Coal sector development in india sample

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To buy this report please visit www.cerebralbusiness.com/knowledgebase or call us on +91 9971498843 (Vineet Sharma) or mail us v.sharma@cerebralbusiness.com. This report is a sample of the detailed report on coal sector developments in India 2014. You will find information related to coal statistics, production, consumption, imports, pricing and coal scam blocks, CAG findings under coal scam, Government initiatives and policies for private players, coal regulatory information.

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Coal sector development in india sample

  1. 1. About Cerebral Business Research Energy and related Infrastructure development is changing fast with the advent of Digital Age. There has been remarkable shift in the energy industry from just production management to effective and efficient risk management. New paradigms whether related to technology or external environment management are been added at a frantic pace. The Hubbert’s Peak theory, which was once regarded as bitter truth of the modern age, has been turned upside down with the emergence of new technologies, discovery of new fields, and the exploitation of unconventional supplies hitting the market. Most business enterprises are constantly faced with the challenge of ‘prospering and growing their business.’ Businesses can choose to build their in-house competencies, invest to create competitive advantages, differentiate and innovate in the product or service line or leverage upon the market, products and revenues of other companies. To capture this change in energy management and Infrastructure delivery systems energy experts from around the globe has created the Knowledge and Information database called CEREBRAL BUSINESS RESEARCH. The Knowledge Management and Information database will help companies in strategizing their key resources, both financial and human, towards maximization of shareholders wealth with both organic and inorganic growth. Cerebral Business Research provides Intelligent Online Business Information Knowledgebase, Newsletter and Thought Leadership services in Oil & Gas (including Upstream), Power & Renewable and Infrastructure (Roads & Highways) verticals. Working extensively our subject matter experts have developed this comprehensive knowledgebase which caters to all Business & Technical aspects of Energy and Infra sector. Our vast experience in the intelligent business information and thought leadership domain enables us to offer you the most relevant, reliable and well-designed online Business Information in order to enhance productivity & growth of your organization and offer insights in the competitors landscape. We also undertake Research on Demand market driven assignments as per client’s requirement and scope of work. Cerebral Business Research is supported with a team of energy and infrastructure experts with varied collective experience of more than 50 years. The Knowledge and Information database is delivered through Newsletters, Online Portal, Reports and Publications. www.cerebralbusiness.com © Copyright 2014 by Cerebral Business Research i
  2. 2. Table of Contents TABLE OF CONTENTS 1. Coal Sector in India: Snapshot ............................................................................................................................ 1 1.1 Introduction .................................................................................................................................................. 1 1.2 Coal Resources in India ................................................................................................................................. 2 1.2.1 State Wise Allocation ............................................................................................................................. 2 1.2.2 Category-Wise Coal Resources .............................................................................................................. 3 1.3 Industry structure ......................................................................................................................................... 3 1.3.1 Roles and Responsibilities of Key Agencies Involved ............................................................................. 3 1.4 Sector Wise Consumption Trends................................................................................................................. 4 1.4.1 Power Sector.......................................................................................................................................... 5 1.4.2 Steel sector ............................................................................................................................................ 7 1.4.3 Cement sector........................................................................................................................................ 7 1.5 Financial Performance of Coal Sector During Eleventh Five year plan ......................................................... 7 1.6 Key Developments 2012-2013 ...................................................................................................................... 8 1.7 Conclusion .................................................................................................................................................... 9 2. Global Scenario ................................................................................................................................................. 10 2.1 Introduction ................................................................................................................................................ 10 2.2 Global Market Trends-H1 2013 .................................................................................................................. 11 2.2 Country Wise Production trends ................................................................................................................ 12 2.2.1 United states ........................................................................................................................................ 13 2.2 China ....................................................................................................................................................... 14 2.3 Australia .................................................................................................................................................. 15 2.4 Indonesia ................................................................................................................................................ 16 2.5 Russia ...................................................................................................................................................... 17 2.6 Germany ................................................................................................................................................. 18 2.3 Global Coal Production Forecast ................................................................................................................ 18 3. Latest Policies and Regulatory Issues ............................................................................................................... 19 3.1 New Reforms Proposed by the Government .............................................................................................. 19 3.2 New Fuel Supply Agreement Policy ............................................................................................................ 21
  3. 3. Table of Contents 3.2.1 Power Plants/Units Where FSAs Are Yet To Be Signed........................................................................ 26 3.2.2 Recent Amendment in FSA Agreement ............................................................................................... 33 3.3 PPP model on coal mining .......................................................................................................................... 34 3.4 COAL REGULATORY Authority BILL ............................................................................................................. 34 3.4.1 BACKGROUND ...................................................................................................................................... 35 3.4.2 Structure of the Regulatory Authority ................................................................................................. 35 3.4.3 Functions and Powers of the Coal Regulatory Authority ..................................................................... 35 3.4.4 Advisory Functions ............................................................................................................................... 36 3.4.5 Regulation of Pricing of Coal ................................................................................................................ 36 3.4.6 Funding of the Regulatory Authority ................................................................................................... 36 3.4.7 Accountability ...................................................................................................................................... 36 3.4.8 Dispute Resolution ............................................................................................................................... 37 3.4.9 Appellate Tribunal ............................................................................................................................... 37 3.5 E Auction ..................................................................................................................................................... 37 3.6 new Mineral and Mines (Regulation and Development) Act, 2010 ........................................................... 39 3.6.1 The Mines and Minerals (Development and Regulation) Bill 2011 ..................................................... 40 3.7 new Land Acquisition Bill Proposal and its Implications ............................................................................. 41 3.7.1 Key Highlights ...................................................................................................................................... 42 3.7.2 Compensation Mechanism Used ......................................................................................................... 43 3.7.3 How are investor concerns addressed ................................................................................................. 43 3.8 Conclusion .................................................................................................................................................. 44 4. Domestic Coal Reserves and Production Status ............................................................................................... 45 4.1 Inventory of Geological Resource of Indian Coal ........................................................................................ 45 4.1.1 Type And Category-Wise Coal Resources Of India............................................................................... 45 4.1.2 State Geological Resources Of Coal ..................................................................................................... 46 4.2 Total Number Of Mines .............................................................................................................................. 46 4.3 Annual Coal Production Trends .................................................................................................................. 47 4.4 Company-Wise Coal Dispatches Trends ..................................................................................................... 47 4.5 All-India Coal Production During Eleventh Plan .......................................................................................... 49
