35778891 Final Coal Report

8/4/2019 35778891 Final Coal Report

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REPORT ON COAL

SUBMITTED BY:-ABHAY AGARWAL

MBA E.T (II SEM.)R590209002


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TABLE OF CONTENTS:-

1. Executive Summary

2. Coal Mining In India: the Past

3. Coal choice for Indian Energy

4. Coal Reserves in India5. Inventory of Coal Resources of India

6. Types of Coal & Challenges

7. Uses of coal

8. Coal Production in India

9. List of Countries by Coal Production

10.Demand & Supply

11.Current State & Forecast of Coal Demand

12.Changes in Coal Consumption by Sectors

Coal Consumption in Electricity

Coal Consumption in Iron & Steel Sector

Coal Consumption in Cement Industry

13.Forecast on Coal Demand

By Planning Commission

By Ministry Of Coal

14.Coal Distribution & Marketing

15.Import Of Coal

16.Major Coal Importers

17.Major Coal Exporters

18.Foreign Colloboration19.Coal Consumer Councils

20.Environmental Effects

21.Economic Aspects

22.Functions Of Ministry Of Coal

23.Public Sector Companies

24.Coal As A Trading Commodity

25.Coal Trading Basics

Introduction

Background

Price Volatility

Brokers

Standardized Contracts

Trading Instruments

Benefits Of Trading

Pragnosis Of Coal


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26.Coal Trading Association

27.Coal Value Chain

28.Coal Prices in 2010

29.SWOT Analysis

30.Cost Benefit Analysis

31.Challenges Of Coal Industry

32.Conclusion


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EXECUTIVE SUMMARY:-

Electricity production in India is projected to expand dramatically in the near term to

energize new industrial development, while also easing the energy shortages throughoutthe country. Much of the new growth in electricity production will be fueled by domestic

coal resources; however, there is worldwide concern about increased coal use, as greater

carbon dioxide (CO2) emissions from coal combustion will exacerbate climate change.

At the same time, there are now a number of different existing and emerging

technological options for coal conversion and greenhouse gas (GHG) reduction

worldwide that could potentially be useful for the Indian coal-power sector. This paper,

part of a series of Pew Center White Papers exploring strategies for reducing CO2

emissions from coal-powered electricity, reviews coal utilization in India and examines

current and emerging coal power technologies with near- and long-term potential for

reducing greenhouse gas emissions from coal power generation.

According to the Ministry of Coal, India is currently the third largest producer of coal in

the world, with a production of about 407 million tons (MT) of hard coal and 30 MT of

lignite in 200506. India has significant coal resources, but there is considerable

uncertainty about the coal reserve estimates for the country. Without improvements in

coal technology and economics, the existing power plants and the new plants added in the

next 1015 years could consume most of Indias extractable coal over the course of the

plants estimated 40- to 50-year lifespans. Indian coal demand, driven primarily by the

coal power sector, already has been outstripping supply; over the past few years, many

power plants have restricted generation or have partially shut down because of coal

supply shortages. Hence, heavy investments in the coal sector, particularly in

underground mining, will be needed to increase the pace of domestic coal production.

Coal imports are also projected to increase significantly over the next 20 to 25 years, withimportant implications for the Indian coal industry, as well as for the national and

financial security of the country.

The demand for coal in Indias power plants has rapidly increased since the 1970s, with

power plants in 200506 absorbing about 80% of the coal produced in the country. Other


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key coal consumers are the steel and cement industries. A large fraction of Indias coal is

transported using railways, and the future development of coal is linked to greater

investments in coal transport infrastructure. The demand for coal in India is expected to

increase rapidly in the future, dominated mainly by the power sector. It is projected that

about 47 gigawatts (GW) of new coal-based power plants will be installed during the

20072012 period; total consumption of coal in the power sector is expected to be about

550 MT by 2012. Nearly all Indian coal power plants rely on one technology for

converting coal to electricity: steam-based subcritical pulverized coal (PC). While the

unit size and efficiency of Indian coal power plants have improved over the years, the

basic technology has remained the same for nearly three decades. Bharat Heavy

Electricals Limited (BHEL) is the main manufacturer of power plants in India; the

companys technology is used in about 70% of power plant units, accounting for more

than 50 GW of installed coal-based capacity in the country. The current standard is the

BHEL 500 MW subcritical PC unit with assisted circulation boilers and turbo-driven

boiler-feed-pumps. Currently, more than 25 of these units are in operation with an

average designed gross-efficiency of 38% and net operating efficiency of 33%. Although

the efficiency of coal-based power plants in India has improved in recent years, the

average net efficiency of the entire fleet of coal power plants in the country is only 29%.

The poor efficiency in India is blamed on a variety of technical and institutional factors

such as poor quality of coal, bad grid conditions, low plant load factor (PLF), degradation

due to age, lack of proper operation and maintenance at power plants, ineffective

regulations, and lack of incentives for efficiency improvements. Studies have indicated

that there is ample scope to improve the efficiency of existing power plants by at least 1

2 percentage points.

Key environmental concerns in the coal-power sector in India include air pollution

(primarily from flue gas emissions of particulates, sulfur oxides, nitrous oxides, and other

hazardous chemicals); water pollution; and degradation of land used for fly ash storage.

Furthermore, the poor quality of Indian coal, with its high ash content and low calorific

values, has led to increased particulate pollution and ash disposal problems.

Regulations that limit pollution from power plants are focused mainly on particulate

matter emissions and ambient air quality standards for sulfur oxides (SOx) and nitrogen


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oxides (NOx), although the enforcement of these regulations has been weak. The demand

for electricity is so great that plants that violate the norms are not shut down, despite legal

obligations to do so. With the projected increase in installed capacity, a key challenge for

the government is to effectively enforce and tighten its existing regulations.

Indias CO2 emissions have been increasing at an average annual rate of 5.5% from 1990

to 2000, with coal accounting for about 70% of total fossil-fuel emissions. Although

India is now the fourth largest emitter of CO2 emissions worldwide, its total emissions

are still about one-fifth and one-third of emissions from the United States and China,

respectively; measured on a per capita basis, Indias carbon emissions are almost one-

twentieth those of the U.S. and less than half those of China. Options to reduce CO2

emissions from coalbased power plants include: a) increasing efficiency of energy

conversion by increasing the efficiency of existing power plants and switching to new,

higher-efficiency technologies; b) using less carbon-intensive fuels or mixtures of fuels

(such as coal-biomass mixtures); and c) capturing and storing CO2 from power plants.

Many advanced power-generation technologies are under consideration for the Indian

power sector, including supercritical PC, circulating fluidized-bed combustion, and

integrated gasification combined cycle (IGCC).

There is already one plant based on supercritical PC technology under construction in

India, and many more are being planned, although a large fraction of the new plants

continue to be based on subcritical PC technology. Gasification of Indian coal is not

practical with standard entrained flow gasifiers because of the high ash content and high

ash-fusion temperature of most Indian coals. Consequently, the less advanced fluidized-

bed gasifier technology is being considered for use with Indian coal.

Carbon capture with amine scrubbers in Indian power plants would require low pollutant

levels in flue gas in order to be technologically and economically viable, as pollutants

would bind with the amine and reduce its absorptive capacity. Carbon capture using

scrubbers also would result in lower capacity and efficiency, and high generation costs.

As a result, India would need higher-efficiency power plants as a precursor to any

possible retrofitting for carbon capture. There is, however, plenty of projected geological

storage capacity, although detailed geological assessments of specific storage sites needs


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to be done. Early demonstration of storage also could be combined with CO2-based

enhanced oil and gas recovery.

Finally, it is far from clear what the appropriate technology choices might be for India, as

all of the current and emerging technologies worldwide have their strengths and

limitations. Therefore, it is critical not only to consider and implement technologies that

meet the near-term needs of the country but also to set the coal-based power sector on a

path that would allow it to better respond to future challenges, including the challenge of

reducing GHG emissions. It will be necessary for India to undertake a systematic analysis

of the various technical options best suited to the countrys unique characteristics, and an

analysis of the best approaches for deployment.


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COAL MINING

IN

INDIA: THE PAST


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COAL MINING IN INDIA: THE PAST

India has a long history of commercial coal mining covering nearly 220 years

starting from 1774 by M/s Sumner and Heatly of East India Company in the

Raniganj Coalfield along the Western bank of river Damodar. However, for about

a century the growth of Indian coal mining remained sluggish for want of demand

but the introduction of steam locomotives in 1853 gave a fillip to it. Within a short

span, production rose to an annual average of 1 million tonne (mt) and India

could produce 6.12 mts. per year by 1900 and 18 mts per year by 1920. The

production got a sudden boost from the First World War but went through a

slump in the early thirties. The production reached a level of 29 mts. by 1942 and

30 mts. by 1946.

