Monthly Report Jan’18

COAL MONTHLY REVIEW

INDIAN COAL IMPORT

(Qty MnT)
3.27 Dec'17 Nov'17
2.83

2.26 2.17
1.78
1.58 1.58 1.51
1.30 1.42 1.35 1.28 1.23
1.13 1.11
0.99 0.96 0.97 0.90 0.95 0.92 0.83
0.72 0.70 0.65 0.67 0.83
0.63 0.61 0.63
0.53 0.47 0.45 0.41 0.39 0.46

NON COKING COAL COKING COAL

5.17 TOTAL COAL IMPORT

14.53 4.14
13.77

Nov'17 Dec'17 Nov'17 Dec'17

PET COKE MET COKE

21.26

1.25 0.39
0.80 0.24
19.21

Nov'17 Dec'17 Nov'17 Dec'17

Nov'17 Dec'17

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 COAL MONTHLY REVIEW

NON COKING COAL MAJOR RECEIVERS QUANTITY (MT)

RECEIVER DECEMBER NOVEMBER M-O-M CHANGES
ADANI ENTERPRISE 2448245 2202617 11.2%
MUNDRA 777340 387787 100.5%
COKING COAL MAJOR RECEIVERS QUANTITY (MT)
DAHEJ 651994 296400 120.0%
RECEIVER DECEMBER NOVEMBER M-O-M CHANGES KANDLA 250200 196840 27.1%
SAIL 1579078 1021791 54.5% HAZIRA 232150 407160 -43.0%
DHAMRA 160960 164696 -2.3%
VIZAG 475050 370200 28.3%
NAVLAKHI 142600 146300 -2.5%
HALDIA 414728 368591 12.5% KRISHNAPATNAM 128001 - N/A
VIZAG 55000 99600 -44.8%
DHAMRA 390000 146200 166.8%
MORMUGAO 30000 - N/A
PARADIP 249300 136800 82.2% HALDIA 20000 - N/A
GANGAVARAM 50000 - N/A GANGAVARAM - 403834 N/A
PARADIP - 100000 N/A
JSW STEEL 724400 860620 -15.8%
ADANI POWER 1032383 1955903 -47.2%
MORMUGAO 601380 671330 -10.4% MUNDRA 880383 1809753 -51.4%

JAIGARH 123020 189290 -35.0% DAHEJ 152000 146150 4.0%

AGARWAL COAL 960257 613394 56.5%
TATA STEEL 610314 836320 -27.0% NAVLAKHI 316680 104300 203.6%
DHAMRA 420914 501320 -16.0% TUTICORIN 194700 87330 122.9%
MANGALORE 128907 20000 544.5%
HALDIA 97000 283300 -65.8%
HAZIRA 110000 135264 -18.7%
PARADIP 92400 51700 78.7% DHARAMTAR 65000 131500 -50.6%
BHUSHAN STEEL 501068 342709 46.2% PARADIP 43670 50000 -12.7%
VIZAG 36300 25000 45.2%
PARADIP 421846 255650 65.0% REVDANDA 25000 30000 -16.7%
GANGAVARAM 79222 - N/A HALDIA 25000 - N/A
KOLKATA 15000 - N/A
VIZAG - 87059 N/A
JAIGARH - 30000 N/A
RINL 348920 236540 47.5% COASTAL GUJARAT POWER 869968 656541 32.5%
GANGAVARAM 348920 236540 47.5% MUNDRA 869968 656541 32.5%
SWISS SINGAPORE 813417 224800 261.8%
JINDAL STEEL AND POWER 333393 165960 100.9%
KANDLA 420640 59800 603.4%
PARADIP 202507 87760 130.8% GANGAVARAM 169510 165000 2.7%
KRISHNAPATNAM 162767 - N/A
GANGAVARAM 88000 78200 12.5%
DHARAMTAR 60500 - N/A
VIZAG 42886 - N/A SEMB CORP GAYATHRI POWER 372528 219850 69.4%
JINDAL SAW 164974 - N/A KRISHNAPATNAM 372528 219850 69.4%
ESSAR POWER 338300 255660 32.3%
MUNDRA 164974 - N/A
BEDI 165000 184300 -10.5%
VISA STEEL 78734 - N/A SALAYA 95200 - N/A
PARADIP 78734 - N/A HAZIRA 78100 - N/A
PARADIP - 71360 N/A
ELECTROSTEEL CASTING 75501 - N/A JSW ENERGY 337097 590294 -42.9%
HALDIA 75501 - N/A JAIGARH 254597 390240 -34.8%
MORMUGAO 82500 71470 15.4%
OTHERS 755,803 678,350 11.4%
KRISHNAPATNAM - 75784 N/A
Grand Total 5,172,185 4,142,290 24.9% ENNORE - 25300 N/A
KARAIKAL - 27500 N/A
KAMACHI 330210 289237 14.2%
KRISHNAPATNAM 330210 289237 14.2%
OTHERS 7,023,213 6,762,162 3.9%
GRAND TOTAL 14,525,618 13,770,458 5.5%

