CCAI Newsletter September-22

From the Editor’s Desk

Unprecedented surge in energy demand on one hand and a global narrativeto reduce its carbon footprints on the other has caught India, Asia’s secondlargest economy, in a paradoxical situation. Until August this year, largeparts of India was shimmering under scorching heat-waves while industrialactivities, subdued by the deadly pandemic since 2020, were also on therise, leading to unprecedented power demand across the country. The coalsector has done a phenomenal job in ensuring seamless supply of coal tothe Utilities to ensure energy security and stopped inventories to dwindlebelow alarming levels.

Being a country with the world's fifth largest coal reserve, India is vastlydependent on dry fuel to meet its power demand. While the Governmentis eager to meet the international goals on climate change by phasing outfossil fuels and adopting clean energy technologies, the ever rising graphof energy demand has led the Government to take up serious measuresto increase coal production. Environmentalists fear this may be counter-productive amid the vision of reducing carbon footprint in the country butright now alternatives to coal are few and far between.

Among major initiatives, relaxation of mandatory compliance norms ofcoal mining expansion projects wherein coal mines with environmentalclearances to expand by 40 percent can now expand up to 50 percent.The Government has also planned to boost its coal output by 100-150MT in the next two-to-three years by restarting few closed/discontinuedmines. It is also being endeavored to recycle non-operational coal minesfor interested players.

With a one billion tonne production target by FY ’24, Coal India Limited,which has already performed handsomely in the last year, is also encouragedto further boost its despatch to power sector. While demand of PowerSector has been sufficient for now through consistent coal allocation, theIndustries received lesser supply compared to their actual demand coupledwith minimal number of coal rakes movement for them. Such a supply-situation may have its share in denting the earnings of the Industrialsector dependent on fossil fuel and adding to overall inflation.

It is hoped that enhancing domestic coal production initiatives would notonly bolster supply to ease the situation but also meet India’s target offurther reducing coal imports. While, boosting coal production and evenimport of the coveted dry fuel may have proved necessary at this moment,India is ramping up more sustainable alternatives such as solar power asthe country witness sunny days for the most part of the year and embraceadvance technologies like coal gasification and green hydrogen projects tohit the right note of industry-environment balance.

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CONSUMERS’

1. Submission by Power Sector Consumers regarding immediate issuance of credit notes against excess surface moisture in coal:

As per the FSA signed between coal company, consumers and third party sampling agency (CIMFER), issuance of credit notes is required in case the monthly weighted average surface moisture in coal exceeds seven percent (7%) during the months from October to May and nine percent (9%) during the months from June to September. Though Coal companies issued debit /credit notes for variation in grades, it may kindly be noted that despite provisions in the FSA, credit notes on account of higher surface moisture have not been issued by SECL yet. A

huge amount of credit notes in this regard are pending for the Power Sector consumers since the inception of 3rd party sampling.

Request has been made to SECL and CIL for early issuance of credit notes to its consumers on account of excess surface moisture in coal supplied.

2. Submission by Power Sector Consumers regarding immediate issuance of credit notes against supply of un graded coal as well as regular instances of grade slippage:

a. Following the long-standing impasse over

refund against ungraded coal, a notification has been issued by CIL on 18.07.2022 where raw coal with GCV 1500 to 2200 Kcal/kg has been divided into two slabs by identifying them as below grade coal and compensation to the consumer for supply of each slab has been de scribed there. However, as the notice has been issued with prospective effect, therefore, it would not be applicable for supply of ungraded coal before 18th July 2022.

In case of supply of ungraded coal Prior to 18th July, the consumers were eligible to pay the cost of Coal at Re.1/- (Rupee one only) per tonne excluding the Royalty, cess, sales tax, etc. to the coal company. However, credit notes to be issued by SECL against supply of ungraded coal to its valued customers are pending for a prolonged period.

Representation has been given to SECL and CIL seeking clarification on whether the credit notes for supply of ungraded coal would be issued as per provision in the older FSA (at Rs. 1/tonne) or the CIL notice on price of below grade coal will be allowed on a retrospective effect as well.

b. Disbursement of credit notes worth crores of rupees by SECL against grade slippage in coal supplied from various mines to the Power Sector are also pending for more than a year. Request has been made to SECL for immediate issuance of pending credit notes on account of grade slippage in coal supplied to the Power Sector consumers.

quent months. However, due to several restric tions during pandemic and darth of workforce at the unloading-ends, these rakes could not be re-indented by the concerned power plants.

Also, many Utilities often receive less coal than their stipulated quantity from SECL due to a sig nificant demand-supply mismatch caused by production issue and Railway constraints which causes the backlog of carry forward rakes from SECL to the power houses continue to accumu late.

As per the SOP laid down by CIL, it is interpret ed that if the carry forward rakes are not reindented within the given time-frame then it is considered as deemed delivered quantity which attracts penalty below trigger level.

Request has been made to CIL that if the Utili ties are unwilling to re-indent the carry forward rakes due to non-supply by the Subsidiary Coal Companies within stipulated time, then that quantity should not be considered as deemed delivered and no penalty be imposed on them. It is also requested that dispensation of carry forward rakes, not supplied during the time of allotment due to production issues / Railway constraints, may only be implemented for will ing customers.

4. Request for supply of entire ACQ of coal from SECL to the Power Sector consumers via Rail mode:

3. Submission by Power Sector consumers regarding carry forward of rakes from SECL:

Utilities procuring coal from SECL could not lift the allotted quantity during January-March, 2020 as rakes allotted to them could not be loaded by SECL/SECR due to coal production issue in certain mines. As a result these rakes were carried forward for loading in the subse

As per SECL notice regarding modalities of or der booking, it is mentioned that monthly alloca tion based on demand of coal raised by the con sumers will be done up to the trigger level (75%) via rail mode and quantity beyond trigger level and up to MSQ will be offered through Road/ RCR mode only. However, for Power plants es pecially at a long distance from the mines, Road / RCR mode of supply is unfeasible both on the basis of cost of transportation and logistics problem.

Consumers from Power Sector have stated that the mode of supply mentioned in the Schedule-I of FSA is Rail and it implies that FSA is primar ily signed for supply of coal through Rail. Also, provision given in FSA for supply of coal other than Rail in clause no.4.3.3 under main clause 4.3 of Sources of supply clearly points out that coal companies can supply coal in other than Rail mode is only 5% of the ACQ and that is also a temporary arrangement till the time the major railway line in SECL is constructed and made operational.

Request has been made to SECL to supply the entire allotted quantity of coal (100% of ACQ) to the power Plants via Rail mode especially for plants located far from the sources of coal sup ply.

Industries in general require low ash coal as high-ash coal lowers the reactor productivity, in creases the fuel consumption rate and generally has a deleterious effect on solid direct reduction process. For every one percent increase in the ash content of coal, productivity in these sec tors comes down at least by 2 percent in the ash range of 20-30 percent. The qualitative require ments of coal in both cement and sponge iron sectors are specified in the Indian Standard (IS) with recommended ash range of 24-27% for ef ficient usage in these industries.

5. Inordinate delay in reconciliation of excess coal value against the quantity despatched by MCL especially via Road mode:

There has been an inordinate delay in reconcili ation of excess coal value against the quantity despatched by MCL especially via Road mode despite rigorous follow-ups by the consumers from both Power and Non-power Sectors. A notable amount of credit notes against short-re ceipts are due to be issued for a long time, some of them are pending for more than 6-months as well. This is putting a massive financial pressure and causing procurement hurdles for the con sumers.

Request has been made to MCL for timely re lease of pending credit notes and reconcilia tion of coal bills pertaining to despatch through Road mode at the earliest possible.

It is seen that G2-G7 grades of coal in India have ash content within the recommended range specified in the IS standard but in lower grades of coal, ash content is much higher. As CIL pro duces around 15% of G2-G7 grades out of its total production, it is requested MoC to ensure that high-grade and low-ash coal available in CIL mines be supplied to the Industries, so that such precious resources can be preserved and utilised scientifically.

