CCAI Monthly Newsletter Feb-21

February 2021 Price: 40/W H E R E S E R V I C E A N D D E D I C AT I O N J O I N H A N D S

Vol. XLIX No. 11

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CCAI Monthly Published Newsletter February 2021 1 on : 28.02.2021

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From the Editor’s Desk

In a bid to tackle the growin g concerns over the adverse impact of mining and usage of fossil fuel on the environment, the Central Gov ernment has come up with a multi-pronged stra tegy to encourage sustainable development in coal mining. The Ministry of Coal is encouraging use of surp lus mine water for irrigation and drinking purpos e in and around mining areas, extr action and use of sand from overburden, pro moting Eco-Mine Tourism, enc ouraging bamboo plantation etc. as par t of its initiative to protect both env ironmental and social fronts.

Even amid the conscious pus h towards embracing renewa ble energy more and more, the centre’s move to rationalize coal mining is sign ificant as the dry fuel is set to remain the single largest source of electric ity in the country at least till 2040, as per the World Coal Association. Hen ce, dep loyment of efficient, clean coal technolo gies in India will become mo re important to meet environmental goals in the coming years. The US-India energy cooperation which includes collaboration on clean coal technology and smart grids, is an important milestone in this regard.

After suffering a major setback in 2020 due to the pandem ic, India is putting significant thrust on its coal sect or to rally its dwindling econom y back on track.

In order to augment produc tion and increase the availab ility of the dry fuel the Centre is also planning to permit 50 per cent of coal/lig nite produced by captive blocks and has invited comments from the state gov ernments of coalbearing states and stakeholder s/general public on the pro posal. The Ministry may also allow Coal India Ltd to export surplus coal for the first time since its inception while clubbing all spot auctions held by the stat e-o wned miner for various consumers for trading on one exchange.

Meanwhile, the national min er Coal India Limited, whose monopoly has been challenged by opening up of Ind ia’s coal market, plans to dive rsif y by investing Rs 1.43 lakh crore in 26 new bus iness areas including solar waf er manufacturing, a greenfield aluminum project , solar generation projects and thermal power plants. The coal behemoth has already prepared a dra ft ma rke t assessment report and plans for a special purpose vehicle (SPV) and aim s to floa t tender for the JV by Q2 of FY22. The Maharatna company will sho rtly star t monitoring the movements of coal load ed rakes through the Indian Rai lwa y’s Freight Operation Information System (FIOS).

As par t of its tirade against environmental pollution, the company has also signed a Memorandum of Und erstanding (MoU) with Energy Efficiency Ser vices Ltd (EESL) to reduce its car bon footprint and improve its ove rall operational efficiency and profitability.

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Content Vol. XLIX No. 11 February 2021

Official Organ of the Coal Consumers’ Association of India. Disseminates News and Views on Coal and all other sources of Energy.

4, India Exchange Place - 7th Floor Kolkata - 700 001 Landline : +91 33 22304488 / 22621516 E-mail : sec.ccai@gmail.com Website : www.ccai.co.in

06

Consumers' Page

08

Power

14

Domestic

20

Global

Editor : Subhasri Nandi Annual Subscription Rs. 400/(including postage) MO/DD to be made in favour of “Coal Consumers’ Association of India” CCAI do not necessarily share or support the views expressed in this Publication.

26 Monthly Summary Of

Imported Coal &Petcoke

29 Overall Domestic Coal Scenario 30

Production And Offtake Performance Of Cil And Subsidiary Companies

CCAI Monthly Newsletter February 2021

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CONSUMERS’ PAGE Submissions by both Power and NRS consumers:

Submission by Power sector consumers:

1. Representation by both Power and NRS consumers regarding various forms of pending refunds:

2. Submission regarding continuous and significant short receipt of coal from SECL and ECL sidings:

Various forms of refunds pertaining to coal consumers across the board including operational refund such as, refund of advance coal value, refund of advalorem taxes, security depots, EMD/BGs, differential CST amounts and abnormal underloading /overloading charges and coal quality related refund such as differential coal value in case of grade slippage, excess surface moisture in coal and supply of ungraded coal have been pending since long from different CIL Subsidiaries.

Power sector consumers have raised concern regarding continuous and significant short-receipt of coal in rakes loaded from SECL’s Kusmunda area sidings and ECL’s Sonepur Bazari sidings. Shortages in all the rakes loaded from Old Kusmunda (OKSR) and New Kusmunda (NKCR) sidings in January-February 2021 have increased to as high as 4% while shortage in rakes loaded from the ECL siding is found to be around 5.5% even after recalibration of weighbridges enroute.

Submission has been made to CIL for its Subsidiaries to expedite these refunds to the respective consumers. In case there is no definite timeline articulated in the FSA for disbursement of such refunds, a suitable time frame may be included in the FSAs

Such recurrent short-receipt is leading to huge financial loss for Power generators. Requests have been made to SECL and ECL to take appropriate measures including ensuring proper loading of rakes and recalibration of weighbridges to eradicate the problem.

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3. Submission regarding inferior quality of coal supplied from various ECL sidings: Coal supplied from various collieries of Salanpur area namely Bonjomehari, Dabor, Mohonpur, Begunia, Gourandih, Itapara are 4-5 grade lower than the declared grade leading to enormous financial loss to power generators.

Request has been made to ECL to ensure supply of the declared grade of coal to these power generators.

4. Submission regarding sizeable difference in RR weight and coal bills for rakes despatched by SECL: Power sector consumers procuring coal from SECL’s Korba coalfields have stated that they are concerned regarding the sizable difference in RR weight and coal bills being raised by SECL for despatches since the last couple of months.

Request has been made to SECL to take adequate measures so that the issue can be taken care of at the earliest possible.

5. Submission by regarding discrepancy in refund of idle freight: Power Utilities are entitled for refund of idle freight from the coal companies in case of underloading of rakes as per FSA provision 10.2 for the Power sector.

However, in reality there is a significant difference in refund amount between the FSA provision and actual refund provided by Subsidiaries. Also, certain Subsidiaries do not return the GST component alongwith the refund amount to the consumers.

Request has been made to CIL for appropriate amount of refund for idle freight in case of underloading and reimburse the GST amount alongwith the actual refund of freight charges paid by consumers.

Submission by NRS consumers: 6. Submission regarding allowing change of mode of supply from Road to Rail by SECL: A number of CIL Subsidiaries have immediately extended the facility for allowing the dispensation of change of mode of supply from Road to Rail under FSA through NRS linkage auction route to the NRS consumers since November'20. However, in spite of repeated requests made by the NRS consumers no notification has been issued by SECL in this regard.

Many SECL consumers have been penalised for short-lifting as they were not able to procure coal by Road Mode during the nationwide lockdown period.

Hence, submission has been made to SECL to allow the change of mode from Road to Rail at the earliest.

7. Request for not imposing penalty for short-lifting from Wani Siding for NRS FSA consumers: A number of NRS consumers procuring coal from WCL are not able to lift allotted quantity from the Subsidiary’s Wani sidings as a) The offered G13 grade of coal is not suitable for direct feed to the boilers and needs to be blended with high grade imported coal making it unviable for the plant. b) In order to lift 75% of ACQ from Wani siding as per the FSA clause, the consumers need to lift a huge number of rakes within less than 2 months which may not be feasible due to shortage in storage capacity. c) The coal price structure of Neeljay OCM, the newly introduced feeding source of Wani siding, is yet to be sent to the consumers.

Request has been to WCL for not penalizing the consumers for short-lifting as contracted grade of was coal was not available from Wani sidings during most of the FY2020-21.

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POWER Policy and regulatory framework for DISCOMs in the offing: PM Modi Asserting that reforms in the regulatory and process framework have significantly 'improved' the outlook towards the power sector, Prime Minister Narendra Modi on Thursday said the Centre is working to remove problems in the distribution sector and a policy and regulatory framework for DISCOMs is in the offing.

Consumers should be able to choose their implementation of the Union Budget provisions in the power and renewable energy sector, the Prime Minister's Office (PM) said in a statement.