  4. 4. Table of Contents 4.6 Company-Wise Target And Actual Coal Production In India ...................................................................... 50 4.7 State-Wise Coal Production Trends ............................................................................................................ 51 4.8 Trends Of Coal Production From Opencast & Underground Mines ........................................................... 52 4.9 PRODUCTION FROM BLOCKS ALLOCATED TO POWER SECTOR .................................................................. 54 4.9.1 Details of Coal Blocks Allocated to Private Sector for IPPs/ CPPs ........................................................ 55 4.10 Company-wise Challenges faced in increasing coal production ............................................................... 57 4.11 Foreign Collaboration Initiatives to increase coal production .................................................................. 58 4.11.1 COOPERATION WITH CANADA .......................................................................................................... 59 4.11.2 COOPERATION WITH FRANCE............................................................................................................ 59 4.11.3 COOPERATION WITH U.K. .................................................................................................................. 60 4.11.4 COOPERATION WITH POLAND ........................................................................................................... 60 4.11.5 CO-OPERATION WITH RUSSIA............................................................................................................ 61 4.11.6 COOPERATION WITH KAZAKHSTAN ................................................................................................... 61 4.11.7 COOPETATION WITH MOZAMBIQUE ................................................................................................. 62 4.11.8 CO-OPERATION WITH GERMANY ...................................................................................................... 62 4.11.9 CO-OPERATION WITH AUSTRALIA ..................................................................................................... 63 4.11.10 COOPERATION WITH CHINA ............................................................................................................ 64 4.11.11 COOPERATION WITH USA ................................................................................................................ 65 4.11.12 COOPERATION WITH SOUTH AFRICA .............................................................................................. 66 4.11.13 Cooperation with Japan ................................................................................................................... 66 5. Status of Coal Blocks Allocated ......................................................................................................................... 67 5.1 Number of Coal Blocks Allocated to Public and Private Sector Companies ............................................... 69 5.2 Progress of Development of Coal Blocks Allocated to NTPC ...................................................................... 69 5.3 Status of Captive Coal and Lignite Blocks ................................................................................................... 71 5.4 Coal Block Allocation to Power Companies (August 2012) ......................................................................... 72 5.5 De-Allocated Coal Blocks ............................................................................................................................ 73 5.6 Recent Developments ................................................................................................................................. 73 6. Demand Supply Gap Analysis ........................................................................................................................... 75 6.1 Introduction ................................................................................................................................................ 75
  5. 5. Table of Contents 6.2 Impact of Coal shortage .............................................................................................................................. 76 6.2.1 Critical Coal Stock Position of Key Thermal Stations ........................................................................... 76 6.2.2 Year Wise Generation Loss due to Coal shortage ................................................................................ 77 6.2.3 Affected and Stranded Thermal capacity- Present and Projected ...................................................... 78 6.2.4 Falling PLF of Coal Based Generating Plants ........................................................................................ 79 6.3 Coal Shortage Projections during Twelfth Plan .......................................................................................... 80 6.4 Coal Requirement Projections during XIII Plan ........................................................................................... 81 6.5 Sector wise coal demand projections ......................................................................................................... 82 6.6 Suggested measures to overcome coal crisis ............................................................................................. 82 6.6.1 Domestic coal production to be augmented to reduce dependence on imports ............................... 83 6.6.2 Expedite implementation of coal procurement and pricing ................................................................ 83 6.6.3 Increase in fuel cost (imported coal) to be made pass-through .......................................................... 84 6.6.4 Coal imports by project companies directly with fuel pass ................................................................. 85 6.6.5 Other Medium and long term remedial measures .............................................................................. 85 7. Role of Imported Coal in Existing Scenario ....................................................................................................... 86 7.1 Introduction ................................................................................................................................................ 86 7.2 Year-wise Import of Coal ............................................................................................................................ 86 7.3 Coal Import by Power Utilities in 2012-13 .................................................................................................. 87 7.4 Import of Coal by NTPC ............................................................................................................................... 89 7.4 Expected Hike in prices due to rising coal imports ..................................................................................... 90 7.5 Key Issues and Challenges .......................................................................................................................... 91 7.6 Country wise import of Coal ....................................................................................................................... 92 7.7 Recent Developments ................................................................................................................................. 93 7.8 Coal Imports Forecast ................................................................................................................................. 94 8. Overseas Coal Acquisition................................................................................................................................. 95 8.1 Introduction ................................................................................................................................................ 95 8.2 Indonesia .................................................................................................................................................... 95 8.2.1 Introduction ......................................................................................................................................... 95 8.2.2 Indonesian Coal Quality and Costs Involved ........................................................................................ 95
