Coal [Compatibility Mode]

8/3/2019 Coal [Compatibility Mode]

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Introduction

Formation of Coal

Coal Basics

Types of Coal

Coal Benefication

Coal Mining

Indian coal scenario

Coal pricing

International Coal Scenario

Summary

Coal is areadily combustibleblack or brownish-black sedimentaryrock normallyoccurring in rockstrata inlayers orveinscalled coal beds.

It is composed primarilyof carbon along with

variable quantities ofother elements,chiefly sulphur, hydrogen, oxygenand nitrogen.

Coal is acombustible,sedimentary, organicrock, formed from

vegetation.

Coal is a fossil fuelcreated from theremains of plants thatlived and died about100-400 millionsyears ago.


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Most abundant of fossil fuels.

Worlds largest energy source.

Type of rock composed of organic matter

having been trapped and compressed

underground.

Classified into four varieties.

Constraints to future use.

More environmental concerns.Mmmmmm,

Coal. Doh!

There are four types of coal:

i. Anthracite

ii. Bituminous

iii. Sub-bituminous

iv. Lignite

Anthracite is a type of

coal with the highest

carbon content, between

86 and 98 percent.

Heat value of nearly

15,000 BTUs-per-pound.

Its the highest rank; aharder, glossy, black coal

used primarily for

residential and

commercial space

heating.

Bituminous coal is

dense mineral, black

but sometimes dark

brown, often with

well-defined bands of

bright and dull

material. It is used primarily as

fuel in steam-electric

power generation.

Its properties rangefrom those of lignite to

those of bituminous

coal.

It is used primarily as

fuel for steam-electric

power generation.

Lignite is alsoreferred to as brown

coal, is the lowest

rank of coal and used

almost exclusively as

fuel for electric

power generation.


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It is the cleaning of coal prior

to its use.

It includes sizing, removal of

rock originating from mining

roof, removal of ash and sulfur

minerals, drying to remove

surface moisture and blending

of different coals to achieve

desired physical and chemical

properties.

Crushed coal is put in a liquid media whose specific

gravity is adjusted to separate the lighter coal (low in

ash) from the heavier coal (high in ash).

There are the two basic methods of mining.Open surface miningUnder ground mining

The choice of mining method dependsprimarily on depth of burial and thickness ofthe coal seam.

Seams relatively close to the surface (depthsless than 55 m) are usually surface mined.

Coals that occur at depths of 180 to 300 feet(91 m) are usually deep mined

Surface Mining

Area Mining

Contour Mining

Mountaintop removal mining

Room & Pillar Mining


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Underground Mining

Drift Mining

Slope Mining

Shaft Mining

Most of the coal production in India comes fromopen pit mines contributing over 81% of thetotal production.

Underground mining currently accounts foraround 19% of national output. Most of theproduction is achieved by conventional Boardand Pillar mining methods.

o COAL INDIA LTD( CIL) AND ITS SUBSIDIARIES

o NEYVELI LIGNITE CORPORATION (NLC)

o SINGRAENI COLLIERY COMPANY LIMITED

(SCCL)


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91.69156.15 247.84

30.0322.21 52.24

0%

20%

40%

60%

80%

100%

CIL Other s Total

Extractable Reserves

Total Reserves

As on Geological Resources of Coal

Proved Indicated Inferred Total

1.1.2002 87320 109377 37417 234114

1.1.2003 90085 112613 38050 240748

1.1.2004 91631 116174 37888 245693

1.1.2005 92960 117090 37797 247847

1.1.2006 95866 119769 37666 253301

1.1.2007 97920 118992 38260 255172

1.4.2007 99060 120177 38144 257381

1.4.2008 101829 124216 38490 264535

1.4.2009 105820 123470 37920 267210

- In Million Tonnes (Source Coal India Ltd)

Formation Proved Indicated Inferred Total

GondwanaCoals105343 123380 37414 266137

Tertiary Coals477 90 506 1073

Total

105820 123470 37920 267210

- In Million Tonnes (Source C oal India Ltd)

Type of Coal Proved Indicated Inferred Total

(A) Coking :-

-Prime Coking4614 699 0 5313

-Medium Coking12449 12064 1880 26393

-Semi-Coking482 1003 222 1707

Sub-Total Coking17545 13766 2102 33413

(B) Non-Coking:-87798 109614 35312 232724

(C) Tertiary Coal477 90 506 1073

Grand Total105820 123470 37920 267210

- In Million Tonnes (Source C oal India Ltd)


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Coal Consumption inCoal Consumption inIndiaIndia

The private Indian companies setting up or

operating power projects as well as coal or

lignite mines for captive consumption in such

projects may be allowed foreign equity up to

100% provided that the coal or lignite

produced by them is meant entirely for captiveconsumption in power generation.