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 COAL MONTHLY REVIEW

International News International Non-coking Coal FOB Prices (Average)

South Africa (6000 NAR)

Waning Demand Pulls Down Coking Coal 94
92
90
88
Prices in International Markets 86
84
82
80
The international Coking Coal market is moving along the expected 78
76
lines. The prices are declining, irradiating sufficient indications of the 74
72
70
prices to fall further to significant levels.
Sellers in Australia, the main international supply market, are compelled to lower their export offers
due to the lackluster buying af inity among the steel makers across the major importing nations. The
110 Australia (6000 NAR)
steel makers have temporarily halted their imports as the prices shot up to signi icant heights.
105
Simultaneously, the resumption of mining activity after the New Year holidays getting over in 100
Australia has eased the supply tightness—compounding to the price decline. 95
90
In China, the largest consuming market, the steel makers have stopped stocking the coal inventories, 85
and waited for further fall in the coal prices in Australia. Moreover, the domestic Coking Coal prices 80
have dropped to around Yuan 1,470/MT, which also indicates that the buyers there will prefer their 75
70
home markets rather than the Australian market for the coal purchases. In view of this, Australian
sellers will have to bring down their export offers to match the price difference to prompt the
Chinese steel makers to import.
Indonesia (3800 GAR)
Export offers for the Premium HCC have come down to around USD 236.50/MT FoB Australia, down 40
by around USD 22.75/MT over the rates in the week last. At the same time, there was some demand 39
38
for the 64 Mid Vol HCC that restricted the export offers from sliding from the week-ago rates—these 37
offers have hovered at around USD 185.60/MT FoB Australia. 36
35
34
33
32
31
30

Indonesia (4200 GAR)

49
48
47
46
45
44
43
42
41
40
39
38
37
36
35

Source: CoalMint Research

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 COAL MONTHLY REVIEW

For the Indian buyers, these offers translate into: USD 249.25/MT and USD 198.35/MT respec vely on CFR India According to the vessel Line-up data maintained by CoalMint research, China was the second-largest
basis. coal receiver from Australia in CY17, and had imported its highest monthly coal shipment of 8,201,131
Similar to the global peers, the Indian steel makers also are avoiding stocking the coal in the hope of seeing MT during Dec'17.
significant downward correc on in the prices.
Strong Asian Demand:
In the Indian context, imports will con nue to rule in the future as the steel makers in the country have no other
While Chinese demand showed signs of temporarily so ening ahead of next month's Chinese New Year
op on but to procure from foreign market. There is inadequacy in the domes c produc on in India; and the
holiday, there was lingering support from other Asia-Pacific buyers – such as South Korea and India.
Coking Coal produced in the country is of lower quality due to cons tu on of ash.
Trading ac vity from China had slowed down, as the buyers had already booked enough coal shipments

Australia: Newcastle Thermal Coal Index for Jan-Feb'18 delivery. However, Indian buyers were ac ve in the market as the need to preserve or
rebuild inventories at power plants con nues.
Remains at 14-Month High According to the data provided by Central Electricity Authority (CEA) coal inventories at 113 Indian coal-
fired power plants had rose 1.5% W-o-W to a five-month high of 13.53 MnT.