7. Request to Include Producer GasPlant in FSA Categories for Coal Linkage:

Tappingcoalresourcesthrough coal gasification with the most modern research technology to provide the feedstock to theindustryisanideal solution to be able to harness its huge coal re serves as energy sourceand feedstock for the industry in an environmentally friendly manner.

6. Request for effective utilisation of higher grade coal available in different CIL Subsidiaries by supplying it to Industrial Sector:

Indiaaimsfor100milliontons(MT) coal for coal gasification by 2030 with investments worth over Rs. 4 lakh crores. The Government of In diahas also introduced a concession of 50% on revenue sharing of coal used for gasifica tion and/or to sellcoalforagasificationproject throughaCoalMineallocatedunderCommer cialMiningRoute.

Request has been made to MoC to provide necessary guidance so that coal linkage can

be availed under the category of Producer Gas Plant (PGP) in theupcoming auctions as it would help India achieve its coal gasification target.

8. Appeal by Industries and their CPPs for increasing supply of total coal quantity and number of rakes:

In spite of robust growth in overall coal produc tion and despatch by CIL, supply to NRS con sumers have shrunk significantly since Septem ber 2021. CIL’s actual allocation of coal to NRS is languishing at just 14% of total despatch. Supply to the NRS consumers have dipped by 28.5% in April-July 2022 period on a Y-o-Y basis. Daily average rake supply to NRS has become 1/3 of the same period last year.

Request has been made to the Hon'ble Minis ter of coal, MoC, MoR and CIL to immediately increase supply of coal quantity and number of rakes to NRS consumers. Also, allocation of coal may be as per ACQ instead of restrict ing it to trigger level. Supply to the CPPs may be increased as per ACQ so that excess power generated by the units could be transmitted to the grid.

feiture of EMD as they were not at fault in this case but EMD amount had been deducted by NCL from the refunded coal value.

Request has been made to NCL to process refund of the deducted EMD amounts against exclusive e-auction held on 23/12/2021 as the consumers are in no way responsible for the non-lifting of allotted quantity.

9. Submission by NRS Consumers for refund of EMD against undelivered quantities via RcR Mode from NCL:

As per Exclusive e-Auction conducted by NCL dated 23/12/2021, allotment of G-8 Grade coal was made through Krishnashila siding via RCR mode. Successful bidders in the said auction had submitted full coal value to NCL.Meanwhile during early April 2022, Railways prioritiseddes patch of coal to Power Sector owing to soaring demand which had restricted movement of coal to the Industries via Rail as well as RcR mode.

Due to non-supply of e-Auction coal for a pro longed period, the Industries submitted applica tions seeking refund of coal value without for

10. Request for enhancement of supply to NRS Sector via Road mode from Northern Coalfields Limited (NCL):

NRS consumers sourcing coal from Bina area of Northern Coalfields Limited (NCL) are not being able to lift even the trigger-level supply (75% of ACQ) from the aforementioned mine due to a number of reasons such as,

• Lesser allotment of coal than what is required for lifting-trigger level quantity within the valid ity period of DOs.

• Allocation of insufficient number of vehicles at the road supply loading point on a daily basis.

• Inadequate coal availability in stock yards for allowed vehicles to lift the required quantity of coal on a day.

• Daily loading time for allowed vehicles is not sufficient to complete loading of all vehicles al lotted to load the daily DO quantity.

Request has been made to NCL and CIL so that the quantity of coal allotted to the Industries from Bina Project may please be increased immediately by NCL, number of vehicles al lowed per day at the mine loading point may be increased to a level which is sufficient to load the daily allotted quantity and round the clock loading or loading till the time the last vehicle is loaded for the day should be allowed from the area.

THER MAL

India’s coal and electricity supplies are more comfortable this autumn: Kemp

India’s electricity supply appears much more comfortable than a year ago, when coal and generation shortages led to grid instability and widespread blackouts. Power consumption has grown significantly, but coal stocks are more than double than last year’s level and grid fre quency is staying closer to the target.

Between June and August, total electricity de mand met was up by 22 billion kilowatt-hours (6%) compared with the same period in 2021.

The increase was supplied by extra solar gener ation (+6 billion kWh) and thermal power plants (+16 billion kWh) mostly burning coal. India’s in

stalled capacity from solar farms and wind tur bines had grown 16% by the end of August 2022 compared with August 2021, helping increase the share of output from renewables. Government policy has encouraged the maximi sation of domestic coal and prioritised solid fuel movements on the rail network to ensure gen erators have enough fuel on hand to run when called. Domestic coal production increased by 27 million tonnes (17%) between June and August compared with the same period a year earlier. The number of loaded coal trains des patched from the mines to power plants av eraged 253 per day. Coal deliveries to power producers totalled 177 million tonnes between June and August up from 150 million tonnes in 2021.

Coal phase out in India could make electricity cost 40% less by 2050

A new research article published in a peer-re viewed journal shows that India could cut its electricity costs by about 40 per cent with a rapid transition of its power sector from coal to renewables by 2050.

The study, published in the prestigious journal Nature Communications and authored by re searchers at Lappeenranta-Lahti University of Technology (LUT), modelled the Indian power sector transition in a state-wide resolution on an hourly timescale up to 2050 for the first-time. According to the study, some key Indian states could have 100 per cent sustainable energy by as early as 2035. Some of the coal dependent states such as Uttar Pradesh, Odisha, West Ben gal, Maharashtra, Gujarat and Jharkhand can phase out coal as early as 2040.

The study estimates a deflationary cost for re newable energy. Solar and wind power costs de cline significantly compared to coal and are ex pected to fall further by another 50-60 per cent by 2050. Whereas per megawatt cost of elec tricity from coal is expected to increase 70 per cent and the cost for nuclear power is expected to increase by more than 13 per cent.

Power Minister Says Country Will Add More Coal-Fired Plants

The leader of India’s power sector has said the country is preparing to add as much as 56 GW of coal-fired generation capacity by 2030 in or der for the country to meet growing demand for electricity. He also said India must invest in en ergy storage, in concert with supporting more wind and solar power development, to reach the country’s goal of 500 GW of renewable energy generation capacity by 2030.

The increase in coal-fired capacity would rep resent about a 25% jump above the country’s current 204 GW of coal-fueled generation. India will continue to support investment in renew able energy, but he said officials will prioritize

“reliable” power to further economic growth, the Government has said.

Indian officials already have said they will delay the closure of some of the country’s older coalfired power plants, while calling for an increase in output from domestic coal mines. Officials in early September extended a deadline for coalfired power plants to install equipment to cut emissions of sulfur by two years, the third time that date has been pushed back.

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Power Grid Rating: Buy a powerpacked deal on the cards

Media reports indicate that power ministry is in talks with Power Grid (PGCIL) to purchase PFC’s 52.63% stake (`144 bn) in REC. Rationale is for PFC to finance power projects through REC stake sale proceeds. PGCIL has sufficient cash and we remain positive on the 1-yr and mediumterm transmission spend growth story. But, this is a near-term dampener and could negatively impact FY23e-25e EPS by 3-5%. Dividend yield could also be lower at 4% vs 6% in FY23e.

Good governance history under the scanner: PGCIL has a commendable execution track record and a dominant leadership position in transmission even with private competition be ing introduced 2013 onwards. NTPC in the past made investments outside the core like fertilis ers on ministry directives, but PGCIL has been relatively insulated. If stake purchase news materialises, multiple is likely to get impacted. PGCIL could potentially trade at the lower end of 2-2.2x PB, where it has traded when visibility on T&D capex and rising earnings growth picked up.

PXIL introduces daily, weekly, monthly contracts for electricity trade

Power Exchange of India Ltd (PXIL) launched daily, weekly and monthly contracts for meeting power trading requirements for up to 90 days ahead. The introduction of daily, weekly and

monthly contracts is in line with the approval granted by the Central Electricity Regulatory Commission (CERC) on June 7, 2022.

