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

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.

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

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

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.

STEEL

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. 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. 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. CEMENT

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.

RAILWAYS & SHIPPING

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,

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. 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 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.