  6. 6. Table of Contents 8.2.3 Recent Regulatory Update- Foreign Investment in the Indonesian Coal Mining Industry .................. 96 8.2.4 Regulation Details ................................................................................................................................ 96 8.2.5 India CoMpanies Investment in Indonesian Coal Mines ...................................................................... 97 8.3 Australia ...................................................................................................................................................... 98 8.3.1 Introduction ......................................................................................................................................... 98 8.3.2 Recent Challenges restraining foreign investment in Australian Coal Mining Industry ...................... 98 8.3.3 Initiatives taken by the new government so far .................................................................................. 99 8.3.4 Indian investments in Australian coal mines and export infrastructure ........................................... 100 8.4 South Africa .............................................................................................................................................. 100 8.4.1 Introduction ....................................................................................................................................... 100 8.4.2 Challenges for Foreign Investors in the South African Coal Industry: ............................................... 101 8.4.3 South Africa government keen on promoting investment from Indian Companies ......................... 101 8.4.4 Indian companies’ investment in South African Coal Sector ............................................................. 102 8.5 Mozambique ............................................................................................................................................. 102 8.5.1 Introduction ....................................................................................................................................... 102 8.5.2 Challenges in Mozambique ................................................................................................................ 103 8.5.3 Indian Companies Investment in Mozambique Coal Sector .............................................................. 104 8.6 Comparison Matrix: Top Four Coal Producing Nations ............................................................................ 105 9. Coal Technologies ........................................................................................................................................... 107 9.1 Coal Mining Technologies ......................................................................................................................... 107 9.1.1 Opencast Mining ................................................................................................................................ 107 9.1.2 Underground Mining ......................................................................................................................... 110 9.2 Technology Initiatives taken by CIl in recent Years .................................................................................. 111 9.2.1 Sourcing Technology .......................................................................................................................... 112 9.3 Combustion Technologies ............................................................................................................................ 113 9.3.1 Sub Critical ......................................................................................................................................... 113 9.3.2 Super Critical ...................................................................................................................................... 113 9.3.2.1 Few Upcoming Coal plants based on super critical technology ..................................................... 114 9.3.4 Advanced Ultra Supercritical Technology .......................................................................................... 120
  7. 7. Table of Contents 9.4 Gasification and combined cycle power generation (IGCC) technologies ................................................ 121 9.4.1 Surface Coal Gasification ................................................................................................................... 121 9.4.2 Underground Coal Gasification .......................................................................................................... 123 9.4.3 Examples of few Upcoming coal plants based on IGCC Technologies ............................................... 124 10. Coal Prices..................................................................................................................................................... 125 10.1 Domestic Coal Prices............................................................................................................................... 125 10.3 International Coal Prices Trends ............................................................................................................. 127 10.3.1 Indonesian Coal Prices ..................................................................................................................... 128 10.3.2 AustraliaN Coal Prices ...................................................................................................................... 129 10.3.3 South African Coal Prices ................................................................................................................. 129 10.3.4 Columbia Coal Prices ....................................................................................................................... 130 10.2 Domestic Vs International Price Comparison ......................................................................................... 130 10.1.1 Recommendations of Ministry of Power on Price Pooling of Imported Coal - May 2013 ................... 131 10.1.1.1 Option A - (Pooling for pre 2009 and post 2009 plants) ............................................................... 136 10.1.1.2 Option B - (Pooling Only for post 2009 plants) ............................................................................. 138 10.1.1.3 Option C - (Pooling for all plants excluding pre 2009 State plants including pre 2009 NTPC plants) .................................................................................................................................................................... 140 10.1.1.4 Option D - (Based on CCEA decision) ............................................................................................ 142 11: Coal Washeries ............................................................................................................................................. 143 11.1 Introduction ............................................................................................................................................ 143 11.2 Advantages of Coal Washing .................................................................................................................. 143 11.3 Details of Existing Coal Washeries .......................................................................................................... 144 11.3.1 State Wise Coal Washeries status ................................................................................................... 145 11.3.2 Consumer Wise Coal Washeries Details .......................................................................................... 145 11.3.3 Details of Coal Washeries setup by CIL ............................................................................................ 146 11.4 performance of coal washeries in operation in the XI plan period ........................................................ 148 11.4.1 Coking Coal ...................................................................................................................................... 148 11.4.2 Non Coking Coal ............................................................................................................................... 149 11.5 Non-coking coal washery installed capacity, utilization and yield.......................................................... 150
  8. 8. Table of Contents 11.6 Coal Washeries Proposed by CIL ............................................................................................................. 150 11.7 Technology.............................................................................................................................................. 151 11.7.1 Existing Technologies ....................................................................................................................... 153 11.8 Washed Coal Requirements by Sectors .................................................................................................. 154 11.9 Economic Benefits of Coal Washing ....................................................................................................... 156 11.10 Business Models ................................................................................................................................... 156 11.10.1 Existing Model ............................................................................................................................... 157 11.10.2 Business Model for Private Operators ........................................................................................... 158 11.11 Key Challenges Faced by Coal Washeries ............................................................................................. 160 11.12 Comparative Ranking of Different States Basis Risk Profile.................................................................. 163 12. Coal Scam Implications ................................................................................................................................. 165 12.1 What is Coalgate Scam ........................................................................................................................... 165 12.2 Benefits to the Private Players ................................................................................................................ 165 12.2 Blocks Allocation Details as Highlighted by CAG..................................................................................... 166 12.3 Action taken by the Government ........................................................................................................... 168 12.4 Impact of Deallocation ............................................................................................................................ 170 13. Other Recent Developments ........................................................................................................................ 172 13.1 Company Related .................................................................................................................................... 172 13.2 Industry Related...................................................................................................................................... 175 13.3 Coal Import/Export/Acquisitions ............................................................................................................ 176 13.4 Coal Production ...................................................................................................................................... 179 13.5 Regulatory News ..................................................................................................................................... 181 Chapter 14: Company Profiles ............................................................................................................................ 184 14.1 COAL INDIA LTD ...................................................................................................................................... 184 14.1.1 COMPANY OVERVIEW ..................................................................................................................... 184 14.1.2 Strategic Vision ................................................................................................................................ 184 14.1.3 Subsidiaries of Coal India Ltd: .......................................................................................................... 184 14.1.4 CIL Production Trends ...................................................................................................................... 186 14.1.5 CIL Financial Highlights .................................................................................................................... 187