The price discovery for these contracts will be through a uniform price matching mechanism through an open auction system. The delivery under daily contract would commence from 'T+2' up to 'T+90' days ahead, with 'T' being the day of transaction. The delivery under weekly contract would commence from week-1 to week-12, considering the week in which trans action occurs as week-0. Delivery under month ly contract would commence from month-1 to month-3.

These new contracts introduced in PXIL's propri etary transaction system 'PRATYAY' are double sided open auctions enabling market partici pants to manage their portfolios efficiently and transparently for a long duration, it added.

a connection with India, which designs most of the advanced chips. Once the designs are com pleted, they are shipped to countries including the US, China, South Korea, and Taiwan.

The Indian semiconductor market was valued at $27.2 billion in 2021 and is expected to grow to $64 billion in 2026, according to Vedanta. The country’s semiconductor imports increased 65 percent in 2021-22 from 2019-20, as per data from the commerce and industry ministry.

India working to transform its energy landscape with significant clean energy share: Minister Jitendra Singh

India is working to transform its energy land scape with a significant clean energy share, Sci ence and Technology Minister Jitendra Singh has told the international community while as serting the country will achieve net zero emis sions by 2070.

India’s power play in semiconductor business – a ticket to becoming global?

India continues to aspire to become a semicon ductor hub and attract electronics ecosystem players across the value chain including manu facturers of highly sophisticated and sensitive equipment, material (high purity gases, chemi cals, wafers, photo-masks), and equipment ser vice providers.

To accelerate its plans, India unveiled a $10 bil lion incentive programme for semiconductor and display manufacturers in December last year. The government also approved modifica tions in the programme for the development of semiconductors and display manufacturing ecosystems in India.

The global semiconductor industry already has

By 2030, India has agreed to reach 500GW nonfossil energy capacity , shift 50 per cent of ener gy its requirements to renewable sources, lower overall anticipated carbon emissions by one bil lion tonnes and reduce carbon intensity of the economy by 45 per cent over the 2005 levels. Highlighting the need to strengthen long-term private sector engagement, he said the transi tion to bioeconomy is based on projects under development and deployment with high invest ment and high-risk ambitions.

India Races to Meet Dec Target for Renewable Energy But 4 Big States Behind Half of Total Shortfall: Report

As India races against time to meet its Decem ber 2022 target of achieving 175 GW of installed renewable energy capacity, four big states con tinue to account for over half of the total short fall, says a new report.

According to the latest assessment done by

global energy think tank Ember, India is still 58 GW away from meeting its 2022 goal. At least 61 per cent of the current shortfall is in Ma harashtra (11.1 GW), Uttar Pradesh (9.7 GW), Andhra Pradesh (9.2 GW), and Madhya Pradesh (6.5 GW) — states that built less than 3 per cent of India’s renewables installed till August.

The analysis based Ministry of New and Re newable Energy (MNRE) data, shows that by August, India had installed 11.1 GW of renew able capacity compared to 9.5 GW in the same period in 2021. While there was a strong yearon-year growth of 17 per cent in the first eight months of the year, it may still fall short of realis ing the year-end goal. The 2030 target, however, seems well within reach, says the report, but for that India would need to install renewables 2.5 times faster to maintain the required monthly build-rates.

Solar continues to power the clean energy tran sition and constitutes 89 per cent of all renew ables growth. While the new solar installations rose from January to August by 22 per cent year-on-year, new wind installations increased by only 7 per cent, with only 1.1 GW installed between January to August 2022, shows data.

Centre ramping up measures to increase green hydrogen generation: Union minister

The Centre is ramping up measures to increase volumes of green hydrogen generation, Union minister BhagwantKhuba said, reiterating gov ernment’s commitment for making India car bon-emission free in future.

“The government is also ramping up measures to increase volumes of green hydrogen genera tion and the support of industrialists is a boon to flourish in the segment,” the minister said. He highlighted that India is “growing vigorously” in the sector of renewable energy and alternative sources such as solar, wind, and electrical en ergy.

Yogesh Mudras, managing director of Informa Markets in India, said India has emerged as the fourth largest country in the world in terms of

installed renewable energy capacity and regis tered the highest growth rate in RE capacity ad dition. Besides, the 2070 target of net zero car bon emission as committed by Prime Minister NarendraModi could boost India’s economy by 4.7 per cent above projected baseline and cre ate 20 million additional jobs by 2032.

India mulls $2.5 billion aid to manufacture grid-scale batteries

India’s power ministry is proposing a nearly $2.5 billion incentive plan to encourage domes tic manufacturing of grid-scale batteries, aim ing at bringing down the cost of energy storage to speed up its energy transition.

Worried over rival China’s dominance in lithium, the nation is in talks with countries includ ing Australia to secure supplies of the battery metal. India also plans to promote other battery technologies. Lower storage costs will be key to providing around-the-clock renewable power supplies from intermittent renewable sources like wind and solar. Until that happens, India is prioritizing energy security, with plans to expand its coal power fleet by a quarter through 2030 unless cheaper storage becomes available.

The battery plan would follow the blueprint of Prime Minister NarendraModi’s Make In India initiative. The government has offered financial incentives to spur domestic manufacturing of everything from solar panels to car batteries and electronics goods, in order to reduce de pendence on imports and create local jobs.

Amazon to set up 3 solar farms in India

Amazon announced it will set up three solar farms in Rajasthan with a combined capacity of 420 megawatt (MW). This will be the first time that the e-commerce major is setting up a solar farm in the country. These would include a 210 MW project to be developed by ReNew Power, a 100 MW project to be developed by Amp Ener gy India, and a 110 MW project to be developed by Brookfield Renewable Partners, for which

power purchase agreements (PPAs) have been signed, it said in a statement.

Further, Amazon will also set up 23 new solar rooftop projects – with a capacity to generate an additional 4.09 MW of power — across 14 cities in India. This would increase the com pany’s total number of solar rooftop projects in the country to 41 with 19.7 MW of renewable energy capacity.

Besides these PPAs, our efforts include provid ing training for developers and other buyers on how to structure these agreements for mutual benefit. Combined, these farms have the ca pacity to generate 1.07 million megawatt hours (1,076,000 MWh) of renewable energy per year, enough to power more than 360,000 averagesized households in New Delhi annually.

Hydro policy may link free power with project progress

The Centre is considering a new hydro power policy that may link free power from a project to the host states to the progress of the projects, offer annuity to project-affected families on early completion and devise other measures to lower project costs and tariffs.

The draft proposal circulated among states for discussion seeks to address problems that have discouraged private investment and stagnated the capacity addition, said a government official.

Time and cost overruns can raise tariffs from new hydro projects up to Rs. 8 per unit but with these measures the government believes a Rs. 4.5 per unit price may be possible.

Hydro power is envisaged to play a vital role in the country meeting Nationally Determined Contribution (NDC) climate commitments. The proposed policy seeks budgetary support for enabling infrastructure around new hydro projects, and waiver of inter-state transmission fees for 18 years. India currently has 48 GW hydro capacity, with a potential for total 145 GW generation. The government is targeting 70 GW capacity by 2030.

Gujarat: SardarSarovar dam's hydropower output nearly doubles this year

Good rainfall in the catchment area of the SardarSarovar dam in Gujarat's Narmada district has led to the generation of 2,142 million units (MUs) of hydropower so far this year, nearly double as compared to the corresponding period last year. The month of August has contributed the most to it, the official data has shown.

As per the India Meteorological Department (IMD), both Gujarat and neighbouring Madhya Pradesh have received excess rainfall this monsoon season. Of the Narmada river's total basin area of 97,410 sq km, a total of 85,858 sq km area lies in Madhya Pradesh and 9,894 sq km in Gujarat.