With the advent of Independence, the country embarked upon the 5-year

development plans. At the beginning of the 1st Plan, annual production went upto

33 mts. During the 1st Plan period itself, the need for increasing coal production

efficiently by systematic and scientific development of the coal industry was

being felt. Setting up of the National Coal Development Corporation (NCDC), a

Government of India Undertaking in 1956 with the collieries owned by the

railways as its nucleus was the first major step towards planned development of

Indian Coal Industry. Along with the Singareni Collieries Company Ltd. (SCCL)

which was already in operation since 1945 and which became a Government

company under the control of Government of Andhra Pradesh in 1956, India thus

had two Government coal companies in the fifties. SCCL is now a joint

undertaking of Government of Andhra Pradesh and Government of India sharing

its equity in 51:49 ratio.


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NATIONALISATION

OF

COAL MINES


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Nationalisation of Coal Mines

Right from its genesis, the commercial coal mining in modern times in India has

been dictated by the needs of the domestic consumption. On account of the

growing needs of the steel industry, a thrust had to be given on systematic

exploitation of coking coal reserves in Jharia Coalfield. Adequate capital

investment to meet the burgeoning energy needs of the country was not

forthcoming from the private coal mine owners. Unscientific mining practices

adopted by some of them and poor working conditions of labour in some of the

private coal mines became matters of concern for the Government. On account

of these reasons, the Central Government took a decision to nationalise theprivate coal mines. The nationalisation was done in two phases, the first with the

coking coal mines in 1971-72 and then with the non-coking coal mines in 1973.

In October, 1971, the Coking Coal Mines (Emergency Provisions) Act, 1971

provided for taking over in public interest of the management of coking coal

mines and coke oven plants pending nationalisation. Another enactment, namely

the Coal Mines (Taking Over of Management) Act, 1973, extended the right of

the Government of India to take over the management of the coking and non-

coking coal mines in seven States including the coking coal mines taken over in

1971. This was followed by the nationalisation of all these mines on 1.5.1973

with the enactment of the Coal Mines (Nationalisation) Act, 1973 which now is

the piece of Central legislation determining the eligibility of coal mining in India.


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COAL CHOICE

FOR

INDIAN ENERGY


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COAL CHOICE FOR INDIAN ENERGY:-

COAL is the most important and abundant fossil fuel in India. It accounts for 55% of the

country's energy need. The country's industrial heritage was built upon indigenous coal.

Commercial primary energy consumption in India has grown by about 700% in the last

four decades. The current per capita commercial primary energy consumption in India is

about 350 kgoe/year which is well below that of developed countries. Driven by the

rising population, expanding economy and a quest for improved quality of life, energy

usage in India is expected to rise around 450 kgoe/year in 2010. Considering the limited

reserve potentiality of petroleum & natural gas, eco-conservation restriction on hydel

project and geo-political perception of nuclear power, coal will continue to occupy

centre-stage of India 's energy scenario.

With hard coal reserves around 246 billion tonnes, of which 92 billion tonnes are proven,

Indian coal offers a unique ecofriendly fuel source to domestic energy market for the next

century and beyond. Hard coal deposit spread over 27 major coalfields, are mainly

confined to eastern and south central parts of the the country. The lignite reserves stand at

a level around 36 billion tonnes, of which 90 % occur in the southern State of Tamil

Nadu.


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COAL

RESERVESIN INDIA


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Coal Reserves In India:-

India has some of the largest reserves of coal in the world (approx. 267 billion tonnes).

The energy derived from coal in India is about twice that of energy derived from oil,

whereas worldwide, energy derived from coal is about 30% less than energy derived from

oil.

The top producing states are:

Orissa - Talcher in Anugul district

Chattisgarh

Jharkhand

Other notable coal-mining areas include:

Singareni collieries in Khammam district, Andhra Pradesh

Jharia mines in Dhanbad district, Jharkhand

Orissa

Chandrapur district, Maharashtra

Raniganj in Bardhaman district, West Bengal

Neyveli lignite mines in Cuddalore district, Tamil Nadu
http://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Orissahttp://en.wikipedia.org/wiki/Talcherhttp://en.wikipedia.org/wiki/Anugul_districthttp://en.wikipedia.org/wiki/Chattisgarhhttp://en.wikipedia.org/wiki/Jharkhandhttp://en.wikipedia.org/wiki/Singarenihttp://en.wikipedia.org/wiki/Khammam_districthttp://en.wikipedia.org/wiki/Andhra_Pradeshhttp://en.wikipedia.org/wiki/Jhariahttp://en.wikipedia.org/wiki/Dhanbad_districthttp://en.wikipedia.org/wiki/Jharkhandhttp://en.wikipedia.org/wiki/Orissahttp://en.wikipedia.org/wiki/Chandrapur_districthttp://en.wikipedia.org/wiki/Maharashtrahttp://en.wikipedia.org/wiki/Raniganjhttp://en.wikipedia.org/wiki/Bardhaman_districthttp://en.wikipedia.org/wiki/West_Bengalhttp://en.wikipedia.org/wiki/Neyvelihttp://en.wikipedia.org/wiki/Cuddalore_districthttp://en.wikipedia.org/wiki/Tamil_Naduhttp://en.wikipedia.org/wiki/Tamil_Naduhttp://en.wikipedia.org/wiki/Cuddalore_districthttp://en.wikipedia.org/wiki/Neyvelihttp://en.wikipedia.org/wiki/West_Bengalhttp://en.wikipedia.org/wiki/Bardhaman_districthttp://en.wikipedia.org/wiki/Raniganjhttp://en.wikipedia.org/wiki/Maharashtrahttp://en.wikipedia.org/wiki/Chandrapur_districthttp://en.wikipedia.org/wiki/Orissahttp://en.wikipedia.org/wiki/Jharkhandhttp://en.wikipedia.org/wiki/Dhanbad_districthttp://en.wikipedia.org/wiki/Jhariahttp://en.wikipedia.org/wiki/Andhra_Pradeshhttp://en.wikipedia.org/wiki/Khammam_districthttp://en.wikipedia.org/wiki/Singarenihttp://en.wikipedia.org/wiki/Jharkhandhttp://en.wikipedia.org/wiki/Chattisgarhhttp://en.wikipedia.org/wiki/Anugul_districthttp://en.wikipedia.org/wiki/Talcherhttp://en.wikipedia.org/wiki/Orissahttp://en.wikipedia.org/wiki/India


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Coal Reserves In India Through Map :-
http://en.wikipedia.org/wiki/Tamil_Nadu


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INVENTORY OF COAL RESOURCES OF INDIA

As a result of exploration carried out up to the depth of 1200m by the GSI, CMPDIand MECL etc, a cumulative total of 267.21 Billion tonnes of Geological Resources

of Coal have so far been estimated in the country as on 1.4.2009. The state-wise

distribution of coal resources and its categorisation are as follows:

(in Million Tonnes)

State Geological Resources of Coal

Proved Indicated Inferred Total

Andhra Pradesh 9194 6748 2985 18927

Arunachal Pradesh 31 40 19 90

Assam 348 36 3 387

Bihar 0 0 160 160

Chhattisgarh 10910 29192 4381 44483

Jharkhand 39480 30894 6338 76712

Madhya Pradesh 8041 10295 2645 20981Maharashtra 5255 2907 1992 10154

Meghalaya 89 17 471 577

Nagaland 9 0 13 22

Orissa 19944 31484 13799 65227

Sikkim 0 58 43 101

Uttar Pradesh 866 196 0 1062

West Bengal 11653 11603 5071 28327Total 105820 123470 37920 267210

Categorisation of Resources:

The coal resources of India are available in sedimentary rocks of older Gondwana
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Formations of peninsular India and younger Tertiary formations of north-eastern/

northern hilly region. Based on the results of Regional/ Promotional Exploration,

where the boreholes are normally placed 1-2 Km apart, the resources are classified

into Indicated or Inferred category. Subsequent Detailed Exploration in selected

blocks, where boreholes are less than 400 meters apart, upgrades the resources into

more reliable Proved category. The Formation-wise and Category-wise coal

resources of India as on 1.4.2009 are given below:

(in Million Tonnes)

Formation Proved Indicated Inferred Total

Gondwana Coals 105343 123380 37414 266137

Tertiary Coals 477 90 506* 1073

Total 105820 123470 37920* 267210

* Includes 456 Mt of Inferred resources established through mapping in NE region.