  9. 9. Table of Contents 14.1.5 SWOT Analysis of Coal India Ltd. ..................................................................................................... 188 14.1.6 Recent Developments...................................................................................................................... 191 14.2 Eastern Coalfields Limited ...................................................................................................................... 192 14.2.1 Production Performance ................................................................................................................. 192 14.2.2 Swot Analysis ................................................................................................................................... 194 14.2.3 Recent Developments ...................................................................................................................... 195 14.3 Northern Coalfields Limited .................................................................................................................... 195 14.3.1 Coal Production ............................................................................................................................... 195 Off-Take ...................................................................................................................................................... 196 14.3.2 FINANCIAL REVIEW .......................................................................................................................... 197 14.3.3 Future investment ........................................................................................................................... 197 14.4 Western Coalfields limited ..................................................................................................................... 198 14.4.1 Production Statistics ........................................................................................................................ 198 Coal Offtake ................................................................................................................................................ 199 14.4.2 Financial Performance ..................................................................................................................... 199 14.5 Central Coalfields Limited (CCL) .............................................................................................................. 200 14.5.1 Production Statistics ........................................................................................................................ 200 14.5.2 Financial Performance ..................................................................................................................... 202 14.6 South Eastern Coalfields Ltd ................................................................................................................... 203 14.6.1 Company Overview .......................................................................................................................... 203 14.6.2 Production Statistics: ....................................................................................................................... 203 14.6.3 SECL Financial Highlights ................................................................................................................. 205 14.7 Bharat Coking Coal Limited ..................................................................................................................... 207 14.7.1 Coal Production of BCCL .................................................................................................................. 207 14.7.2 Financial Performance of BCCL ........................................................................................................ 208 14.8 Mahanadi Coalfields Limited (MCL) ........................................................................................................ 209 14.8.1 Production Performance of Mahanadi Coal Fields .......................................................................... 209 14.8.2 Financial Performance of MCL ......................................................................................................... 210 14.8.3 Swot Analysis of Mahanadi Coalfileds ............................................................................................. 211
  10. 10. Table of Contents 14.9 Singareni Collieries Company Limited .................................................................................................... 212 14.9.1 Coal Production ............................................................................................................................... 212 14.9.2 Swot Analysis of Singareni Collieries Company Ltd ......................................................................... 214 14.9.3 Recent DevelopmentS ..................................................................................................................... 217 14.10 Gupta Coalfields & Washeries Ltd ........................................................................................................ 218 14.10.1 Gupta Group Business ................................................................................................................... 219 14.10.2 Financial Performance of Gupta .................................................................................................... 219 14.11 Aryan Coal Benefications Private Limited ............................................................................................. 220 14.11.1 Fianacial Performance ................................................................................................................... 220 14.11.2 Strengths ........................................................................................................................................ 221 Annexure ............................................................................................................................................................ 222
  11. 11. Chapter 1: Coal Sector in India 1. COAL SECTOR IN INDIA: SNAPSHOT 1.1 INTRODUCTION India is the third-largest economy in the purchasing power parity (PPP) index, next to USA and China and the second-largest growing economy based on real GDP. With the rising economic activity, demand for energy sources has also been growing consistently. At present, fossil fuels, viz oil, gas and coal meet around four fifth of the total energy demand in the world, which will continue to command a predominant share in the next two decades or so. As per the BP Statistics 2013, country-wise energy consumption reveals that, India is the fourth largest energy consumer accounting for 5.1% (563.51 Mtoe) of the global energy use as of December 2012. It is followed by the US (17.7% or 2,208.8 Mtoe), Russia (5.6% or 694.2 Mtoe). However, in terms of fastest growing energy consuming countries in last ten years, India is the world’s fifthfastest energy consumer with a CAGR of 6.1%. Cotent Hidden Figure 1.1: Country wise Trends in Energy Consumption Top 10 World Energy Consumers (MTOE), 2012 2735 World's Fastest Energy Consumers, 2002-12 (%) 9.8% 9.3% 9.3% 2209 6.3% 6.1% 5.9% Cotent Hidden 694 563 478 5.9% 5.8% 5.7% 5.4% 329 312 275 271 245 Source: BP Stats 2013 and Cerebral Research From the above statistics, it is clear that India's energy needs are expanding too fast with its increased industrialization and capacity addition in Power generation. This is where 'Coal' steps in. In India coal is the critical input for major infrastructure industries like Power, Steel and Cement. www.cerebralbusiness.com © Copyright 2014 by Cerebral Business Research 1
  12. 12. Chapter 1: Coal Sector in India Figure 1.2: Key facts stating importance of coal in India's energy scenario Coal meets around 52% of India's primary commercial energy needs against 29% the world over Cotent Hidden Around 66% of India's power generation is coal based India is the third largest coal producing country in the world after China and US India has the fifth largest coal reserves in the world Source: Cerebral Business Research 1.2 COAL RESOURCES IN INDIA As a result of exploration carried out up to the maximum depth of 1200m by the Geological Survey of India (GSI), Central Mine Planning and Design Institute (CMPDI), Singareni Collieries Company Ltd (SCCL) and Mineral Exploration Corporation Limited (MECL) etc, a cumulative total of 2,93,497 Million Tonnes of Geological Resources of Coal have so far been estimated in the country. The coal resources of India are available in older Gondwana Formations (292005 MT) of peninsular India and younger Tertiary formations (1493 MT) of north-eastern region. The details of state-wise and category wise geological resources of coal (as on 01/04/2012) are given below. 1.2.1 STATE WISE ALLOCATION Most coal reserves are located in the eastern parts of the country. Jharkhand, Chhattisgarh, and Orissa account for approximately 70 percent of the country's coal reserves. Other significant coal producing states include West Bengal, Andhra Pradesh, Madhya Pradesh, and Maharashtra. Figure 1.3: State wise coal resources allocation (%) Maharashtra Andhra Pradesh 4% 8% Others 1% Source: Ministry of Coal, Cerebral Research www.cerebralbusiness.com © Copyright 2014 by Cerebral Business Research 2
