India’s FY19 cement output to rise 6% YoY: ICRA

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India’s FY19 cement output to rise 6% YoY: ICRA

10th july 2018

With a recovery in the affordable and rural housing markets and infrastructure construction picking up, India’s domestic credit rating agency ICRA expects cement production in India to rise by six per cent in FY19.
However, rising input costs will continue to dampen company profits.
Output from India’s cement plants reached 298Mt in FY18, a 6.3 per cent rise when compared with the 280Mt. The main share of this growth took place in the second half of the financial year as key markets registered a higher demand.
ICRA expects 19-22Mta of capacity to be added in FY19, primarily in the eastern part of the country. While lower than in the previous financial year, the capacity growth, when combined with market demand, will result in utilisation levels to remain below 70 per cent over the next two years.
Source: CEMNET

Coal prices have remained strong but are set to decline

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Coal prices have remained strong but are set to decline

10th july 2018

Coal spot prices have been highly volatile in recent years, with an upward trend since recent lows in April 2018, National Australia Bank says in its latest Mineral & Energy outlook.
NAB further said, Hard coking coal prices rose above US$200 a tonne in mid- June (due to port and rail maintenance issues), while thermal coal prices pushed above US$110 a tonne (the highest level since early 2012). Spot prices for thermal coal may become increasingly important – given the breakdown of the traditional Japanese financial year contract mechanism, with Tohoku Electric Power Co pulling out of negotiations with miner Glencore (the two parties who negotiate the agreement).
According to NAB economists, Asia is the key region for seaborne coal demand – with China, India, Japan and South Korea accounting for almost 60% of global imports in 2017. The growth potential of the latter two is somewhat limited longer term (given the mature nature of their economies), while rapidly growing India is increasing its domestic supply, aiming to develop self-sufficiency in coal supply.
China’s coal import trends have been mixed in 2018. NAB noted that, in the first five months, imports of metallurgical coal fell sharply – down 25% to 22.6 million tonnes, while thermal coal imports rose by 20% to 97.4 million tonnes. In a large part the latter reflected a particularly cold winter (boosting demand across January through March) and poor availability of natural gas.
Short term supply issues have impacted coal markets in recent years – particularly hard coking coal exports from Queensland. A dispute between the privately owned rail operator and the Queensland Competition Authority regarding its regulated maximum allowable revenue between 2017 and 2021 could limit the state’s coal exports in coming years – adding some upside risk to our price forecasts, the report says.
Australia’s total coal exports have increased strongly in the first four months of 2018 – albeit this reflects the recovery from Tropical Cyclone Debbie that severely disrupted metallurgical coal exports in April 2017. Thermal coal volumes rose by 0.8% yoy to 64.8 million tonnes, while metallurgical coal exports rose by 13% yoy to 55.6 million tonnes. That said, metallurgical coal exports remain well below the levels recorded in the first four months of 2014 through 2016.
Coal prices are expected to ease from current levels – as a softening China’s steel sector reduces coking coal demand and supply side concerns ease. We expect hard coking coal prices to average US$186 a tonne in 2018, a decrease of almost 15% (reflecting impact of supply shortfalls in 2017). In contrast, average thermal coal prices are forecast to increase by 12% to US$98 a tonne, the report says.
Source: NATIONAL AUSTRALIA BANK

China to cut coal use, curb steel in 2018-2020 pollution plan

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China to cut coal use, curb steel in 2018-2020 pollution plan

10th july 2018

China will cut coal consumption, boost electric vehicle sales and shut more outdated steel and coke capacity in the coming three years, the State Council said in a long-awaited 2018 to 2020 pollution action plan published on Tuesday.
China is in the fifth year of a “war on pollution” aimed at reversing the damage done to the country’s environment since the economy was opened up in 1978, with President Xi Jinping promising to use the full might of the Chinese Communist Party to meet the country’s goals.
The new 2018 to 2020 action plan, released on the country’s official government website, will expand the fight to 82 cities across China, and confirmed that the major coal-producing provinces of Shanxi and Shaanxi have been added to the list of “key” pollution control regions.
The new plan will also cover the heavily industrialised province of Henan in central China, as well as the Yangtze river delta, which includes the provinces of Anhui, Zhejiang, Jiangsu and the region around Shanghai.
The document said the regions of Beijing, Tianjin, Hebei, Shandong and Henan will be required to cut coal consumption by 10 percent over the 2016 to 2020 period, while the Yangtze delta region will have to cut coal use by 5 percent over the period.
It also said no new capacity for steel, coke and primary aluminium production will be allowed in the regions through to 2020, the State Council, or China’s cabinet, said. It will cap steel capacity in Hebei, the country’s largest steelmaking province, at 200 million tonnes by 2020, down from 286 million tonnes in 2013.
China will also take more action to tackle small-scale “scattered” pollution sources, and will work to cut off water, electricity and raw material supplies to firms that violate rules.
To meet its politically important smog targets in northern China last year, the government curbed traffic and coal use, and also imposed “one size fits all” restrictions on industries like steel, aluminium and cement throughout 28 northern cities from October 2017 to March this year.
The cabinet said special anti-smog measures would still be introduced over autumn and winter, but each of the 82 cities would now draw up its own bespoke plan. It also said it would raise gas storage capacity to ensure supplies were sufficient during winter.
The cabinet also set an annual production and sales target for new energy vehicles at around 2 million vehicles a year by 2020 in order to reduce road emissions.
Source: REUTERS