Modi said the government treats power as a separate sector and not as part of the industry sector, while adding that the Centre's approach towards it has been holistic and guided by the four mantras of "reach, reinforce, reform and renewable energy".

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He noted that the renewable energy capacity of the country has been enhanced by two-and-a-half times in the last six years and the solar energy capacity by 15 times.

Referring to the PLI (performance-linked incentive) scheme, he said high-efficiency solar PV modules are now part of it and the government is committed to investing Rs 4,500 crore in this. Modi hoped for a massive response to the scheme. Under the PLI scheme, integrated solar PV manufacturing plants with a capacity of 10,000 MW will be operationalised with an estimated investment of Rs 14,000 crore.

Power Min reduces discom penalties to 5 per cent over SBI lending rate The government has lowered the late payment fee chargeable by power and transmission developers

from distribution companies by linking it to State Bank of India's lending rate against the current 18 per cent.

the better prospects for the sector as a result, amid an improved macroeconomic backdrop," Moody's said in a note.

The Electricity (Late Payment Surcharge) Rules 2021 exclude existing power plants and transmission systems whose tariffs have been determined through competitive bidding.

Sustaining generation growth indicates stabilization of the operating environment, which was severely impacted by the lockdowns. Our expectations of a rebound real GDP growth to 10.8 per cent in fiscal 2022 further underpins the potential for improving power demand and a more stable picture for the sector, it said.

The rules bar electricity distribution companies with any outstanding bills after seven months from due date from procuring power from power exchanges or grant of short -term open access. The rules came into force on Monday when they were notified.

The gazette notification issued by the power ministry evoked mixed response from the industry as it supersedes regulations of the Central Electricity Regulatory Commission (CERC) and also the power purchase/transmission agreements. CERC chairperson P K Pujari had in October sent a statutory advice to the government against issuance of the rules citing jurisdictional overlap.

The power distribution companies welcomed reduction in late payment fee while electricity generation plants and transmission companies with regulated tariffs said lowering of the penalty rates interest would discourage timely payments by states .

Moody's upgrades power sector outlook to stable on generation uptick Rating agency Moody's on Monday upgraded the outlook on the power sector to stable from negative, citing the fifth consecutive month of generation growth in January.

The Central Electricity Authority last week reported a 3.1 per cent year-on-year growth in power generation in January, making it the fifth consecutive month of generation growth after six months of decline driven by coronavirus pandemic.

For the first 10 months of the fiscal 2021, power generation growth declined 2.9 per cent year-on, compared to earlier expectations of a minimum 4-5 per cent decline. But renewable energy generation (excluding hydro power) grew 4.3 per cent during the same period and wind the weakest down 12 per cent.

"We have changed the outlook for the power sector to stable from negative, recognising

States to be consulted amended power Bill

on

The Union ministry of power is holding consultations with its state energy counterparts on Wednesday on the proposed Electricity (Amendment) Bill, 2020. The central government had proposed the new Bill in 2020, amending the original Electricity Act, 2003.

The Centre has proposed privatisation of power distribution, withdrawal of subsidies in power bills, besides promoting renewable energy. The Bill proposes introduction of private licenses in distribution through which discoms would lease out the distribution network.

The Bill also proposes withdrawing subsidies from power bills. Consumers, however, would get direct cash benefit if the government extends the subsidy. Farmers and other sectors that previously were granted power subsidy will now have to pay the total bill amount. Any subsidy will be in the form of a direct cash benefit.

Discoms or their private partners will collect the unsubsidised tariff from the consumer.

The Bill also proposes a National Renewable Energy Policy that mandates the states to purchase a percentage of renewable energy as fixed by the Centre.

Now, discoms must clear dues to purchase power In a move that could push the already beleaguered power distribution companies into more trouble, the Centre has brought changes to the Electricity Act to suspend discoms from buying power if they fail to clear dues to generation companies beyond six months.

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The Centre has also brought in a clause in the Act to impose penalties on the discoms for late payment of dues. The Centre on Monday issued a notification by amending the Electricity Act, 2003, to make discoms clear the dues on time. As per the new guidelines stipulated by the Centre, discoms cannot escape from paying dues to the Gencos (PPAs) and Transcos (TSA) beyond one month.

capped the transaction fee charged by the exchanges to two paise per unit. Though the rate is similar to the current margin levels earned by exchanges, the role of the regulator was restricted to oversight under the old regulations while the board of exchanges would determine the margins.

“Discoms will be penalised with a 0.5% penalty on the total due to the firm from which it procured power, either Genco or private power developer, in case it fails to pay the dues after 30 days. This is aimed at making the discoms cough up at any cost and push them into more debts and losses,” said AP Assistant Executive Engineers (AEEs) Association president Vamsi Srinivas. Similarly, the penalties would keep growing for six months as the Centre has capped the maximum penalty at 3%.

Centre cannot charge GST on power services: Rajasthan High Court

Surprisingly, the Centre has given liberty to the transmission company or the power supplier (private developer) to stop the supplies to the particular discoms and force the company to pay the dues.

CERC norms: ‘Market coupling’ mechanism for spot power market gets a leg-up Analysts said the new regulations will help increase the share of spot power in electricity purchased by discoms and large industrial consumers. The move is seen to dent the market dominance of the Indian Energy Exchange (IEX), where currently around 94% of the spot market transactions take place and catalyse formation of new exchanges.

The Rajasthan High Court (HC) has quashed a clarification issued by the Union government that had allowed the authorities to impose goods and services tax (GST) on certain portions of power supply.

Power distribution services draw zero GST rate since they fall under the negative list of services released by the Union government in 2017.

However, the Central Board of Indirect Taxes and Customs (CBIC) came out with a circular in 2018 imposing GST on various activities, such as application fee for releasing electricity connection, rental charges against metering equipment, testing fee for meters, capacitors, and duplicate bill charges. The circular was issued after the GST Council made recommendations to that effect, said Harpreet Singh, partnerindirect taxes, KPMG. The HC circular restrained the Union government from raising any demand and taking coercive measures to recover any tax on the basis of an impugned order.

The move is seen to dent the market dominance of the Indian Energy Exchange (IEX), where currently around 94% of the spot market transactions take place and catalyse formation of new exchanges.

Off-grid solar industry bracing for impact of import duty hike for lanterns and inverters

The Central Electricity Regulatory Commission (CERC) has introduced the ‘market coupling’ mechanism for spot power trading, a move which could align spot prices within same geographical areas and time slots, and encourage exchanges to attract consumers via improved quality of supply, payment flexibility, etc.

With a goal of promoting local manufacturing, India’s new budget tripled to 15 per cent the duty on imported solar lanterns, while the duty on solar inverters would rise from 5 per cent to 20 per cent. The off-grid solar industry, which already saw a 10 per cent decline in solar lantern sales in 2019-2020, is bracing for an ever bigger hit because of the new tariffs.

The move is seen to dent the market dominance of the Indian Energy Exchange (IEX), where currently around 94% of the spot market transactions take place and catalyse formation of new exchanges.

As a result, off-grid industry executives are calling for a more measured approach that accounts for the current gap in quality local production while ensuring that India’s rural poor are protected from expected price hikes until that gap is filled.

In its latest power market regulation, the CERC also

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According to Ministry of Commerce statistics, more

CCAI CCAI CCAI Monthly Monthly Monthly Newsletter Newsletter Newsletter September November February 2020 2019 2021

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than 95 per cent of the roughly six million solar lanterns sold in India in 2019-2020 came from China.

As a result, India lacks capacity to immediately replace those millions of quality-assured solar lanterns with domestic production. At present, there is only one locally manufactured product (a Frontier Markets torch) that has passed standards established by the IFC Lighting Global Framework.

It will be important for the domestic market to keep a focus on the consumer and ensure they get access to safe, high-performing, affordable, and durable products. Adhering to global quality assurance frameworks is a first step.

