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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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Thursday, 04 November 21
FASTER DECARBONISATION: BACK TO BASICS FOR THE MINING INDUSTRY? - WOOD MACKENZIE
To the uninitiated, rugby is a technical and complicated game. As young schoolboys it was all a wee bit confusing and we invariably ended up on the ...
Wednesday, 03 November 21
CHINA TO LAUNCH NEW DATA MONITORING SYSTEM, TARGETING COAL MARKET SPECULATION, HOARDING - GLOBAL TIMES
China’s top economic planner announced on Sunday a new data system for supervising the implementation of medium- and long-term contracts of c ...
Wednesday, 03 November 21
CHINA’S STATE PLANNER SAYS COAL SUPPLY IMPROVING, PRICES STABILISING - REUTERS
China’s coal supply situation has seen significant improvement with joint efforts from coal producers, logistics and downstream users, while ...
Wednesday, 03 November 21
HIGHER COKING COAL PRICES TO PARE PROFITABILITY OF STEELMAKERS IN SECOND HALF OF FY22 - CRISIL RATINGS
The operating margin of primary steelmakers will reduce by a third to 24-26% in the second half of this fiscal versus the first half as input cost ...
Wednesday, 03 November 21
MARKET INSIGHT - INTERMODAL
November is here and soon the all time seasonal favorite “all I want or Christmas is you” by Mariah Carey will be played in radio stati ...
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- Merrill Lynch Commodities Europe
- Ministry of Mines - Canada
- GN Power Mariveles Coal Plant, Philippines
- Indogreen Group - Indonesia
- Wilmar Investment Holdings
- Makarim & Taira - Indonesia
- Riau Bara Harum - Indonesia
- IEA Clean Coal Centre - UK
- Gujarat Mineral Development Corp Ltd - India
- Agrawal Coal Company - India
- Samtan Co., Ltd - South Korea
- London Commodity Brokers - England
- Orica Australia Pty. Ltd.
- Wood Mackenzie - Singapore
- TeaM Sual Corporation - Philippines
- Bulk Trading Sa - Switzerland
- Medco Energi Mining Internasional
- Xindia Steels Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Goldman Sachs - Singapore
- Indian Oil Corporation Limited
- Directorate General of MIneral and Coal - Indonesia
- Metalloyd Limited - United Kingdom
- Mintek Dendrill Indonesia
- Altura Mining Limited, Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Jaiprakash Power Ventures ltd
- Global Business Power Corporation, Philippines
- Posco Energy - South Korea
- Attock Cement Pakistan Limited
- Energy Link Ltd, New Zealand
- Interocean Group of Companies - India
- Vedanta Resources Plc - India
- Krishnapatnam Port Company Ltd. - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- VISA Power Limited - India
- Dalmia Cement Bharat India
- Planning Commission, India
- Borneo Indobara - Indonesia
- India Bulls Power Limited - India
- Electricity Generating Authority of Thailand
- SMC Global Power, Philippines
- Toyota Tsusho Corporation, Japan
- Sojitz Corporation - Japan
- Lanco Infratech Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Ambuja Cements Ltd - India
- Edison Trading Spa - Italy
- Asia Pacific Energy Resources Ventures Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Jindal Steel & Power Ltd - India
- Savvy Resources Ltd - HongKong
- Electricity Authority, New Zealand
- Grasim Industreis Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Billiton Holdings Pty Ltd - Australia
- Economic Council, Georgia
- Miang Besar Coal Terminal - Indonesia
- White Energy Company Limited
- Thai Mozambique Logistica
- ICICI Bank Limited - India
- Sinarmas Energy and Mining - Indonesia
- Aboitiz Power Corporation - Philippines
- Banpu Public Company Limited - Thailand
- Vizag Seaport Private Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bharathi Cement Corporation - India
- Karbindo Abesyapradhi - Indoneisa
- Bahari Cakrawala Sebuku - Indonesia
- Tata Chemicals Ltd - India
- OPG Power Generation Pvt Ltd - India
- New Zealand Coal & Carbon
- Baramulti Group, Indonesia
- Formosa Plastics Group - Taiwan
- ASAPP Information Group - India
- Commonwealth Bank - Australia
- CNBM International Corporation - China
- Iligan Light & Power Inc, Philippines
- Mjunction Services Limited - India
- Semirara Mining Corp, Philippines
- Deloitte Consulting - India
- Romanian Commodities Exchange
- Chettinad Cement Corporation Ltd - India
- Chamber of Mines of South Africa
- Bukit Asam (Persero) Tbk - Indonesia
- Siam City Cement - Thailand
- Straits Asia Resources Limited - Singapore
- Kohat Cement Company Ltd. - Pakistan
- Coastal Gujarat Power Limited - India
- McConnell Dowell - Australia
