China eases coal mine working day curbs as supply tightens
China’s top planning body has relaxed working day restrictions on its coal mines after reduced output boosted prices, frustrating central planners’ desire to control both price and supply of the nation’s most important energy source.
China’s National Development and Reform Commission said on Thursday that all mines could produce for 330 days each year, after last week extending a production band of 276-330 days through the end of March. Mines had been regulated on how many days they could operate, within the band.
The relaxation came after output statistics for October showed Chinese coal production had dropped 11 per cent in the first 10 months of 2016 versus the same period the year before. On a daily basis, output in October was down 1.5 per cent from September.
The relaxation is likely to hit “frothy” thermal coal prices, Fitch Ratings said in a note on Thursday: “The strong pricing rebound since early 2016 is unlikely to be sustained as the Chinese government relaxes its working-day curtailment policies to manage prices.”
A prolonged slump in coal prices has allowed the Chinese state to re-exert control over a sector that was known for its private capital and ungovernable private mines when the Chinese economy was booming.
Many indebted private mines have shut or been absorbed by large state-owned mining companies, leaving Beijing wrestling with a re-nationalised industry in an economy that is more complex than during the heyday of state planning.
Output restrictions on thermal coal had been intended to bolster prices and allow China’s chronically bloated state coal miners to repay loans. But planners failed to account for the degree to which private miners had also dropped out of the market, and were caught off-guard when investors profited by the squeeze to drive up futures prices of coking coal, used in steelmaking. Coal futures are up roughly 200 per cent year-on-year, even after a sell-off this week as futures exchanges imposed measures to deter speculation.
As recently as November 11 the NDRC had maintained it would stick with the band of working day output restrictions. “The increasing price of coal will not dampen the determination to cut coal capacity,” its vice-secretary said at the time.
The NRDC has also strong-armed state-owned miners to sign supply agreements with state-owned power plants at below-market prices in an attempt to persuade traders that prices have risen too much.
Power plant supply agreements that were set too low was one of the factors that deterred state coal mines from expanding two decades ago, opening the door for private entrepreneurs to capitalise on strong spot demand for coal as economic growth took off.
https://www.ft.com/content/cf425aa2-ac98-11e6-9cb3-bb8207902122
Coal India’s decision may help TANGEDCO save Rs. 550 crore
The Tamil Nadu Generation and Distribution Corporation (TANGEDCO) need not depend on import of coal as the Centre has assured a supply of high-quality indigenous coal to substitute the imported coal being used in thermal power stations in the State.
The assurance from the Coal India Limited (CIL) on providing import-substitution coal comes as a shot in the arm for the power utility. It will enable the corporation to cut down its purchase of imported coal and save Rs. 550 crore a year.
A TANGEDCO official said this move followed the deliberations between the Union and State Ministers to chalk out plans for Tamil Nadu joining the UDAY (Ujwal DISCOM Assurance Yojana) scheme in New Delhi on October 21.
At the meeting, officials raised the issue of inferior coal supply and the proposed supply of additional five million tonnes of indigenous coal to substitute imports, he added. After Tamil Nadu assured the Centre that it would join the UDAY scheme, at a subsequent meeting that TANGEDCO officials had with CIL officials in Kolkata on October 24, the latter agreed to supply an additional five million tonnes from Eastern Coal Fields Limited, in addition to the existing quantity under the Fuel Supply Agreement.
TANGEDCO would be get an additional three million tonnes of Indian coal per annum towards import substitution from the Singareni Collieries Company Ltd. as instructed by the Centre.
The power utility has been assured an additional 3 million tonnes of coal from Eastern Coal Fields
22 million tonnes coal auctioned in non-regulated space till October in FY17
Around 22 million tonnes of coal linkages have been auctioned till October in the ongoing fiscal for the non-regulated sector, including cement and sponge iron.
"In the non-regulated sector, which includes cement, sponge iron, captive, power plant and others, there has been a linkage auction of 22.14 mtpa (million tonnes per annum) in 2016-17 (till October 2016) under the policy of linkage auction," Minister of State for Coal, Power, New and Renewable Energy and Mines Piyush Goyal said in a reply to the Lok Sabha.
There is an increase of about 10 mtpa in coal linkage to the non-regulated sector, the minister said.
The minister further said the coal-based generation as well as consumption of coal have been consistently increasing during preceding years. However, the government is now focusing on capacity addition of renewable energy sources to meet the demand and reduce dependence on coal for generation of electricity.