CSE opposes proposal to extend emission norms deadline for thermal power plants The Centre for Science and Environment (CSE) has cautioned the Ministry of Environment, Forest and Climate Change (MoEF&CC) against agreeing to the Power Ministry’s proposal for extending the deadline of meeting emission norms for coal-based thermal power plants in the country.

The Ministry of Power has requested the MoEF&CC to extend the deadline for all thermal plants from 2022 to 2024.

Virtual assessment, which seeks to eliminate human interface, is welcome, provided the principles of fairness and equity are not eroded “Extending the deadline once again will have grave repercussions for the fight against air pollution. It will also mean a complete mockery of the Supreme Court and Indian regulators’ efforts to control pollution from the coal-based thermal power sector over the last five years,” said SunitaNarain, Director-General, CSE. The extension was sought on the account of uncertainties and delays due to the Covid-19 pandemic, and other issues like import restrictions, lack of local availability of components, liquidity crunch in the power sector, credit refusals due to high stress in the sector, regulatory delays etc.

Gadkari urges power minister to reconsider restriction on solar rooftop projects Union micro, small and medium industries minister

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NitinGadkari has urged power minister R K Singh to reconsider a recent controversial decision to restrict net metering in solar rooftop projects.

The power ministry had recently issued a gazette notification directing states to henceforth allow net metering only for solar rooftop projects with capacity lower than 10 KW. Those with higher capacity needs to shift to gross metering.

With most solar rooftop installations in the commercial and industrial (C&I) segment being above 10 KW, developers had strongly protested the step.

Discoms in many states have been lobbying against net metering, arguing that the system robs them of legitimate revenue. This is because the tariff discoms pay while buying power from developers is markedly lower than the tariff at which they sell power to consumers.

In a letter to Singh dated February 15, Gadkari noted that while more and more micro, small and medium enterprises (MSMEs) were installing solar rooftop projects, thereby contributing to the share of clean energy in the grid, the notification might well discourage them.

TERI, POSOCO sign MoU to encourage research in domestic power sector The Energy and Resources Institute on Monday signed an MoU with Power System Operation Corporation (POSOCO) to encourage research in the domestic power sector.

According to the statement, "The two have agreed to work together to strengthen research-industry interaction for knowledge sharing and capacity building through collaboration, and to encourage research on issues related to the Indian power sector."

Joint endeavours under the MoU pertain to further developing power system simulation models, integrated resource planning, including demand and supply, on a short-term, medium-term and long-term perspective.

Preparation of joint reports and capacity building of state utilities is also part of the MoU. K V S Baba, Chairman and Managing Director, POSOCO Ltd, said "With its rich experience in the power sector, TERI, together with POSOCO, can produce extensive research reports backed with evidence to gain confidence in robust power systems operation.

Power Minister R K Singh calls for study on impact of hydro projects Power Minister R K Singh brushed aside apprehensions that water storage or dam projects, which also generate hydro electricity, harm environment, and urged experts to commission an authoritative and scientific study to find out the truth.

Singh said, "I have not seen science of environment being harmed. I see science of progress in this (water storage). Punjab and Haryana developed and they are where they are today because of BhakraNangal dam."

He further said, "If you ask any person in Bihar, then his dearest wish is to construct large dams on the river Kosi in Nepal. Wherever we constructed large dams, we have improved the lives of people...generations. This is the message we need to convey."

He brought attention toward pushback to water storage or dam projects in the country by NGOs (nongovernment organisations) or civil societies which claim that these would harm environment.

“In water resources, in the past decade also, we have faced headwinds in harnessing our water resources.

There was concerted movement against harnessing the water, dams, against any project which sought to harness our water resources."

Currently, India is developing around 14,000 megawatts of hydropower generation capacity.

Continuum Wind Energy to issue maiden green bond worth $500600 mn Continuum Wind Energy Ltd, sponsored by Singapore-based Clean Energy Investing Ltd, the indirect wholly-owned subsidiary of a Morgan Stanley fund entity, New Haven Infrastructure Partners, plans to issue its maiden green bond of $500-600 million, to be listed on the SGX. The proceeds will be used to refinance the project debt at six of its operating entities and to set up wind projects in India.

both strong financial and non-financial additionality.

IFC will be facilitating access to international capital markets for a first-time issuer through an innovative financial structure that will help the sector in tackling lack of suitable domestic market financing options during the ongoing pandemic.

Continuum Wind Energy to issue maiden green bond worth $500600 mn Continuum Wind Energy Ltd, sponsored by Singapore-based Clean Energy Investing Ltd, the indirect wholly-owned subsidiary of a Morgan Stanley fund entity, New Haven Infrastructure Partners, plans to issue its maiden green bond of $500-600 million, to be listed on the SGX. The proceeds will be used to refinance the project debt at six of its operating entities and to set up wind projects in India.

The proceeds of the green bond will be used to refinance the project debt at six of its operating entities of the Continuum Group which together will form part of a bond issuing Restricted Group (RG1).

IFC investment consists of the subscription to this green bond of an amount of upto $75 million for a tenor of 6 years. The proposed IFC investment has both strong financial and non-financial additionality.

IFC will be facilitating access to international capital markets for a first-time issuer through an innovative financial structure that will help the sector in tackling lack of suitable domestic market financing options during the ongoing pandemic. In addition, IFC will contribute to strengthening the company's E&S practices through the adoption of IFC's performance standards, said IFC. RG1 has an aggregate capacity of 722.9 mega watt, comprising operational wind and solar assets which have Madhya Pradesh and Maharashtra as off takers and power purchase agreements with C&I customers in Gujarat and Tamil Nadu.

The proceeds of the green bond will be used to refinance the project debt at six of its operating entities of the Continuum Group which together will form part of a bond issuing Restricted Group (RG1).

IFC investment consists of the subscription to this green bond of an amount of upto $75 million for a tenor of 6 years. The proposed IFC investment has CCAI Monthly Newsletter February 2021

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DOMESTIC Govt says major thrust on sustainable development in coal mining The Centre on Friday said it has put a major thrust on sustainable development in coal mining and is taking multi-pronged action on both environmental and social fronts.

The Ministry of Coal has moved forward with a comprehensive sustainable development plan and initiated its speedy implementation.

Primary focus is on making immediate social impact through Out of Box (OoB) measures besides regular environmental monitoring and mitigation during mining operation, the coal ministry said in a statement.

These OoB measures include use of surplus mine water for irrigation and drinking purpose in and around mining areas, extraction and use of sand from overburden (OB), promoting Eco-Mine Tourism, encouraging bamboo plantation, etc.

Top most priority is being given to gainful utilisation of mine water for irrigation and providing treated water for drinking to rural population in and around

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command area of mining subsidiaries of Coal India (CIL), Singareni Collieries Company Ltd (SCCL) and NLC India Ltd (NLCIL).

Centre to permit sale of 50% coal from captive blocks; invites comments The Centre plans to permit sale of 50 per cent of coal/ lignite produced by captive blocks, a move aimed at augmenting the production and increasing the availability of dry fuel. The government plans to do so through incorporation of a provision in the Mines and Minerals (Development and Regulation) Act, 1957 (MMDR).

"In the note for consultation of Ministry of Mines, it is proposed to incorporate a provision in the Act to allow sale of 50 per cent of coal/lignite produced by captive mines on an annual basis. Further, an additional amount will be charged on the merchant sales of coal/lignite by the captive miners," the coal ministry said in brief note.

The ministry said that it has invited comments from the state governments of coal-bearing states and stakeholders/general public on the said proposals.

The Ministry of Mines has also invited comments of the state governments, among others, on the proposals for additional amendments being considered in the MMDR Act. It is further proposed to specify the additional amount payable on such sale in the Act itself instead of leaving it to be specified under the rules framed under the Act in the same manner as will be specified for the other minerals.

Coal projected to be India's largest source of power in 2040: World Coal Association Coal is projected to remain the largest single source of electricity in India in 2040, according to Michelle Manook, Chief Executive, and World Coal Association. She said that coal will continue to play a vital role in supporting intermittent renewable energy sources to underpin infrastructure development and industrialization.