From the River Bed Power House (RBPH) turbines at the dam located in Kevadia, 2,142 MUs of electricity was produced till September 20 this year as compared to 1,129 MUs units till September end in 2021, the data shared by the SardarSarovar Narmada Nigam Limited (SSNNL) said.

Inox Wind commissions India’s first 3.3MW wind turbine in Jasdan

Gujarat CM Bhupendra Patel commissioned India’s first 3.3 MW wind turbine at Ranparda village of Jasdantaluka in Rajkot district.

The wind turbine has been established by wind energy solutions provider, Inox Wind. The turbine developed has a 100 metre tubular tower and 146 metre rotor blades and incurs the lowest possible cost of energy.

KailashTarachandani, CEO,Inox Wind, said, “The 3.3 MW turbine has been specifically designed for the Indian low wind regions. Due to its size, capacity and competitiveness, it will be a game changer in the Indian market. . Inox Wind’s initiative in the direction of fulfilling the promise of wind energy is a big eap in fulfilling this dream in Gujarat”.

DOMESTIC COAL

Coal production to increase to 1.23 bn tonne by FY 2024-25: Centre

In a bid to ensure energy security for the country, the Centre has said that it is in the process of increasing coal production to 1.23 Billion Tonne (BT) by FY 202425. To achieve this ambitious goal, Coal India Ltd (CIL) has adopted an integrated planning approach by strengthening evacuation infrastructure for one billion tonne production and seamless transportation of dry fuel.

North Karanpura Coalfield is a major coalfield in Jharkhand State, falling within the command of Central Coalfields Limited (CCL) having coal resource of about 19 billion tonnes. CCL has projected production contribution of about 135 Million tonne by FY25, out of which about 85 MT is likely to be

produced from North Karanpura Coalfield from several Greenfield/brownfield coal mining projects.

Further, Shivpur-Kathautia, a new rail line of 49km, has been envisaged and is being constructed through formation of project specific SPV, which shall provide another exit for coal evacuation via Koderma to the trunk railway line from Howrah to Delhi.

Centre may set area caps for mining in states

The Union government is preparing to set out area caps for mining as it aims to carve out smaller mining areas to attract more investors, two people aware of the development said. The move will also prevent vast tracts of land irregularly ending up with a few miners, which would undermine the very purpose of

auctioning mineral concessions through a fair and transparent mechanism.

All states will have to follow the area limits for various minerals including iron ore, diamond, bauxite, gold and copper while auctioning resources, and changes would require permission from the Centre.

Depending on the kind of mineral mined, states can set aside 25-400 sq. km for a prospecting licence (PL), and 10-25 sq. km for a mining lease (ML), said one of the two persons quoted above, both of whom spoke on the condition of anonymity. The changes will be made through an amendment of the Mines and Minerals Development and Regulation) Act, 1957

Almost 50% coal blocks allotted to power PSUs face delay in production: Report

Seven out of the total 16 coal blocks issued to stateowned power sector entities or PSUs like National Thermal Power Corporation (NTPC), Damodar Valley Corporation (DVC), Neyveli Lignite Corporation (NLC), THDC (a mini-Ratna company under NTPC) and PatratuVidyutUtpadan Nigam Ltd (PVUNL - a joint venture between NTPC and JBVNL) are yet to start or have just started production, even more than seven years after their allotment.

This is despite the fact that coal blocks were allotted to these power sector PSUs back in March 2015 to fulfil their shortage of dry fuel, as India's largest coal producer, Coal India Ltd (CIL), on its own, could not completely meet their requirements.

Reasons like delay in land acquisition, environment and forest clearances, non-availability of land records as well as law and order issues are the main reasons behind lack of work in these coal blocks, sources aware of the developments said.

Price of coal in India will not rise despite higher costs: CIL

Pramod Agrawal, chairman of state-owned Coal India, has announced that despite an upcoming wage hike for its workers and rising diesel and explosives costs, the company is unlikely to increase prices of coal in the near term. However, higher labor and

energy costs will lead to price hikes in the coming years, he added.

During the company's general meeting, Agrawal said, "In the prevailing circumstances, where the price of energy has increased substantially, bringing all the stakeholders on board and increasing the price becomes slightly difficult."

As the government is wary of aggressive pricing having a knock-on effect on the debt-laden electricity distribution sector, the company, which is the world's largest miner and accounts for over 80 percent of India's coal, has kept prices steady since 2018.

Coal India supplies to power sector surpasses annual action plan target

Coal India’s supplies to power sector at 243.3 million tonne (MT) achieved 108% of annual action plan (AAP) target of 225.4 MT, progressive till August FY23. Supplies overshot the target by nearly18 MT. The company also breached its AAP target of 276 MT for total off-take achieving 102.5% satisfaction. Total supplies have risen sharply to 283 MT, during the period under reference with a jump of 7 MT over the target.

CIL’s supplies of 243.3 MT to power sector during April and August this year were 38.1 MT more compared to same period last year, posting a growth of 18.6%. Supplies were 205.2 MT for the same period last year. At 283 MT, total coal offtake of the company, progressive till August of the current fiscal, increased by 23.6 MT in volume terms against 259.4 MT of last year, a 9.1% growth.

Allaying fears of shortage, coal stock at power plants is close to 30 MT, including imported coal, ending August 22. This is substantially higher than 12.8 MT of August last year when the stock plummeted by 11.2 MT in a month.

Operational improvements boosting prospects for Coal India

As coal demand in the country remains strong, Coal

India’s fortunes are being led by improving operating performance. Added to good domestic demand are firm global prices, which have helped realisations at the company’s e-auctions, thereby boosting earnings outlook.

Coal India has also been impressing with its output growth, having already produced 159.75 million tonne during Q1 (April-June), up 28.8% year-on-year, with the momentum continuing into Q2.

Adding to the earnings prospects are strong coal prices, worldwide. The global benchmark--South African thermal coal--had crossed its all-time high of around $200 per tonne, which was seen in October 2021, and peaked at around $300 per tonne in April 2022 before settling at $285 per ton in June 2022.

As a result, Coal India saw e-auction realisations at Rs. 4,339.97 a tonne during Q1, up 176.6% year-onyear and 78.3% sequentially, and is likely to continue benefitting.

Rising volumes and better e-auction realisations will also likely drive-up earnings. During Q1, Ebitda improved significantly by 153% y-o-y and 35% sequentially, aided by growth in the top line and also helped by lower employee expenses - down 3% y-o-y and 7% sequentially, respectively. The company reported an attributable net profit of ₹8,833 crore, up 179% on year, and 32% sequentially.

Coal India to sell around 90 mt coal through e-auction route

Coal India Ltd is expecting to sell close to 80-90 million tonne (mt) of coal through e-auction platform this year at an average premium of around 300 per cent over the notified price backed by higher demand and surge in international coal prices. While in volume terms, it may be marginally lower than the total sales through e-auction registered last year, the realisations are expected to be much higher due to the huge premium over notified price.

The state-owned miner has been earning close to Rs. 4,400-4,500 a tonne on sale through e-auction route this year as compared to the average realisation of around Rs.1,400-1,500 a tonne through FSA (fuel supply agreement) route. It had earned a premium of around 30 per cent over the notified price (or close to Rs.1,570 a tonne) same period last year.

It is to be noted that a higher sale through auction route would help the company garner better profitability as the average price realisation on e-auction is usually better than the sale through FSA route. According to Pramod Agarwal, Chairman and Managing Director, CIL, sale through e-auction route might get curtailed if the demand of power increases substantially. However, as production starts picking up in the coming months and the anticipated drop in demand from power sector moving forward would help push up e-auction volumes.

Coal ministry conducts auction of 10 more coal blocks

The coal ministry has conducted forward e-auctions of 10 coal mines, following technical evaluation of the bids submitted for commercial coal mining. E-auction for eight coal mines has been conducted on September 13.

According to a coal ministry statement, total peak rate capacity of mines put for auction has been estimated at 39.31 million tonne (mt) per annum.