An Indian Trader had commented even if buying from China is halted a er the beginning of their New
Year, coal prices would be s ll supported by strong demand from India.
The persis ng weather related disrup on to coal supply had also supported the coal prices. Heavy rain
had affected loading at Australia's major thermal coal export port of Newcastle, where currently 14
vessels were said to have been wai ng to enter the port, and stocks had risen to a mul -year high of
2.73 MnT.

The Asia-Pacific Newcastle coal index has remained at around 14-month highs this week amid buoyant demand
and ongoing supply disrup ons in Australia and Indonesia.

The Global Coal Newcastle (Australia) index rose by a marginal 0.4% over the past week to USD 106/MT – the
highest level since Nov'16.
Newcastle thermal coal shipments were being traded USD 2 higher than the current coal index. However,
China's Zhengzou May'18 thermal coal future contract se led last virtually flat W-o-W at CNY 634/MT (USD
98.50/MT).
Market par cipants have informed that Chinese miners were struggling to get enough coal to the market,
hence the appe te for coal imports were strong among the buyers. It would be interes ng to see whether the Indications of Met Coke Prices Declining
Chinese government will re-impose the restric ons on imports, if the current situa on con nues.
Rife in Market
China's Na onal Development and Reform Commission had temporarily li ed the restric on on coal imports
in Dec'17, in a view to meet the rising coal demand for the winter season. Market indications show that good news for Met Coke buyers is

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 COAL MONTHLY REVIEW

Met Coke prices in the domes c markets of China have started to decline; and some traders in China, IMPORTS
contacted by CoalMint, said that the price decline was due to the combined impact of poor demand and
During the first half of Jan’18, around 186 ’000MT of Met Coke was imported in India, data compiled by
sinking Coking Coal prices. Purchases of Met Coke have been low as the prices were significantly higher that CoalMint Research shows.
prompted the sellers in that country to reduce their prices to encourage buying.
In the Chinese market, prices of Met Coke have moved down to around Yuan 1,900 to 2,000/MT, across various South African Coal Market Turn Bullish on
grades. The price range is lower by at least Yuan 100/MT than the earlier prices
In the line with the domes c prices, Met Coke export offers also have gone down. Offers for the 64% CSR Met A Confluence of Factors
Coke have slid to around USD 373/MT FoB China, a drop of around USD 11/MT over the week-ago rates.
Exhibi ng a similar trend, offers for the 62% CSR Met Coke also have dropped by around USD 11/MT against
the offers in the last week to around USD 363/MT FoB

Source: CoalMint Research

For Indian buyers, these offers amount to: USD 389/MT and USD 379/MT respec vely on CFR India basis.
In a communica on with a trader in the western India, he commented, ”The market is cold now, no sales are
there.” His comment virtually captures the en re state of affairs in the Indian Met Coke market. There is South African coal prices have gone up quickly of late, driven by
almost nil demand in the Met Coke market in India as the buyers are wai ng for the export offers to decline to ongoing concerns regarding the usage of pet coke in India.
the lowest possible.
Coal price index API-4 had reached USD 96 last week, but a er the Supreme Court eased the ban on
Indian Met Coke producers are also having no reason to revise their ex-works prices in such an environment.
pet coke for Cement and Lime industry, index price has slightly come down and is assessed at USD
The prices thus have undergone no change.
The current ex-works prices for the Blast Furnace grade in India are: INR 25,000/MT (east coast); and INR 95.25 .
27,000/MT, INR 27,500/MT and INR 32,500/MT(west coast). Although the recent South African coal offers have not changed from the previous week, there exist
various factors that are likely to support coal prices in the coming month.

1. Supply Tightness: Coal supply at the Richards Bay coal terminal (RBCT) was disrupted in Nov'17
due to loading issues. South African coal miners which were unable to supply their shipments in
Nov'17 are now looking to clear their previous month's backlog in Dec'17.
An Indian trader men oned that he had heard some Indian inquiries for South African coal shipments
were turned down due to low cargo availability, and an cipated the present condi on to remain un l
Jan'18.

