Coal related report

According to TERI(the energy research institute)

·       Coal accounts for > 50% in India’s energy mix

·       Delay in clearances and tightening of environmental norms create problem for coal sector

·       Import of coal scenario: 83 million tonnes(current fiscal), 142 million tonnes(next fiscal)

·       Amidst tight global supplies and price rise, the ability to import large quantities could be restricted

·       India has followed the ISP(Indian Standard Procedure Code) to assess coal inventory

·       ISP code is based on the geological evaluation of resources without assessing the quality, mineability or extractability of deposits

·       Total coal inventory: 276.81 billion tonnes

·       Proven coal inventory: 0.4 * 276.81= 110 billion tonnes

·       Extractable : 55 billion tonnes

·       At the current rate of production 550 million tonnes per annum, coal reserve will last for around 100 years

·       Considering increasing rate of production, coal might last within next 50 years.

CIL status:

·       Total inventory : 65 billion tonnes

·       Feasibility studies for : 30.4 billion tonnes

·       Extractable reserve : 21.8 billion tonnes

Ø  Tighter environmental regulations forced the world’s largest coal producer to revise downward its output target twice during the fiscal

Ø  TERI suggests UNFC(the United Nations Framework Classification)

UNFC’s method includes several parameters which are (among others):

·       Geological parameters

·       Economic and commercial viability

·       Field project status

·       Feasibility in arriving at the inventory

Ø  Government decided to apply UNFC in 2001, not yet applied

Ø  One of the reasons for not applying UNFC is time consuming process of UNFC’s methods

Chemical properties of coal are :

·       Ash

·       Moisture

·       Volatile matters

Physical parameters are:

·       Caking index

·       Coke type

·       Swelling index

Reserves :

·       Coking coal: 33.7 billion tonnes

·       Non coking coal: 258 billion tonnes

·       Tertiary coal : 1.5 billion tonnes

Ø  In NCV(net calorific value),  the heat contained in water is not recovered

Ø  In GCV(gross calorific value), the heat contained in water is recovered

Ø  Under the new norm, to be made effective from April, BCCL would be charging 20% less than the landed cost of imported coal of equivalent gross calorific value, against 30% earlier.

Ø  SAIL imports close to 80% of its total coking coal requirement of about 14 million tonnes  

Ø  The price increase by Coal India will apply to only around 3 million tonnes

How Indian steel industry would suffer

The environmentalists in Australia has plotted a very powerful plan, which may affect the export of coal from Australia. All the projects will be delayed and production will be hampered in 2012 and 2013.

The coking coal that is fed to the coke ovens of steel plants in India are mainly exported from Australia. As the coal export will plummet, the steel industry will look towards Indian coal to feed their plants. But the domestic coal is by far insufficient for Indian Steel Industry, as the coking coal in India is very limited. The power sector has maintained the price structure for non-coking coal but for coking coal it will change. Thus, increased price of coking coal and reduced supply may lead to astronomical prices of steel.

The price increase may stop many construction projects in the middle, thus reducing the demand of steel. The share market will plummet. Index of Industrial Production(IIP) which is suffering a lot these days will further suffer and may again go south. The pressure may be felt by captive mines, though there is very little potential there, but increased pressure of production may lead to neglecting safety practices. Reduced safety may lead to accidents, and this may further hamper the production. The coming financial year would be baleful for steel industry.

This may lead to lesser demand of power in future by steel industry and thus power sector may diversify their field of interest. The surplus power may be diverted to domestic purposes which will be a great step towards inclusive development. It may also fuel the research being done in Smart Grids.