After missing 1st-quarter targets, Coal India is facing criticism yet again

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After missing 1st-quarter targets, Coal India is facing criticism yet again

10th july 2018

After missing its first-quarter targets, Coal India is facing criticism yet again as the country’s power plants continue to reel under coal stock shortage. This is even after the coal monolith stepped up production and sales dramatically on a year-on-year basis.
Company sources suggested that the prevalent 10-day coal stock with the power generators in the country against the 22-day stipulated norm is primarily owing to the hydel power sector missing its targets in the first quarter. In turn, to maintain power generation, there was increased pressure on the thermal power segment. This put serious pressure on Coal India.
During April-June, production in the coal-based power segment stood at 248453.54 million unit (mu), which exceeded the targeted production by 1.63 per cent but the hydro-power generators produced 30,510.24 mu, thereby missing the target by 6.54 per cent.
The Maharatna company produced 136.87 million tonne (mt) of coal during April-June this year, which is an increase of 15.2 per cent as compared to the output of 118.84 mt in the similar months of the last fiscal year. Nevertheless, it missed its output target for the given quarter by nine per cent.
On the other hand, coal supplies to power stations grew by 15.4 per cent at 122.84 mt which helped in bringing down the count of power stations having critical coal stocks from 30 (as on April 1, 2018) to 16 backed by an increase in rake loading.
As per company officials, the coal behemoth loaded 217.04 rakes per day on average to the power sector, during April-June 2018 as against 189.9 rakes loaded during the same period last year. The overall rake loading, comprising despatches to power as well as non-power sectors like steel, cement and others stood at 238.8 rakes a day recorded a growth of 9.1 per cent on a year-on-year basis.
Coal India officials are of the view that the shortage of coal in the power plants can be eased once hydel power production picks up in the country and are optimist on account of a good monsoon forecast.
Given the optimism around the monsoon, when coal stocks are poised to ease, the threat of overburden removal, however, haunts Coal India which is already down by over five per cent. Overburden removal refers to the process of removing the topsoil to expose the coal seams for extraction in an opencast mine.
The process becomes more cumbersome during the monsoons. In case Coal India is not ready with exposed coal seams, it cannot step-up production dramatically like it did in the previous year when shortage from renewable power sources, particularly hydel, suddenly led to a power crisis in the country.
So long, although coal stocks remain dismal in the thermal power plants, the country hasn’t yet faced a crisis.
Furthermore, company officials suggested that law and order problems, particularly in the Mahanadi Coalfields, Eastern Coalfields, Central Coalfields and Bharat Coking Coal mining areas are affecting production.
Sector analysts expect the power demand from coal based generators to increase by around five per cent this fiscal year, which wouldn’t be a problem for Coal India to cater to.
However, sources in the company view the targeted production of 610 mt to be “high” and “aspirational” and are of the view that the production growth registered in the first quarter is good and in line with its growth strategy.
In April this year, the coal ministry had appointed KPMG to conduct a study on coal requirements for 2020. Coal India officials expect that 1 billion tonne of the previously targeted production may not be relevant anymore and a revision of target is likely.
Source: BUSINESS STANDARD

Coal India Q1 production up by 15 percent to 137 million tonne

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Coal India Q1 production up by 15 percent to 137 million tonne