The Type and Category-wise coal resources of India as on 1.4.2010 are given in

table below:

(in Million Tonnes)

Type of Coal Proved Indicated Inferred Total

(A) Coking :-

-Prime Coking 4614 699 0 5313

-Medium Coking 12449 12064 1880 26393

-Semi-Coking 482 1003 222 1707

Sub-Total Coking 17545 13766 2102 33413(B) Non-Coking:- 87798 109614 35312 232724

(C) Tertiary Coal 477 90 506 1073

Grand Total 105820 123470 37920 267210
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Status of Coal Resources in India during Last Five Years:

As a result of Regional, Promotional and Detailed Exploration by GSI, CMPDI and

SCCL etc, the estimation of coal resources of India has reached to 267.21 Bt. The

estimates of coal resources in the country during last 5 years are given below:

(in Million Tonnes)

As on Geological Resources of Coal

Proved Indicated Inferred Total

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
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Types of Coal

&Characteristics
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Types of Coal & Characteristics:-

As geological processes apply pressure to dead biotic material over time, under

suitable conditions it is transformed successively into following types:-

Peat,considered to be a precursor of coal, has industrial importance as a fuel in

some regions, for example, Ireland and Finland. In its dehydrated form, peat is a

highly effective absorbent for fuel and oil spills on land and water

Lignite, also referred to as brown coal, is the lowest rank of coal and used almost

exclusively as fuel for electric power generation. Jet is a compact form of lignite

that is sometimes polished and has been used as an ornamental stone since the

Iron Age Sub-bituminous coal, whose properties range from those of lignite to those of

bituminous coal are used primarily as fuel for steam-electric power generation.

Additionally, it is an important source of light aromatic hydrocarbons for the

chemical synthesis industry.

Bituminous coal, dense mineral, black but sometimes dark brown, often with

well-defined bands of bright and dull material, used primarily as fuel in steam-

electric power generation, with substantial quantities also used for heat and power

applications in manufacturing and to make coke

Steam coalis a grade between bituminous coal and anthracite, once widely used

as a fuel for steam locomotives. In this specialized use it is sometimes known as

sea-coal in the U.S.[2]Small steam coal (dry small steam nuts or DSSN) was used

as a fuel for domestic water heating

Anthracite, the highest rank; a harder, glossy, black coal used primarily for

residential and commercial space heating. It may be divided further into

metamorphically altered bituminous coal andpetrified oil, as from the deposits in

Pennsylvania

Graphite, technically the highest rank, but difficult to ignite and is not so

commonly used as fuel: it is mostly used in pencils and, when powdered, as a

lubricant.
http://en.wikipedia.org/wiki/Tamil_Naduhttp://en.wikipedia.org/wiki/Tamil_Naduhttp://en.wikipedia.org/wiki/Pressurehttp://en.wikipedia.org/wiki/Biotic_materialhttp://en.wikipedia.org/wiki/Peathttp://en.wikipedia.org/wiki/Precursorhttp://en.wikipedia.org/wiki/Lignitehttp://en.wikipedia.org/wiki/Jet_%28lignite%29http://en.wikipedia.org/wiki/Iron_Agehttp://en.wikipedia.org/wiki/Sub-bituminous_coalhttp://en.wikipedia.org/wiki/Sub-bituminous_coalhttp://en.wikipedia.org/wiki/Aromatic_hydrocarbonhttp://en.wikipedia.org/wiki/Chemical_synthesishttp://en.wikipedia.org/wiki/Bituminous_coalhttp://en.wikipedia.org/wiki/Coke_%28fuel%29http://en.wikipedia.org/wiki/Steam_locomotivehttp://e/Abhinav/coal%201/Coal.htm%23cite_note-1http://e/Abhinav/coal%201/Coal.htm%23cite_note-1http://e/Abhinav/coal%201/Coal.htm%23cite_note-1http://en.wikipedia.org/wiki/Water_heatinghttp://en.wikipedia.org/wiki/Anthracitehttp://en.wikipedia.org/wiki/Anthracitehttp://en.wikipedia.org/wiki/Space_heatinghttp://en.wikipedia.org/wiki/Graphitehttp://en.wikipedia.org/wiki/Graphitehttp://en.wikipedia.org/wiki/Lubricanthttp://en.wikipedia.org/wiki/Lubricanthttp://en.wikipedia.org/wiki/Graphitehttp://en.wikipedia.org/wiki/Space_heatinghttp://en.wikipedia.org/wiki/Anthracitehttp://en.wikipedia.org/wiki/Water_heatinghttp://e/Abhinav/coal%201/Coal.htm%23cite_note-1http://en.wikipedia.org/wiki/Steam_locomotivehttp://en.wikipedia.org/wiki/Coke_%28fuel%29http://en.wikipedia.org/wiki/Bituminous_coalhttp://en.wikipedia.org/wiki/Chemical_synthesishttp://en.wikipedia.org/wiki/Aromatic_hydrocarbonhttp://en.wikipedia.org/wiki/Sub-bituminous_coalhttp://en.wikipedia.org/wiki/Iron_Agehttp://en.wikipedia.org/wiki/Jet_%28lignite%29http://en.wikipedia.org/wiki/Lignitehttp://en.wikipedia.org/wiki/Precursorhttp://en.wikipedia.org/wiki/Peathttp://en.wikipedia.org/wiki/Biotic_materialhttp://en.wikipedia.org/wiki/Pressure


22/99

The classification of coal is generally based on the content of volatiles. However, the

exact classification varies between countries. According to the German

classification, coal is classified as follows:

Name Volatile % Carbon

%

Hydrogen

%

Oxygen

%

Heat

content

kJ/kg

Braunkohle

(Lignite)

45-65 60-75 6.0-5.8 34-17 9.8


23/99

Uses

Of

Coal


24/99

Uses Of Coal:-

For many centuries, coal was burned in small stoves to produce heat in homes and

factories. Today, the most important use of coal, both directly and indirectly, is still as a

fuel. The largest single consumer of coal as a fuel is the electrical power industry. The

combustion of coal in power generating plants is used to make steam which, in turn,

operates turbines and generators. For a period of more than 40 years, beginning in 1940,

the amount of coal used in the United States for this purpose doubled in every decade.

Coal is no longer widely used to heat homes and buildings, as was the case a half century

ago, but it is still used inindustriessuch aspaperproduction, cementand ceramic

manufacture,ironandsteelproduction, and chemical manufacture for heating and for

steam generation.

Another use for coal is in the manufacture ofcoke. Coke is nearly pure carbon produced

when soft coal is heated in the absence of air. In most cases, one ton of coal will produce

0.7 ton of coke in this process. Coke is of value in industry because it has a heat value

higher than any form of natural coal. It is widely used in steel making and in certain

chemical processes.
http://e/Abhinav/coal%201/Coal-Uses.htmlhttp://e/Abhinav/coal%201/Coal-Uses.htmlhttp://e/Abhinav/coal%201/Coal-Uses.htmlhttp://science.jrank.org/pages/5016/Paper.htmlhttp://science.jrank.org/pages/5016/Paper.htmlhttp://science.jrank.org/pages/5016/Paper.htmlhttp://science.jrank.org/pages/3692/Iron.htmlhttp://science.jrank.org/pages/3692/Iron.htmlhttp://science.jrank.org/pages/3692/Iron.htmlhttp://science.jrank.org/pages/6488/Steel.htmlhttp://science.jrank.org/pages/6488/Steel.htmlhttp://science.jrank.org/pages/6488/Steel.htmlhttp://science.jrank.org/pages/6488/Steel.htmlhttp://science.jrank.org/pages/3692/Iron.htmlhttp://science.jrank.org/pages/5016/Paper.htmlhttp://e/Abhinav/coal%201/Coal-Uses.html


25/99

CoalProduction

In India


26/99

Coal Production In India:-

Coal produced in the country (excluding Meghalaya) during the year 2007-08 (April

2007 to December, 2007) has been 309.517 million tonnes (MT) (provisional) as

compared to the production of 295.148 million tonnes (MT) achieved during the

corresponding period of the previous year showing a growth of 4.87 %. Company-wise

details are given below:

(In million tonnes)

Company Target

2007-08

Actual

Production(April 2007

to

Dec. 2008)

(Prov.)

Projected

Production(Jan.

