Coal Insights, May 2022

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CONTENTS 16 Seaborne thermal coal offers rise in May 17 Seaborne coking coal offers remain firm in May 18 April coal imports down 7.36% y-o-y 19 CIL’s coal production up 28% in April 20 SCCL’s coal production up 10% in April 23 Need integrated coal gasification combined cycle power plants: JSPL 25 Ministries work out ways to enhance coal transport efficiency 27 Lower fixed cost recovery if coal stocks fall below norm: CERC 28 India rolling out ‘big bang’ policies to accelerate transition: IEEFA 31 CERC to decide on monthly import coal cost escalation rate for PPAs 32 India’s April sponge iron production up 6% y-o-y 33 Power capacity addition down 10% in FY22 36 Coal handled by major ports up 12% in April 37 Indian Railways’ coal handling up 11% in April 38 China plans investment to ensure coal-fired power meet demand revival 41 US coal production to rise by 3 percent in 2022: EIA 43 Tata Power Mundra to benefit from import cost pass-through norm 47 Gainwell to start production at Panagarh by January 2023 48 NTPC coal import jumps 2.45 times in Q4 of FY22 50 Corporate update 52 Government update 54 E-auction data 56 Port Data

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6 | COVER STORY

“NCL to leap beyond its targets.” Exclusive interview of Bhola Singh, Chairman and Managing Director of Northern Coalfields Ltd.

34 |

FEATURE

Firing all cylinders to meet power demand Import of coal for blending by states is not satisfactory, says power ministry.

39 | INTERNATIONAL IEA asks Poland to rethink fossil fuel investments Poland remains heavily reliant on fossil fuels.

42 | CORPORATE

MECL likely to merge into CMPDIL To result in creation of single integrated entity.

45 | CORPORATE

Adani plans to mine 40 mt of coal in FY23 Peak output from Sulyari expected in FY23.


COVER STORY

“Northern Coalfields to leap beyond its targets”

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COVER STORY

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pearheading the third largest mining subsidiary of Coal India in times of high energy demand and early stages of energy transition has put Bhola Singh, Chairman and Managing Director of Northern Coalfields Ltd (NCL) under the spotlight ever since he assumed his current responsibility on the first day of 2022. Before being appointed the CMD of NCL, Singh worked as Director Technical, Central Coalfields Ltd from January 2019 to December 2021. Singh completed B Tech (Hons) in mining engineering from IIT, Kharagpur and possesses FCC (Coal). He is a professional mining engineer with over 35 Years of experience in reputed public and private sector organizations. He started his career with NCL in 1987 as a Graduate Engineer Trainee. He was responsible for production, productivity, safety, environment and overall mine management. In 2008, Singh joined AES of US as the Head of a Greenfield mining project in Chhattisgarh. Later on, he worked for Manoharpur Coal Blocks allotted to Odisha Power Generation Corp. Singh also has the experience of working as Project Director of Sasan Power Ltd from May 2015 to January 2019. In a freewheeling interview with Arindam Bandopadhyay and Sumit Maitra of Coal Insights, Singh talked of NCL’s achievements so far and the journey ahead.

Among all the CIL subsidiaries, NCL staged the highest increase in production (nearly 40 million tons or 45 percent) over the last five years (FY17-FY22). What were the factors that led to this stupendous growth at a time when many other miners struggled to cope with the pressure to perform? Northern Coalfields Ltd Singrauli, a pioneering company of Coal India Ltd has seen unprecedented growth in the last 5 years of about 45 percent from 84.09 million tons (mt) in 2016-17 to 122 mt in 2021-22. NCL operates with 10 highly mechanised opencast coal mines and has deployed about 1200 high capacity HEMMs in its mines which helps the NCL to maintain productivity and ensures resultant output within the timeframe.

Well planned and timely executed Monsoon Action Plan results in smooth production during even the monsoon seasons which results in uninterrupted and uniform coal production every month and every day from our highly productive coal mines including the rainy season. Systematic mining with well-maintained and properly designed haul roads, separate haul roads for different sized vehicles, engineered benched dump yards of overburden, and adequate arrangement of dust suppression and illumination in all workplaces including all transport roads is ensured. Strategically designed coal evacuation and dispatch systems play key roles to surpass the nation’s production expectations from us. We believe that our workmen are the