  13. 13. Chapter 1: Coal Sector in India 1.2.2 CATEGORY-WISE COAL RESOURCES Out of 293.5 billion tonnes (Bt) of coal reserves—“Prime” coking coal are 5.3 Bt, Medium & Semicoking coals are 28 Bt and Non-coking coals 250.8 Bt. Most of these resources occur in Gondwanas and the balance in the Tertiary formations. Table 1.1: Type and Category-wise coal resources of India as on 1.4.2012, (in Million Tonnes) Type of Coal (A) Coking :-Prime Coking -Medium Coking Proved Indicated Inferred Total 4614.35 698.71 0 5313.06 12836.84 11951.47 1880.23 26668.54 -Semi-Coking Sub-Total Coking (B) Non-Coking:(C) Tertiary Coal Cotent Hidden Grand Total Source: Ministry of Coal 1.3 INDUSTRY STRUCTURE Currently, the government enjoys a monopoly in producing coal with over 90% of the production coming from government-controlled mines. The policy for captive mining was introduced in 1993. This opened the coal sector to private investment, although no promising progress has been made in Content Deleted 1.4 SECTOR WISE CONSUMPTION TRENDS In India, the end-use sectors of coal mainly include electricity, iron and steel and cement. Demand from the unorganized small scale sector comprising primarily of the brick and ceramic industry is relatively large though infirm as users switch between coal, firewood and biomass depending on their relative price. Content Deleted www.cerebralbusiness.com © Copyright 2014 by Cerebral Business Research 3
  14. 14. Chapter 1: Coal Sector in India Figure 1.4: Sector-wise Coal Consumption (%) Sector wise consumption Projected 2012-13 Sector wise consumption Projected 2016- Others, 13% Power utilities, 66% Source: Planning Commission as per XII plan estimates and projections 1.4.1 POWER SECTOR As of September 30, 2013, coal-based installed capacity in India was 134.4 GW, accounting for around 59% of the country’s total capacity. Despite issues such as coal shortages, delays in coal transportation, high carbon emissions, relatively low plant load factors (PLFs) and operational inefficiencies affecting power generation from coal, it still emerges as the most-preferred fuel for future capacity additions due to economic and energy security reasons. Coal’s share in India’s total power generation has increased from 65 GW in 2004 to 130 GW in 2013 at a CAGR of about 8%. Content Deleted www.cerebralbusiness.com © Copyright 2014 by Cerebral Business Research 4
  15. 15. Chapter 1: Coal Sector in India Figure 1.5 Break-up and Growth of Installed Coal Capacity, as of June 30, 2013 (%, GW) Coal Based Capacity Installed (GW) Y-o-Y Growth (%)- RHS 160 25% 140 20% 120 100 15% 80 Content Hidden 10% 60 40 5% 20 0% Sep'13 2013 2012 2011 2010 2009 2008 2007 2006 2005 0 2004 Diesel 1% Coal 59% Source: CEA, Cerebral Business Research However, coal supply has not kept pace with the growth in generation capacity. In terms of last five years demand supply analysis, Generation capacity (coal) grew at CAGR of 14.2% p.a. over last 5 years, whereas, coal supply has grown at a negligible CAGR of 6% p.a. during this period. Table 1.2: Coal Demand Supply Analysis, FY2009-13 Particulars FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 CAGR (%) Capacity (MW) 77,600 14.2% Coal supply (MT) 363.0 6% Source: Cerebral Business Research In FY13, the demand for coal exceeded its supply by around 192 MT . www.cerebralbusiness.com Content Deleted © Copyright 2014 by Cerebral Business Research 5
  16. 16. Chapter 1: Coal Sector in India Table 1.3: Details of Affected and Stranded Capacity due to coal shortage Particulars Capacity at January 31, 2013 (MW) (A) Coal Installed Capacity Coal Coal Gas Total Gas 8,800 Total 53,000 Stranded Capacity Total Capacity at March 31, 2017 (MW) (A+B) 122,900 Affected Capacity Gas Capacity addition th for balance XII plan (MW) (B) 60,300 Source: Cerebral Business Research Impacts of the coal supply deficit on power sector are: • • Presently 71,900 MW capacity affected due to inadequate coal/gas in FY13 Investments of INR 340,000 Crore impacted Content Deleted • Enhance long term energy security through proactive planning for future fuel demand and supply as well as the optimal fuel mix 1.4.2 STEEL SECTOR Coal is an essential input in the production of steel and presently about 70% of the world's steel production is based on coal. The Indian steel industry has been facing severe coal shortage for last several years. Content Deleted 1.4.3 CEMENT SECTOR India is the second largest producer of cement in the world. Large amount of energy is required during the production of cement and coal is used as an energy source. Content Deleted www.cerebralbusiness.com © Copyright 2014 by Cerebral Business Research 6
  17. 17. Chapter 1: Coal Sector in India 1.5 FINANCIAL PERFORMANCE OF COAL SECTOR DURING ELEVENTH FIVE YEAR PLAN 1 The Eleventh Plan outlay of 37,100 crore for MoC was planned to be financed through an Internal and Extra Budgetary Resources (IEBR) of 35,774.37 crore, and Content Deleted Table1.4: Financial Performance of the Coal Sector S.No. 1 CIL 2 SCCL 3 NLC-Power 4 NLC- Mines 5 Eleventh Plan Outlay Sector Total NLC Approved MTA Anticipated 17,390.07 16,090.68 13,460.78 Total IEBR 6 Central Sector Schemes Total MOC Source: Planning Commission 1.6 KEY DEVELOPMENTS 2012-2013 In the recent past, India’s coal sector has received a lot of attention highlighting various problems faced by the sector such as: 1. Captive block allocation: The Government Auditor or the Comptroller and Auditor General (CAG), in a recent report, estimated the losses due to the government’s policy of giving out coal blocks for free to the tune of Rs1.86 lakh crore. Content Deleted 2. 3. 4. 5. Disinvestment of Coal India Ltd.: The government intends to disinvest 5 per cent of paid up equity capital or over 31.58 crore shares of CIL through Offer for Sale of shares by promoters through the stock exchanges. 1 Source: Planning Commission www.cerebralbusiness.com © Copyright 2014 by Cerebral Business Research 7
  18. 18. Chapter 1: Coal Sector in India 1.7 CONCLUSION Content Deleted www.cerebralbusiness.com © Copyright 2014 by Cerebral Business Research 8
  19. 19. Chapter 2: Global Scenario 2. GLOBAL SCENARIO 2.1 INTRODUCTION Worldwide, compared to all other fossil fuels, coal is the most abundant and is widely distributed across the continents. Coal is also the second most dominant source of primary energy behind oil, accounting for approximately 28% of total primary energy consumption. Content Deleted ng economic performance – are key drivers of coal consumption among these emerging economies. Figure 2.1: Total World Production and Consumption Trends, as of 31 Dec 2012 (in BToe) 40 38 38 35 36 31 32 29 30 26 28 26 24 24 22 37 28 31 32 36 0.2 0.3 2.9 33 34 0.3 0.2 2.7 1.0 34 28 38 1.1 35 32 33 32 29 26 24 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 20 Source: BP Statistical Report 2013 Content Deleted www.cerebralbusiness.com © Copyright 2014 by Cerebral Business Research 9
  20. 20. Chapter 2: Global Scenario Table 2.1: Country Wise Reserves and Production Details, 2012 S No. Countries Reserves (MT) 1 USA 237295 2 Australia India Kazakhstan 8 South Africa 9 Poland 10 Indonesia 11 100.00% Germany 7 3845.30 60600 6 100.00% 76400 5 Share of total China 4 Production (MTOE) Russia 3 Reserves in % of total 27.60% Others Total 860938 Source: BP Statistical Report 2013 2.2 GLOBAL MARKET TRENDS-H1 2013 • The rapid expansion of coal demand and supply experienced over the last decade was driven by the rise in demand by China and other Asian economies. • Content Deleted • • • • • • • The market for coal-fired power stations took a hit last year when the World Bank announced it will no longer lend countries money to build them. 2.2 COUNTRY WISE PRODUCTION TRENDS China is having huge production of coal which accounts to about 49% of the total production, followed by US, Australia, Indonesia and India. Content Deleted www.cerebralbusiness.com © Copyright 2014 by Cerebral Business Research 10
  21. 21. Chapter 2: Global Scenario Figure 2.2: Country Wise breakup, Coal Production, as of December 31, 2012 Source: BP Statistical Report 2013 Content Deleted Figure 2.3: Production and Consumption pattern of key countries, 2012 (mtoe) 78 600 500 400 192 74 300 200 187 34 100 0 Production Consumption Source: Cerebral Business Research www.cerebralbusiness.com © Copyright 2014 by Cerebral Business Research 11
  22. 22. Chapter 2: Global Scenario 2.2.1 UNITED STATES On analyzing last five year coal production and consumption trend, it is seen that, both production as well as consumption are falling. Content Deleted Figure 2.4: U.S. Coal Production and Consumption, 2008 - 2012 (MToe) 700.0 596.7 540.8 600.0 551.2 556.1 2009 2010 2011 515.9 500.0 400.0 300.0 200.0 100.0 0.0 2008 2012 Source: BP Statistical Review 2013 2.2 CHINA China is world’s largest producer and consumer of coal, and accounts for more than 45% of both global totals. China accounted for more than three-quarters of incremental coal production in 2012 and domestic Content Deleted www.cerebralbusiness.com © Copyright 2014 by Cerebral Business Research 12
  23. 23. Chapter 2: Global Scenario Figure 2.5: China Coal Production and Consumption, 2008 - 2012 (MToe) 2000.0 1800.0 1600.0 1400.0 1369.2 1401.0 1470.7 1486.5 1609.7 1617.5 1760.8 1758.0 1873.3 1825.0 1200.0 1000.0 800.0 600.0 400.0 200.0 0.0 Source: BP Statistical Review 2013 In terms of import export trends, China, typically was a net coal exporter, and became a net coal importer in 2009 for the first time nearly after two decades. Content Deleted 2.3 AUSTRALIA Production & consumption Coal plays a major role in meeting domestic energy needs, accounting for about 69 percent of Australian electricity generation. Content Deleted www.cerebralbusiness.com © Copyright 2014 by Cerebral Business Research 13
  24. 24. Chapter 2: Global Scenario Figure 2.6: Australia Coal Production and Consumption, 2008 - 2012 (MToe) 300 250 200 150 100 50 0 Source: BP Statistical Review 2013 Clearly from the graph above, it is seen that the gap between production and consumption is very high. Consumption is much below the production, which is the prime reason of Australia being the second largest coal exporter in the world. Content Deleted Year Import Export 2003 0 230,395 2004 0 2005 0 2006 56 2007 2008 2009 2010 2011 CAGR 0.95% 3.93% Source: EIA 2.4 INDONESIA www.cerebralbusiness.com © Copyright 2014 by Cerebral Business Research 14