March 2008)

Actual

Production(2006-07)

CIL 384.40 257.754 123.27 360.913

SCCL 40.508 29.962 10.546 37.707

OTHERS 36.85 21.801 15.049 32.212

TOTAL 461.758 309.517 148.865 430.832

(figures excluding Meghalaya)


27/99

MAJOR COAL

PRODUCTION

COUNTRIES


28/99

List of countries by coal production:-

This is a list of countries by coal production in 2007 based on Statistical Review of

World Energy 2008 published in 2008 by BP ranks countries with coal production larger

than 3 millions tonnes.
http://en.wikipedia.org/wiki/Coalhttp://www.bp.com/productlanding.do?categoryId=6929&contentId=7044622http://www.bp.com/productlanding.do?categoryId=6929&contentId=7044622http://en.wikipedia.org/wiki/BPhttp://en.wikipedia.org/wiki/BPhttp://www.bp.com/productlanding.do?categoryId=6929&contentId=7044622http://www.bp.com/productlanding.do?categoryId=6929&contentId=7044622http://en.wikipedia.org/wiki/Coal


29/99

DEMAND

&

SUPPLY


30/99

DEMAND AND SUPPLY:-

1.6 During the year 2007-08 (April-December, 2007), coal off take from CIL was

271.473 MT (Provisional) against the target of 277.951 MT ensuring 97.67% supply

against target. Out of this coal off take for power sector was 203.586 MT against the

target of 200.621 MT ensuring 101.48% supply against target. Similarly during April-

December, 2007, coal off take from SCCL was 31.11 MT (Provisional) against target of

28.49 MT ensuring supply of 109% against target. Out of this coal off take to power

sector was 22.27 MT (Provisional) against the target of 20.78 MT ensuring 107% supply

against target.


31/99

Current State and Forecast of Coal Demand:-

Current State of Coal Consumption:-

Coal consumption in the electricity sector in FY2004 was 305.3 million tons, or 75.5%

of the total. It is followed by 32.1 million tons (7.9%) in the iron and steel sector, and

18.1 million tons (4.5%) in the cement sector, and these three sectors in total account

for 88% of the total. Consumption in other sectors (fertilizer, ceramic industry other

than cement, textile, chemicals, paper, etc.) was 49.2 million tons, or 12.1% of the total.

When comparing coal consumption in FY1984 and FY2004, consumption decreased in

other sectors only. This is largely because coal consumption by railway decreased to

zero during this period. On the other hand, coal consumption for the electricity sector

over the same period increased by 247.7 million tons, iron and steel sector by 7.1

million tons and cement sector by 10.8 million tons. In particular, coal consumption in

the electricity is nearly five times larger than 20 years ago. Increase in coal consumption

in India is largely due to increased consumption for electricity.


32/99

Change in Coal Consumption by Sectors (excluding lignite)

Unit: million tons)


33/99

COAL

CONSUMPTION INTHE

ELECTRICITY


34/99

Coal Consumption in the Electricity:-

The comparison of the change in electric power generation in India (excluding private

power generation) and coal consumption in the electricity sector. Electric power

generation in FY2004 was 587.4 TWh. By power source, coal fired power generation was

424.1 TWh (composition ratio: 72.2%). Diesel fired power generation was 2.5 TWh

(0.4%), and gas fired power generation was 59.5 TWh (composition ratio: 10.1%).

Thermal power generation in total accounted for 486.1 TWh (composition ratio: 82.7%),

while hydraulic power generation accounted for 84.5 TWh (composition ratio: 14.4%)

and nuclear power generation for 16.8 TWh (composition ratio: 2.9%). Thermal power

generation is the major source of power generation in India, and coal fired power

generation holds the largest share among them. Therefore, the role of coal in India is

quite important. The growth rate of electric power generation by power source for the

ten-year period from FY1984 to FY1994 were as follows: 10.2% for thermal power,

4.4% for hydraulic power, 3.3% for nuclear power, and 8.4% for total electric power

generation. Therefore, growth in thermal power is notable. Similarly, the growth rate for

the ten-year period from FY1994 to FY2004 were: 6.4% for thermal power, 0.2% for

hydraulic power, 11.5% for nuclear power, and 5.3% for electric power generation in

total. While the growth of thermal power is still strong, nuclear power had the highestgrowth rate for the period. Based on available materials, there is no breakdown of thermal

power generation in FY2002 and before. In Table 3-2, coal fired power generation during

this period is estimated. First, coal consumption per 1kWh (coal consumption rate) was

calculated from electric power generation and coal consumption during FY2003-FY2004.

Then, based on this rate, coal consumption rate 7 in 2002 and before is assumed at

680g/kWh, and electric power generation is calculated from coal consumption for each

fiscal year. This estimation is based on the premise that there are no changes in power

generation efficiency and calorific value of coal. As a result, it was confirmed that the

share of electric power generation by coal fired power generation was the largest in

the past as well.


35/99

The coal consumption rate in Japan is at the level of 340g/kWh. Compared to this figure,

coal consumption in India is extremely inefficient. The major reason for this is

considered to be the calorific value of coal. While the calorific value of coal used in

Japan for power generation is 6,000kcal/kg or more, in India, it is around 3,800kcal/kg,

even for hard coal, and that of lignite remains at the level of around 2,700kcal/kg. In

FY2004, 92% of coal consumption was hard coal, and the remaining 8% was lignite.


36/99

COAL

CONSUMPTION IN

THE IRON AND

STEEL SECTOR


37/99

Coal Consumption in the Iron and Steel Sector:-

Table 3-3 compares the changes in pig iron production and coal consumption in the

iron and steel sector shown in Table 3-1. Please note that the figure of coal imports

here shows imports of coking coal for each fiscal year, and that domestic coal

consumption was calculated by subtracting this import figure from coal consumption

shown in table 3-1.

From FY1994 to FY2004, pig iron production expanded at an average annual

growth rate of 3.5%, from 17.8 million tons to 25.1 million tons. On the other hand,

coal consumption decreased from 38.6 million tons in FY1994 to 32.1 million tons in

FY2004, a decrease by 6.5 million tons. In Table 3-3, coal consumption is divided by

pig iron production to obtain coal consumption per 1 ton of pig iron (coal consumption

rate). Up to FY1998, when domestic coal accounted for more than 70% of the total coal

consumption, the coal consumption rate was more than 1.6tons/ton. On the other

hand, in FY1999 and after, when the share of domestic coal decreased to less than

70%, the rate becomes less than 1.6 tons/ton. Ash content in domestic coal is high even

for coking coal (see Table 4-3), and an increase in the use of domestic coal will lead to

a jump in the amount of coal consumption necessary for pig iron production. In

contrast, increase in the use of import coal can relatively reduce the coal consumption

even if pig iron production is increased, as can be seen in FY2002-FY2004.


38/99

COAL

CONSUMPTION IN

THE CEMENT

SECTOR


39/99

Coal Consumption in the Cement Sector:-

Table 3-4 compares the changes in cement production and coal consumption in the

cement sector shown in Table 3-1. Cement production became 2.1 times larger from

62.3 million tons in FY1994 to 133.6 million tons in FY2004, showing a average

annual growth rate of 7.9%. Compared to this, growth of calorific consumption is

relatively small. The main reason for this is improvement in coal quality due to

increases of imported coal, and this tendency can be found notably in FY1997-FY1999.


40/99


41/99

FORECAST ON

COAL DEMANDBY THE

PLANNING

COMMISSION


42/99

Forecast on Coal Demand by the Planning Commission

According to the initial forecast announced by the Planning Commission of India in

the Tenth Five-Year Plan, coal demand is estimated as follows: 460.5 million tons of

hard coal and 57.8 million tons of lignite, and 518.3 million tons in total for FY2006;

620.0 million tons of hard coal and 81.5 million tons of lignite, and 701.5 million tons

in total in FY2011. Afterwards, the working group on the Planning Commission

upwardly revised the figures, and the forecast as of 2005 shows that the demand for

hard coal in FY2006 will be 473.0 million tons and that in FY2011 will be 676.0

million tons. Also, in the draft of report by the Expert Committee on Integrated

Energy Policy by the Planning Commission, forecast on coal demand shown in Table

3-5 is included, which is cited from Coal Vision 2025 prepared by The Energy and

Resources Institute (TERI).

This forecast on coal demand is based on two scenarios. One in which the GDPgrowth rate is 7%, and one in which it is 8%. With a GDP growth rate of 7%, it is

forecast that coal demand will increase from 445.7 million tons in FY2005 and to

1,147.1 million tons by FY2024, and with a GDP growth rate of 8%, to 1,272.0 million

tons by FY2024. Average annual growth rate of coal demand is 5.1% in the case of 7%

GDP growth rate, and is 5.7% in the case of the 8% scenario. By sectors, the growth

rate is the highest for cement, followed by power captive (IPP) and iron and steel. As

for the share of each sector in total coal demand, cement will increase by 5 points in the

said period, but the shares of all other sectors will slightly decline.