100% foreign investment in the equity of anIndian subsidiary of a foreign company or inthe equity of an Indian company for setting upof coal processing plants in India may beallowed subject to the conditions that such anIndian subsidiary or the Indian company(a) shall not do coal mining(b) shall not sell the washed coal or sized coalfrom their Coal Processing Plants in the openmarket and shall supply the washed coal orsized coal from their Coal Processing Plants tothe respective parties sending raw coal to suchCoal Processing Plants for washing or sizing.

The other private Indian companiesengaged in exploration or mining of coal

and lignite for captive consumption for

production of iron and steel and

production of cement may be allowed

foreign equity up to 74%


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Coal Pricing ,at present , is fixed by coal

ministry in consultation with Coal India

Ltd. ( CIL ) & Singareni Collieries

Company ( SCCL ) . The price are

determined on the basis of cost incurred

in Coal Production from different mines.

The expert committee on Integrated

Energy Policy headed by Kirit Parikh, has

recommended setting up of an

independent Coal Regulator to replace

government committees for determine

coal prices for different user industries.

Component Symbol Rs/ tonne

(effective

from 1.4.

1997)

Rs/ tonne

(effective

from

1.4.2001)

Basic Raw coal Price (BP)

+ Crushing Charges (CR)

PR 332

20

431

20

Statutory Charges on Raw Coal (Ro)

=Royalty

+ (SE)= SED

PSr 50

3.50

50

3.50

Add: Adjustment due to Yield Factor (Yc) Extra 83.78 154.97

Total Raw Coal Component Price 489.28 659.47

Washing charges =

+ Wage Revision Adjustment

PW 225.72 268.48

+2.04

Total Price of Washed Coal (P) 715.00 930.00

Functions of Regulators :-

Ensure price revisions.

Suggest measures for Setting Coal prices.

Regulate trading margins.

Ensure that price discovery through e- auctions

is free of distortions.

Ensure coal supply to the power sectors under

commercially driven Long term Fuel Supply &

Transport Agreements ( FSTAs)

Annual prices quoted include the Northwest

Europe marker price, Japan steam and coking

coal import prices, and the US Central

Appalachian coal spot price index.

Coal prices except for the US Central

Appalachian price are calculated as cif prices,

where cif = cost + insurance + freight (average

freight prices). The US Central Appalachian price

is fob = free on board. Prices are quoted in US

dollars per tonne.


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Coal prices take off in recent years (US$/tonne fob)

20

30

40

50

60

70

80

90

100

110

120

130

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

$/tonnefob

Hard CC Thermal - contractT he rm al - S.A fric an s po t S em i- So ftULV PCI

fob (free on board) basis is the price loaded onboard a ship at the portof origin and thusexcludes carriage insurance and freight (cif).

Spot and contract thermal coal prices from Australia and SouthAfrica (US$/tonne fob)

20

25

30

35

40

45

50

55

60

65

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

$/tonnefobAustralia Spot (Asian

Tender)Japan AnnualContract

20

24

2832

36

40

44

48

52

56

60

64

68

72

2001 2002 2003 2004 2005

$/tonnefob

fob RichardsBay

fob Newcastle

Source:Tex Report,GlobalCoal.com,October 2005

Monthly spot South African prices since 1981, with and withoutfreight charge

10

20

30

40

50

60

70

80

90

1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005

$/tonne

fob S.Africa (RBCT)

CIF Rotterdam (incl. freight)

Price gap between domestic Chinese coal prices andimport prices has been closed in 2005

20

30

40

50

60

70

8090

Jan-02

Mar-02

May-02

Jul-02

Sep-02

Nov-02

Jan-03

Mar-03

May-03

Jul-03

Sep-03

Nov-03

Jan-04

Mar-04

May-04

Jul-04

Sep-04

Nov-04

Jan-05

Mar-05

May-05

Jul-05

Sep-05

$/tfob

Aust - cif Japan

China - Datong premiumfob main port

Forecast Japanese thermal contract coal prices in

historical context

20

25

30

35

40

45

50

55

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006f

2008f

2010f

$/tonnefob


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The present system of royalty charging is likelyto change to combined royalty rates ( fixedplus ad valorem ) to balance the aspirations ofthe coal producing states and apprehensions ofthe consumers.This new system of royalty would jack up coalprices by 10 to 15 % taking up the overallroyalty components on coal prices to 15 -20 %level .