The ministry till now has auctioned 43 coal blocks, with peak rate capacity of 85.54 mt per annum (mtpa).

The Union government, to enhance the country’s coal production, started commercial auction of coal blocks on a revenue-sharing mechanism. It has allowed sale of excess coal, amending the Mineral Concession Rules of 1960. This was done with a view to allow sale of coal or lignite on payment of additional amount to the state government by the lessee of a captive mine. The lessee can sell up to 50% of its total production from the captive mine in a fiscal in the open market, after meeting the requirement of the end-use plant linked with the mine. This has been applicable for both private and public sector captive mines.

Coal India Ltd (CIL), under the aegis of Ministry of Coal, will ink memorandum of undertaking (MoU)

CIL to ink MoU with three PSUs for setting up coal-to-chemical projects

with three major PSUs for setting up of coal-tochemical projects through Surface Coal Gasification (SCG) route on September 27 in New Delhi.

The state-owned miner will be joining hands with Bharat Heavy Electricals Ltd, Indian Oil Corporation and GAIL (India) for setting up four SCG projects, the government said in a statement.

Through SCG route coal is converted into syngas that can be subsequently processed for downstream production of value-added chemicals. These are produced through imported natural gas or crude oil. The proposed projects would not only help reduce forex outgo but would also lead to direct and indirect employment generation to the tune of 23,000.

In its latest annual report (2021-22), CIL said it had completed pre-feasibility studies during the year to set up integrated coal-to-chemical plants utilising low-ash coal. These plants are proposed to be located near mine heads of ECL, SECL and WCL to produce methanol, ammonia and ammonium nitrate, respectively.

Domestic steel mills face a tough time ahead as the external environment is becoming more and more challenging in key global consumption markets.

The steel demand in China, which accounted for 52 per cent of the global demand in 2021, is witnessing a decline as the economy prepares for the combined impact of the property bubble, strict zero Covid lockdowns, and a severe ongoing heatwave.

Slowdown set to delay steel sector turnaround

Subdued demand and weak international prices of steel will continue to impact prices of the commodity in India, said industry experts. Restricted construction activity during the monsoon led to muted domestic demand in the September quarter, while slowing global economies and rising interest rates are adding to the concerns over global steel demand and pricing, they added.

Demand from China, the world’s largest consumer of commodities, is also muted, following a real estate crisis and covid-led lockdowns. As a result, analysts are not too optimistic on the sector for the near term.

Steel prices in India to remain under pressure over near future: Icra

Icra said it expects steel prices to remain under pressure in the country over the near future as the prices in the domestic market cannot be cushioned from the global trends. The rating agency also expects the steel demand in the domestic market to grow at 7-8 per cent in the current financial year, making the country the fastest-growing large steel markets globally this year.

"We expect domestic steel prices to remain under pressure over the near term, since domestic steel prices cannot be insulated from the trends emerging in global steel markets," Icra Senior Vice-President & Group Head, Corporate Sector Jayanta Roy said.

Duty exemptions on exports is leading to higher domestic inventory, but the government may not withdraw it soon, said analysts. Domestic prices of hot-rolled coil (HRC) steel, used in automobiles and home appliances, rose 23% during the JanuaryApril period, but have since fallen 28% to ₹57,000 a tonne, 9% lower than the June quarter average, said Jefferies India Pvt. Ltd. in a 25 September report. Though domestic steel prices are 6-11% above import parity, Jefferies expects more downside risk

Commerce ministry for imposing anti-dumping duty on Chinese steel tubes, pipes

The commerce ministry has recommended imposition of anti-dumping duty on Chinese steel tubes and pipes for five years to guard domestic players from cheap imports from the neighbouring country. The Directorate General of Trade Remedies (DGTR) has recommended the duty on imports of ‘stainless-steel seamless tubes and pipes’ from China after concluding in its probe that the product

has been exported at dumped prices into India, which impacted the domestic industry.

The recommended duty ranges between USD 114 per tonne and USD 3,801 per tonne. The finance ministry takes the final call to impose these duties.

The imposition of anti-dumping duty is permissible under the World Trade Organisation (WTO) regime. India and China both are members of this Genevabased multi-lateral body. The duty is aimed at ensuring fair trading practices and creating a levelplaying field for domestic producers vis-a-vis foreign producers and exporters.

Nippon Steel plans to almost double Indian unit's output capacity

Japan's biggest steelmaker Nippon Steel Corp plans to almost double crude steel output capacity at its India's Hazira plant to secure more of the growing market. The expansion plan comes despite a growing concerns about a slowdown in the global economy amid rising interest rates and weaker demand in top buyer China.

In 2019, Nippon Steel and ArcelorMittal jointly bought India's bankrupt Essar Steel, now called AM/ NS India, and have been considering expanding the venture. Annual output capacity at the Hazira plant in western India would increase to between 14 million and 15 million tonnes from about 8 million tonnes by building new blast furnaces, he said, without giving a value for the new investment or other details. AM/ NS India said it would buy some infrastructure assets from Essar Group for $2.4 billion to strengthen its steel business.

Steelmakers face an uncertain outlook, with volatile prices for coking coal, iron ore and other raw material caused by the Ukraine crisis and with China's weak steel output. Coking coal now unusually trades at a steep discount to thermal coal, used mainly in electricity generation, which is booming because of disruptions to Russian energy supplies.

Profitability of cement companies to fall for second straight fiscal: Crisil

Operating profitability of cement makers will decline around 15% on-year to Rs. 900-925 per tonne in fiscal 2023, adding to the pain of a 9% decline last fiscal, as increase in realisations will not be enough to offset the increase in prices of coal, petcoke and diesel that has pushed the average cost of production higher, the rating agency Crisil said in a report.

According to the rating agency, the 17% growth in cement demand during the first quarter of the fiscal, albeit on the low base of the previous fiscal, offers a silver lining. Though growth may taper in subsequent quarters, and print at 8-10% for the full fiscal, it would still be the highest since fiscal 2019.

The higher demand will mitigate the impact of lower profitability on absolute operating profits and cash accruals of cement makers, cushioning their credit profiles. Eastern India (including the north-east) will lead the demand growth, at 13-14%, largely on a lower base. The central and southern regions may see ~10% growth, given demand from key infrastructure projects. The northern and western regions, which are relatively more developed in terms of rural-urban mix as well as infrastructure, may see mid-singledigit demand growth.

Increased construction activity to keep cement demand on track

The Centre and southern states were expected to retain their thrust in giving a push to housing and infrastructure projects leading to cement demand to remain on track, The India Cements Ltd ViceChairman and Managing Director N Srinivasan said. Increased house building and construction activity in metros, semi-urban and urban centres would boost cement demand although cost pressure is expected to remain with higher cost of fuel, power tariff, he said.

He pointed out that the Russia-Ukraine conflict also led to shortage of coal and oil in the market. "All these adversely impacted profitability of the industry and it was unable to increase cement prices to cover the increase in cost."

The recovery of the cement industry in the southern region witnessed a moderate growth of 8 per cent and a marginal growth of two per cent in the JulySeptember 2022 quarter. "The Centre and southern states are expected to retain their thrust on giving a push to housing projects and infrastructure development by implementing irrigation, road building, metro rail and other infrastructure projects.

Ports seek intervention by Govt

Several port authorities have sought the government's intervention over the build-up of coal at their premises. The Visakhapatnam Port Authority has written a letter to the railways and coal ministries seeking expeditious evacuation of imported coal. About 5 million tonnes of coal is accumulated at Indian ports, of which about 3 million tonnes is imported coal, said officials.

The rest is domestic coal that is to be transported through the coastal shipping route. Sufficient coal stocks at power plants slowed evacuation from the ports, leading to a build-up. Importers will have to bear demurrage charges because of the delay, ranging from Rs 5-35 lakh per day depending on the size of the vessel and volume of commodity stranded.