43/99

FORECAST ON

COAL DEMAND

BY THE

MINISTRY OF

COAL


44/99

Forecast on Coal Demand by the Ministry of Coal:-

The Annual Plan 2005-06 published annually by the Ministry of Coal shows the

forecast for coal demand by FY2011. This shows that coal demand will increase from

445.7 million tons in FY2005 to 676.0 million tons by FY2011, an increase by 230.0

million tons. Most of the increase is due to the increase of demand in the power

captive (IPP) sector. Coal demand in the power utilities sector will show an average

annual growth of 9.1% from FY2005, and the share of the power sector of total coal

demand will increase from 74.2% in FY2005 to 80.3% in FY2011. The average annual

growth rates for iron and steel (coke) and cement during the same period will be

around 3-4%, and it is forecast that shares for both sectors will decrease.


45/99


46/99

COAL

DISTRIBUTION

AND MARKETING


47/99

COAL DISTRIBUTION AND MARKETING:-

The Marketing Division of CIL coordinates marketing activities for all its subsidiaries.

CIL has set up Regional Sales Offices and Sub-Sales Offices at selected places in the

country to cater to the needs of the consuming sectors in various regions.

Linkage Committees

Two types of linkage committees function for deciding the long term and short term

availability of coal and distribution to the consumers belonging to Cement, Power &

Steel including Sponge Iron Units.

(i) Standing Linkage Committee (Long - term)

(ii) Standing Linkage Committee (Short - term)

Standing Linkage Committee (Long-term):-

Standing Linkage Committee (Long-term) for Power, Cement and Sponge Iron considers

requirement of coal of consumers at the planning stage and links the requirement in the

long-term perspective from a rational source after examining factors like quantity and

quality required, time frame, location of the consuming plants, transport logistics,

development plan for the coal mine etc.

The Long-term linkage Committee is presently being Chaired by Special Secretary,

Ministry of Coal and has representatives from Ministry of Power, Ministry of Steel,

Ministry of Commerce & Industry, Ministry of Railways, Department of Shipping,

Central Electricity Authority, Coal India Limited, CMPDIL and Singareni Collieries

Company Limited (SCCL).

In addition to above there is another committee known as Standing Linkage

Committee(Short-term), an inter Ministerial Committee consisting of the representatives

of Ministry of Power, Central Electricity Authority, Railways, Department of

Industrial Policy and Promotion and coal companies. This Committee allocates coal

to consumers of Power and Cement Sector on quarterly basis taking into account coal


48/99

production and logistic involved therein. The short-term linkages to power and cement

industries are granted once every quarter. SLC also takes care of mid term deviations.

Coal India Limited, Kolkata, decides allocation to Sponge Iron Units.

Linkages of coal to thermal power stations are allocated by Standing Linkage Committee

(ST) on quarterly basis keeping in view the recommendation made by the Central

Electricity Authority (CEA). The CEA recommendations are based on the power

generation programme, ground stock with individual power houses etc. Factors for

deciding the linkages are power generation programme, availability of coal and carrying

capacity of Railways as well as feasibility of movement by other modes.

New Coal distribution Policy has introduced the concept of Letter of Assurance

(LOA) , which provides for assured supply of coal to developers, provided they meet

stipulated milestones. Once the milestones as stipulated in the LoA are met by the

developers, LoA holders would be entitled to enter into Fuel Supply Agreements

(FSAs) with the coal companies for long-term supply of coal. The quantity of coal to be

supplied along with other commercial terms and conditions are covered in the FSA itself.


49/99

IMPORT

OF

COAL


50/99

IMPORT OF COAL:-

As per the present Import policy, coal can be freely imported (under Open General

Licence) by the consumers themselves considering their needs based on their

commercial prudence.

Coking coal is being imported by Steel Authority of India Limited (SAIL) and other

Steel manufacturing units mainly to bridge the gap between the requirement and

indigenous availability and to improve the quality. Coast based power plants, cement

plants, captive power plants, sponge iron plants, industrial consumers and coal traders are

importing non-coking coal. Coke is imported mainly by Pig-Iron manufacturers and Iron

& Steel sector consumers using mini-blast furnace.

Details of import of coal and products during the last five years is as under (in million

tonnes) :

Coal 2003-04 2004-05 2005-06 2006-07 2007-08

Coking Coal 12.99 16.93 16.89 22.00 22.02

Non-coking Coal 8.69 12.03 21.70 23.00 27.76

Coke 1.89 2.84 2.62 3.80 4.24

Total Import 23.57 31.80 41.21 48.80 54.02


51/99

Major coal importers:-

Imports of Coal by Country and year (million short tons)


52/99

MAJORCOAL

EXPORTERS


53/99

Major coal exporters:-

Exports of Coal by Country and year (million short tons)


54/99

FOREIGN

COLLOBORATION


55/99

FOREIGN COLLABORATION:-To meet country's growing demand for coal, foreign collaboration with the

advanced coal producing countries are considered for:

Bringing in new technologies both in underground and opencast sectors for efficient

management in the coal industry and skill development and training etc.

Seeking bilateral funds for import of equipment, which are not manufactured

in the country.

Bringing foreign financial assistance to meet the investment requirement.

Keeping these objectives in view, Joint Working Group on coal had been set up with

France, Germany, Russia, Canada, Australia and China. Department of Coal is also the nodal

Department for the Joint Commission with Poland. The priority areas, inter-alia, include

acquisition of modern underground mining technology, introduction of high productive

opencast mining technology, working underground in difficult geological conditions, fire

control and mine safety. Training of Indian personnel as well as assimilation of the

technology are an important consideration. With the liberalization of the economy, greaterthrust is being given to get the foreign investments /assistance on the basis of cost

competitiveness.

The latest policy pursued by CIL is to encourage technology up gradation through Global

Tender. Bilateral co-operation, although limited, continues to play an important role for

search of new technologies and process improvement. Global tender approach has been used

towards introduction of high productivity Continuous Miners at SECL and WCL. Bilateral co-

operation mode has been adopted for the introduction of PSLW mining at 3 mines in SECL.


56/99

COAL

CONSUMERS

COUNCILS


57/99

COAL CONSUMERS COUNCILS:-

For redressal of consumer's grievances and monitoring of complaints received

from the consumers, one Regional Coal Consumers Council has been set up foreach coal company. An Apex body viz. National Coal Consumers Council has also

been set up at the Headquarters of Coal India Limited. In case the complainant

does not receive a reply within a month or the complainant is not satisfied with the

reply of Coal Company, he may prefer a complaint to the National Coal

Consumers Council. These Councils have been reconstituted during the year 2008-

09 with the introduction of many new members . The meetings of these councils

are also being held regularly.


58/99

ENVIRONMENTAL

EFFECTS


59/99

Environmental effects:-

There are a number of adverse environmental effects ofcoal mining and burning,

specially in power stations including:

Generation of hundreds of millions of tons of waste products, including fly ash,

bottom ash, flue gas desulfurization sludge, that contain mercury, uranium,

thorium, arsenic, and other heavy metals

Acid rain from high sulfur coal

Interference with groundwater and water table levels

Contamination of land and waterways and destruction of homes from fly ash

spills such as Kingston Fossil Plant coal fly ash slurry spill Impact of water use on flows of rivers and consequential impact on other land-

uses

Dust nuisance

Subsidence above tunnels, sometimes damaging infrastructure

Coal-fired power plants without effective fly ash capture are one of the largest

sources of human-caused background radiation exposure

Coal-fired power plants shorten nearly 24,000 lives a year in the United States,

including 2,800 from lung cancer[36]

Coal-fired power plants emit mercury, selenium, and arsenic which are harmful to

human health and the environment[37]