"India is choosing to prioritize economic growth enabled by a resilient energy mix, inclusive of coal and clean coal technologies," Michelle said, adding a pragmatic and collaborative focus from international governments, industry, and investors is needed to ensure policies are in place to support the deployment of clean technologies. "An Upcoming Coal Industry Advisory Board (CIAB) report, 'A Pathway to reducing emissions from coal power in India, provides a model for wider development and deployment of efficient, clean coal technologies in India to meet environmental goals," Michelle added.

Coal India to invest in 26 projects in new business areas, plans to tie up with private companies Coal India plans to invest Rs 1.43 lakh crore in 26 projects in new business areas. The new business areas will include solar wafer manufacturing, a greenfield aluminium project along with brownfield aluminium projects in a joint venture with NALCO, solar generation projects, and thermal power plants.

CNBC-TV18 Learns that the company has received approvals from NITI Aayog, DIPAM for the solar water manufacturing and the greenfield aluminium projects. The company has already prepared a draft market assessment report and plans for a special purpose vehicle (SPV) and aims to float tender for the JV by Q2 of FY22. The company plans to incorporate SPV where it will seek private partners and bid will be on the lines of the UMPP (Ultra mega power project).

It also plans to participate in the solar energy corporation of India’s (SECI) for solar power generation

projects in a JV with Neyveli Lignite Corporation once it gets approval. Coal India with Neyveli lignite plans to commission thermal power projects of over 8,500 MW capacity which are expected to be commissioned between FY22-28 in Odisha, Madhya Pradesh, Jharkhand, Uttar Pradesh, and Tamil Nadu.

The company also plans to invest Rs 38,000 crore in clean coal technologies. It is expected that CIL may float tender for 4 coal gasification projects in May this year. Along with coal gasification, the company intends to float tender for 3 coal bed methane projects and 3 coal washeries in the first quarter of FY22.

India proposes single spot coal auction for all consumers; CIL to export The government proposes to allow Coal India Ltd to export surplus coal for the first time since its inception while clubbing all spot auctions held by the stateowned miner for various consumers for trading on one exchange. The state-run miner is likely to set up a special e-auction window for export of coal which cannot be sold in India. The coal ministry has also proposed a single auction trading platform for all coal consumers of Coal India. A senior government official said coal prices to power and non-power Coal India consumers who hold long term linkages will remain unchanged. “After meeting requirement of linkages of power and non-power consumers, Coal India should be allowed to sell coal on a transparent basis. Coal trading platform as a single e-auction window would enable removal of market distortions leading to one nation, one price for one grade,” an official said.

The government has auctioned 19 coal blocks in the first tranche of commercial coal auctions. Another 75 mines with reserves of over 38,000 million tonnes are proposed to be offered in the current tranche of the auctions.

CIL to monitor rake movements to enhance supplies through rail mode PSU miner Coal India (CIL) would shortly start monitoring the movements of coal loaded rakes through the Indian Railway’s Freight Operation Information System (FIOS). This would help the miner rationalise its entire coal supply matrix by obtained information of a rake’s turnaround time which down the line would enable the company push more coal via the rail mode.

CIL has signed an MOU with the Centre for Railway CCAI Monthly Newsletter February 2021

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Information System (CRIS) to get faster and customised automated access to the FIOS data, providing CIL the details of loading, weighment and unloading along with the turnaround time of rakes. The freight operation information between the networks of CIL and CRIS would help minimise the instances of underloading and overloading while also facilitating faster billing and bill monitoring process replacing the manual entry of railway receipts with instantaneous online transfer. The pact with CRIS assumes greater significance since CIL is pushing for increased rail evacuation to gradually reduce the road movement of the dry fuel. “The real time data helps us in better planning” said a senior executive of the company.

CIL’s coal movement through rail mode from its own sidings, goods sheds and private washeries was 302.51 million tonne (MT) up to February 20 this fiscal. This accounted for 61% of the total offtake quantity.

Coal India, EESL sign MoU to reduce carbon footprint Coal India announced on February 4, 2021 that it has signed a Memorandum of Understanding (MoU) with Energy Efficiency Services Ltd (EESL) to reduce its carbon footprint and improve its overall operational efficiency and profitability.

Under the agreement, the two companies will collaborate in the area of energy efficiency and resource conservation for de-carbonisation of state-owned Coal India.

The Energy Efficiency Services will help Coal India with energy efficiency in processes along with decentralised captive solar plants. It will also help to improve the operational efficiencies of CIL's subsidiaries and reduce significant costs, without any upfront investment.

technologies like microbial enhanced recovery, advance reservoir simulation, CBM exploitation technology from deeper coal seams and others.

They will also jointly work towards finding an effective solution for various technological and operational challenges faced during CBM exploration and production.

As part of the MoU, EOGEPL would propose an initial list of research topics and provide data for the same to the industry experts and researchers of IIT Dhanbad while also giving them access to its CBM wells in Ranigunj for carrying out an investigation, research experiments. Essar and the IIT ISM would jointly pursue collaborative research as well.

EOGEPL’s Raniganj East CBM Block in West Bengal has already created a niche gas customer base who continue to depend on the supply of CBM gas to sustain their businesses. The block, connected with the Pradhan MantriUrja Ganga pipeline of GAIL has already invested over Rs 4,000 crore towards drilling wells, setting up supply infrastructure and laying customer pipelines to Durgapur and nearby industrial areas.

RAILWAYS

Indian Railways registers highest ever freight loading in January 2021; details here

EOGEPL & IIT Dhanbad join hands for advanced research on CBM

Indian Railways creates new record in freight loading. The highest ever freight loading figures have been registered by Indian Railways i.e. 119.79 million tonnes (MT) in the month of January 2021. The last best freight loading figure of 119.74 MT was recorded in March 2019. According to the Railway Ministry, on mission mode, the freight loading figures of Indian Railways for the last few months have crossed the loading as well as earnings for the same period of last year. As per the statistics provided by the Railway Ministry for February 2021 (so far), the freight loading of Indian Railways was 30.54 million tonnes which include 4.15 million tonnes of iron ore, 13.61 million tonnes of coal, 1.03 million tonnes of fertilizers, 1.04 million tonnes of foodgrains, 0.96 million tonnes of mineral oil as well as 1.97 million tonnes of cement (excluding clinker).

With the CBM gas widely seen as green fuel of the century, both Essar and the IIT Indian School of Mines (ISM) will explore research and develop a plethora of

According to the Railway Ministry, several concessions or discounts are also being given in Indian Railways in order to make the movement of freight at-

The EESL will also help CIL conduct energy audits and undertake assignments to minimise losses on account of energy through the financial energy service company (ESCO)/renewable energy service companies (RESCO) model. Under the ESCO/RESCO model, the entire project cost will be borne by EESL against the proposed energy savings project and the payment to EESL shall be monetised through energy savings.

16 | CCAI Monthly Newsletter February 2021

tractive. Moreover, in a bid to attract new business as well as incentivize other existing clients, the Railway Ministry has conducted meetings with the top leadership of power, automobiles, iron and steel, cement, coal, and logistics service providers. Also, Business Development Units (BDUs) at Divisional and Zonal levels, as well as near doubling of freight speed, are contributing to sustainable growth momentum, the ministry added.

STEEL

materials to steel mills and finished steel to demand centres is an area to be looked at, he said in his address. "The freight cost from Jamshedpur to Mumbai can be as high as USD 50 per tonne in comparison to USD 34 per tonne from Rotterdam to Mumbai."

In India, Chatterjee said that for every 1 tonne of steel produced, roughly 3 tonnes of raw material needs to be transported. “So, even as India doubles its steel production in the next 10 years, the logistic requirement of the domestic steel industry will become virtually unmanageable unless steps are taken to improve the physical infrastructure especially by the Indian Railways,” he said.