To deliver a sustained growth of 8% through

2031, India would, in the very least, need to

grow its primary energy supply by 3 to 4 times

and electricity supply by 5 to 7 times of todays

consumption. By 2031 -32 power generation

capacities would have to increase to 778095MW and annual coal requirement would be

2040 mt.

473.18

629.63

828.16

1078.54

1267.01

0

200

400

600

800

1000

1200

1400

06-07 11-12 16-17 21-22 24-25

Coal Demand (Mill Tes)

Coal Demand (Mill Tes)

365

537 554

756

840

0

100

200

300

400

500

600

700800

900

2006-07

2011-12

2016-17

2021-22

2024-25

Coal Supply Million Tes)


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33 2

30 1

31

50 548 4

21

69 0

60 3

87

0

100

200

300

400

500

600

700

800

Demand Availability Shortage

10th Plan

11th Plan

12 Th Plan

Stepping up domestic coal production by allottingblocks to central and state public sector units andfor captive mines to notified end users

Coal Import needs creation of necessaryinfrastructure. Will also put pressure on domesticcoal industry to be efficient. NTPC has importedabout3 million tes of coal in 2005-06.

Amendment in Coal Mines Act to facilitate (a)private participation in coal mining for purposesother than those specified and (b) offering offuture coal blocks to potential entrepreneurs.

Technology for economic exploitation of coal lyingat greater depths

Pricing

70% of the domestic coal is dedicated to powergeneration.

Fuel cost constitutes about 65% of the total cost ofgeneration

Since the dismantling of APM,coal prices have beentaken for arbitrary escalation with no transparency

The opening of the sector to private players willbring in competition and prices will be determinedby market dynamics

Till such time, a regulatory mechanism needs to beput in place to put a check on arbitrary price hike.

Infrastructural Limitations- Burdened transportation

network - calls for following measures:

Transportation capacity to be increased.

Rationalization of linkages to cut down on

transportation distance and better utilization of

existing infrastructure Cut down on criss-cross rail movement

Coastal stations to be run on imported coal

Environmental Issues :

More emphasis on use of washed coal

Use of clean coal technology like IGCC

Strict implementation of MOEF stipulations

Proper restoration of degraded land due to open

cast mining.


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Recognizing the Vision of Government of India

& that economies of scale leading to cheaper

power can be secured through development of

large size power projects using latest super

critical technologies, Ministry of Power, CEA

and Power Finance Corporation are proposing

to facilitate setting up of Five Ultra Mega power

Project with capacity of 4000 MW each in the

first phase through Tariff based competitive

bidding rout .

The Project will be developed based on theprinciples ofBuild Own and Operate (BOO).It included construction, execution andmaintenance of 4000 MW coal based PowerProject for its life cycle.

It will facilitate setting up of large sizedprojects with economies of scale leading tocheaper power. Utilization of higher efficiencycan be achieved by using Super CriticalTechnology with unit size of 800 MW each (5x800).

Project also includes development of dedicated

coal-mines, thus free from coal availability

risks.

Mining and transportation of coal to the Power

Project itself is a sub-project thus will generate

employment opportunities for the local

population.