Release of carbon dioxide, a greenhouse gas, which causes climate change and

global warming according to the IPCC. Coal is the largest contributor to the

human-made increase of CO2 in the air.
http://en.wikipedia.org/wiki/Coal_mininghttp://en.wikipedia.org/wiki/Power_stationhttp://en.wikipedia.org/wiki/Fly_ashhttp://en.wikipedia.org/wiki/Bottom_ashhttp://en.wikipedia.org/wiki/Flue_gas_desulfurizationhttp://en.wikipedia.org/wiki/Mercury_%28element%29http://en.wikipedia.org/wiki/Uraniumhttp://en.wikipedia.org/wiki/Thoriumhttp://en.wikipedia.org/wiki/Arsenichttp://en.wikipedia.org/wiki/Heavy_metalshttp://en.wikipedia.org/wiki/Acid_rainhttp://en.wikipedia.org/wiki/Groundwaterhttp://en.wikipedia.org/wiki/Water_tablehttp://en.wikipedia.org/wiki/Kingston_Fossil_Plant_coal_fly_ash_slurry_spillhttp://en.wikipedia.org/wiki/Background_radiationhttp://en.wikipedia.org/wiki/Lung_cancerhttp://en.wikipedia.org/wiki/Lung_cancerhttp://en.wikipedia.org/wiki/Lung_cancerhttp://e/Abhinav/coal%201/Coal.htm%23cite_note-36http://e/Abhinav/coal%201/Coal.htm%23cite_note-36http://e/Abhinav/coal%201/Coal.htm%23cite_note-36http://en.wikipedia.org/wiki/Greenhouse_gashttp://en.wikipedia.org/wiki/Climate_changehttp://en.wikipedia.org/wiki/Global_warminghttp://en.wikipedia.org/wiki/Intergovernmental_Panel_on_Climate_Changehttp://en.wikipedia.org/wiki/Intergovernmental_Panel_on_Climate_Changehttp://en.wikipedia.org/wiki/Global_warminghttp://en.wikipedia.org/wiki/Climate_changehttp://en.wikipedia.org/wiki/Greenhouse_gashttp://e/Abhinav/coal%201/Coal.htm%23cite_note-36http://en.wikipedia.org/wiki/Lung_cancerhttp://en.wikipedia.org/wiki/Lung_cancerhttp://en.wikipedia.org/wiki/Background_radiationhttp://en.wikipedia.org/wiki/Kingston_Fossil_Plant_coal_fly_ash_slurry_spillhttp://en.wikipedia.org/wiki/Water_tablehttp://en.wikipedia.org/wiki/Groundwaterhttp://en.wikipedia.org/wiki/Acid_rainhttp://en.wikipedia.org/wiki/Heavy_metalshttp://en.wikipedia.org/wiki/Arsenichttp://en.wikipedia.org/wiki/Thoriumhttp://en.wikipedia.org/wiki/Uraniumhttp://en.wikipedia.org/wiki/Mercury_%28element%29http://en.wikipedia.org/wiki/Flue_gas_desulfurizationhttp://en.wikipedia.org/wiki/Bottom_ashhttp://en.wikipedia.org/wiki/Fly_ashhttp://en.wikipedia.org/wiki/Power_stationhttp://en.wikipedia.org/wiki/Coal_mining


60/99

ECONOMIC

ASPECTS


61/99

Economic Aspects:-

Coal liquefaction is one of the backstop technologies that could potentially limit

escalation of oil prices and mitigate the effects of transportation energy shortage that will

occur under peak oil. This is contingent on liquefaction production capacity becoming

large enough to satiate the very large and growing demand for petroleum. Estimates of

the cost of producing liquid fuels from coal suggest that domestic U.S. production of fuel

from coal becomes cost-competitive with oil priced at around $35 per barrel,[39](break-

even cost). With oil prices as low as around $40 per barrel in the U.S. as of December

2008, liquid coal lost some of its economic allure in the U.S., but will probably be re-

vitalized, similar to oil sand projects, with an oil price around $70 per barrel.

In China, due to an increasing need for liquid energy in the transportation sector, coal

liquefaction projects were given high priority even during periods of oil prices below $40

per barrel.[40]This is probably because China prefers not to be dependent on foreign oil,

instead utilizing its enormous domestic coal reserves. As oil prices were increasing

during the first half of 2009, the coal liquefaction projects in China were again boosted,

and these projects are profitable with an oil barrel price of $40.[41]

Among commercially mature technologies, advantages for indirect coal liquefaction over

direct coal liquefaction are reported by Williams and Larson (2003).

Intensive research and project developments have been implemented from 2001. The

World CTL Award is granted to personalities having brought eminent contribution to the

understanding and development of coal liquefaction. The 2009 presentation ceremony

was in Washington, D.C. (USA) at the World CTL 2009 Conference (2527 March

2009).
http://en.wikipedia.org/wiki/Backstop_resourceshttp://en.wikipedia.org/wiki/Mitigationhttp://en.wikipedia.org/wiki/Peak_oilhttp://e/Abhinav/coal%201/Coal.htm%23cite_note-38http://e/Abhinav/coal%201/Coal.htm%23cite_note-38http://e/Abhinav/coal%201/Coal.htm%23cite_note-38http://en.wikipedia.org/wiki/Oil_sandhttp://e/Abhinav/coal%201/Coal.htm%23cite_note-39http://e/Abhinav/coal%201/Coal.htm%23cite_note-39http://e/Abhinav/coal%201/Coal.htm%23cite_note-39http://e/Abhinav/coal%201/Coal.htm%23cite_note-40http://e/Abhinav/coal%201/Coal.htm%23cite_note-40http://e/Abhinav/coal%201/Coal.htm%23cite_note-40http://www.world-ctl2008.com/award.htmlhttp://en.wikipedia.org/wiki/Washington,_D.C.http://www.world-ctl2009.com/http://www.world-ctl2009.com/http://en.wikipedia.org/wiki/Washington,_D.C.http://www.world-ctl2008.com/award.htmlhttp://e/Abhinav/coal%201/Coal.htm%23cite_note-40http://e/Abhinav/coal%201/Coal.htm%23cite_note-39http://en.wikipedia.org/wiki/Oil_sandhttp://e/Abhinav/coal%201/Coal.htm%23cite_note-38http://en.wikipedia.org/wiki/Peak_oilhttp://en.wikipedia.org/wiki/Mitigationhttp://en.wikipedia.org/wiki/Backstop_resources


62/99

ALLOCATIONOF

COAL

BLOCKS


63/99

ALLOCATION OF COAL BLOCKS:-

Till December, 2007, Ministry of Coal has allocated 172 Coal Blocks with geological

reserves of coal of 38.05 billion tonnes to eligible companies. Sector-wise allocation of

coal blocks is as below:-

Sector / End Use No of blocks Geological Reserves(MT)

I Power

(a) Captive Dispensation 31 7896.07

(b) Govt. dispensation20

20 10476.07

Sub-total 51 18372.14

II Commercial Mining 39 5929.83

III Iron and Steel 3 1492.30

Total 93 25794.27

B. Private Companies

(a) Power 20 2702.21

(b) Iron and Steel 47 6703.27

(c) Small and Isolated 2 9.34

(d) Cement 3 232.34

(c) Ultra Mega PowerProject

7 2607.24

Sub-total 79 12254.40

Grant total 172 38048.672

During the year, 2007-08 (April-December, 2007), 45 coal blocks with total geological

reserves of 11386 MT were allocated to Public Sector and Private Companies of which

21 blocks

with total geological reserves of 8641.53 MT were allocated to Public Sector and Private

Companies engaged in power sector.


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EXPERT COMMITTEE:-

Government had set up an Expert Committee under the Chairmanship of Shri T.L.

Shanker for suggesting a road map for the coal sector in India. The Committee has

recently submitted its final report (Part-II). The important findings and

recommendations contained in Report (Part-II) of the Expert Committee cover

following areas:-

Enhance exploration efforts to establish new coal reserves;

Augment production to match the projected demand in medium and long terms;

Make fuel supply and transport agreements mandatory for major consumers like power;

Streamline procedures for environmental, forestry and mining approvals both at Central

and State levels in a time bound manner to realize the projected production with strict

monitoring mechanism;

Introduce exploration-cum-mining leases for coal in line with new exploration

licensing policy of oil sector;

Adopt clean coal technologies at the stage of production and consumption to address

the issue or emissions;

Enhance the delegated powers of PSU Coal Company Boards to facilitate them to take

decisions involving higher investment levels;

Revisit the Forest Conservation Act, 1980 for diversion of forest land for non-forest

purposes including re-categorisation of forest lands to identify go and no-go

areas;

Proper mine closure and restoration of mined out areas;

Instituting a regulatory mechanism for coal sector;


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Restructuring of CIL;

Review of human resource management in coal sector;

Improve the productivity of man and machinery with focus on technology upgradation;

Promotion of underground mining;

Switch over to Gross Calorific Value (GCV) based pricing and grading of coal;

Promote coal washing;

Rationalize railway tariff;

Greater emphasis on research and development;

Promotion of cutting edge technologies like Underground Coal Gasification (UCG),

Coal Bed Methane (CBM), Coal Mine Methane (CMM), Coal to Liquid (CTL), etc.


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FUNCTIONS OF MINISTRY OF COAL:-

The Ministry of Coal is responsible for development and exploitation of Coal and Lignite reserves in

India. The subjects allocated to the Ministry under the Government of India (Allocation of Business)

Rules, 1961, as amended from time to time are as follows:

(i) Exploration and development of coking and non-coking coal and lignite deposits in India.