key assets and the company recognises the role of miners in its growth. NCL is not only providing and updating stateof-the-art welfare amenities but also continuously upskilling the workforce with regular training and development as per the paradigm shift of scenario. These endeavors reflect in terms of production and productivity. Thrust upon R&D in vivid facets is also playing a crucial role to enhance productivity exponentially. How do you see NCL performing in the current year vis-à-vis its yearly production and dispatch targets? What is your production roadmap for 2030? NCL is a premier coal company that is expected to leap beyond its targets. The company has a heritage to cross its targets for years. In FY22, NCL produced 122.43 mt of coal with 6.4 percent y-o-y growth against the targeted 119 mt coal production and dispatched 125.66 mt of coal with 16 percent y-o-y growth against the targeted 119 mt. The company is faring well in the current fiscal and has seen spectacular growth. In April, the company produced 10.81 mt of coal with whooping 26.22 percent y-o-y growth. This produced coal is 105.8 percent of the target for the month of April 2022. Augmenting supply to meet the demand of coal consumers amid increasing energy consumption of the nation in the postpandemic period, NCL dispatched 11.14 mt of coal in April with 18 percent y-o-y growth. NCL has been entrusted with 122 mt of coal production, despatch, and 410 million cubic meters of Overburden Removal in FY23. In order to make the nation Atmnirbhar in the coal sector, NCL is eyeing 130 mt of coal production in its contribution to 1 billion tons of production of Coal India.

Coal Insights, May 2022

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FEATURE

Need integrated coal gasification combined cycle power plants: JSPL Coal Insights Bureau

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o avoid transporting coal over long distances to power plants, integrated coal gasification combined cycle power plants (IGCC) are needed to be set up at pitheads, said an official of Jindal Steel & Power. “We waste lots of money and energy to transport coal away from the coal pithead. So it’s a suggestion that if we can promote more integrated gasification combined plant IGCC power plant at the pithead which will save a lot of transporting from that coal pithead,” the official said at the investors meet in Mumbai on coal gasification and auction of closed mines of Coal India.

IGCC power plants are a next-generation thermal power system with significantly enhanced power generation efficiency and environmental performance due to its combination with coal gasification and the Gas Turbine Combined Cycle (GTCC) system. Large-type IGCC systems can improve power generation efficiency by approximately 15 percent and reduce CO2 compared with conventional coal-fired thermal power systems, according to technology provider Mitsubishi. The investors’ meet discussed issues related to scaling up of coal gasification with a focus on the need for a suitable business model for coal gasification to promote private

investments, development of indigenous gasification technology on a commercial scale, and suitable policy provision for marketing of an indigenous product derived from coal gasification. Investors allowed 50% concession in revenue share

Ministry of Coal has allowed concession of 50 percent in revenue share for coal gasification. Union Minister of Coal, Mines & Parliamentary Affairs Pralhad Joshi, speaking at the event, said that Ministry of Coal has allowed concession of 50 percent in revenue share for coal gasification. Joshi also pitched for options like manufacturing Hydrogen from Coal to help India become energy independent. During the event Joshi launched a report ‘Roadmap for Coal to Hydrogen’, prepared by Ministry of Coal. “Coal Gasification is the need of the hour and a step towards sustainable future. The Government aims gasification of 100 million tons coal by 2030. This will generate jobs in both technical and non-technical sector,” Raosaheb Patil Danve, Minister of State for Coal, Mines & Railways.

Coal Insights, May 2022

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FEATURE

Firing all cylinders to meet power demand

Power Minister in a meeting to ensure adequate power generation and preparation before the monsoon.

Coal Insights Bureau

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s a sweltering heatwave grips most part of the plain lands of India, coal-based power generation grew significantly by 9 percent to 1,02,529 million units (MU) in April 2022 against 93,838 Mu in the corresponding month year ago. This was majorly aided by 29 percent jump in coal production, from 51.62 million tons (mt) in April 2021 to 66.58 mt in the previous month. The growth seen in April was a consequence of return of vibrancy to the economy, follows from a similar 8.9 percent growth in demand. Due to increase in consumption of electricity, the share of coal-based generation has increased and the total coal consumption by power plants has also gone up. Materialisation of domestic coal is only about 88 percent of total requirements, according to the power ministry. With demand expected to grow, reaching 215-220 GW in months of May-June, the

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Government and other stakeholders are working together to ensure power supply. However, there are frequent reports of power outages across several northern Indian regions. While coal production is in full swing, despatches, particularly through the rail mode is lagging behind while states are still cagey about going for imported coal primarily because of high costs of imports. Ministry of Power had issued directions under section 11 of the Electricity Act that all the imported coal based plants start running and most of them have started running. “However, import of coal for blending by states is not satisfactory. In FY19 a total of 21.4 mt of coal were imported for blending. In FY20, the total import for blending was 23.8 mt whereas in FY22, it was only 8.3 mt. This is the cause of the stress in the availability of coal,” the Power Ministry said. Solving power crisis