- Independent Power Producers Association of India
- Bukit Makmur.PT - Indonesia
- Intertek Mineral Services - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Parry Sugars Refinery, India
- Bangladesh Power Developement Board
- Malabar Cements Ltd - India
- Energy Development Corp, Philippines
- Bukit Baiduri Energy - Indonesia
- Gujarat Sidhee Cement - India
- Global Green Power PLC Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Bhushan Steel Limited - India
- San Jose City I Power Corp, Philippines
- Directorate Of Revenue Intelligence - India
- Global Coal Blending Company Limited - Australia
- GVK Power & Infra Limited - India
- Thiess Contractors Indonesia
- Oldendorff Carriers - Singapore
- Coal and Oil Company - UAE
- Kepco SPC Power Corporation, Philippines
- Tamil Nadu electricity Board
- Barasentosa Lestari - Indonesia
- Price Waterhouse Coopers - Russia
- Petron Corporation, Philippines
- Videocon Industries ltd - India
- Manunggal Multi Energi - Indonesia
- Bhatia International Limited - India
- Indian Energy Exchange, India
- Central Electricity Authority - India
- Eastern Coal Council - USA
- Cigading International Bulk Terminal - Indonesia
- Mercuria Energy - Indonesia
- Rio Tinto Coal - Australia
- Star Paper Mills Limited - India
- Singapore Mercantile Exchange
- Gujarat Electricity Regulatory Commission - India
- PowerSource Philippines DevCo
- CIMB Investment Bank - Malaysia
- Indika Energy - Indonesia
- Therma Luzon, Inc, Philippines
- Siam City Cement PLC, Thailand
- European Bulk Services B.V. - Netherlands
- Vijayanagar Sugar Pvt Ltd - India
- Africa Commodities Group - South Africa
- Heidelberg Cement - Germany
- Asmin Koalindo Tuhup - Indonesia
- Port Waratah Coal Services - Australia
- PTC India Limited - India
- Alfred C Toepfer International GmbH - Germany
- LBH Netherlands Bv - Netherlands
- Kaltim Prima Coal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Ministry of Finance - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Kobexindo Tractors - Indoneisa
- Kartika Selabumi Mining - Indonesia
- Orica Mining Services - Indonesia
- Parliament of New Zealand
- SMG Consultants - Indonesia
- Binh Thuan Hamico - Vietnam
- Antam Resourcindo - Indonesia
- Sindya Power Generating Company Private Ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Madhucon Powers Ltd - India
- Timah Investasi Mineral - Indoneisa
- Australian Commodity Traders Exchange
- GAC Shipping (India) Pvt Ltd
- Latin American Coal - Colombia
- Aditya Birla Group - India
- Globalindo Alam Lestari - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Bayan Resources Tbk. - Indonesia
- Power Finance Corporation Ltd., India
- Uttam Galva Steels Limited - India
- Anglo American - United Kingdom
- Kapuas Tunggal Persada - Indonesia
- Kideco Jaya Agung - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Sical Logistics Limited - India
- International Coal Ventures Pvt Ltd - India
- Ministry of Transport, Egypt
- Leighton Contractors Pty Ltd - Australia
- Bhoruka Overseas - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Ind-Barath Power Infra Limited - India
- Simpson Spence & Young - Indonesia
- Coalindo Energy - Indonesia
- Standard Chartered Bank - UAE
- Marubeni Corporation - India
- Australian Coal Association
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Georgia Ports Authority, United States
- Sree Jayajothi Cements Limited - India
- Indo Tambangraya Megah - Indonesia
- Indonesian Coal Mining Association
- Larsen & Toubro Limited - India
- Trasteel International SA, Italy
- Cement Manufacturers Association - India
- Renaissance Capital - South Africa
- Kalimantan Lumbung Energi - Indonesia
- SN Aboitiz Power Inc, Philippines
- Maheswari Brothers Coal Limited - India
- MS Steel International - UAE
- Sarangani Energy Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sakthi Sugars Limited - India
- Pendopo Energi Batubara - Indonesia
- The Treasury - Australian Government
- The University of Queensland
- Minerals Council of Australia
- The State Trading Corporation of India Ltd
- Karaikal Port Pvt Ltd - India
- GMR Energy Limited - India
- South Luzon Thermal Energy Corporation
- Mercator Lines Limited - India
- PNOC Exploration Corporation - Philippines
- Semirara Mining and Power Corporation, Philippines
- Carbofer General Trading SA - India
- Meralco Power Generation, Philippines
- Meenaskhi Energy Private Limited - India
- Kumho Petrochemical, South Korea
- Eastern Energy - Thailand
- IHS Mccloskey Coal Group - USA
- Holcim Trading Pte Ltd - Singapore
- Central Java Power - Indonesia
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