10th july 2018

Coal India Limited said it has registered a 15.2 % growth in coal production during the first quarter ended June 2018 to 136.87 million tonne while supply to power plants also jumped by 15.4 % to 122.84 million tonne. A senior official of Coal India said that “Clearly the focus is on higher coal output and increased supplies and there had been a consistent growth both in coal production and supplies to consumers during all the three months of the first quarter.”
While the offtake was spurred by higher rake loading, the overall coal offtake zoomed to 153.43 million tonne at the end of June, translating into a growth of 11.7 per cent.
Coal supplies to power stations stood at 122.84 million tonne during the quarter.
The number of power stations having critical stock has come down from 30 in April to 16 as on June-end, the company said.
The Company said that “Our aim is to shore up coal stocks at thermal power plants to the normative stock of 22 days requirement and see that the coal-fired power plants do not suffer for want of coal. We have also requested the thermal power plants to perk up their coal stocks, the official said.
Power sector accounted for 80 % of coal supplies during the period.
Coal India has been working with the Coal and Railways ministries for enhanced rake loading of 217.04 rakes per day on an average to the power sector during the first quarter of FY’19 against 189.9 rakes in the same period last year, registering a growth of 14.9 %.
The company produced 44.88 million tonne in June 2018, reflecting an increase of 5.20 million tonne in absolute terms over corresponding month of last year.
The company liquidated 16.56 MT of its pit head coal stock during the first three months of the current fiscal.
Source: THE ECONOMIC TIMES

Coal India asks thermal plants not to limit intake to avert future crisis

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Coal India asks thermal plants not to limit intake to avert future crisis

10th july 2018

State-owned Coal India said it has asked power plants not to restrict intake of coal during monsoon when electricity demand drops usually. “Coal India (CIL) has urged power stations not to restrict intake of coal during monsoon period when power generation demand drops, but to use this period as an opportunity to build stocks to cope up with subsequent increase in generation demand,” the company said in a statement.
Most of thermal power stations faced crisis situation last year as they had chosen to restrict intake of coal due to subdued power generation demand during 2016-17 and started consuming the inventory to cope with the spurt in demand for power in 2017-18.
“The situation could have been averted had they realised inherent logistics constraints for rushing coal to power plants widely dispersed across the country at short notices and maintained safe stocks as per the norms prescribed by CEA,” it said.
Coal India and Indian Railways are working in synergy to help ensure that power plants have enough coal.
An action plan has been drawn to prioritise coal supplies to power stations lest they turn critical due to non-availability of coal.
“Outcome of the coordinated efforts of CIL and Railways gets reflected in CEA report which indicates reduction in the number of critical power stations from 30 as on April 1, 2018 to 13 on July 2, 2018,” it said.
Growth in despatch of coal to power sector has helped coal based generation to achieve positive growth of 5.6 per cent during the first quarter of 2018-19 thereby offsetting the negative growth in generation from other sources.
CIL despatched 122.84 million tonnes (MT) of coal to the power sector during the first quarter as compared to despatch of 106.46 MT in same period last fiscal.
The coal requirement as indicated by power ministry is 1.41 million tonnes per day.
However, CIL despatched 1.35 Million tonnes of coal per day during April-June 2018.
Bot power and coal ministries have taken initiatives to convince the power producers in the vicinity of the coalfields to lift more coal by road and captive modes of transportation, so that the railway rakes presently in use for these power stations can be utilised for the long distance power stations.
Source: PTI

Coal India may offer 30 million tonnes of thermal and coking coal for non-power sector

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Coal India may offer 30 million tonnes of thermal and coking coal for non-power sector

10th july 2018

Coal India plans to offer a mix of 30 million tonnes of thermal and coking coal at its recently announced fourth tranche of long-term supply contract for the non-power sector.
In the auction, the offer price for the coal would be the notified price for the non-power sector. Notified price for non-power is almost 20% higher than price fixed for the power sector.
“Auctions would be held in phases where each phase would be meant for a specific industry and the first one would be for sponge iron sector where around 7 million tonnes of coal is on offer by seven Coal India subsidiaries” said a senior Coal India executive.
This would be followed by offers for other sectors like cement, steel and captive power plants. According to a senior Coal India executive, 25 million tonnes of thermal coal would be on offer under the auction while the rest at 5 million tonnes would be coking coal for metallurgical uses.
According to a preliminary plan, South Eastern Coalfields will offer 9 million tonnes of coal; Central Coalfields, 6.11 million tonnes and Northern Coalfields 6.3 million tonnes. Mahanadi Coalfields plans to offer 5.2 million tonnes while Western Coalfields would be offering 3.5 million tonnes. Bharat Coking Coal and Eastern Coalfields would be offering 0.5 million tonnes and 0.55 million tonnes respectively.
This is part of the government’s plan to replace all existing fuel supply agreements allotted on nomination basis to the non-power sector with supply contracts decided through e-auctions. The government will not renew existing agreements although they will not be prematurely terminated.
“If a fuel supply agreement expires before announcement of long-term supply contract auction, Coal India will not renew it but will continue to supply coal till a fresh round of auction is announced. They would be eligible for bidding for the exact amount of coal they have been receiving through their recently expired fuel supply agreement. They would have to participate in the auctions meant for the non-power sector in which they belong,” a senior Coal India executive said.
This auction is likely to be followed by an auction for the power sector. This would be power companies that do not have coal supply agreement and power purchase agreement. The auction would be on the basis of highest bid like in the case of non-power sectors.
Source: THE ECONOMIC TIMES