The government has set a target to increase India's

Govt eases steel usage curb for total installed steel capacity to 300 million tonne by highway construction; allows us- 2030. ing steel produced by secondary India becomes net importer of steelmakers steel in January For the construction of highways, the Modi government has allowed the usage of steel produced by secondary steel makers. Earlier, in highway construction, road developers were required to use steel produced by the primary steel producers only. The decision has been taken in the wake of rising prices of steel supplied by primary steelmakers.

The minister’s concerns were partly addressed in the Union Budget for 2021-22, in which import of steel was made easier by lowering customs duty on a range of items and granting duty exemption on import of steel scrap, utilized by secondary steelmakers. As per India Ratings, domestic hot rolled coil (HRC) prices (Mumbai 2.5 mm-8 mm) inched up 45 per cent year-on-year and 3 per cent month-onmonth to Rs 57,000 per tonne in mid-January 2021.

In 2019-20, 103 million tonne of finished steel was produced by India, out of which around 45 per cent was manufactured by the secondary steel producers.

Need to increase logistics arrangement for steel sector: ISA There is an urgent need to increase and improve the logistics arrangement for the domestic steel sector, industry body Indian Steel Association (ISA) on Thursday said.

Managing logistics requirements is still challenging and costly for many steel makers in India, ISA Secretary-General Bhaskar Chatterjee said in the Indian Steel Markets Conference 2021 organised by mjunction. Noting that the steel production and consumption of the metal are expected to grow on the back of government initiatives, the transportation of raw

During January 2021, export was lower by 24.6% while import increased by 22.0% over January 2020.

Month-on-month, export decreased by 15.23% and import increased by 13.66% as compared to December 2020.

India became a net importer of steel for the first time in the current fiscal in January, bucking the trend of the first nine months. The net trade deficit, however, was marginal at 0.06 MT. “India was net exporter of finished steel during AprilJanuary 2020-21 with net trade surplus of 5.0 MT. However, the progressive unlocking of the economy and improving economic activities leading to better domestic demand have resulted in decline/moderation in export and increase in imports in recent months with import exceeding export for the first time during this fiscal in January 2021,” the steel ministry said in a note.

During the current fiscal till January, export of finished steel from India was at 8.84 MT, up by 22.5%, while import at 3.79 MT have declined by 36.7% over the corresponding period last year (CPLY).

During January 2021, export was lower by 24.6% while import increased by 22.0% over January 2020.

Month-on-month, export decreased by 15.23% and import increased by 13.66% as compared to December 2020.

Govt eases curbs on steel for highway construction to reduce cost CCAI Monthly Newsletter February 2021

| 17

Doing away with restrictive conditions for use of steel in highways construction, the government on Sunday announced that all kinds of steel will be allowed for highways provided these meet the quality parameters.

Earlier, the contract provisions required use of steel produced by primary/integrated steel producers only.

The move is aimed at ensuring cost reduction in highways construction using steel.

"The Ministry of Road Transport and Highways has issued orders that all steel whether produced from ore, billets, pellets or melting of scrap - would be allowed to be used for National Highway construction, as long as it meets the standards required for specific grades of steel," the Ministry said in a statement.

Govt reduces customs duty on certain steel items to provide relief to MSMEs The government on Monday announced slashing of import duties on a number of steel items in order to provide relief to MSMEs which have been hit hard by high cost of raw materials.

Finance Minister NirmalaSitharaman in her Budget speech for 2021-22 said the anti-dumping duty (ADD) and countervailing duty (CVD) have also been revoked on certain steel products."MSMEs and other user industries have been severely hit by a recent sharp rise in iron and steel prices. Therefore, we are reducing customs duty uniformly to 7.5 per cent on semis, flat, and long products of non-alloy, alloy, and stainless steels.The minister also announced increasing duty on steel screws and plastic builder wares from 10 per cent to 15 per cent.

CEMENT Resuming cement capex plans is good, but pricing concerns remain Cement manufacturers have resumed their organic growth plans. Thanks to the recovery in rural and infrastructure demand, companies are reviving their earlier announced expansion plans and committing fresh infusions.

For instance, UltraTech Cement Ltd, which has a pan-India presence, announced 12.8 of new capacity expansion in the central and eastern regions. ACC

18 | CCAI Monthly Newsletter February 2021

Ltd expects its central India expansion to be commissioned in 2022. The Ambuja Cement Ltd management said its Marwar-Mundwa expansion is likely to be commissioned in mid-2021. Shree Cement Ltd expects its grinding units in Cuttack and Pune to go on stream this quarter. Regional cement makers such as JK Cement Ltd, Orient Cement Ltd, JK Lakshmi Cement Ltd and The Ramco Cements Ltd have also announced capacity expansions.

“India’s cement companies (14 listed; 67% of overall capacity share) reported consolidated volume growth of 8.6% year-on-year in Q3FY21. Growth expectations have been upgraded significantly on robust recovery in demand. We expect the cement demand to grow by 20-22% cumulatively over FY21-23E,” JM Financial Institutional Securities Ltd said in report.

However, muted prices amid rising cost pressure remain a concern. While cement makers are yet to pass on the burden of rising cost pressures to partially offset the impact of cost inflation, they have reduced dealer discounts.

Cement stocks in demand; Dalmia Bharat, JK Cement, Ramco Cement at new high Shares of cement companies were in demand on Friday with Dalmia Bharat, JK Cement, and Ramco Cement hitting their respective new highs, while Ambuja Cements, Birla Corporation and Prism Johnson touched their respective 52-week highs on the BSE in intra-day trade. The stocks climbed up to 7 per cent, as compared to 0.18 per cent rise in the S&P BSE Sensex, at 51,625 points, at 10:32 am.

The government’s thrust on infrastructure spending and affordable housing bodes well for cement demand. Analysts expect cement demand to remain flat in FY21, but grow 11 per cent year on year in FY22 – on the back of government spending on infrastructure and affordable housing. We prefer companies that are moving down the cost curve, have the potential to gain market share, and provide valuation comfort, MotilalOswal Securities said in Union Budget 2021-22 update.

Among the individual stocks, Dalmia Bharat surged 7 per cent to Rs 1,500, also its new high on the BSE. In the past one week, it has rallied 21 per cent after recording strong volume growth of 14 per cent in the December quarter (Q3FY21). Earnings before interest, taxes, depreciation, and amortization (EBITDA) grew 51 per cent year on year (YoY) at Rs 691 crore, EBITDA/T increased of 32 per cent YoY and capacity utilization of 81 per cent.

With Best Compliments From:

Sharda Ma

Logistics Pvt. Ltd. ( )

COAL MERCHANTS, IMPORTERS HANDLING AGENTS Handling and Transportation of Coal&both

by Rail and Road and also via Rail cum Road mode from SECL INDIA and SOUTH INDONESIA SINGAPORE HONG NIGERIA otherAFRICA Subsidiary Coal Companies of Coal IndiaKONG Limited

352, Agarwal Chambers, 3rd Veer Savarkar Block

UGF 1& 2, Kanchenjunga Building, 18 Barakhamba Road, New Delhi-110001, India - 110095 P : +91 11 23354046/47Shakarpur, F Delhi : +91-11-23354047 E : corporate@shardamaa.com W : www.shardamaa.com Phone: +91 1141 510 186, Email: nj@shardamaa.com

GLOBAL Atlantic coking coal: steady amid tightness

Prices

US coking coal prices have ended the week unchanged, as tightness in spot availability across the low volatile and high volatile segments have continued to support prices, despite some buyers holding off as they take stock of the recent price weakness in Asia-Pacific.

The Argus-assessed US low volatile coal price is unchanged at $162/t fob Hampton Roads, in line with the latest cfr China deals, as any European spot requirement is fulfilled by lower-priced Australian coals. The high volatile A and B prices are stable at $156/t fob Hampton

20 | CCAI Monthly Newsletter February 2021

Roads and $137.50/t fob Hampton Roads, respectively, after rising by $1/t yesterday on the back of supply limitations.