  25. 25. Chapter 2: Global Scenario Unlike many other countries, Indonesia's government encourages increased use of coal in the power sector, due to relatively abundant domestic supply and as a way to reduce the use of expensive diesel and fuel oil. Content Deleted 2.3 GLOBAL COAL PRODUCTION FORECAST According to the estimates from U.S. Energy Information Administration (EIA), global coal production is expected to reach 11.5 billion tonnes by 2040, 5722 501 432 358 446 434 2040 400 537 589 2030 993 850 696 1177 1156 1080 2020 685 5633 4725 Content Deleted Source: U.S. Energy Information Administration, International Energy Outlook 2013 Report www.cerebralbusiness.com © Copyright 2014 by Cerebral Business Research 15
  26. 26. Chapter 3: Latest Policies and Regulatory Issues 3. LATEST POLICIES AND REGULATORY ISSUES Indian coal industry is monopolised by a single producer i.e. Coal India Limited. In year 2000, a bill was introduced in the parliament to amend the acts related to private participation and allow private participants in coal sector. However, the bill failed to gain the necessary support. The absence of legislative amendments required to induct competition make the sector vulnerable to the ill effects, viz. lack of quality technology and production methods, lack of transparency in coal block allocations, falling production, price increases, etc. Content Deleted Table 3.2: Details of the FSAs concluded with power plants commissioned during 1.4.2009 till 05.08.2013 S.N o. Year of Commission ing Power Plants/Units Capacity (MW) 2011-12 Bajaj Energy Private Limited (Khamberkhera Unit-I & II) CCL 90 0.390 21/11/2012 2 2011-12 Bajaj Energy Private Limited (Maqsoodpur unit-I & II) CCL 3 2011-12 Bajaj Energy Private Limited (Barkhera Unit-I) CCL 4 2009-10 Rosa Power Supply Company Limited Phase I ( Unit I) CCL 2012-13 Vellure'Unlt-2 MCL 500 2.310 24/07/2013 34793 131.066 1 82 Total FSA Qty. (Mt) Date of Execution/ Migration to FSA Model Oct'12 Comp any Remarks Source: Ministry of Coal Content Deleted www.cerebralbusiness.com © Copyright 2014 by Cerebral Business Research 16
  27. 27. Chapter 3: Latest Policies and Regulatory Issues Table 3.4: List of Power Plants/Units appearing in the MOC letters dated 17.02.12 as well as and 17.07.13 where FSAs are yet to be signed S.No. Unit/Plant Name (Details) Company Name Name Of subsidia ry compan y Capaci ty (Mw) Quantity as per LOA (mt) 1 Pathadi (UNCO) Unit- 1 UNCO Power Limited SECL 300 1.450 2 Bhilai JV Unit-1 JV (NTPC+SAIL) SECL 250 1.200 38 Muzaffarpu r TPP, Unit2 JV (NTPC+BSEB) ECL 195 COD date (confirm ed/ Expected ) 09.04.20 10 0.609 21.10.20 09 Reason(s) for not signing of FSA The unit is not having PPA and reluctant to sign FSA in the new model. Since it is in the category of CPP, Not eligible for execution of FSA as IPP. It has been informed to the JV for signing the FSA in CPP category. ECL vide letter dated July 26, 2013 requested the unit for signing of FSA. The JV has to come forward for signing the FSA. Source: Minstry of Coal Government intervention to resolve the issue between CIL and power companies To strike a middle ground between CIL and power companies, the Prime Minister Office (PMO) has intervened and suggested a revision to CIL’s new FSA to address the concerns of all stakeholders. Content Deleted Table 3.5: Details of coal blocks allocated under the new rules Sl. No 1 2 14 Coal Block / Capacity / Host State Tentuloi/1234 MT/Odisha Bhalumuda/550 MT/Chhattisgarh KalyanpurBadalpara/102 MT/ Jharkhand Proposed Applicant State/CPSU Proposed Govt. Company Proposed allocated Coal Reserves(MT) Odisha Odisha Thermal Power Corporation Ltd. (OTPCL) 1234.00 CPSU / NTPC NTPC Ltd. 550.00 Harayana HPGCL 51.00 UP UPRVUNL 51.00 Source: Cerebral Business Research www.cerebralbusiness.com © Copyright 2014 by Cerebral Business Research 17
  28. 28. Chapter 5: Status of Coal Blocks Allocated 4. DOMESTIC COAL RESERVES AND PRODUCTION STATUS India has the fifth largest coal reserves in the world. Of the total reserves, nearly 88% are non-coking coal reserves. The country’s coal production has increased from 431 MT in 2006-07 to 554 MT* in2011-12 (CAGR 5.1%). On the other hand, the demand for coal has grown at a CAGR of more than 7% in the last decade and has reached around 600 MT in 2012-13. Content Deleted Table 4.1: The Type and Category-wise coal resources of India as on 1.4.2012 (in Million Tonnes) Type of Coal (A) Coking :-Prime Coking -Medium Coking -Semi-Coking Sub-Total Coking (B) Non-Coking (C) Tertiary Coal Grand Total Proved Indicated Inferred Total 4614.35 698.71 0 5313.06 118144.81 Source: Ministry of Coal 4.1.2 STATE GEOLOGICAL RESOURCES OF COAL Most coal reserves are located in the eastern parts of the country. Jharkhand, Chhattisgarh, and Orissa account for approximately 70 percent of the country's coal reserves. Other significant coal producing states include West Bengal, Andhra Pradesh, Madhya Pradesh, and Maharashtra. Table 4.2: Gondwana Coalfields as on April 1, 2012 State Geological Resources of Coal ( in Million Tonnes) Proved Indicated Inferred 9566.61 9553.91 3034.34 22154.86 Assam 0 2.79 0 2.79 Bihar 0 0 160 160 32383.99 292004.51 Andhra Pradesh Chhattisgarh 13987.85 Jharkhand Total 40163.22 Madhya Pradesh Maharashtra Orissa Sikkim Uttar Pradesh West Bengal Total Source: Ministry of coal www.cerebralbusiness.com © Copyright 2014 by Cerebral Business Research 18
  29. 29. Chapter 5: Status of Coal Blocks Allocated Content Deleted 4.8 TRENDS OF COAL PRODUCTION FROM OPENCAST & UNDERGROUND MINES In last five years, in CIL, production from Open Cast (OC) mines witnessed a much higher CAGR of 7.2% while the production from Under Ground (UG) mines grew by just 2.1% due to lackluster performance in the Conventional B&P technology. However, the UG segment performance was still better at CIL, as SCCL posted a negative 1.1% CAGR over the same period. Production from OC mines for SCCL was almost at par with CIL, registering a CAGR of 6.5%. Table 4.7: Trends of Production Of Raw Coal From Opencast & Underground Mines (in MT) Company Technology 2007-08 2008-09 2009-10 2010-11 2011-12 (Projected) 0.32 0.35 0.35 0.30 0.30 CIL OC Manual Mechanised Total OC 437.34 Total UG 12.26 TOTAL 40.61 44.55 45.01 46.00 47.01 Source: Ministry of Coal Table 4.8: Details of Coal Blocks Allocated to Private Sector for IPPs/ CPPs - August 2013 S.No. Name of the Company Date of Allotment Coal Block allocated Coal fields State Geological Reserves (In MT) 1 RPG Industries / CESC Ltd. 10.08.1993 Sarisatolli Raniganj West Bengal 140.47 2 Utkal Coal Ltd. (formerly ICCL) 29.05.1998 Utkal-C Talcher Orissa 208.77 28 (b) Adhunik Thermal Energy Ltd. 28.05.2009 Ganeshpur North Karanpura Jharkhand Source: Cerebral Business Research Content Deleted 4.11.10 COOPERATION WITH CHINA 9th meeting of the Indo-China Joint Working Group on Coal held during 9th – 11th February 2004 in India (New Delhi). Chinese delegation was led by Mr. Zhao Tiechui, Deputy Administrator of State of www.cerebralbusiness.com © Copyright 2014 by Cerebral Business Research 19
  30. 30. Chapter 5: Status of Coal Blocks Allocated Administration of Work Safety (SWAS) State Administration of Coal Mines Safety (SACCS), PR China and Indian delegation led by Dr. P.K.Mishra, Secretary (Coal) and the following bilateral issues/projects were discussed in the meeting. • • • BCCL -Moonidih project-Seam RXVI Top. Jhanjra project of ECL. Performance of existing Longwall faces at SECL. Content Deleted Table 5.5: Details of De-allocated blocks S. No. Name of the Block Block Allocation Date of Allocation Date of Deallocation 1 Binani Cement Limited Datima 05.09.2008 27.04.2010 2 Murli Industries and Grace Industries Lohara (East) 27.06.2008 17.05.2010 3 Maharastra State Mining Corporation Ltd. Agarzari 25.07.2007 28.06.2010 17 Damodar Valley Corporation Saharpur Jamarpani 25.07.2007 14.06.2011 Source: Ministry of Coal, Cerebral Business Research 5.6 RECENT DEVELOPMENTS Aug 2013: Five states receive fresh allocation of coal blocks from the Coal ministry The coal ministry has decided to allocate new coal blocks to five states - Madhya Pradesh, Chhattisgarh, Orissa, Andhra Pradesh and Rajasthan. Coal from the blocks will be used for generating power. The coal ministry has said that the companies which will use the blocks will have to pay a reserve price. www.cerebralbusiness.com © Copyright 2014 by Cerebral Business Research 20
  31. 31. Chapter 7: Role of Imported Coal in Existing Scenario 6. DEMAND SUPPLY GAP ANALYSIS 6.1 INTRODUCTION Despite India’s huge coal reserves, there is a growing concern on the increasing demand-supply gap; attributed primarily to the rapidly rising coal demand outstripping the production growth. Over the last five years, the demand for coal has been growing at an average rate of 8–9 percent annually as compared to a 5–6 percent Content Deleted 6.2.2 YEAR WISE GENERATION LOSS DUE TO COAL SHORTAGE Generation loss on account of Current Stranded Capacity estimated is at INR 42,000 Crore (120 billion units @ INR 3.50 per unit); about 0.45% of GDP Table 6.2: Generation loss due to Shortage of Coal for the year 2012-13 reported by Power Utilities Sr. No. State 1. Haryana 2. U.P. 3. TOTAL Thermal Power Station Capacity (MW) Generation Loss (MU) MAHATMA GANDHI-CLP 1320 1562.0 UNCHAHAR-NTPC 1050 18.0 DADRI(NCPP) -NTPC 1820 169.0 39812.5 11736 Source: Cerebral Business Research Content Deleted www.cerebralbusiness.com © Copyright 2014 by Cerebral Business Research 21
  32. 32. Chapter 7: Role of Imported Coal in Existing Scenario 7. ROLE OF IMPORTED COAL IN EXISTING SCENARIO 7.1 INTRODUCTION Presently, India ranks fourth in the coal import demand, being led by Japan. India accounts for about 10% of the world’s import coal demand. It is facing stiff competition from other Asian economies like Japan, South Korea and China. Japan has continued to lead the import demand, China is fast catching up and its demand is estimated to rise at significantly high rate (CAGR 29%) between 2008 and 2013. Table 7.2: Company Wise Import Statistics (MT) Name of Utility Plant 2012-13 % Materialisation Target MT Achievement MT Torrent 0.50 0.292 58% GSECL 1.50 0.359 24% CESC Reliance Energy (Dahanu) HPGCL APGENCO WBPDCL DVC UPRVUNL RVUNL MSPGCL MPGCL TNEB KPCL OPGCL NTPC Pathadih NTPC (JV) Indira Gandhi Reliance Energy Rosa Sterlite NTPC SAIL Power CO Tata (Maithon RB) Lanco Anpara CSEB Bajaj Hindustan TVNL Vedanta (Balco) NTPC (JV-Vallur) Adani Power (Tiroda) CLP (Mahatma Gandhi) Source: Cerebral Business Research www.cerebralbusiness.com © Copyright 2014 by Cerebral Business Research 22
