMPORTED COAL & PETCOKE Coal Price Index COAL

(kcal/kg)

Monthly Price - FOB

Monthly Change (USD)

South Africa

6000 NAR

USD 59.13

INR 4217

- 2.44

South Africa

5500 NAR

USD 47.89

INR 3415

- 0.49

Australia

5500 NAR

USD 49.16

INR 3506

- 1.45

Indonesia

5000 GAR

USD 46.75

INR 3334

- 0.75

Indonesia

4200 GAR

USD 32.71

INR 2333

0.66

USA

6900 NAR

USD 48.69

INR 3472

- 2.79

PET COKE

Sulphur

India-RIL(Ex-Ref.)

-5%

INR 6900

Price

Saudi Arabia (CIF)

+ 8.5%

INR 5349 ($75)

USA (CIF)

- 6.5%

INR 5491 ($77)

Exchange Rate

Change (Monthly)

USD/INR 71.318

0.40

Coking Coal Price: Premium Low Vol

FOB Aus CFR China 144.59

162.69

HCC 64 MID Vol

Semi Soft

Low Vol PCI

Mid Tier PCI

MET COKE 62% CSR

FOB Aus

CFR China

FOB Aus

CFR India

129.83

145.13

80.45

94.93

92.83

308.13

FOB N China 291.13

South Africa: * SA Coal is burning out quicker than expected. A report on the export outlook for South African coal published by the Institute for Energy Economics and Financial Analysis (IEEFA), a respected international energy think-tank, warns that new energy technologies will replace coalfired power faster than most predict. Eskom and Sasol, which together take nearly two thirds of the 250 million tonnes of coal produced by South African mines each year, are planning to curb their use of the fossil fuel.

32 | CCAI CCAI Monthly Monthly Newsletter Newsletter September August 2019 2019

* South African thermal coal exports via the Richards Bay export hub will continue to languish at around 73m tonnes/year unless benchmark export prices rise at least 20% from current levels, the CEO of miner Canyon Coal said. Shipments from Richards Bay Coal Terminal (RBCT) – which account for more than 90% of the country’s exports – will likely total 73m tonnes this year, compared with 73.5m tonnes in 2018 and 76.5m tonnes in 2017, said Vuslat Bayoglu, at a Coaltrans conference in Johannesburg.

Australian Coal News:

* Foreign buyers of Australian coal have deferred shipments over the past two months, adding to evidence of fading demand for several export commodities. Peabody Energy said its financial performance had "materially'' deteriorated since June 30 on the back of ''demand-driven deferrals'' of coal shipments, slumping coal prices and a slower than expected return to production at Queensland's Middle mount mine after safety incidents. * Australia is now less reliant on coal than at the beginning of the century even as energy consumption steadily climbs with a growing population. As the population grew by 1.6 per cent in 2017/18 to 25 million, energy consumption rose by 0.9 per cent, compared with average growth of 0.6 per cent over the past 10 years. Of this, brown coal-fired generation fell 17 per cent in 2017/18 and the decline was only partly offset by a three per cent increase in black coal use, the latest Australian Energy Update has found.

Indonesian Coal News:

* Indonesian thermal coal exports for the first half of 2019 appeared to be on track for another record year, totaling 171.7 million mt, up 21% year on year, according to customs data released. This was the largest first half volume since S&P Global Platts began collecting the data in 2013.

US Coal News:

* Exports of U.S. thermal coal used primarily to generate electricity is forecast to drop by 10 million metric tons (mt) in 2019 to just 44 million mt. In 2020, thermal coal exports are expected to drop by another 8.6 mt. The estimates were

34 | CCAI Monthly Newsletter September 2019

released by S&P Global Platts Analytics. The analysts also noted that exports were down by 4.3 million mt year over year in the first six months of this year.

Pet Coke News: * US fuel-grade petcoke exports totaled about 2.7 million mt in July, up 16.4% from June and down 14.7% from the year-ago month, US Census Bureau data showed. Through seven months, non-calcined petcoke exports were down 9.5% compared with the year-ago period. Combined calcined and non-calcined petcoke exports totalled about 3 million mt, up 17.5% from the previous month and down 13.2% from the year-ago month. * Indian buying interest for international petcoke saw an uptick, driven by post-monsoon requirements for cement production, market sources said. A trade for a Supramax cargo CFR India West with 6.5% sulphur petcoke was heard at $76/mt for October loading, a west India-based trader said. “Cement producers need petcoke requirement for post monsoon, “he said, “but inquiries are less than expected due to the economic slowdown.” Even so, he said, the Indian demand-supply gap will always be fulfilled by imported petcoke.

Shipping Update: * Economic slowdown has impacted coal import cargo in the first half of this fiscal, as overall cargo growth at major ports registered a marginal growth of 1.9 percent to 294 million tonnes, rating agency Icra said. Healthy volume growth in container, crude and iron ore segments was offset by the decline in coal and some other bulk cargo volumes, it said. “The volume growth at major ports has been impacted by 4 percent fall in coal volumes – 63.6 MT vs 66.3 MT – and some decline in fertiliser and liquid volumes,” Icra said in a statement.

CCAICCAI Monthly Monthly Newsletter Newsletter September August 2019

| 35

55.51

81.81

Source CEA

82.51

51.02

AUG-2019

1330000.00

6218.00

ACTUAL*

NUCLEAR

HYDRO BHUTAN IMP TOTAL

44720.00

136932.00

PROGRAM

280417.06

0.00

THERMAL