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Tuesday, 19 October 21
COAL INDIA, THE FALL GUY FOR POWER CRISIS - INDIA EXPRESS
The post-Covid economic recovery has led to a major increase in the demand for power, both in India and globally. In India, coal-based power plants have witnessed rapid depletion of coal stocks from a comfortable 28 days at the end of March to a precarious level of four days by the end of September. The country is struggling to understand how the crisis is likely to pan out in the near future. Coal India Ltd (CIL) has been unfairly attacked, even as it gears up to play a crucial role in fighting the power crisis.
The reasons for the crisis are not hard to find. These are structural as well as operational. A government-appointed committee in the early 1990s concluded that CIL “cannot be expected to meet the demand of the power sector, in case the pace of capacity addition accelerates.” This led to an amendment in the Coal Mines Nationalisation Act (CMNA) in 1993 that enabled the government to take away 200 coal blocks of 28 billion tons from CIL and allocate them to end-users for the captive mining of coal. These end-users, mostly in the private sector, failed to produce any significant quantity of coal to meet the rapidly rising power capacity between 2007 and 2016. The cancellation of 214 blocks by the Supreme Court added to the problem.
Commensurate to the captive mines allocated to the end-user industries, the coal production today should have been at least 500 million tonnes per annum (mtpa). In reality, this has never exceeded 60 mtpa. CIL, with denuded reserves, is called to meet the rising gap in coal supplies. These structural factors fuelled not just over-expectations from CIL, they also kept the company in a constant state of stress.
On the operational side, power plants are required by the Central Electricity Authority (CEA) to maintain a minimum stock of 15 to 30 days of normative coal consumption, depending upon the distance of the plant from the source of coal. The compliance with this directive by power plants has been severely lacking. This enhances the vulnerability of power plants, particularly those at longer distances, to supply constraints on account of the coal producer or transporter.
The persistent non-payment of coal sale dues by power plants to coal companies has created a serious strain on their working capital position. Some companies were forced to borrow from banks to meet the operational expenses, including disbursement of salaries. According to reports, Rs 18,000 crore is currently due to coal producers.
The persistent shortage of coal production by the privatised and captive mines forced India to import around 200 million tonnes (mt) of coal. Of this, more than 40 per cent goes to meet the demands of power plants. A spurt in imported coal prices, mainly due to a major increase in coal imports by China, acted as a brake on imports of coal. This escalated the demand for domestic coal.
Simultaneously, from August, the demand for thermal power witnessed a sudden rise after stagnating for over three years. The spurt in demand for coal is being linked to the post-Covid economic recovery. In the short run, the coal production by CIL has faced severe headwinds in the first quarter due to the second wave of the pandemic. Thousands of workers and officers were infected and hospitalised and more than 250 CIL employees lost their lives. In the second quarter, the extended monsoon severely affected open-cast mining. These added to supply disruptions and aggravated the crisis.
Despite so many constraining factors, it is to the credit of CIL that it has achieved a growth of 14 million tonnes (mt) or 5.8 per cent in coal production during the first half of 2021-22. Yet, the offtake was higher than the preceding year by 52 mt or 20.6 per cent. This was possible by drawing down on the opening inventory of coal from 100 mt to 42 mt during April to September.
With the monsoons behind us and the onset of a good productive season, CIL has already stepped up coal offtake to more than 1.5 mt per day. It is expected to rise further to 1.6/1.7 mt in the next few weeks. With these efforts, supply will match, if not exceed consumption. With efforts on the part of the railways in moving the coal, the crisis should dissipate in the near future, at least for power plants that pay timely for coal supplies. Obviously, it will take a few months for coal stock at power plants to climb to comfortable levels in line with the CEA’s norms.
Besides meeting the growing coal demand of power plants, CIL has been able to significantly replace the import of highly expensive thermal coal. Even after bearing the highest tax and transport cost globally, the landed cost of CIL coal continues to be much cheaper than imported coal at almost all destinations. The resultant benefits are savings of foreign exchange, and generation of power at affordable tariffs. The coal price charged by CIL, expressed in energy units, is at a deep discount of 60-70 per cent of imported coal.
In brief, CIL has been unfairly blamed for the coal crisis. It has played a stellar role, standing like a solid rock between light and darkness. It is striving to build comfortable stocks at the power plants, not in default of payment. The company has ramped up coal production despite the 1990s policy that took away coal blocks of 28 billion tonnes of reserves. It is time that the country recognises the critical role of CIL. It needs bouquets rather than brickbats.