  33. 33. Chapter 7: Role of Imported Coal in Existing Scenario Table 7.3: Details of coal import during 2012-13 by NTPC Thermal Power Station Capacity as on 31.03.2013 (MW) Coal imported (in MT) Average landed cost of imported coal (INR / Tonne) Talcher Super 3000 2.218 5905 Indicative* Increase in tariff (Rs. / kWh) due to blending of imported coal 0.45 Farakka 2100 1.048 6578 0.19 Kahalgaon Ramagundam I&II Simhadri Dadri Rihand Tanda Unchahar Vindhyachal Korba Sipat Total Source: Cerebral Business Research Content Deleted 7.6 COUNTRY WISE IMPORT OF COAL India's coal imports rose 29% to 135 million tonnes in the 2012/13 fiscal year, according to data from government sources. Thermal coal imports for use in power plants jumped three-quarters to 97.23 million tonnes, while imports of coking coal, used in steel-making, rose a modest 1.2% to 32.2 million tonnes. Content Deleted www.cerebralbusiness.com © Copyright 2014 by Cerebral Business Research 23
  34. 34. Chapter 8: Overseas Coal Acquisition 8. OVERSEAS COAL ACQUISITION 8.1 INTRODUCTION To overcome coal shortage problem, most of the companies in India are looking to source coal from other countries either through fuel supply agreements or buying coal assets in coal rich countries. Countries in which Indian companies have shown interest in recent past include Indonesia, South Africa, Columbia, Mongolia and Mozambique among others. Content Deleted 8.2 INDONESIA 8.2.1 INTRODUCTION Indonesia has witnessed a robust increase in coal production, coal exports and domestic sales of coal since the early 1990s, when the coal mining sector was reopened for foreign investment. The Indonesian coal industry is rather fragmented with only a few big producers and many small players that own coal mines and coal mine concessions Content Deleted www.cerebralbusiness.com © Copyright 2014 by Cerebral Business Research 24
  35. 35. Chapter 8: Overseas Coal Acquisition 8.6 COMPARISON MATRIX: TOP FOUR COAL PRODUCING NATIONS Table 8.1: Comparison Matrix: Top Four Coal Producing Nations Countries Australia Indonesia Coal Regions Queensland (overly exploited), New South Wales (overly exploited), Surat Basin & Galilee Basin (open for exploration) South Africa Mozambique Sumatra (overly exploited), Kalimantan (overly exploited), Papua, Java, Maluku & Sulawesi (partly exploited). Cost of Mining Coal Quality Infrastructure Tax Regime Political Stability Proximity to Indian Ports Overall Assessment Source: Cerebral Business Research www.cerebralbusiness.com © Copyright 2014 by Cerebral Business Research 25
  36. 36. Chapter 9: Coal Technologies 9. COAL TECHNOLOGIES Clean Coal Technologies (CCTs) are defined as ‘technologies designed to enhance both the efficiency and the environmental acceptability of coal extraction, preparation and use’. These technologies reduce emissions, reduce waste, and increase the amount of energy gained from each tonne of coal. Content Deleted Table 9.1 CIL HEMM Population: 2007-12 Name of Equipment 2007 Dragline 41 2008 2009 2010 2011 2012 Envisaged by MoC 41 40 40 40 Actual 119 40 Shovel Dumper Dozer Drill Source: Cerebral Business Research Table 9.2: Norms and actual HEMM availability and utilization during Eleventh FYP Equipment Availability (%) Utilization (%) CMPDI Norms Actual 85 78-85 Dragline CMPDI Norms Actual Shovel Dumper Dozer Drill Source: Cerebral Business Research 9.1.2 UNDERGROUND MINING In UG mining, the basic equipment for transporting are either haulage or conveyor belts. Worldwide, Longwall mining is used for UG mining due to higher outputs and productivity, safety related factors, and to achieve improved recovery. The other method used is continuous mining. www.cerebralbusiness.com © Copyright 2014 by Cerebral Business Research 26
  37. 37. Chapter 9: Coal Technologies Content Deleted 9.3.2.1 FEW UPCOMING COAL PLANTS BASED ON SUPER CRITICAL TECHNOLOGY Plant Company MW State Status Ankulapatur power station phase 1 VSF Projects 350 Andhra Pradesh Construction Ankulapatur power station phase 2 VSF Projects 135 Andhra Pradesh Planning Pynampuram Thermal Power Project Units 1 and 2 Thermal Powertech Corporation 1320 Andhra Pradesh Advanced development Year 2014 More than 60 plants listed Source: Cerebral Business Research 9.3.4 ADVANCED ULTRA SUPERCRITICAL TECHNOLOGY The government’s National Mission for Technology, the Advanced Ultra Super Critical (AUSC) project, which could cost well over Rs 6,000 crore, will be put up by a joint venture of BHEL, NTPC Content Deleted www.cerebralbusiness.com © Copyright 2014 by Cerebral Business Research 27
  38. 38. Chapter 10: Coal Prices 10. COAL PRICES 10.1 DOMESTIC COAL PRICES CIL meets around 80 percent of coal requirement for power sector in India and around 55 percent of the country’s total energy requirement. Although its high-grade coal production is only around 5 percent of its total production, the overall impact of price would be huge on about 20 million tons (mt) of coal produced by the company. Content Deleted Table 10.1: CIL thermal coal prices before and after revision (Rs/ton) S.No. 1 GCV Bands (Kcal/kg) 7000+ 2 6700-7000 3 4300-4600 11 4000-4300 12 3700-4000 13 3400-3700 14 3100-3400 15 2800-3100 16 2500-2800 17 0 4600-4900 10 4870 * 4900-5200 9 Change (%) 5200-5500 8 * Old Price 5500-5800 7 New Price after revision on May 28 for sectors other than power sector, fertilizer and defence 5800-6100 6 Change (%) 6100-6400 5 Old Price 6400-6700 4 New Price after revision on May 28, 2013 for power sector, fertilizer & defence sector 2200-2800 www.cerebralbusiness.com 4,870 4,870 0 © Copyright 2014 by Cerebral Business Research 4,870 28
  39. 39. Chapter 10: Coal Prices Content Deleted Source: CIL, Cerebral Business Research 10.3 INTERNATIONAL COAL PRICES TRENDS Globally, coal prices have cooled off by 14-17 per cent over the last one year and prices are unlikely to recover anytime soon as demand from China is down sharply. Impact on tariff (INR / unit) Pre 2009 2013-14 Post 2009 2014-15 2013-14 2014-15 MW Pithead INR / unit MW INR / unit MW INR / unit MW INR / unit 13,200 0.08 13,200 0.07 13,750 0.08 19,360 0.07 Coastal Non-coastal non- pithead Sub total (i) Capacity commissioned in the year 1 (ii) Total Capacity (iii) = (i) + (ii) Capacity considered for 2013-14 Capacity considered for 2014-15 Impact on tariff (INR / unit) 2013-14 2014-15 2013-14 2014-15 MW Pithead INR / unit MW INR / unit MW INR / unit MW INR / unit 13,200 0.08 13,200 0.10 13,750 0.08 19,360 0.10 Coastal Non-coastal non- pithead Sub total (i) Capacity commissioned in the year 1 (ii) Total Capacity (iii) = (i) + (ii) Capacity considered for 2013-14 Capacity considered for 2014-15 Source: Cerebral Business Research Issues: In case the pre 2009 plants of State Governments are excluded from pooling because of the www.cerebralbusiness.com © Copyright 2014 by Cerebral Business Research 29
  40. 40. Chapter 10: Coal Prices opposition from State Governments, pooling could be among all post 2009 plants and non-State pre 2009 plants. However, this option would raise the following issues that need consideration: Content Deleted www.cerebralbusiness.com © Copyright 2014 by Cerebral Business Research 30
  41. 41. Chapter 11: Coal Washeries 11: COAL WASHERIES 11.1 INTRODUCTION Despite the massive coal reserves in India, the demand continues to widen its gap from supply as coal production is progressing at a slow pace compared to fast rising coal demand. Due to geological reasons, coal in India is characterized with high ash content and low calorific value. This further adds on to the coal supply crisis along with rising Table 11.1: Details of existing Coal Washeries by CIL, (as of April 30, 2013) SI. No. Washery Capacity ( MTY) Location Consumer Coking Coal 1 Dudga-II 2.00 Jharkhand Steel Plants 2 Bhojudih 1.70 West Bengal Steel Plants 3 Patherdih 1.60 Jharkhand Steel Plants 12 Nandan 1.20 MP Steel Plants (A) Coking Coal, CIL 20.10 NON-COKING COAL 1 Dugda-I 1.00 Jharkhand TPS 7 Bina 4.50 UP TPS (A) Non Coking Coal, CIL 20.20 Source: Cerebral Business Research Table 11.2: Details of existing Coal Washeries by Private Players, (as of April 30, 2013) Washery Name Type Capacity ( MTY) Location Consumer Player Name DCOP Coking Coal 1.35 WB Steel Plants DPL Jamadoba Coking Coal 1.72 Jharkhand Steel Plants TISCO Source: Cerebral Business Research 11.4 PERFORMANCE OF COAL WASHERIES IN OPERATION IN THE XI PLAN PERIOD 11.4.1 COKING COAL Content Deleted www.cerebralbusiness.com © Copyright 2014 by Cerebral Business Research 31
  42. 42. Chapter 11: Coal Washeries Table 11.3: Details of Proposed coal washeries in India Sl.no. Subsidiary Washery Capacity(Mty) Type Scheme 1 ECL Chitra 2.5 Non-coking BOM 2 ECL Sonpurbazari 8.0 Non-coking BOM 3 BCCL Madhuband 5.0 Coking BOM 4 BCCL Patherdih 5.0 Coking BOM 5 BCCL 6 BCCL 7 BCCL 8 BCCL 9 CCL 10 CCL 11 CCL 12 CCL 13 CCL 14 SECL 15 SECL 16 MCL 17 MCL 18 MCL 19 MCL 20 WCL TOTAL 111.1 Source: CIL Website Content Deleted Table 11.7: Ranking of States most suitable for Coal Washing Indices Rank States Ash cont ent Total Naxa lism Total st Jharkhan d 5 1.25 1 0.15 nd Orissa 4 1 2 0.3 rd Chhattis garh th MP th WB 1 2 3 4 5 Land & Wat er Total Stat e flexi bility Total Infra struc ture Total Coal avail abilit y Total Sum Source: Cerebral Business Research www.cerebralbusiness.com © Copyright 2014 by Cerebral Business Research 32
  43. 43. Chapter 12: Coal Scam Implications 12. COAL SCAM IMPLICATIONS 12.1 WHAT IS COALGATE SCAM Between 1993 and 2011, the government of India gave away 206 coal blocks for free to government and private companies. Estimates suggest that only 41 out of the 206 blocks given away for free were allocated before the end of 2003. This means that 165 blocks were allocated between 2004 and 2011. The UPA government has been in power since May 2004. Hence, a major number of coal blocks were given away free during the UPA rule. The Government Auditor or the Comptroller and Auditor General (CAG), in a recent report, estimated the losses due to the government’s policy of giving out coal blocks for free to the tune of Rs1.86 lakh crore. Content Deleted 12.2 BENEFITS TO THE PRIVATE PLAYERS As per some estimates, a company saves 10 times from captive mining against buying coal from the open market. For example to generate 1000MW of power, Rs. 250 crore / annum amount is needed in case of captive coal and Rs 3240 crore per annum is required in-case coal is bought from the open market. Content Deleted Table 12.1: Sector wise private players with captive blocks Sector Companies with captive blocks No. of blocks allotted Sponge & Pig Iron Abhijeet Infrastructure, Usha Martin, Bhushan Steel, Rungta Mines, Neelanchal Iron, Bajrang Ispat, Electrosteel Castings, Domco Smokeless Fuel, Tata Sponge, Nalwa Sponge Iron, Topworth Urja & Metals 26 Power Coal-toliquid Cement Steel Source: CAG, Cerebral Business Research www.cerebralbusiness.com © Copyright 2014 by Cerebral Business Research 33