(ii) All matters relating to production, supply, distribution and prices of coal.

(iii) Development and operation of coal washeries other than those for which the Department of Steel is

responsible.

(iv) Low Temperature carbonisation of coal and production of synthetic oil from coal.

(v) Administration of the Coal Mines (Conservation and Development) Act,

1974 (28 of 1974).

(vi) The Coal Mines Provident Fund Organisation.

(vii) Administration of the Coal Mines Provident Fund and Miscellaneous Provision Act, 1948 (46 of

1948).

(viii) Rules under the Mines Act, 1952 (32 of 1952) for the levy and collection of duty of excise on coke

and coal produced and despatched from mines and administration of rescue fund.

(ix) Administration of the Coal Bearing Areas (Acquisition and Development) Act, 1957 (20 of 1957).

(x) Administration of the Mines and Minerals (Development and Regulation) Act, 1957 (67 of 1957) and

other Union Laws in so far the said Act and Laws relate to coal and lignite and sand for stowing, busines

incidental to such administration including questions concerning various States.


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PUBLIC

SECTOR

COMPANIES


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PUBLIC SECTOR/JOINT SECTOR COMPANIES:-

The Ministry of Coal has under its administrative control Coal India Limited (CIL) a public sector

undertaking with eight subsidiary companies, namely:-

(a) Bharat Coking Coal Limited (BCCL)

(b) Central Coalfields Limited (CCL)

(c) Eastern Coalfields Limited (ECL)

(d) Western Coalfields Limited (WCL)

(e) South Eastern Coalfields Limited (SECL)

(f) Northern Coalfields Limited (NCL)

(g) Mahanadi Coalfields Limited (MCL)

(h) Central Mine Planning and Design Institute Limited (CMPDIL)


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Coal as a Traded Commodity:-

The price of coal increased from around $30.00 per short ton in 2000 to around $150.00 per short ton as

of September 2008. As of October 2008, the price per short ton had declined to $111.50.

In North America, Central Appalachian coal futures contracts are currently traded on the New York

Mercantile Exchange (trading symbol QL). The trading unit is 1,550 short tons (1,410 t) per contract, and

is quoted in U.S. dollars and cents per ton. Since coal is the principal fuel for generating electricity in the

United States, coal futures contracts provide coal producers and the electric power industry an important

tool for hedging and risk management.

In addition to the NYMEX contract, the IntercontinentalExchange (ICE) has European (Rotterdam) and

South African (Richards Bay) coal futures available for trading. The trading unit for these contracts is

5,000 tonnes (5,500 short tons), and are also quoted in U.S. dollars and cents per ton.
http://en.wikipedia.org/wiki/Short_tonhttp://en.wikipedia.org/wiki/Appalachianhttp://en.wikipedia.org/wiki/Futures_contracthttp://en.wikipedia.org/wiki/NYMEXhttp://en.wikipedia.org/wiki/NYMEXhttp://en.wikipedia.org/wiki/Electrical_power_industryhttp://en.wikipedia.org/wiki/Hedge_%28finance%29http://en.wikipedia.org/wiki/Risk_managementhttp://en.wikipedia.org/wiki/IntercontinentalExchangehttp://en.wikipedia.org/wiki/IntercontinentalExchangehttp://en.wikipedia.org/wiki/Risk_managementhttp://en.wikipedia.org/wiki/Hedge_%28finance%29http://en.wikipedia.org/wiki/Electrical_power_industryhttp://en.wikipedia.org/wiki/NYMEXhttp://en.wikipedia.org/wiki/NYMEXhttp://en.wikipedia.org/wiki/Futures_contracthttp://en.wikipedia.org/wiki/Appalachianhttp://en.wikipedia.org/wiki/Short_ton


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COAL

TRADINGBASICS


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INTRODUCTION:-


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BACKGROUND:-


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PRICE VOLATILITY:-


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BROKERS:-


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STANDARDIZED CONTRACTS:-


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TRADING INSTRUMENTS:-


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BENEFITS OF TRADING:-


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PROGNOSIS OF COAL TRADING:-


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COAL TRADING ASSOCIATION:-

The Coal Trading Association (CTA) is the only trade association dedicated

exclusively to the needs of traders, trading managers, brokers, risk managers,

sales managers and purchasing managers in the coal trading industry.

CTA was established in 1999 to promote coal trading capability and liquidity

in the US. CTA develops and maintains industry standards for coal trading

activity with the goal of achieving a disciplined, liquid and efficient coal

trading industry. To achieve this goal, CTA develops policies, exchanges

information among members and other interested professional and technical

groups, and offers training programs to improve the knowledge, skills and

practice tools of its members.


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COAL VALUE

CHAIN


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Coal Value Chain:-


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COAL PRICESIN 2010


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Coal Prices In 2010:-Coal prices are indeed destined to go higher as they follow the rise of coal currencies such as Australia

Dollar (AUD), South African Rand (ZAR) and Columbian Peso (COP). Strong emerging market demand

is also pushing up prices although it may be limited by abundant stocks on coal producing countries.

The BofA Merrill Lynch Global Report on energy pointed out that many oil currencies including UAE

Dirhams (AED) and Saudi Arabian Riyal (SAR) are pegged to the US dollar, but coal exporters tend to

keep a free float therefore currencies linked to coal have outperformed both their emerging market and G

10 peers. The report notes that near upside gains in steam coal will be limited to US dollar weakness.

Mirroring forex, prompt API-2 thermal coal prices have jumped 9% in the past month reaching $73/mt

slightly ahead of crude oil and petroleum productswhile calendar prices for 2010 have recovered to a

six-week high of over $84/mt. With coal inventories swelling to record highs around the globe, any near-

term upside pressure on front-month coal prices above $80/mt is likely to be limited to further USD

weakness. Although BofA Merrill Lynch Global report said that steam coal forwards to flatten

significantly over the next six months as the recovery takes hold, excess supply will still dampen any

upside pressure on near-dated spreads in the short-run.

The outlook for thermal coal markets should improve significantly and high inventories will be burned

down next year as coal is set to regain market share relative to natural gas. Chinese and Indian demand

for coal is already growing strongly. With a demand recovery coming in the rest of Asia, South Africa

and the Atlantic Basin, the market is likely to tighten pretty quickly in 2010.


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SWOTANALYSIS


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STRENGTH:-

1.The government offers a wide range of concessions to investors in India, engaged in mining activity.

The main concessions include, inter alia:

* Mining in specified backward districts is eligible for a complete tax holiday for a period of 5 years from

commencement of production and a 30 percent tax holiday for 5 years thereafter.

* Environment protection equipment, pollution control equipment, energy saving equipment and certain

other equipment eligible for 100 percent depreciation.

* One tenth of the expenditure on prospecting or extracting or production of certain minerals during five

years ending with the first year of commercial production is allowed as a deduction from the total

income.

* Export profits from specified minerals and ores are eligible for certain concessions under the Income

tax Act.

* Minerals in their finished form exempt from excise duty.

* Low customs duty on capital equipment used for minerals; on nickel, tin, pig iron, unwrought

aluminium.

* Capital goods imported for mining under EPCG scheme qualify for concessional customs duty subject

to certain export obligation.

2. World's largest producer of mica; third largest producer of coal and lignite & barytes; ranks among the

top producers of iron ore, bauxite, manganese ore and aluminium.

3. Labours easily available


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4. Low labour and conversion costs

5. Large quantity of high quality reserves

6. Exports iron-ore to China and Japan on a large scale

7. Strategic location : Proximity to the developed European markets and fast-developing Asian markets

for export of Steel, Aluminium


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WEAKNESS:-

1. Coal mining in India is associated with poor employee productivity. The output per miner per

annum in India varies from 150 to 2,650 tonnes compared to an average of around 12,000 tonnes

in the U.S. and Australia; and

2. Historically, opencast mining has been favored over underground mining. This has led to land

degradation, environmental pollution and reduced quality of coal as it tends to get mixed with

other matter;

3. India has still not been able to develop a comprehensive solution to deal with the fly ash

generated at coal power stations through use of Indian coal. Clean coal technologies, such as

Integrated Gasification Combined Cycle, where the coal is converted to gas, are available, but

these are expensive and need modification to suit Indian coal specifications.

4. Poor infrastructure facilities

5. Mining technology is outdated

6. Low innovation capabilities

7. Labor force is highly un-skilled and inexperienced

8. High rate of accidents

9. Lack of R&D programs and training and development

10. Most of the Indian mining companies do not have access to Indian capital market

11. There is a lack of respect for the mining industry and it suffers from the incorrect perception that

ore deposits are depleted.