"As per the initial estimate, coal demand for 2016-17 has been assessed to be 884.87 mt of which 598.73 mt has been assessed to be the coal demand of power utility sector, 91.11 mt for captive power, 34.37 mt for cement, 24.05 mt for sponge iron and 80 mt for others," he added.
No power producer approached CIL for imported coal supply
No power producer has got in touch with state-owned CIL for supply of imported coal for plants in the current fiscal, Parliament was informed today.
"No thermal power plant/coal company has approached CIL for supply of imported coal for 2016-17," Minister of State for Coal, Power, Renewable Energy and Mines Piyush Goyal said in a reply to the Lok Sabha.
In accordance to the Presidential Directive issued to Coal India Ltd (CIL) and under the provision of new fuel supply agreement, option is given to power utility sector consumers to opt for supply of a part of Annual Contracted Quantity (ACQ) from the imported coal through CIL, the minister said.
As per the initial estimate, the demand of coal in 2016-17 is estimated to be 884.8 million tonnes (mt) against which supply plan from indigenous sources has been estimated to be 724.7 mt, leaving a demand supply gap of 160 mt to be met through imports by consuming sectors, he said.
The country has imported 86.5 mt of coal valued at Rs 3,3489.3 crore in April-August in the ongoing fiscal.
On account of increased production by CIL in the last financial year, coal imports have fallen to 199.8 mt in 2015-16 from 217.7 mt in 2014-15, he added.
West Bengal ready to tap into its rich coal and mineral reserves: Amit Mitra
State Finance Minister Amit Mitra on Wednesday said West Bengal was ready to utilise its coal and mineral reserves to fullest. Addressing the 13th Global Mining Summit, a four-day event inaugurated in the city, he said, “If properly harnessed, the mining sector in India can not only produce millions of jobs by 2025, but can also be a significant contributor to the nation’s GDP. Please give us the deliverables from this summit, we would work on them with CII.” The state has identified six granite prospective blocks and exploration has begun in three through competitive bidding, he added.
The summit is being organized by CII in collaboration with the union ministry of mines and Coal India Limited. With Australia as its partner country, 290 exhibitors have put up stalls showcasing the latest mining equipment from China, Czech Republic, Germany, Italy, Poland, Russia and the UK.
“West Bengal is the third largest mineral resources-rich state in the country, 1/5th of the total mining resources of India are located in the state. It throws an opportunity for employment growth. The coal reserves of Deocha Pachmi, the second largest in the world, at 2,00,000 million tonnes alone can create enormous jobs,” said Mitra. “Bengal has tied up with Kudurmukh for iron ore deposit exploration in the state,” he added.
The finance minister said that geological surveys carried out in the state have indicated that it has untapped reserves of iron ore, dolomite, tungsten, fireclay, granite and sand. “The government has made the state’s minerals related geo-scientific data public and updated rules for mining,” he said.
Balvinder Kumar, secretary of the union ministry of mines, said that the star rating system for the operating mines was operational and the country’s first such rating report will be published in the first half of December. Moreover, following the MMDR Act amendment, the government had facilitated 17 auctions of 55 leases in 9 states, fetching Rs 70,000 crore. “Another Rs 47,000 crore is likely to be fetched from auctions in the near future,” said Kumar. “Iron-ore production in the first half of the current fiscal (April-September 2017) was up by 25.8 per cent to 84 million tonnes,” he added.
The minister secretary further said that the District Mineral Fund, already constituted in 234 mineral-producing districts of the country, have collected Rs 3,500 crore from miners for development of tribals in districts. “The ministry has facilitated initiatives of large scale exploration of minerals in the country through the Geological Survey of India and a number of public sector miners. By April 2017, an aerial survey on potential mineral blocks covering 2 lakh square kilometres of land would be over. This would be of G3 level of exploration data, which will help prospecting on the ground areas possible,” he added.
Kumar also said that the government has put in place a satellite-based remote sensing of surveillance system to keep illegal mining in check. The mining ministry has also developed a mobile app to help citizens to report irregular or unlawful mining activity. Kumar said the overall growth mineral production was 9 per cent in 2015-16. “This year, we are expecting a 15 per cent growth in iron ore output,’’ he added. An exclusive CII report titled ‘Roadmap for Indian Mining Industry’ was launched during the inaugural session as well.
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Anurag Singal
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Essel Mining & Industries Ltd
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