RAILWAYS & SHIPPING

The Visakhapatnam Port Authority said in its letter that there was a requirement of 62 rakes in August but only 27 were supplied for dispatch to

Logistics cost will be cut to 8-9% of GDP by 2030: DPIIT Secy

The government is aiming to trim India’s elevated logistics costs by as much as five percentage points by 2030 from the current 13-14 per cent of gross domestic product (GDP) to 8-9 per cent of the GDP, according to Department for Promotion of Industry and Internal Trade (DPIIT) Secretary Anurag Jain.

The National Logistics Policy (NLP) aims to achieve quick last-mile delivery, end transport-related challenges, save time and money of manufacturers and prevent wastage of agro products. Today it is believed that our logistic cost is around 13-14 per cent of GDP, but the global standard is around 8-9 per cent. India is aiming it to bring it down by 5-6 percentage points by the year 2030.

In order to achive this goal, 196 critical infrastructure gap projects pertaining to port connectivity and movement of coal, steel and food products have been identified so far, on which the Network Planning Group (NPG) is coordinating with the concerned ministries.

Amid buildup of coal inventory,

the Visakhapatnam Port Railway Station. This has caused severe congestion at its stack yards, which in turn is affecting the vessel performance at port. Due to less supply of empty rakes, the imported cargo stock inside the Paradip port exceeded 3.5 million tonnes in May.

Railways carries record freight in August for 2 years in a row

Freight loading by the Indian Railways increased 7.86% year-on-year to 119.32 million tonnes in August, in line with the other high-frequency indicators, indicating a steady economic recovery. Freight loading in August 2021 stood at 110.63 MT, 17.07% higher than a year ago, showed latest data.

With this, the Indian Railways has reported two straight years of best ever monthly freight loading in August 2022. Total freight revenue of the railways stood at Rs 12,927 crore, up from Rs 10,867 crore in August 2021, said officials.

The monthly goods and services tax (GST) collection numbers increased 28% year-on-year to Rs 1.44 lakh crore in August. E-Way bill generation was also up 15%, indicating that recovery gained ground. August was the 11th straight month for total freight loading to cross 110 MT. During the month, the Indian Railways achieved an incremental loading of 9.2 MT of coal.

GLOBAL

Seaborne coal market to be undersupplied in 2022: Noble

Seaborne thermal coal demand is expected to hold steady this year, supported by increased demand from India and Europe, with the mar ket expected to be undersupplied, according to commodity trader Noble Resources.

Noble projects this year's global thermal coal demand at 996mn t, against a supply of 983mn t. This scenario could further support interna tional coal prices, which are hovering at multiyear highs. Several European countries includ ing Germany, the UK, and France are bringing mothballed coal-fired units back on line. India is expected to import 171mn t of thermal coal this year, up from 149mn t a year earlier.

Imported thermal coal demand from the At lantic region, including European countries, ap pears to be strong. Thermal coal imports by the Atlantic region — including purchases by Euro

pean as well as north and south American coun tries — are expected to end the year at 180mn t, up by 39mn t from last year. Demand from north and southeast Asian countries is also strong this year, with Japan and South Korea expected to raise imports. Rising imports in other mar kets would partly offset the expected decline in receipts of seaborne coal by China, although demand from Chinese buyers has recovered sharply in the last three weeks. China to host almost a third of the world’s new coal mines

Almost a third of the new coal mines planned for the world are in China, all but guaranteeing that output will keep rising in the top producer, even as calls grow for the dirtiest fossil fuel to be phased out to avoid the worst effects of climate change.

Based on data from Global Energy Monitor, China had 559 million tons of proposed new coal mines at the start of the year, accounting for 29% of the global total, according to a note from Bloomberg Intelligence. Australia was second with a 17% share, then India and Russia with 16% each.

Still, the 1.94 billion tons of new mines planned around the world is 15% less than a year ago. The daily coal output target was raised to 12.5 million tons in August, implying annualized production of 4.56 billion tons, BI said. While the spot price should remain resilient as miners prioritize shipments to term-contract customers, imports are likely to come under even more pressure.

China digs deep to raise coal output to record high

China’s coal production has surged this year as the government seeks to improve energy security by reducing dependence on imports and amassing inventories at power plants. Raising domestic coal output is consistent with Beijing’s broader effort to indigenise supplies of critical energy sources, raw materials and technology.

Production hit a record 2,929 million tonnes in the first eight months of 2022, according to China’s National Bureau of Statistics. Mine output was up by 332 million tonnes (13%) compared with the same period in 2021 and 520 million tonnes (22%) compared with the last pre-pandemic year in 2019.

Production has been growing faster than coalfired electricity generation as the government tries to increase fuel stocks and cut reliance on imports.

Thermal power generation, nearly all from coal, set a new record of 3,883 billion kilowatt-hours (kWh) in the first eight months of the year. But thermal generation was up by just 10 billion kWh (0.3%) compared with 2021 and 497 billion kWh (15%) compared with 2019.

Indonesia deepens renewables push

Indonesia's move to gradually reduce dependence on coal and promote renewable energy will serve as a model for other countries wanting to pursue climate-friendly growth, analysts said.

Indonesian President JokoWidodo issued a decree on Sept 14 instructing government agencies to prepare a road map for renewable energy development and the gradual phasing out of coal-fired power plants.

The Presidential Regulation No 112 of 2022 on the Acceleration of Renewable Energy Development for Electricity Generation, or PR 112/2022, is in line with Indonesia's commitment to hit net zero emissions by 2060. It comes as Indonesia holds the presidency of G20, and Indonesia has listed sustainable energy transition among its priorities as this year's G20 head.

Putra Adhiguna, energy analyst at think tank Institute for Energy Economics and Financial Analysis, said that by issuing PR 112/2022, Indonesia sets an example that it is committed to developing renewable energy and phasing out coal-fired plants, even though it is highly dependent on coal for its energy needs and export revenues.

Coal power and mining firms in Indonesia are finding it tougher to raise funds due to climatecrisis concerns and are being increasingly pushed by banks to present concrete-transition plans to shift away from dirty energy.

Standard Chartered bank announced it was ending its partnership with PT Adaro Indonesia, a subsidiary of coal miner PT Adaro Energy, as the British financial giant pledged to stop

Coal miners face financing squeeze as more banks pledge to ‘go green’

providing financial services to mining and powergeneration companies deriving 100 percent of their revenue from thermal coal.

National banks are also facing foreign and domestic pressure to stop funding coal business as the Indonesian Financial Services Authority (OJK) demands lenders which belong to the BUKU 4 category -- or those with core-capital higher than Rp 30 trillion (US$2.675 billion) -such as state-owned Bank Rakyat Indonesia (BRI) and private lender Bank Central Asia (BCA), to diversify their lending portfolio from fossil fuels to reduce their climate risks.

fired power plants

Indonesia is allowing the development of coalfired power plants for certain projects and under specific conditions, a year after it said it would phase them out to become carbon neutral by 2060.

A presidential regulation allows construction of coal-fired steam power plants “within an industrial area oriented toward boosting the value of natural resources,” or designated as nationally strategic projects that create many jobs and contribute to economic growth.

Revised taxation on coal imports to hike power rates in Indonesia

The revised uniform taxation being enforced by the Bureau of Customs (BoC) on Indonesian coal imports being utilized for power generation will drive up electricity rates, according to industry players.

As noted, the scale of rate increases in the electric bills could range from P0.10 per kilowatt hour (kWh) and up to P1.70 per kWh for bigger scale coal-fired generating facilities – primarily those that are in the 600-megawatt installed capacity range.

According to Frank Thiel, president of the American Chamber of Commerce of the Philippines (AmCham) and managing director of Quezon Power, the new Memorandum Order No. 242-2022 issued by the Assessment and Operations Coordination Group (AOCG) of the Customs Bureau “does not consider the different coal CVs (calorific values), nor does it consider the different indexes used to contract and price coal.” It was emphasized that the reference applied by the BOC in July coal shipments, in particular, had been at the rate of $319 per metric ton (MT). .