12. There is limited access to capital, and mines are increasingly more costly to find, acquire, develop

and produce.

13. There are long lead times on production decisions.

14. The Indian mining industry suffers from an out-dated, unattractive approach to mining education

that is partly to blame for insufficient human resources.


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15. Improvement in operational efficiency of the mining companies - Mining companies are in

need of an organizational transformation to gradually align its operating costs to international

standards. Mining costs of Indian companies are at least 35 percent higher than those of leading

coal exporting countries such as Australia, Indonesia, and South Africa. To match productivity,

they will need to invest in new technologies, improve processes in planning and execution of

projects, and institutionalize a comprehensive risk management framework.

16. Mining operations are not environment friendly. Least importance is given to environment

concerns.

17. High rate of illegal mining


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OPPORTUNITY:-

India has an estimated 85 billion tonnes of mineral reserves remaining to be exploited. Besides

coal, oil and gas reserves, the mineral inventory in India includes 13,000 deposits/ prospects of 6

non-fuel minerals. Expenditure outlay on mining is a meager sum when compared to other

competing emerging mining markets and the investment gap is most likely to be covered by the

private sector. India welcomes joint ventures between foreign and domestic partners to mobilise

finances and technology and secure access to global markets.

Potential areas for exploration ventures include gold, diamond, copper, lead, zinc, nickel, cobalt,

molybdenum, lithium, tin, tungsten, silver, platinum group of metals and other rare metals,

chromite and manganese ore, and fertiliser minerals.

The main opportunities in the mining sector (excluding coal and industrial minerals) are in the

development and production of surplus commodities such as iron ore and bauxite, mica, potash,

few low-grade ores, mining of small gold deposits, development of placer gold resources located

on the frontal belt of the Himalayas, mining known deposits of economic and marginal categories

such as base metals in Bihar and Rajasthan and exploitation of laterite for nickels in Orissa,

molybdenum in Tamil Nadu and tin in Haryana.

Considerable potential exists for setting up manufacturing units for value added products.

There exists considerable opportunities for future discoveries of sub-surface deposits with the

application of modern techniques.

Current economic mining practices are generally limited to depths of 300 meters and 25 percent

of the reserves of the country are beyond this depth

Strengthening of logistics in coal distribution - In India, the logistics infrastructure such as

ports and railways are overburdened and costly and act as bottlenecks in development of free

market. Privatization of ports may bring the needed efficiencies and capacities. In addition,

capacity addition by the Indian Railways is necessary to increase freight capacity from the coal

producing regions to demand centers in the northern and central parts of the country. On the

Indian rail network, freight trains get a lower priority than passenger trains, a problem that

promotes delays and inefficiency. Special freight corridors would raise speeds, cut costs, and

increase the system's reliability.


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Focusing on technology for future - India's numerous technology research institutes are workin

on energy related R&D. However, there is a possibility that they are operating in a fragmented

fashion. The Government may get improved recoveries on its investment by concentrating on few

important technology areas. To start with focus may be applied for tighter emission standards and

development of inexpensive clean-coal technologies viz. extraction of methane from coal

deposits.

Estimated 82 billion tonnes of reserves of various metals yet to be tapped

While India has 7.5% of the world's total bauxite deposits, aluminium production capacity is only

3% of world capacity, indicating the scope and need for new capacities


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THREATS:-

Foreign Investment in the Mining Sector

During 1999, the Government had cleared 7 more proposals of leading international mining

companies for prospecting and exploration in the mineral sector to the tune of US$ 62.5 million.

65 licenses have been issued till date for prospecting an area of around 90,142 sqkms in the states

of Rajasthan, Maharashtra, Gujarat, Bihar, Haryana and Madhya Pradesh. Prospecting licenses

have been granted in favour of Indian subsidiaries of well-known mining companies. These

include BHP Minerals, CRA Exploration supported by Rio Tinto (RTZ-CRA), Phelps Dodge of

USA, Metmin Finance and Holding supported by Metdist Group of Companies UK, Meridien

Minerals of Canada, RBW Mineral Industries supported by White Tiger Resources of Australia,

etc.

Large integrated international metal manufacturers including POSCO, Mittal Steel and Alcan

have announced plans for expansion in India

Mining companies and equipment suppliers are under the constant threat of being taken over by

foreign companies.

A heavy tax burden discourages further investment.

Politicians undervalue the industry's contributions to the economy.

Stricter environment rules restricting mining activities


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CHALLENGES OF COAL INDUSTRY:-

Coal is the other fossil fuel, promising to supersede oil as petroleum supplies dwindle and solar and othe

alternatives plug part of the future energy gap. But coal comes with a potentially hefty environmentalprice. According to the Intergovernmental Panel on Climate Change, the increased use of coal and the

resultant release of carbon dioxide and methaneboth greenhouse gaseshave contributed

significantly to global warning and climate change.

So, how do we reconcile our need for coal as a viable and domestically plentiful alternative to oil with

our equally important need to use it in a sustainable way that minimizes environmental harm?


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Measuring Carbon Content :-

One example of the potentially significant environmental impact of Committee D05s work is revised

standard D5373, Test Methods for Instrumental Determination of Carbon, Hydrogen and Nitrogen in

Laboratory Samples of Coal, published in February 2008. The standard could affect the analysis of coalworldwide and subsequent carbon dioxide emissions if universally embraced. According to D05 chair

John Riley, Ph.D., professor emeritus, Western Kentucky University, Bowling Green, Ky., D5373 is the

best standard in the world and a huge improvement over the first version of the standard. But it took

some work to get there.

In the mid-1990s, engineers at coal-burning electrical generating plants all around the world were

wondering why they saw discrepancies between their predictive heat valuesor the amount of

electricity that they expected to generateand the actual plant rate. They found that even when

engineers at different plants tested the same coal for carbon and other elements, they had different results

More alarming, those engineers also had different results when testing pure substances, laboratory

samples specially prepared to contain the same substances. Because measuring the carbon in coal is

essential for predicting the amount of carbon dioxide emissions it will create when burned, there was a

clear need for a standard that delivered accurate, repeatable results.

Janke explains, You cant negotiate emissions standards if you dont have a reliable way of measuring

emissions.

To address this need, Janke organized an international control study, eventually developing the revised

standard, which instructs engineers at coal-fired power generating plants how to use pure substances to

calibrate their instrumental analyzers. That way, they can determine more accurate heat values as well as

carbon content and carbon dioxide emissions, features that also make the standard useful to governmenta

and other entities concerned with the environmental impact of burning coal.

The revised standard forces us to be honest about emissions and encourages more efficient use of coals

that are appropriate for their end product, says Janke.
http://www.astm.org/Standards/D5373.htmhttp://www.astm.org/Standards/D5373.htm


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Natural Gas from Coal:-

A proposed D05 standard, WK8750, Practice for Determination of Gas Content of CoalDirect

Desorption Method, addresses the amount of natural gas, also referred to as methane or unconventional

natural gas, in coal beds. As a greenhouse gas, methane contributes 21 times as much to global warming

as carbon dioxide. Its also volatile, fueling explosions and fires in coal mines. WK8750 could have the

combined effects of helping energy producers recover a useful and plentiful fuel, control greenhouse gas

emissions and make coal mining operations safer.

Coal beds in the United States contain an estimated 30 to 604 trillion cubic feet (1 to 17 trillion cubic

meters) of recoverable methane. In the last 15 to 20 years, coal bed methane has grown to account forsome seven to 10 percent of total natural gas production in the U.S., and its likely to increase as large

fields of natural gas are depleted and producers drill for gas in the coal fields of Wyomings Powder

River Basin, the San Juan Basin in New Mexico and Colorado, the Warrior Basin in Alabama and in

fields along the Rocky Mountains, Gulf Coast and in the Midwestern states. Overseas, China and

Australia are also known to have large reserves of coal bed methane.

Currently, there are two methods for determining the viability of recovering coal bed methane in a

particular area or region. One is an indirect method that makes inferences from available geological

information. The other, advocated by the proposed standard, uses the direct desorption method where a

core of coal is extracted from a deposit and put in a sealed container. Measuring the amount of gas

released from the core over time determines how much natural gas is contained in a coal bed.

Peter Warwick, research geologist with the U.S. Geological Survey, Reston, Va., and technical contact

for the task group, explains, Determining whether a coal deposit is a viable source of natural gas in

advance of mining leads producers to use coal deposits more efficiently.

A draft of the proposed standard is expected to be ready for review this spring

Documents

35778891 Final Coal Report