Coal-fired power plants set to get renewed push

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Coal-fired power plants set to get renewed push

10th july 2018

Coal-fired power plants, often regarded as polluting relics in an era of clean energy, are making a comeback in the government’s thinking as an official study says the rapid growth in solar projects needs to be matched with new investment in steady, 24×7 electricity supply from thermal projects.
A study carried out by the power ministry to determine the right solar-coal mix shows that India’s plan to produce 55% energy from renewable sources by 2030 is overambitious. India would need 850 GW of capacity by 2030, of which solar plants, with storage facility, should not be more than 350 GW. Of around 500 GW estimated capacity addition for renewables, 140 GW will come from wind projects, senior officials aware of the development told ET. Coal, however, will be low at almost the present levels which is a concern.
“The worrying fact is that there is no fresh proposal to set up coal-based capacity for base load,” a government official said. Coal-based plants have a long gestation period of about five years against 18-24 months in case of solar. The country has not seen any major fresh coal based power plant proposal in the last few years but the government’s view until recently was that thermal plants had enough spare capacity that can be utilised when demand rises.
The official said solar energy supply is seasonal and good to meet daytime demand. “But to meet the peak evening demand and the manage supply in months when wind, solar and hydro generation is less, the study showed we will need fresh coal-based capacity,” he said. Analysts agree. As renewable energy is not firm in nature, demand from renewable energy has to be viewed in the context of balancing the grid and providing reliable 24×7 power to consumers, said Vinay Rustagi, managing director at Bridge to India.
“Fifty five percent renewable energy penetration is an extremely ambitious target. Anything close to or in excess of 30% renewable energy penetration requires huge effort in expanding the grid or making it resilient as well as in comprehensive redesign of the regulatory framework. We feel the grid integration issues for RE are being ignored in this rush for new capacity addition. This can lead to grid curtailment (as high as 40% in China and some other countries) and the government needs to be extremely careful in planning renewable energy capacity addition,” he said.
Currently, India has 196-GW coal capacity and about 50 Gw of hydro and nuclear plants. About 51Gw thermal plants are stranded or stressed because of non-availability of fuel, lack of PPAs or under-recovery. While another 23 Gw of under-construction projects are likely to be online in the coming five years. R K Singh, minister for power and renewable energy, on Monday said the share of renewables in India’s installed capacity is set to increase to around 55% by 2030.
India had committed in the Paris convention to shift 40% of its electricity generation capacity to green energy by 2030. It is expected to achieve the target by 2022-23. Besides 227 Gw estimated renewable energy generation by 2022, the renewable energy ministry has prepared a trajectory to tender renewable energy projects—30 Gw of solar and 10 Gw of wind each year till 2028.
Analysts agree. As renewable energy is not firm in nature, demand from renewable energy has to be viewed in the context of balancing the grid and providing reliable 24×7 power to consumers, said Vinay Rustagi, managing director at Bridge to India. Having seen the consequences of mismatch due to explosive growth of thermal in the last decade, we cannot afford another mismatch, said Association of Power Producers director general Ashok Khurana said.
“Looking at the quantum of under-utilised/idling and under construction thermal capacity in system, we need to recalibrate our renewable capacity addition programme pace on grounds of absorption capacity of base/peak power, impact on financial health of distribution utilities and power transmission capability up to last mile,” he said.
Kameswara Rao, leader-energy and utilities at PwC India said, “Not only new base-load capacity is needed, but as the mix shifts to renewable energy, we need to invest in flexible generation such as gas and pumped storage hydro to manage variability. In a sense, the power system needs a balanced diet and skimping on any of these can be expensive.”
The mandatory renewables purchase obligations on states, transmission and duty exemptions, the companies have shifted focus to renewable energy but consumers may have to shell a higher price. “The tariffs of renewable energy projects with storage cannot match that of coal plants close to coal source,” an expert said on condition of anonymity. “The power distribution companies and consumers will have to bear the cost.”
Source: THE ECONOMIC TIMES