Overall spot tightness among major suppliers has meant that market indications for high-vol A remain in the mid-$150s/t, with one US miner indicatively expecting $158-160/t fob Hampton Roads if it had any volumes to offer. A European steelmaker was heard to be seeking 70,000t of April-loading high vol A for its eastern European operations, but it is unclear if this requirement has been met. A European mill recently secured a second-quarter loading high vol A cargo at a 4pc discount to the index price, but details could not be confirmed.

The lack of availability in high vol A is expected to lend support to miners with high vol B volumes to offer. "Buyers who can't get high vol A are naturally going to look to high vol B, and I expect prices will go up towards $140/t," said one US miner.

na in the first quarter of 2021.

Met coke offers into Europe have been increasing, while Chinese met coke plants accepted a 100 yuan/t drop in prices on higher stock levels.

"A few weeks ago, there were no met coke offers, now there are several unsolicited offers but at very high levels," said a European mill.

.

.

US low-vol output recovers, highvol falls further US coking coal production fell by approximately 20pc in 2020, based on a survey of a number of US mining firms comprising the bulk of US coking coal production, Mines Safety and Health Administration (MSHA) data show.

Production of high-volatile coals fell by 20-25pc, while the low-volatile segment fell by approximately 10-15pc, as mining firms responded to depressed pricing and weakened steel and coking coal demand caused by the Covid-19 pandemic. In the high-vol segment, Blackhawk's Hampden complex remained idled throughout the year, and Peabody closed its Shoal Creek mine for six months at the start of the first quarter.

In the fourth quarter, spot opportunities resulting from China's restrictions on imports of Australian coal drove a recovery of low-vol production to 2019 levels, an increase of approximately 10pc compared with the previous quarter. It is likely that low-volatile production will continue to rise in 2021, as Chinese buyers have expressed an interest in term deals for US coals.

Coronado raised low-vol production at its Buchanan mine by 65pc to 1.07mn t in the fourth quarter. By the end of 2020, four Capesize cargoes — approximately 650,000st or more — of Buchanan coal had been booked to ship to Chi-

Production of premium low-vol coal at Oak Grove in Alabama increased by 23.6pc on a quarterly basis to 459,522st in October-December. Several Oak Grove cargoes have sold to Chinese buyers since October.

US coal-fired power generation totals 78.7 TWh in December, highest in five months: EIA US coal-fired power generation totaled 78.7 TWh in December, up 28.3% from November and the highest level of generation in five months, US Energy Information Administration data said late Feb. 25.

Register Now Year on year, monthly generation rose 8.4%, and from the five-year average of about 97.5 TWh in December, generation was at a 19.3% deficit this year.

Coal generated a monthly average of 64.5 TWh in 2020, compared with 80.4 TWh in 2019.

Out of total power generation, coal took a 22.9% share, the highest in five months. Throughout the year, coal share averaged 19.1%, compared with 23.3% in the previous year.

Coal capacity averaged 48.6% in December, up from 39% in the previous month and the largest percentage since August. Annual coal capacity averaged 40.1% in 2020, compared with 47.4% in 2019.

Natural gas contributed nearly 126 TWh in December, up 15.3% from the previous month and down 4.7% from the year-ago month. The monthly average for gas was 135 TWh, up from 132 TWh in the year before.

Gas took a 36.4% share of power generation, up 0.4 percentage points from November. In 2020, gas averaged 40.1% of total US generation, compared with 38.2% in 2019.

From the five-year average of 112 TWh for the month of December, gas was up 12.4%.

CCAI Monthly Newsletter February 2021

| 21

US coal exports drop 7% YOY in Q4’20; China emerges among top importers U.S. coal shipments to some of the country’s top importers increased significantly in the fourth quarter of 2020, with China recording a tripledigit uptick amid its escalating trade dispute with Australia.

Total U.S. coal exports during the three-month period fell 7.3% year over year to 17.4 million tonnes from 18.8 Mt, according to an analysis

by S&P Global Market Intelligence. Compared to the previous quarter, the U.S. shipped 25.1% more of the commodity from October through December 2020.

Despite the year-on-year slowdown, the quarterly exports figure “slightly” exceeded Moody’s projection for the period, reflecting some recovery in coal pricing in the second half of 2020, Moody’s Investors Service analyst Benjamin Nelson told Market Intelligence.

its coal processing industries, a government regulation reviewed by Reuters showed.

The world's top exporter of thermal coal aims to develop its coal processing industry to replace energy imports, such as refining coal to gas to reduce its liquefied petroleum gas imports, while optimising the use of its domestic coal.

Companies usually pay 2% to 7% of calorific value of the coal to the central government in royalties, depending on the calorific value of the coal and if it has been mined from underground or open pit mines.The regulation took effect on Feb. 2.

The energy ministry will issue a further regulation clarifying which coal processing activities are eligible to pay 0% royalties, the document showed, without giving a timeline.

Indonesia's mining giants race to adapt as investors cool on coal

Six of the top 10 U.S. coal terminals by volume had a significant slowdown year over year in shipments during the last quarter of 2020 and five posted decreases of 15% or more.

Indonesia's mining giants are piling into coal gasification projects as the country's biggest export markets and global investors move toward a carbon-neutral future.

Coal terminals in Los Angeles and Detroit booked the biggest year-on-year decreases in seaborne shipments in the fourth quarter of 2020. Los Angeles terminals shipped 135,000 tonnes of coal, dropping 64.1% from the prior-year period, while Detroit terminals recorded a 37.9% decrease in shipments to 90,000 tonnes. Shipments from terminals in New Orleans and Seattle decreased by 35.6% and 32.7%, respectively, year on year, while coal shipments from terminals in Norfolk, Va., fell 15.1% to 6.0 Mt.

Coal gasification can be used to create a range of fuel products with lower emissions, an important consideration for investors increasingly concerned about environmental, social and corporate governance, or ESG, issues. The moves also dovetail with the Indonesian government's push to develop the downstream industry, rather than simply exporting raw natural resources.

Indonesia to remove royalty payments for downstream coal Indonesia is removing royalty payments for coal used in its downstream sector in a bid to boost

22 | CCAI Monthly Newsletter February 2021

The Southeast Asian country is the world's largest coal exporter, shipping out 455 million tons, or 31.7% of the world's exports, in 2019, according to International Energy Agency.

State-owned Tambang Batubara Bukit Asam, known as PTBA, announced in December its partnership with state oil and gas company Pertamina and U.S. chemical industry company Air Products on a $2.1 billion project to con-

vert coal into dimethyl ether (DME).

PTBA is planning to start construction of the coal-to-DME processing facility near its mine in TanjungEnim, South Sumatra Province, in the middle of this year.

"Moreover with this project, hopefully it can be a good start to support national energy security," Arifin said. "Hopefully our coal-to-DME project will inspire other coal companies in Indonesia to take similar action."

Commercial operations are targeted to start in 2025, with a production capacity of 1.4 million tons of DME per year. Six million tons of coal will feed the plant every year -- about a fifth of the miner's production output in 2019.

China’s Coal Supply Crisis Means High Prices, Blackouts As the cost of coal spikes during China’s severely cold winter, what is an economic and uncomfortable hardship for many citizens could turn into a hot political problem for one man: President Xi Jinping.

China’s coal prices rose just as temperatures dropped in December, when demand was already surging because of China’s economic recovery from the coronavirus pandemic. Fossil fuels, mostly coal, provide nearly 70% of China’s power.

Power cuts and outages began hitting swathes of China in early December, dimming even firsttier cities such as Beijing and Shanghai. Hunan, Jiangxi and other industry-driven provinces imposed mandatory "power-saving initiatives" for the "orderly use of electricity.” In Zhejiang province, an economic powerhouse, the city of Yiwu’s "power restriction orders” meant local enterprises had electricity for one of every five days.

Given that China is the world’s largest importer of coal, the result is insufficient coal stocks, a

flickering power supply and blow to Xi’s prestige, even though Zhao Chenxin, secretary general of the National Development and Reform Commission, which steers energy policy, told citizens in December, “In general, please believe that our ability to ensure stable energy supply is not a problem.”