International Scenario ofInternational Scenario of

CoalCoal

Coal provides 26.5% of global primary energy

needs and generates 41.5% of the world's

electricity

Total Global Hard Coal Production 5845Mt (2008e)

5442Mt (2007)

3489Mt (1990)

Total Global Brown Coal/Lignite Production 951Mt (2008e)

956Mt (2007)


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Proved reserves at end of 2008Thousand million tonnes (anthracite and bituminous coal shown in brackets)

Proved Coal ReserveProved Coal Reserve -- 20082008

Projected exports to 2010

Queensland ports and rail links

Location of Elk Valley Coal mines and rail and ports ofWest Coast Canada

Location of Xstratas coal mines in South

Africa

PR China2761Mt Indonesia 246Mt

USA 1007Mt South Africa 236Mt

India 490Mt Kazakhstan 104Mt

Australia 325Mt Poland 84Mt

Russia 247Mt Colombia 79Mt

Top Ten Hard Coal ProducersTop Ten Hard Coal Producers Worldwide Coal Production


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ProductionMillion tonnes oil equivalent

ConsumptionMillion tonnes oil equivalent

Coal Production &Coal Production &ConsumptionConsumption -- 20082008

Top Ten Hard Coal ConsumersTop Ten Hard Coal Consumers

CoalCoal As an Energy SupplierAs an Energy Supplier


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SouthAfrica

94% Israel 71% Morocco 57%

Poland 93% Kazakhstan 70% Greece 55%

PR China 81% India 68% USA 49%

Australia 76% Czech Rep 62% Germany 49%

CoalCoal In Electricity GenerationIn Electricity Generation

Export & Import


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Steam Coking Total Trade

1990 299Mt 199Mt 498Mt

2000 421Mt 187Mt 608Mt

2008 676Mt 262Mt 938Mt

International Hard Coal Trade(Source: IEA -www.iea.org)Steam Coal Coking Coal

Atlantic Pacific Atlantic Pacific

1986 74Mt 59Mt 61Mt 81Mt

1996 125Mt 139Mt 70Mt 103Mt

2006 240Mt 330Mt 72Mt 129Mt

Developmentof Seaborne Trade(Source: SSY - www.ssyonline.com)

Projected supply/demand balance in thermal coal

seaborne market to 2010

24

32

2522 22

272623

25

29

26 27

0

510

15

20

25

30

35

2005f 2006f 2007f 2008f 2009f 2010f

m

illiontonnes

Supply

Demand

Total of which Steam Coking

Australia252Mt 115Mt 137Mt

Indonesia 203Mt 173Mt 30Mt

Russia 101Mt 86Mt 15Mt

Colombia 74Mt 74Mt -

USA 74Mt 35Mt 39Mt

South Africa 62Mt 61Mt 1Mt

PR China 47Mt 43Mt 4Mt

Top Coal Exporters (2008)Total of which Steam Coking

Japan 186Mt 128Mt 58Mt

Korea 100Mt 76Mt 24Mt

Chinese Taipei 66Mt 60Mt 6Mt

India 60Mt 31Mt 29Mt

Germany 46Mt 37Mt 9Mt

PR China 46Mt 35Mt 11Mt

UK 44Mt 37Mt 7Mt

Top Coal Importers (2008)


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Indonesia dominates supply growth in recent years to become theworlds largest exporting country in 2005(million tonnes)

0

20

40

60

80

100

120

140

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

milliontonnes

Australia Indonesia South Africa

China Colombia Russia

Source:Coal Information 2004(IEA),McCloskeyCoal,October 2005

Summary of Chinese coal market by end use (million

tonnes)

Chinese Coal Demand 2004

Power

52%Constn/

cement

17%

Others

(heating)

11%Cokel/steel

14%

Chemicals

6%

Chinese coal demand by use

0

200

400

600

800

1000

1200

1400

1600

1800

2000

1995

2000

2001

2002

2003

2004

2005f

2006f

2007f

2008f

2009f

2010f

mt

Power

Construction/cement

Metallurgical/steel

Chemicals

Others (heating,etc)

0

20

40

60

80

100

120

140

160

180

200

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

milliontonnes

Australia Indonesia South Africa

China Colombia Russia

Coal shall remainmainstay for power generation.

Allocation of captive blocks to end users. Allowing private participation

This will also create a competitive environment and which will

enablemarket drivenpricing structure.

Till such time, regulator to be put in place to ensure fair

pricing of coal, proper development of infrastructure &

efficient utilization of resources in the coal sector.

Keeping in view the longer gestation period of coal mines,

faster clearances of coal projects needs to be undertaken so

as to be commensurate with the commissioning of power

plants.

Coal washing and use of clean coal technology to be

promoted.

Transportation network bottlenecks to be reduced by

judiciousrationalization of linkages.

Conclusion & Way Forward


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Coal [Compatibility Mode]