Source: The India Express
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Wednesday, 24 November 21
WHY THIS MINING ANALYST IS UPBEAT ON THE IRON ORE PRICE FORECAST - MOTLEY FOOL
In many ways, 2021 can be called the year of the iron ore price. Much of the talk of the ASX town this year has revolved around this key economic m ...
Wednesday, 24 November 21
PRICE OF CHINA’S COAL FUTURE DROPS BY 60% AS NATIONWIDE DAILY OUTPUT REACHES OVER 12 MILLION TONS: NDRC - GLOBAL TIMES
China’s daily coal output has now stabilized after reaching over 12 million tons and the price of coal futures has declined to 800 yuan ($125 ...
Friday, 19 November 21
CHINA: COAL SUPPLIES TO STABILIZE FOR COMING COLD SEASON
China is capable of ensuring stable coal supplies this winter and next spring with the increase in coal production and the rising stockpiles at pow ...
Wednesday, 17 November 21
MARKET INSIGHT - INTERMODAL
It has been another declining week for the dry bulk market and evidently, we are seeing asset values gradually losing momentum as well. Following a ...
Tuesday, 16 November 21
EARNINGS RECOVERY IN INDONESIAN COAL TO CONTINUE THROUGH 2021, BUT SLOW IN 2022 - FITCH RATINGS
The recovery in the operating and financial performance of Indonesian coal miners and coal contractors is likely to slow in 2022, but coal prices s ...
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- GAC Shipping (India) Pvt Ltd
- Chamber of Mines of South Africa
- Eastern Energy - Thailand
- Ministry of Mines - Canada
- Bhushan Steel Limited - India
- Posco Energy - South Korea
- Indo Tambangraya Megah - Indonesia
- ASAPP Information Group - India
- Sojitz Corporation - Japan
- Orica Australia Pty. Ltd.
- Intertek Mineral Services - Indonesia
- Central Java Power - Indonesia
- Malabar Cements Ltd - India
- Goldman Sachs - Singapore
- Indika Energy - Indonesia
- Star Paper Mills Limited - India
- Madhucon Powers Ltd - India
- Thiess Contractors Indonesia
- CIMB Investment Bank - Malaysia
- Straits Asia Resources Limited - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- McConnell Dowell - Australia
- Maharashtra Electricity Regulatory Commission - India
- Kaltim Prima Coal - Indonesia
- Singapore Mercantile Exchange
- European Bulk Services B.V. - Netherlands
- Indian Oil Corporation Limited
- Coal and Oil Company - UAE
- IHS Mccloskey Coal Group - USA
- The Treasury - Australian Government
- Makarim & Taira - Indonesia
- Jaiprakash Power Ventures ltd
- Krishnapatnam Port Company Ltd. - India
- Bangladesh Power Developement Board
- Pendopo Energi Batubara - Indonesia
- Sakthi Sugars Limited - India
- Australian Coal Association
- Bayan Resources Tbk. - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Siam City Cement PLC, Thailand
- Orica Mining Services - Indonesia
- Commonwealth Bank - Australia
- Siam City Cement - Thailand
- Sindya Power Generating Company Private Ltd
- Mercator Lines Limited - India
- Attock Cement Pakistan Limited
- Meenaskhi Energy Private Limited - India
- Alfred C Toepfer International GmbH - Germany
- Borneo Indobara - Indonesia
- Karaikal Port Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Rio Tinto Coal - Australia
- Mercuria Energy - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Gujarat Sidhee Cement - India
- Bharathi Cement Corporation - India
- GN Power Mariveles Coal Plant, Philippines
- Tata Chemicals Ltd - India
- Globalindo Alam Lestari - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Xindia Steels Limited - India
- Ambuja Cements Ltd - India
- GVK Power & Infra Limited - India
- GMR Energy Limited - India
- Africa Commodities Group - South Africa
- Petrochimia International Co. Ltd.- Taiwan
- Economic Council, Georgia
- Aboitiz Power Corporation - Philippines
- Simpson Spence & Young - Indonesia
- Tamil Nadu electricity Board
- New Zealand Coal & Carbon
- Wood Mackenzie - Singapore
- Antam Resourcindo - Indonesia
- Bhoruka Overseas - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Bahari Cakrawala Sebuku - Indonesia
- Sree Jayajothi Cements Limited - India
- Sical Logistics Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Holcim Trading Pte Ltd - Singapore
- Manunggal Multi Energi - Indonesia
- Australian Commodity Traders Exchange
- Aditya Birla Group - India
- Metalloyd Limited - United Kingdom
- Vizag Seaport Private Limited - India
- PNOC Exploration Corporation - Philippines
- Kumho Petrochemical, South Korea
- Directorate Of Revenue Intelligence - India
- Independent Power Producers Association of India
- Standard Chartered Bank - UAE