  44. 44. Chapter 12: Coal Scam Implications 12.2 BLOCKS ALLOCATION DETAILS AS HIGHLIGHTED BY CAG STATE-WISE STATUS OF BLOCKS ALLOCATED AS HIGHLIGHTED BY CAG As can be seen from the graphs, maximum number of blocks is allocated in Jharkhand (27) and Chhattisgarh (13). Content Deleted State West Bengal Average GR per block (MT) MP Maharashtra Chhattisgarh Jharkhand Orissa 77.5 Figure 12.2: Year wise, state wise no. of blocks allocated, from 2005-2009 3 4 6 1 10 2 1 4 7 5 3 2005 1 3 2006 2007 2008 1 2 2 2009 Source: CAG, Cerebral Business Research 12.3 ACTION TAKEN BY THE GOVERNMENT Government has set up a review committee, naming Inter Ministerial Group (IMG), which has shortlisted 58 companies whose coal licences are likely to be revoked for underperformance. The group is scrutinising 29 blocks awarded to private firms out of the total 58 which were given showcause notices for delays in developing mines. Content Deleted www.cerebralbusiness.com © Copyright 2014 by Cerebral Business Research 34
  45. 45. Chapter 12: Coal Scam Implications Table 12.3: Blocks Recommended For Deduction of Bank Guarantee S.NO Company Name State Block Name Date of Allotment Sector Extractable Reserve (MT) 1 Usha Martin Ltd. Jharkhand Lohari 24-Aug-05 Steel 9.0 14 Monnet Ispat & Energy * Orissa Utkal B2 Block Source: Cerebral Business Research Most of the blocks recommended for deduction of bank guarantee are in the sponge iron category (7 blocks), followed by four blocks in the Power sector. Content Deleted Table 12.4: Blocks Recommended for De-allocation by IMG S NO Company Name State Block Name Date of Allotment Sector Extractable Reserve (MT) 1 Bhusan Steel & Strips Ltd. & Others Orissa New Patrapara 13-Jan-06 Sponge Iron 316.1 13 Maharashtra Seamless, Dhariwal Infrastructure and Kesoram Industries Maharashtra Source: Cerebral Business Research The state of Jharkhand has the maximum number of blocks (5 blocks) been recommended by IMG for de-allocation, closely followed by Chhattisgarh with 3 blocks. The rest of the states including Maharashtra, Madhya Pradesh, West Bengal and Orissa have either one or two de-allocation recommendations each. Content Deleted 12.4 IMPACT OF DEALLOCATION There is unlikely to be any kind of immediate impact on the economy. However, some impact in the mid-term is quite likely. Many power projects, which are dependent on captive coal blocks from the www.cerebralbusiness.com © Copyright 2014 by Cerebral Business Research 35
  46. 46. Chapter 12: Coal Scam Implications allocation, are likely to get delayed without assured supply of coal. If supply of electricity is affected, there will be a cascading effect across the economy Content Deleted www.cerebralbusiness.com © Copyright 2014 by Cerebral Business Research 36
  47. 47. Chapter 13: Other Recent Developments 13. OTHER RECENT DEVELOPMENTS 13.1 COMPANY RELATED Hindalco to buy coal from other sources for aluminium project in Odisha (Oct 2013) Business Standard reported that Hindalco will have to buy coal from other sources at a very high cost for its INR 17,000 crore aluminium project in Odisha, as its Talabira mine is yet to receive StageII clearances from the Union environment ministry. Content Deleted Indian coal mining scam - CBI recovers INR 25 crore cash from Hindalco (Oct 2013) CBI said that a day after it lodged an FIR against Hindalco and its boss Mr Kumar Mangalam Birla, it had recovered INR 25 crore in cash from the corporate office of the aluminum major in the city. Content Deleted Jindal to takes over ownership of Gujarat NRE Coking Coal (Oct 2013) Jindal Steel will take over ownership of Gujarat NRE Coking Coal after a successful shareholder vote recently. Content Deleted CIL production hit due to recent Cyclone (Oct 2013) PTI reported that state owned CIL has suffered a production loss of about 1.2 million tonne in the past 3 days on account of Cyclone Phailin which has affected the key coal producing states of Odhisha, Jharkhand and West Bengal. Content Deleted www.cerebralbusiness.com © Copyright 2014 by Cerebral Business Research 37
  48. 48. Chapter 14: Company Profiles CHAPTER 14: COMPANY PROFILES 14.1 COAL INDIA LTD 14.1.1 COMPANY OVERVIEW • • • Coal India Limited (CIL) as an organized state owned coal mining corporate came into being in November 1975 with the government taking over private coal mines. With a production of 79 Million Tonnes (MTs) at the year of its inception CIL today is the single largest coal producer in the world. Operating through 81 mining areas CIL is an apex body with 7 wholly owned coal producing subsidiaries and 1 mine planning and Consultancy Company spread over 8 provincial states of India. Content Deleted 14.1.2 STRATEGIC VISION The strategic vision of CIL is to place itself on a path of accelerated growth with enhancement in productivity competitiveness Content Deleted 14.1.3 SUBSIDIARIES OF COAL INDIA LTD: 1. Eastern Coalfields Limited (ECL), Sanctoria, West Bengal 2. Bharat Coking Coal Limited (BCCL), Dhanbad, Jharkhand 3. Central Coalfields Limited (CCL), Ranchi, Jharkhand Content Deleted Existing Material Agreements/Joint Ventures/MOUs • Agreement between CIL and Indian Oil Corporation Limited, IBP Division ("IOCL-IBP") for the supply of bulk loading explosives to our Subsidiaries. Content Deleted Products • • Coking Coal Cokin Coal www.cerebralbusiness.com © Copyright 2014 by Cerebral Business Research 38
  49. 49. Chapter 14: Company Profiles Content Deleted Services: Content Deleted 14.1.4 CIL PRODUCTION TRENDS CIL accounted for about 81% of the total coal produced in the country during fiscal 2013. There appears to be no shortage of market for the mineral, if it can be produced at a reasonable cost on a sustainable basis. Figure14. 1: CIL Raw Coal Production Production of Raw Coal During 2003-04 to 2012-13 500 450 400 350 300 250 200 150 100 50 0 Source: CIL Annual Reports Off Take of Raw Coal Off-take of raw coal continued to maintain its upward trend and reached 465.18 million tonnes for fiscal ended March 13, surpassing previous highest of 433.08 million tonnes achieved during the last Content Deleted www.cerebralbusiness.com © Copyright 2014 by Cerebral Business Research 39
  50. 50. Chapter 14: Company Profiles Figure 14.2: Off take of Raw Coal from CIL Content Deleted Source: CIL Annual Reports Content Deleted 14.1.5 CIL FINANCIAL HIGHLIGHTS CIL is one of the largest profit making and tax & dividend paying enterprises in India.Aggregate pretax profits for CIL and its subsidiaries increased by 17.42% from Rs. 21,272.66 crores in 2011-12 to Rs. 24,979.04crores for 2012-13. Figure 14.3: Profit after Tax & Net worth of CIL Content Deleted Source: CIL Annual Report 14.1.5 SWOT ANALYSIS OF COAL INDIA LTD. STRENGTH WEAKNESS Maharatna Status Government Intervention OPPURTUNITIES THREAT Operational Risks Details of Strengths Maharatna Status: The Company is the single largest coal producing company in the world. It was awarded a Maharatna Status on 11th Apil 2011, becoming the fifth company to be awarded the status. The Maharatna Content Deleted Details of Weakness www.cerebralbusiness.com © Copyright 2014 by Cerebral Business Research 40
  51. 51. Chapter 14: Company Profiles Government Intervention Excessive government intervention in the operations of the company may be cause of concern for the shareholders. Content Deleted Details of opportunities Increasing Coal Demand Rising coal demand provides an opportunity for the company to expand its operations. Coal is used as a raw material in the production of steel. Content Deleted 14.1.6 RECENT DEVELOPMENTS CIL allots Rs 4000cr for overseas blocks Mon Aug 12, 2013 Coal India has made a provision of Rs 4,000 crore as capital expenditure this fiscal to develop blocks in Mozambique and acquire overseas assets. “The capital expenditure for 2013-14 has been envisaged at Rs 5,000 crore plus an additional ad hoc provision of Rs 4,000 crore for the acquisition of coal assets abroad and development of coal block in Mozambique,” Content Deleted www.cerebralbusiness.com © Copyright 2014 by Cerebral Business Research 41
  52. 52. Chapter 14: Company Profiles ANNEXURE Annexure 4.1: Details of Geological Reserves (Resource in million tonne) State/ Coalfield/ Type of coal Depth Proved Indicated Inferred (Exploration) Inferred (Mapping) Total GONDWANA COALFIELDS WEST BENGAL 1. RANIGANJ 0-300 MEDIUM COKING 194.70 1.60 0.00 196.30 15.30 300-600 16.90 0.00 32.20 Total 0-300 300-600 SEMI-COKING 600-1200 Total High Sulphur 0-300 TOTAL FOR DGM REPORT TOTAL FOR NAGALAND 293.47 8.76 293.47 GRAND TOTAL 8.60 298.05 315.41 99.34 49.57 749.92 1492.64 118144.81 Total for Tertiary Coalfields 0.00 593.81 Total for Gondwana Coalfields 142168.85 32433.57 749.92 293497.15 117551.00 Source: Cerebral Business Research Note: Totals may not match since the contents are deleted S. No. Features Pakri-Barwadih Date of allotment Mode of allotment Features Geo. Reserves (MT) Mineable Res. (MT) (OC) Est Capacity (MTPA) End-use Project H Coal Production 11.10.04 Government Dispensation 1436 503 15 Shortfall of: Lara (4000 MW) Darlipalli (3200 MW) September 2013 ChattiBarwadih 25.01.06 Captive Kerandari(*) 25.01.06 Captive 194 285 151.08 142.01 7 6 Barh St.-ll (1320 MW) Tanda Expn, St-ll (1320 MW) February 2015 August 2015 (*) Chatti-Bariatu, Kerandari & Chatti-Bariatu(S) coal mining blocks were de-allocated by Ministry of Coal on June 14, 2011. Ministry of Coal has withdrawn the de-allocation and restored these coal blocks to NTPC on January 23, 2013. Source: Cerebral Business Research 12.1 State wise status of blocks allotted (under COALGATE SCAM) Chhattisgarh www.cerebralbusiness.com © Copyright 2014 by Cerebral Business Research 42
  53. 53. Chapter 14: Company Profiles Content Deleted Source: Cerebral Business Research State wise status of blocks allotted- Jharkhand Content Deleted State wise status of blocks allotted- Orissa Content Deleted State wise status of blocks allotted- Others Content Deleted www.cerebralbusiness.com © Copyright 2014 by Cerebral Business Research 43

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