Companies also are allowed to build coal-fired power plants provided that they commit to reducing greenhouse gas emissions by at least 35 percent within 10 years since the start of operations and/or cease operations by 2050. To realize the energy transition, the government begins by transitioning from conventional vehicles to electric vehicles, the government has said.

.

Australia's Queensland coal exports mixed in August

Coal shipments from the Australian port of Dalrymple Bay Coal Terminal (DBCT) in Queensland rebounded in August from a fiveyear low in July, but fell at the ports of Gladstone and Hay Point.

The ports of Hay Point, DBCT, Abbot Point and Gladstone shipped 16.17mn t of coal in August, up from 15.26mn t in July, but down from 17.2mn t in August last year, according to port data. The ports shipped 125.77mn t of coal in January-August, down from 133.72mn t a year earlier, putting them on track to dispatch less coal this year than the 197.29mn t shipped last year and the peak of 219.24mn t in 2019.

DBCT and Gladstone, which are multiuser ports, have experienced the biggest decline in shipping year to date, while Australian mining firm BHP has only seen a 1pc drop through its Hay Point port and Indian firm Adani just 0.64pc through its Abbot Point port. Abbot

Reversing course, Indonesia conditionally allows new coal-

Point is used to export coal from Adani's 10mn t/yr Carmichael mine, which began shipping in January and should significantly boost throughput at the port.

AGL Energy to accelerate exit from coal

Australia's largest electricity generator AGL Energy will go "net zero" after abandoning plans to split into two companies.

Australia's biggest carbon emitter announced a shutdown of all coal-fired generation by the end of fiscal year 2035, with annual greenhouse gas emissions to reduce from 40 million tonnes to net zero.

AGL chair Patricia McKenzie said the company will have "net zero" emissions from operations following the closure of the Liddell and Bayswater power plants in NSW and the Loy Yang power station that provides almost a third of Victoria's power. The financial implications of bringing forward the closure of Loy Yang by a decade includes an impairment charge of $700 million. AGL plans to invest up to $20 billion by 2036 in new renewable and energy storage funded by assets on the balance sheet, offtake agreements and partnerships.

persistently high prices—or very high price volatility—risk driving away customers over the long run, particularly when affordable substitutes are available. If more frequent extreme weather events, a key prediction of many climatologists, become more routine it may mean more price volatility for mined commodities like coal too.

Climate change could be doubleedged sword for Australian coal

Australia is raking in huge amounts of cash from coal—due both to bad geopolitics and bad weather. The war in Ukraine is a key factor boosting benchmark Asian coal prices, which recently hit a new high. But some very unusual weather is also shutting mines and transport links down under.

In the short term Australia, one of the world’s two top coal exporters, and coal miners like Glencorewill benefit from even more pricing power.

But as every economics student knows,

The prospects for anthracite are looking very good, especially in terms of market value and having demand coming from different parts of the world. many European countries are seeking alternatives to anthracite from Russia, a major anthracite producer, and opportunities are opening up for non-Russian anthracite producers to establish long-term relationships with new markets.

South Africa produces approximately threemillion tons of anthracite per annum. About 60% is exported via Richards Bay or Durban, the balance is consumed locally. More than 90% of exports consist of fines. Billions in export earnings revenue are generated by the country through the sector and thousands of people are directly and indirectly employed in this sector. About 80% of the Zululand Anthracite Colliery’s (ZAC’s) product is sold in South Africa as a cheaper option for manufacturers compared with higher-cost Russian anthracite or coke from China. With its variety of industrial applications, anthracite is key to many of South Africa’s downstream industries.

Four inter-connected factors will drive the market in the foreseeable future. The first is the race for post-Covid global economic recovery. The second is the ongoing Russian war in Ukraine which has triggered Western sanctions against Russia. European anthracite importers that have previously depended on Russia have searched and discovered replacements elsewhere including in South Africa. The third factor is the intrinsic value of anthracite. As a high-premium coal with high carbon content, anthracite is suitable for a variety of industrial applications – from steel to electrode paste

‘Anthracite prospects in South Africa looking very good’

manufacturing. The fourth is possible shortage of coking coal.

Tanzania coal exports exponentially soar as Europe flocks to Africa for natural resources

In the last few months, Tanzania’s coal entered the European market, thanks to a contract between Ruvuma Coal Ltd. and Hong Kongbased Kenexon Co. Through the one-year contract, the companies in May transported 60,000mt of coal to the Netherlands. Tanzania's coal reserves are estimated at 1.9 billion tonnes, 25% of which are proven.

Coalfields with the highest potential are Ketawaka-Mchuchuma in the Ruhuhu Basin, the Ngaka fields in the South-West of Tanzania, and the SongweKiwira fields.

Buyers in Europe and beyond are now vying to pay top dollar for coal from often remote mines in places such as Tanzania, Botswana and even potentially Madagascar.The resurgent coal demand, driven by governments trying to wean themselves off Russian energy while keeping a lid on power prices, clashes with climate plans

pointed out that the new European sanctions will include further bans on Russian imports and exports to the country, as well as targeting new economic sectors and expanding the 'blacklist' of individuals and companies responsible for the Russian escalation.

He also pointed out that EU diplomacy is working with the European Commission to curb the export of Russian coal to third countries, following the measure that prohibits European companies from participating in these transactions.

European industry faces growth pangs amid soaring energy prices

Europe is paying seven times as much for gas as the US, underscoring a dramatic erosion of the continent's industrial competitiveness that threatens to cause lasting damage to its economy. With Russian President Vladimir Putin redoubling his war efforts in Ukraine, there's little sign that gas flows - and substantially lower prices - would be restored to Europe in the near term.

EU considers measures against export of Russian coal to third countries under new sanctions

The European Union is working to curb the export of Russian coal to third countries as part of the new round of sanctions to respond to the Russian escalation in the Ukrainian conflict following the announcement of partial mobilization of the population, nuclear threats and referendums in the Donetsk, Lugansk, Kherson and Zaporiyia regions.

In an appearance in the European Parliament, the deputy managing director for Eastern Europe and Central Asia of the EU External Action Service (EEAS), Luc Pierre Devigne, has

Signs of an economic transformation are already afoot: Germany, Europe's biggest economy, has seen its usual trade surplus dwindle as the surge in imported energy costs offsets its high-value exports of cars and machinery, and chemical companies began shifting production outside the country. Last month, German producer prices jumped by a record 46%.

Plastics maker Covestro AG won't make growth investments in Europe if the crisis persists and instead look to Asia, where chief executive officer Markus Steilemann said the company can secure energy at prices 20 times cheaper than in the German and European spot market. Volkswagen, Europe's biggest carmaker, warned that it could reallocate production out of Germany and Eastern Europe if energy prices don't come down.

Major shift in Russian coal shipment destination since war

In the new geopolitical situation, exports of Russian coal undergo structural transformation. The market participants expect the shipments to shift from Europe to the East with China, India and Turkey to be the key importers. The coal shift to Asia is attributed not only to import restrictions: it is the Asia Pacific Region that accounts for the main growth of the global demand for coal.

In the 8-month period of 2022, India increased imports of Russian coal 2.2 times to 4.37 million tonnes with scope for even more taking into account high quality of Russian coal and considerable discounts versus the offer of suppliers from other countries.

Coal is primarily exported by sea with the shipment ports concentrated mainly in three regions: Far East, South and North-West. In the Far East, stevedores’ facilities do not get sufficient amount of coal. In 2021, throughput capacity of the Eastern Operating Domain was 144 million tonnes with the demand as high as 284 million tonnes per year. Thus, the railway capacity deficit is estimated at 140 million tonnes. While the ports in the East are suffering logistical constraints, ports operating in the South and in the North-West could have exported about 80 million tonnes in 8 months if they were fully loaded. However, they shipped only 62 million tonnes so far.