- London Commodity Brokers - England
- Agrawal Coal Company - India
- Eastern Coal Council - USA
- Barasentosa Lestari - Indonesia
- Bulk Trading Sa - Switzerland
- ICICI Bank Limited - India
- Trasteel International SA, Italy
- South Luzon Thermal Energy Corporation
- Semirara Mining Corp, Philippines
- Mintek Dendrill Indonesia
- Kartika Selabumi Mining - Indonesia
- Savvy Resources Ltd - HongKong
- Electricity Generating Authority of Thailand
- Jindal Steel & Power Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Larsen & Toubro Limited - India
- Planning Commission, India
- Kapuas Tunggal Persada - Indonesia
- Georgia Ports Authority, United States
- Dalmia Cement Bharat India
- Latin American Coal - Colombia
- Baramulti Group, Indonesia
- Ministry of Finance - Indonesia
- Kobexindo Tractors - Indoneisa
- Price Waterhouse Coopers - Russia
- Maheswari Brothers Coal Limited - India
- Toyota Tsusho Corporation, Japan
- Carbofer General Trading SA - India
- The State Trading Corporation of India Ltd
- Billiton Holdings Pty Ltd - Australia
- Salva Resources Pvt Ltd - India
- Mjunction Services Limited - India
- Merrill Lynch Commodities Europe
- Coastal Gujarat Power Limited - India
- Cement Manufacturers Association - India
- SMG Consultants - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bhatia International Limited - India
- Marubeni Corporation - India
- Gujarat Mineral Development Corp Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Lanco Infratech Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Karbindo Abesyapradhi - Indoneisa
- Ministry of Transport, Egypt
- Ind-Barath Power Infra Limited - India
- Interocean Group of Companies - India
- OPG Power Generation Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Uttam Galva Steels Limited - India
- SN Aboitiz Power Inc, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Romanian Commodities Exchange
- Indonesian Coal Mining Association
- Petron Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- LBH Netherlands Bv - Netherlands
- Global Green Power PLC Corporation, Philippines
- Samtan Co., Ltd - South Korea
- Formosa Plastics Group - Taiwan
- Deloitte Consulting - India
- Parliament of New Zealand
- Indian Energy Exchange, India
- Pipit Mutiara Jaya. PT, Indonesia
- Essar Steel Hazira Ltd - India
- Chettinad Cement Corporation Ltd - India
- Meralco Power Generation, Philippines
- San Jose City I Power Corp, Philippines
- Banpu Public Company Limited - Thailand
- Coalindo Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Binh Thuan Hamico - Vietnam
- Oldendorff Carriers - Singapore
- Videocon Industries ltd - India
- PowerSource Philippines DevCo
- Therma Luzon, Inc, Philippines
- Edison Trading Spa - Italy
- Power Finance Corporation Ltd., India
- Minerals Council of Australia
- Parry Sugars Refinery, India
- Timah Investasi Mineral - Indoneisa
- Altura Mining Limited, Indonesia
- International Coal Ventures Pvt Ltd - India
- India Bulls Power Limited - India
- Kideco Jaya Agung - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- AsiaOL BioFuels Corp., Philippines
- SMC Global Power, Philippines
- MS Steel International - UAE
- PetroVietnam Power Coal Import and Supply Company
- CNBM International Corporation - China
- Cigading International Bulk Terminal - Indonesia
- Iligan Light & Power Inc, Philippines
- Wilmar Investment Holdings
- Central Electricity Authority - India
- Electricity Authority, New Zealand
- Neyveli Lignite Corporation Ltd, - India
- Energy Link Ltd, New Zealand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Thai Mozambique Logistica
- Energy Development Corp, Philippines
- Global Coal Blending Company Limited - Australia
- The University of Queensland
- Renaissance Capital - South Africa
- Sarangani Energy Corporation, Philippines
- White Energy Company Limited
- Directorate General of MIneral and Coal - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Global Business Power Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Heidelberg Cement - Germany
- Indogreen Group - Indonesia
- Bukit Baiduri Energy - Indonesia
- VISA Power Limited - India
- Bukit Makmur.PT - Indonesia
- Vedanta Resources Plc - India
- Sinarmas Energy and Mining - Indonesia
- TeaM Sual Corporation - Philippines
- Anglo American - United Kingdom
- IEA Clean Coal Centre - UK
- Medco Energi Mining Internasional
- Grasim Industreis Ltd - India
- Port Waratah Coal Services - Australia
- PTC India Limited - India
- Riau Bara Harum - Indonesia
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