The government has taken a host of policy

“Import of coal for blending by states is not satisfactory. In FY19 a total of 21.4 mt of coal were imported for blending. In FY20, the total import for blending was 23.8 mt whereas in FY22, it was only 8.3 mt. This is the cause of the stress in the availability of coal.” Power Ministry decision to raise coal stocks at the power plants by forcing the Railways to commit more rakes for the power sector, incentivising coal import for blending which had fallen recently due to high costs in the global markets, allowing pass-through mechanism for imported coalbased power plants. Additionally, instructions have been given to maximise production in captive coal mines. Coal blending deadline Power Ministry has issued directions to all Gencos that if the orders for import of coal for blending are not placed by Gencos by May 31, and if the imported coal for blending purpose do not start arriving at the power plants by June 15, all the defaulter Gencos would have to import coal for blending purpose to the extent of 15 percent (in order to meet shortfall of imported coal for blending purpose in Quarter1 i.e. Apr-June 2022) in the remaining period up to October 31. The directive came after the ministry found that not much blending has taken place in April and May.


CORPORATE

MECL likely to merge into CMPDIL

Iron ore, gold, diamond and other minerals including coal in various states. Avoiding duplication of resources

Both MECL and CMPDI have been conducting promotional exploration under the Ministry of Coal’s Plan scheme of Promotional Exploration for Coal & Lignite. Its responsibility in these projects is similar to what CMPDI has been doing. For example, MECL recently has taken up projects like core drilling work for exploring coal in North Piparwar Phase-II coal block in Jharkhand. CMPDI’s ongoing diversification projects

CMPDI officials inspecting a drill site at Gopalpur exploration camp for Chhatabar Block.

Coal Insights Bureau

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he government is considering a proposal to merge Mineral Exploration Corp Ltd (MECL) into Coal India Ltd (CIL) arm Central Mine Planning and Design Institute Ltd (CMPDIL). The proposal is being pursued to strengthen CMPDI through diversification into other minerals and resouces, the government has said in a press communication. “Ministry of Coal has clarified that CMPDIL is a subsidiary of CIL that provides exploration and consultancy services primarily to the coal sector. Keeping in view the scope for its business expansion in other minerals, the Government has plans for its strengthening, for which it is being considered to merge MECL into CMPDIL,” the communication said.

Broadening of expertise

With MECL having domain expertise in non-coal mineral exploration and consultancy, such merger and creation of one integrated exploration and consultancy organisation would result in growth and

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value addition, the Coal Ministry said clarifying that CMPDIL will continue to be a subsidiary of CIL. A Mini Ratna-I PSU, MECL, is engaged in detailed mineral exploration in the country having more than 48 years of expertise in geological exploration activities. It enters into agreements with various entities for exploratory work. It has earlier signed Memorandum of Understanding (MoU) with NMDC for exploration of

In line with Coal India’s own effort to turn into a diversified energy provider by venturing into Renewable Energy like solar power generation and also coal gasification project, CMPDI has also taken up these projects expanding its expertise, which, so far, was restricted mainly to coal exploration and project consultancy. CMPDI recently floated tenders for setting up coal-to-methanol plant at Bahadurpur in Ranigunj under Eastern Coalfields and for a coal gasification-based ammonia plant under South Eastern Coalfields. It is also developing expertise in solar power projects through its existing Memorandum of Agreement with Central Coalfields Ltd as a project management consultant. MECL officials undertaking detailed exploration at Jhamarkotra Rock Phosphorite mine.


CORPORATE

Adani plans to mine 40 mt of coal in FY23

Coal Insights Bureau

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dani Enterprises in FY23 plans to start work on two mines – a commercial mine and the Parsa mine under the MDO route, taking its total annual production to 40-42 million tons (mt), Vinay Prakash, Director of Adani Enterprises and Chief Executive Officer Natural Resources said. Towards the end of fourth quarter of FY22, Adani started mining at Sulyari and the miner plans to achieve the peak capacity within the first year of operation. “We wish to achieve the peak capacity in the first year itself which is going to be a very big milestone for coal industry,” Vinay Prakash, Director of Adani enterprises and Chief Executive Officer Natural Resources said in an investors conference call. Adani now has four operational coal mines and one operational iron ore mine. Among the coal mines, in Gare Pelma III, Adani did close to 3.7-3.8 mt in FY22 and this year the peak of 5 mt will be touched. From the Talabira mines of NLC Ltd, which is operated under the MDO mode, Adani Enterprises expects to produce 10 mt in FY23, up from 6.7 mt in FY22 to take benefit of the current high coal prices. “We have been requested to increase from 10 mt to 13 mt or 15 mt and we are

working with NLC and the local community to see what else we can do but 10 mt is for sure going to be coming from Talabira,” he said. For Parsa East Kente Basen (PEKB), approval has been received from the Coal Ministry and the Ministry of Environment to raise the capacity from 15 mt, which has already been reached, to 18 mt. The production can be raised by use of efficient mining technologies, Prakash explained. Adani Enterprises Ltd is the pioneer of MDO concept in India with an integrated business model that spans across developing

mines as well as the entire upstream and the downstream activities. Developments in FY22