Australia govt sees more iron ore price pain

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Australia govt sees more iron ore price pain

10th july 2018

The iron ore price continued to retreat on Monday on worries about a slowdown in top consumer China and as trade war fears continue to weigh on the industry.
The CFR 62% Fe benchmark import price at the port of Qingdao tracked by Metal Bulletin declined to $64.45 a tonne, down 11.6% year to date, but well off lows in the $50s hit during last summer in the northern hemisphere.
According to the latest quarterly report from Australia’s Department of Industry more pain is to come.
The official forecaster of the world’s top exporting country sharply cut its price estimate for 2020: iron ore prices would average $51 a tonne as a result of a forecast decline in steel production and prices in China and a well-supplied seaborne market.
A seasonal rebound in construction activity in China’s spring will shore up prices to average $59.40 a tonne this year according to the report.
The price used by the Bureau of Resources and Energy Economics is free-on-board Australia so for comparison add between $6 – $10 for cost and freight.
China’s overall iron ore imports is predicted to slow by 0.6% per year to 1.07 billion tonnes in 2020 (the same as actual total last year).
The research points to a structural shift has taken place in the trade of the steelmaking raw material, the top global commodity trade after crude oil as spreads between grades widen significantly:
The price difference between premium and lower grade ores reached a historic high in April, driven by high steel margins which incentivise Chinese steel makers to use higher grade iron ore.
The price spread is expected to narrow as steel production ramps up in China over the next few months, weighing on steel prices and profit margins and reducing incentives to purchase (more expensive) higher grade ores.
Nevertheless, with an expected ongoing government push to improve air quality through increasingly stringent air pollution policies, the spread is not expected to return to historical levels.
According to the report Australia’s iron ore export volumes are forecast to increase from 846 million tonnes in 2017–18, to 887 million tonnes in 2019–20, driven by the ramp up in production by Australia’s largest producers.
The value of Australia’s iron ore exports is forecast to decrease from $62 billion in 2017–18 to $55 billion in 2019–20, driven by lower prices offsetting growth in export volumes.
In June, BHP approved construction of a $4.2 billion iron ore mine with capacity of 80m tonnes per year while Rio Tinto announced construction of its Koodaideri iron ore mine will commence in 2019 sparking talk of a new boom time in the Pilbara region of West Australia.
Source: MINING.COM

CMDC looking for mine operator for Aridongri iron ore field

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CMDC looking for mine operator for Aridongri iron ore field

10th july 2018

The Chhattisgarh Mineral Development Corporation (CMDC) has invited bids from prospective operators for excavation, magnetic separation, crushing, screening, transportation and delivery of iron ore at Aridongri Iron Ore Mine in Kanker district of Bastar, officials informed.
The iron ore deposit of Aridongri hills of District Kanker lies in the southern part of the Rajhara iron ore deposit.
The State Government’s Mineral Resources Department vide letter dated November 10, 2015 had issued Letter of Intent (LoI) for granting Mining Lease (ML) in favour of CMDC over an area of 166.800 hectares in the compartment number 608 of Bhanupratappur Forest range under the Bhanupratappur East Forest Division.
Forest Clearance as well as Environment Clearance has been received from the Union Ministry of Environment, Forest and Climate Change for the mining operations, officials informed.
CMDC intends to sell iron ore produced from the proposed Aridongri mine to steel/sponge iron units at Bhilai, Raipur and Raigarh on priority basis, officials informed.
Efforts are being made to increase the production so that sufficient quantity of iron ore is available for export after meeting the requirements of the expanding home market. Export of iron ore is necessary for earning the much needed foreign exchange, they informed.
The mining at Aridongri will be carried out by open cast mechanized method. The project area is located near Kachhe village on Dallirajhara-Bhanupratappur road.
The Chhattisgarh Government has targeted to carry out survey and mapping for 1,000 square kms of State’s area during 2015-16 for geological exploration during the 12th five year plan ( 2012-17).
The minerals being explored as Bauxite, Limestone, Iron ore, Coal, Dolomite, Manganese and Granite, officials stated.
Source: THE PIONEER