Low-vol PCI price falls; 5 Australian coal cargoes unloaded The seaborne low-volatility pulverized coal injection (PCI) cfr price declined on Friday February 19 on alleviated Russian-origin material supply tightness while the majority of Australian coal cargoes were still in anchorage, sources said.

No transactions were heard on Friday February 19, sources told Fastmarkets.

“Russia-origin low-vol PCI supply is not as tight as it was before the Lunar New Year public holiday and its offer price is now around $145 per tonne cfr China,” a trader source said.

Last December, the supply of Russian low-vol PCI was tight due to rail-freight capacity issues in the Russian Far East.

Another trader source estimated that the tradable price for Russian low-vol PCI is at $135 per tonne cfr China now.A trader source from northern China said that five cargoes of Australian coal, which had been waiting in anchorage, were unloaded recently.

“But it’s uncertain whether those cargoes will be allowed to pass customs clearance,” he said.

Some cargoes of Australian coking coal, which had been in anchorage since China’s unofficial ban on Australian coal last October, were resold to other countries at a discount, while the majority of cargoes are still in anchorage along Chinese ports.

CCAI Monthly Newsletter February 2021

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Aurizon anticipates coal export German coal-fired output back growth under pressure Aurizon Holdings is confident of the long-term demand for Australian coal from international markets despite a 10 per cent drop in exports during the second half of last year.

Australia exported 183 million tonnes of coal during the period, comprising 86 million tonnes of metallurgical coal and 97 million tonnes of thermal coal, down 6 and 12 per cent, respectively, on the prior year. Aurizon also experienced interruptions to its export contracts with Australian coal miners due to COVID-19-related disruptions to steelmaking, particularly in China.

The company was unable to retain its 3.2 million tonne a year export contract with Stanwell Corporation, which ended in December 2020, and is also saying goodbye to a 5.2 million tonne per annum contact for New Acland this December.

This caused Aurizon’s coal revenue to drop by 8 per cent, or $73.2 million, to $644.5 million.

Aurizon managing director and chief executive Andrew Harding reiterated that the company remained confident for long-term demand for Australia’s high-quality coal.

India was Australia’s largest metallurgical coal export market during the second half of last year, with an export volume of 27 million tonnes, followed by Japan at 16 million tonnes and China at 12 million tonnes. Japan topped Australia’s thermal coal export market with an export volume of 37 million tonnes during the same period, with South Korea coming in second at 16 million tonnes and Taiwan at 10 million tonnes.

24 | CCAI Monthly Newsletter February 2021

Generation from German coal-fired plants has remained firm this month, supported by higher demand and below-average wind. But forecasts for milder weather combined with high CO2 prices have pushed more coal out of the forward market for March.

Generation from German coal-fired plants has averaged 6.69GW this month so far, which is similar to January, and the highest February level since 2019. Coal-fired output reached its highest on 11 February at 9.82GW. Despite firm output month on month, generating margins for less efficient coal-fired plants have been narrower this month, compared with January. Working day-ahead clean dark spreads for 36pc efficiency have averaged €0.35/MWh in February compared with €1.44/MWh in January.

German wind power generation has been higher this month at an average of 16.49GW, up from 15.55GW last month but still below the 17.84GW five-year average for February. This combined with below-zero temperatures — particularly during the second week of February — and consequent higher demand have helped to keep coal almost unchanged on the month.

Consumption has averaged 60.85GW so far in February and is on track to end it at the highest level for any month since February 2019.

Demand for German power exports has continued to decline, limiting domestic coal burn, with net flows at around 8GW, lower on the month and the lowest for the period since 2017. Germany has been an importer from the Netherlands, Belgium and the Czech Republic, net dayahead flows show.

MONTHLY SUMMARY OF IMPORTED COAL & PETCOKE Indicative Imported Coal Price COAL

(kcal/kg)

Monthly Price - FOB

Monthly Price- FOB

Monthly Change (USD)

South Africa

6000 NAR

USD 87.72

INR 6395

-2.66

South Africa

5500 NAR

USD 60.48

INR 4409

-2.14

Australia

5500 NAR

USD 56.03

INR 4085

-0.18

Indonesia

5000 GAR

USD 66.68

INR 4861

-8.18

Indonesia

4200 GAR

USD 39.73

INR 2897

-7.93

Indicative Pet Coke Price PET COKE

Sulphur

Price

Monthly Change

India-RIL(Ex-Ref.)

-5%

INR 10512

INR 1080.00

Saudi Arabia (CIF)

+ 8.5%

INR 10869 ($117)

9.00

USA (CIF)

- 6.5%

INR 11311 ($122)

9.75

Exchange Rate

Change (Monthly)

INR 72.90

-0.26

Indicative Coking Coal Price Premium Low Vol Current Month

Monthly Change (USD)

HCC 64 MID Vol

Semi Soft

CFR China FOB Aus

Low Vol PCI

Mid Tier PCI

FOB Aus

FOB Aus

MET COKE 62% CSR

FOB

CFR China

FOB Aus

141.07

221.13

131.91

207.32

97.81

106.19

104.69

437.38

453.75

14.41

5.09

21.97

11.00

6.00

4.25

8.69

28.63

22.00

South African Coal News: *South Africa's Richards Bay Coal Terminal (RBCT) could experience delays should the recent force majeure at rail lines serving the terminal continue, which would eventually increase the price of thermal coal. Sources said that given the low stockpiles currently at the terminal, as well as numerous logistical issues caused by the force majeure, a supply shortage could quickly develop.

26 | CCAI Monthly Newsletter February 2021

CFR India FOB N China

* South African thermal coal prices could rise on rail disruption. Sources said that given the low stockpiles currently at the terminal, as well as numerous logistical issues caused by the force majeure, a supply shortage could quickly develop. FOB Richards Bay export pricing, which had been relaxing from high levels recently, would likely come under upward pressure as a result. * South African mining giant Anglo American plans to exit thermal coal production by 2024,

slightly later than previously planned, amid efforts to improve its green credentials. In 2021, Anglo American aims to produce 24m tonnes, of which 16m tonnes will be from South African and the remainder from Colombia.

Australian Coal News:

*Australian thermal coal exports dropped to a four-year low last year, largely because of a30pc slide in shipments to China after Beijing started restricting coal imports from Australia as trade tensions between the two countries increased last year. Australian coal exports in calendar 2020 were down by 6pc from 2019. * Despite the push towards renewable energy, Australian thermal coal will thrive for decades to come, experts say. The lion’s share of Australia’s coal is exported, mainly to Asia.

Each year about $26bn worth of thermal coal for electricity generation and $43bn worth of metallurgical coal for steelmaking is exported.

Trend is expected to continue as developing Asian nations will keep depending on high quality Australian coal. * Despite the tag of war with China, coal boom in Australia stokes $2bn budget boost. Australian thermal coal exports have held up in defiance of China’s import restrictions, with surging global prices set to deliver an additional $6bn in annual export earnings.

Indonesian Coal News:

* Indonesia's Ministry of Energy and Mineral Resources set its February thermal coal reference price (HBA) -- at $87.79/mt in Februery’21, up by 16% on m-o-m and up 33% on year. Strong Chinese demand and higher gas prices led to a boost in thermal coal prices in January as buyers scrambled to stock up before

the Lunar New year holidays. * The Indonesian government has stated that it will now push to rehabilitate abandoned mining pits following claims that deforestation for coal mines exacerbated recently deadly flooding in southern Borneo. But the damage from decades of industrial expansion across the once-forested landscape of South Kalimantan province is already too expensive for a return to nature, activists say. * Indonesia is removing royalty payments for coal used in its downstream sector in a bid to boost its coal processing industries, a government regulation reviewed by Reuters showed. The world's top exporter of thermal coal aims to develop its coal processing industry to replace energy imports such as refining coal to gas to reduce its liquefied petroleum gas imports, while optimising the use of its domestic coal.