4.2 million mt of coke in 2021, behind only China and Poland, which have been fighting in recent years for the first place with coke exports of 8-9 million mt/year. Brazil, México and some European countries are the top destinations of Colombian coal, according to the federation. Cante noted that Colombia has a variety of low-phosphorous metallurgical coal, unique in the nation’s Norte de Santander region and in a specific region of China. Several coking coal miners and metallurgical coke producers unveiled plans to lift production in the coming years while noting the potential risks regarding demand.

Global tightness may offset US met coal output growth

In the first half of 2022, US coking coal output was stable at approximately 28mn st (short tonnes) from the same period a year earlier, data from the Mines Safety and Health Administration (MSHA) shows. . If output continues at the same rate as the first half of the year, 2022 output should exceed 2021 by around 3-5pc. But as miners continue to respond to a strong price environment, it is likely that production at US coking coal mines will continue to accelerate, resulting in a stronger increase.

Colombia mulls becoming world’s top coke exporter

The Colombian coke industry expects to double its exports in the coming years and surpass China and Poland as the world top exporter.

“If we manage to reach 10 million mt/year, we would enter the fight for that first place, in a world in which there is a demand for this product and in which we have a great advantage: our quality,” senior coal official from the country has said.

The Latin American country exported a record

Despite the likely increase of US coking coal output and recent declines in steel output in most regions, this year's elevated thermal coal prices and the sale of coking-quality coals to thermal end users are likely to significantly diminish the availability of coking coal for metallurgical buyers for the rest of the year. At the same time, the onset of La Nina weather in Australia is likely to limit the country's coal exports, lending support to Asian demand for US coking coals.

It remains to be seen to what extent the expected fall in European blast furnace production in the near future will be matched by a fall in coke output. Coke plants' ability to produce their own gas could incentivise relatively stable coke production for the rest of the year, despite the poor sentiment in steel markets.

OF IMPORTED

PETCOKE

Indonesian Coal News:

coal miners

Europe ahead of winter

racing to boost

a ban on

from Russia. Miners in Indonesia do not

ship to Europe, with China, India and some other Asian nations

their top export destinations. But the European Union prohibition on

from Russia, which took effect in August,

country's shutdown of some gas supplies to the continent amid the war in Ukraine have left European

for coal from as far away as

United States and Indonesia have agreed on a framework to accelerate Indonesia’s transition to

energy in the recently conducted G20

Environment and Climate Ministerial Meeting in Bali. The two nations have also agreed on the urgency of decarbonizing energy systemsby accelerating the

coal to renewable electricity generation,

by rapidly increasing renewable energy

through policy reforms intended to hasten new renewables capacity growth, reduced coal generation and coal retirement, and end-use efficiency, while strengthening efforts to reach universal, affordable, and reliable access to energy.

Australian Coal News:

Prime Minister Anthony Albanese has assured the resources industry that the country will remain a major exporter of fossil fuels under his leadership. Albanese said the federal government would work with the industry to lower its emissions

had no intention to limit coal and gas exports.

Start with quality, destination will be excellence.

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Australia will continue to be a trusted and stable supplier of energy and resources to our key trading partners, the Prime Minister noted.

*Climate change could be a double-edged sword for Australian coal, experts say. Australia's earnings from the sale of coal have hugely increased both due to conflicting geopolitical situations. The war in Ukraine is a key factor in boosting benchmark Asian coal prices, which recently hit a new high. But some very unusual weather is also shutting mines and transport links in Australia. In the short term Australia, one of world’s two top coal exporters, and coal miners like Glencore will benefit from higher coal pricing but frequent extreme weather events, may mean more price volatility for mined commodities like coal too.

expected to reach a four-year high. Global supply of seaborne thermal coal is estimated at 983 million tonnes. Increase in supply this year is expected from Indonesia while Australian output drops due to heavy rain.

South African Coal News:

*The prospects for anthracite are looking very good in South Africa, especially in terms of market value and having demand coming from different parts of the world, coal majorManer said. South Africa, which produces about three-million tons of anthracite a year, is one of the countries benefiting from access to new lucrative markets. Sixty per cent of South African anthracite is exported from Richards Bay and Durban and 40% is used domestically for sintering, ferroalloys, and electrode paste.

*A tight energy market — made worse in recent week after Russia’s state-owned natural gas exporter Gazprom closed its main pipeline to Germany — has been a boon for South Africa’s coal exporters, which have enjoyed higher prices amid stronger demand. Thungela South Africa’s largest exporter of powerstation coal recorded a stunning leap in earnings in the first half of 2022.

*Europe’s efforts to break its dependence on Russian energy have helped soaring demand of coal, with many EU nations turning toward coal as a substitute for natural gas, the price of which has risen even more steeply and supplies of which are running short. Germany, which previously planned to phase out coal by 2038, has also shunned climate-friendly nuclear power — now finds itself turning to coal as well. Other EU countries, including France, the Netherlands, Spain, Italy, Greece, Czech Republic, Hungary and Austria, are also extending the lifetimes of coal plants scheduled for closure, reopening closed plants or raising caps on working hours of coal plants to reduce gas consumption.

US Coal News:

*Total U.S. coal production rose in the second quarter compared to a year earlier, and a sustained rise in demand for the fuel used in domestic and power generation allowed companies to increase their worker head counts. On a year-over-year basis, average employment rose 11.3% in the second quarter, and coal volumes improved about 2.0%. The average number of employees in the U.S. coal sector has gradually increased over the last four quarters. Second-quarter employment rose 1.5% to 43,358 compared to the previous quarter, even though coal production volumes fell by 2.5% to 145.5 million tons.

European Coal News:

*European imports of thermal coal could be the highest in at least four years in 2022 and may rise further next year, analysts said. Europe's imports of thermal coal in 2022 could rise to about 100 million tonnes, the most since 2017 while shipments are

*The United States' Department of Energy (DOE) is looking into the possibility of converting coal power plant sites to nuclear in a bid to boost the country's net zero drive.The DOE has released a report after screening recently retired and active coal plant sites. The study team identified 157 retired coal plant sites and 237 operating coal plant sites as potential candidates for a coal-to-nuclear transition. This coalto-nuclear (C2N) transition could add a substantial amount of clean electricity to the grid, helping the United States reach its net zero emissions goals by 2050.

Pet Coke News:

*The Global CalcinedPetcoke Market is expected to grow by $ 3.26 bn during 2022-2026, decelerating at a CAGR of 5.16% during the forecast period, a recent report has said. Meanwhile, petroleum products and shipments of U.S. grain continued to lead the way in Aug., as 3.46 million tons of cargo moved through the Great Lakes-St. Lawrence Seaway system. For the 2022 shipping season through the end of August, Great Lakes-Seaway shipping has reached nearly 19.2 million tons.

*Petcoke prices are dropping sharply despite record discounts as supply is increased and buyers sit back and wait. The high sulphur (6.5 per cent S) petcoke FOB contract is currently at US$115, with an expected trading range of US$105-130. Discounts for high-sulphurpetcoke when compared with API4 coal have increased when compared with previous energy reports. The discount for 6.5 per cent Sulphurpetcoke FOB sold at US$115 is 73% when compared with 4Q22 API4 coal sold at US$340.

Shipping Update:

*Dry bulk container market has exhibited a sharp decline in earnings over the summer. Data shows congestion at ports persists at high levels though it has shifted from more visible to less visible regions in the world. The summer of 2022 has witnessed a slow motion collapse in freight rates for both bulk carriers and container ships. As a result the biggest instance of congestion shifting has occurred in the US since the pandemic which did not just cause delay in loading and discharging of containers but has also impeded the onward inland distributions.

*Shipping lines and container owners in North America (majorly in the US) are finding it difficult to return containers to China. To add to the present challenges, the US is also facing major trucking issues that are making cargo movement within the country difficult. The US is again in the spotlight according to the monthly container logistic report published today by Container XChange, a technology marketplace and operating platform for container logistic companies.