In FY22, mining production volume increased by 58 percent to 27.7 mt on yearon-year (y-o-y) basis. Further, dispatch increased by 58 percent to 25.2 mt on y-o-y basis. On the commercial mine front, two of the subsidiaries have been declared successful bidders for commercial coal mines at Bijahan in Odisha and Gondbahera Ujheni East in Madhya Pradesh. With this, the company has now total

“We did the first shipment (from Australia) in January, the second shipment in March which actually came in April and now in May onwards, we are planning to have four shipments a month and then moving it to five or six and then seven shipments a month with capsize vessels.” Vinay Prakash, Director of Adani Enterprises, Chief Executive Officer Natural Resources Coal Insights, May 2022

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CORPORATE

NTPC coal import jumps 2.45 times in Q4 of FY22 Coal Insights Bureau

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TPC Ltd, India’s largest power utility, imported 1.07 mt of coal in the fourth quarter of FY22, 2.45 times more than 0.31 mt imported in the corresponding quarter of FY21 and 105 percent from than 0.52 mt shipped in the December quarter of FY22. Imports rose even as captive coal production went up by 17.52 percent to 4.36 mt while domestic sourcing of coal rose 5.84 percent to 51.21 mt year-on-year (y-o-y). This is because aggregate coal consumption grew to 52.28 mt, up 6.60 percent over March quarter of FY21. In the December quarter of FY22, coal consumption, however, was higher at 53.33 mt. Capacity touches 69,017 MW

Consequent upon commissioning of second part capacity of 35 MW out of 92 MW Kayamkulam Floating Solar PV Project at Kayamkulam in Kerala, NTPC group’s installed and commercial capacity have touched 69,016.68 MW and 68,356.68 MW respectively.

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Thermal capacity addition plans

Keeping in mind the rising power shortages in the country due to revival in demand leading to power outages in several parts of the country, NTPC is in the process of adding fresh 6 GW of thermal power capacity. The upcoming coal-fired projects include 1600 MW at Singrauli, 1600 MW at Lara and 660MW at Darlipali. Additionally, NTPC has floated tender for 2x660 MW of capacity at Talcher, company officials told analysts on May 20 during a conference call. Floats tender to procure 4.53 mt of imported coal

NTPC has floated 3 Notices Inviting Tenders to procure a total of 4.53 mt of imported coal to be delivered on FOR power stations basis for its different thermal power plants (TPPs). Of the total volume, 1.50 mt would be procured for Kudgi, Solapur, Sipat, Mouda, Gadarwara, Lara and Korba TPPs, while 1.43 mt would be procured for Vindhyachal, Rihand, Singrauli, Khargone, Dadri, Tanda and Unchahar TPPs. Another 1.60 mt would be procured for Talcher Kaniha, Farakka, Kahalgaon, Barh, Barauni, Bongaigaon, Simhadri & Ramagundam TPPs.

According to the tender document, total quantity of imported coal shall be delivered to the stations in 4 months period, as per delivery schedule to be given to the successful bidder by NTPC. Delivery schedule may be extended further at the sole discretion of NTPC. The specified range for quality of coal shall be as under: Parameters

Specified range

Total Moisture (ARB)

Up to 32%

Ash (ADB)

Up to 20% Max

Gross Calorific Value (ARB)

Not less than 4700 Kcal/Kg

Sulphur (ADB)

Up to 1.00% Max

Fixed Carbon (ADB)

30-50% Typical

Volatile Matter (ADB)

25-45%

Base parameters for coal under this tender for Price Basis are as under: Total Moisture (ARB): 25 percent, Ash (ADB): 15 percent, Sulphur (ADB): 0.90 percent, Gross Calorific Value (ARB): 5000 Kcal/Kg, Size (less than 2.36 mm) not exceeding: 10 percent of quantity received at power plant. The last date for submission of bids is May 23. Q4 consolidated net profit up 14%

NTPC reported 14 percent rise in consolidated net profit at `5,167 crore for the fourth quarter of FY22, up from `4,542 crore in the year ago period. On a sequential basis, the profit grew 14.8 percent from `4,499 crore during the December quarter. Consolidated revenue grew 23 percent


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