US Coal News:

*Coal production at the top 25 mines in the Central Appalachian basin of the U.S. held steady during the fourth quarter of 2020 while output slumped for the full year. The region produced 6.28 million tons of coal during the last three months of 2020, an 8% increase from 5.8 million tons in the preceding quarter. The basin yielded 24 million tons of coal over all of 2020, a 14.3% drop from 28.1 million tons of coal mined during 2019.*US coal carload originations fell to a seven-week low of 54,496 in the week ended Feb. 13, down 9.3% from a week earlier, according to a Feb. 17 report. The latest week was also down 13.6% from the year-ago week and 31.6% lower than the five-year average. It was also the lowest total for the corresponding week in over 11 years. * U.S. coal shipments to some of the country’s

CCAI Monthly Newsletter February 2021

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top importers increased significantly in the fourth quarter of 2020, with China recording a triple-digit uptick amid its escalating trade dispute with Australia. Total U.S. coal exports during the three-month period fell 7.3% year over year to 17.4 million tonnes from 18.8 Mt, according to analysis by expert agencies.

Compared to the previous quarter, the U.S. shipped 25.1% more of the commodity from October through December 2020.

Pet Coke News: * The price of US Gulf Coast pet coke is expected to move higher following increased demand from Brizilian and Indian cement makers.

Brazilian cement producers, who normally buy domestic petcoke, are reportedly looking to the US gulf for petcoke after prices for the domestic material jumped, while their Indian counterparts are monitoring the market after South African coal prices have begun rising. *Cement manufacturers and traders in India say the elevated price of seabourne fuel grade petcoke has caused the import petcoke deals in the country to be largely muted in 2021.

Amid higher freight rates, cement companies preferred to buy cheaper Australian thermal coal, or Indian domestic petcoke. * The price of Indian delivered petroleum coke edged up this week partially due to supply crunch from the US market and higher freight rate in February. Indian cement producers have also ramped up production by overcoming as there is a flurry of construction activities in the country by overcoming the slump during COVID period. Demand from cement plants for petcoke and thermal coal in India was good due to the expansion plan of the cement plants.

Shipping Update: * With global supply chains buckling under huge order volumes and a confluence of disruptive

28 | CCAI Monthly Newsletter February 2021

forces, shippers should prepare for 2021 to be a perpetual peak season across all transport modes, logistics experts warn. Competition for freight space is set to be fierce as companies will need to pay exorbitant premiums to get on vessels and apply more flexible shipping methods to avoid delays. * India’s Shipbuilding Industry Development Policy-2020 recently approved by the government, though belated, is no doubt a welldirected move not only to acknowledge the potential of this unexplored area but also to give it the focus it deserves as a potential growth driver of the economy, government officials say.

The aforementioned policy aims at earning $4.0 billion annually from ship exports by the year 2025. *India’s top-12 ports witnessed a considerable decline in cargo traffic for the tenth straight month in January to 542.13 million tonnes (MT), according to ports’ apex body IPA. Cargo traffic at 12 major ports that are under the control of the Centre, has dropped by 7.44% to 542.13 (MT) during April-January this fiscal, compared with 585.73 MT in the year-ago period. * Prime Minister Narendra Modi said the Government of India’s commitment to portled development can be seen through the Sagarmala scheme. He also said Tamil Nadu is making a major contribution to India’s industrial growth while launching various projects related to V. O. Chidambaranar (VOC) at Tuticorin.

OVERALL DOMESTIC COAL SCENARIO Coal Production (in MT) Company CIL SCCL

January, 2021 60.47 5.96

January, 2020 63.09 5.72

% Growth -4.2% 4.1%

April- January, 2021 453.28 38.61

April- January, 2020 451.52 52.47

% Growth 0.4% -26.4%

Overall Offtake (in MT) Company

January, 2021

January, 2020

% Growth

April- January, 2021

April- January, 2020

% Growth

CIL SCCL

53.28 5.59

55.86 5.63

-4.6% -0.7%

462.86 37.38

473.40 51.98

-2.2% -28.1%

Coal Despatch to Power (Coal and Coal Products) (in MT) Company

January, 2021

January, 2020

% Growth

April- January, 2021

April- January, 2020

% Growth

CIL SCCL

40.429 4.74

43.638 4.68

-7.4% 1.2%

357.540 31.61

379.56 44.00

-5.8% -28.2%

Company

Coal Qty. Allocated January, 2021

Coal Qty. Allocated January, 2020

Increase over notified price

Coal Qty. Allocated April- January, 2021

Coal Qty. Allocated April- January, 2020

Increase over notified price

CIL

3.80

3.62

35%

32.80

24.87

25%

Spot E-auction of Coal (in MT)

Special Forward E-auction for Power (in MT) Company

Coal Qty. Allocated January, 2021

Coal Qty. Allocated January, 2020

Increase over notified price

Coal Qty. Allocated April- January, 2021

Coal Qty. Allocated April- January, 2020

Increase over notified price

CIL

4.32

2.39

17%

27.33

19.84

6%

Exclusive E-auction for Non- Power (in MT) Company

Coal Qty. Allocated January, 2021

Coal Qty. Allocated January, 2020

Increase over notified price

Coal Qty. Allocated April- January, 2021

Coal Qty. Allocated April- January, 2020

Increase over notified price

CIL

2.08

0.00

18%

21.92

6.84

10%

Company

Coal Qty. Allocated January, 2021

Coal Qty. Allocated January, 2020

Increase over notified price

Coal Qty. Allocated April- January, 2021

Coal Qty. Allocated April- January, 2020

Increase over notified price

CIL

0.05

0.30

6%

2.34

0.96

13%

Coal Qty. Allocated April- January, 2020

Increase over notified price

Special Spot E-auction (in MT)

Special Spot E-auction Scheme 2020 For Import Substitution Company

CIL

Coal Qty. Allocated January, 2021

0.23

Coal Qty. Allocated January, 2020

0.00

Increase over notified price

10%

Coal Qty. Allocated April- January, 2021

7.53

0.00

18%

CCAI Monthly Newsletter February 2021

| 29

PRODUCTION AND OFFTAKE PERFORMANCE OF CIL AND SUBSIDIARY COMPANIES COAL PRODUCTION (Figs in Mill Te) FEB'21

SUB CO. ACTUAL THIS YEAR

APR'20 - FEB'21

ACTUAL SAME % PERIOD GROWTH LAST YEAR

ACTUAL THIS YEAR

ACTUAL SAME PERIOD LAST YEAR

% GROWTH

ECL

4.60

5.40

-15.60

39.00

43.90

-11.20

BCCL

2.00

2.90

-31.40

21.90

24.30

-10.10

CCL

7.10

8.40

-15.50

53.90

55.40

-2.80

NCL

9.30

8.90

4.20

103.90

98.00

6.00

WCL

7.10

7.50

-5.20

41.90

47.10

-11.00

SECL

17.90

16.80

6.40

124.20

127.50

-2.60

MCL

13.90

16.20

-14.10

130.30

121.10

7.60

0.00

0.40

515.10

517.80

NEC CIL

0.10 61.90

66.20

-6.60

-0.50

OFFTAKE (Figs in Mill Te) SUB CO.

FEB'21

APR'20 - FEB'21

ACTUAL ACTUAL THIS SAME % YEAR PERIOD GROWTH LAST YEAR

ACTUAL THIS YEAR

ACTUAL SAME PERIOD LAST YEAR

% GROWTH

ECL

3.80

4.80

-21.50

37.10

44.20

-16.20

BCCL

1.80

2.70

-33.60

20.40

26.10

-21.80

CCL

6.50

6.30

3.80

57.80

61.80

-6.50

NCL

9.00

9.20

-2.70

98.30

99.00

-0.80

WCL

5.20

5.30

-1.80

43.90

47.40

-7.50

SECL

12.60

13.40

-6.30

124.50

128.70

-3.30

MCL

12.40

12.80

-3.10

132.10

120.30

9.80

0.10

0.50

514.10

528.00

NEC CIL

0.10 51.20

54.60

30 | CCAI Monthly Newsletter February 2021

-6.20

-2.60

CCAI Monthly Newsletter February 2021

| 31

REGISTERED

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