2. Global Coal Shortage: Thermal coal market around the globe is facing supply shortage. With
China buying aggressively for winter stocking, bad weather affec ng Indonesian coal produc on and
the rising Australian coal prices, South African prices are affected as well.
Source: CoalMint Research

Pg 05

3. South African miners hold stock to gain more: Many Japanese and South Korean power u li es float
coal tenders in this part of the year. In a bid to gain profits through these tenders, African coal miners release
lesser coal in open market, so as to get higher price realisa on.
4. Indian Buying Spree: Indian imports have been increasing because of the domes c coal shortage, and it
seems that the trend is likely to con nue. Although, the Court has relaxed the ban on pet coke usage, the
government has substan ally increased import duty on the fuel to 10% which was 2.5% earlier.
Domes c pet coke producers in line with the government's call, have also raised offers by INR 500/MT. The pet
coke offers if not compa ble, will lead to another surge in South African coal prices, as the buyers may
eventually turn towards South African coal to meet their demands.
Market par cipants have informed that the discounts on coal prices have also been lowered by South African
miners. 5500 NAR coal was offered at a discount of USD 8.5/MT on API-4 index, while 4800 NAR coal was
offered at a discount of USD 13.5/MT.
South African 5500 NAR coal was assessed at USD 82/MT, FOB Richards Bay and 4800 NAR coal price was USD
68/MT, FoB Richards Bay.
Indonesia: Power Plants' Set to Increase
Domestic Coal Demand in 2018
Indonesian government is expecting domestic coal demand to reach
114.51 MnT in 2018, up 6% Y-o-Y from the estimated demand of 2017,
largely driven by the coal-fired power plants in the country.
COAL MONTHLY REVIEW
Although the consump on of coal is also rising from other Domes c industries, however it remains
small in comparison to the demand that arises from power plants.
In 2018, power plants are expected to consume 89.75 MnT coal, which is approximately 78% of the
es mated demand. Cement industry with es mated demand of 15.6 MnT comes second, followed by
paper industry with demand es mated at 3.18 MnT.
The difficulty in acquiring land permits for electric projects may provide hindrance to the growth of the
power plants. However, coal consump on would be boosted by the rising electricity demand in the
country. Total coal consump on of power plants reached 76 MnT in 2017, up from 70 MnT in 2016.
Moreover exis ng plants have also been raising their capacity output, which would require more coal.
Estimated Coal production in 2018
Indonesian government was keen to curtail coal produc on in order to preserve enough coal for future,
however coal miners in the country would be encouraged to produce more, as the coal prices had
yielded be er realisa on in 2017.
Indonesian thermal coal benchmark price HBA (or Harga Batubara Acuan) has increased 39% Y-o-Y to
USD 85.9/MT in CY17, against USD 61.8/MT recorded in CY16.
Policy makers in the country are expec ng that the government would allow 5% Y-o-Y increase in 2018
coal produc on.
Coal produc on would also be strengthened by the fact that many new mining companies are set to
commence their opera ons. Currently, there are about 2000 companies in the country that holds coal
mining permit.
With produc on set to increase in 2018, exports are also expected to rise accordingly driven by
demand from both China and India.
Pg 06

DOMESTIC
Should Indian Govt Eliminate Coking Coal
Import Duty to Soothe Steel Makers’ Woes?
While examining the steel industry in India, two dissimilar facets catch a en on:
the growing produc on and the dependency of the steel producers on imports of
Coking Coal, a vital ingredient in steel produc on.
The steel industry in India is relevant globally as the country is regarded as the third largest steel producing
na on in the world—behind Japan and China. Interes ngly, Japan’s second posi on is under threat as India is
poised to occupy that posi on, pushing Japan off to the third. The difference in steel produc on between
India and Japan is not significantly large. India hitherto produces around 95 MnT of steel, while the
produc on in Japan is at around 103 MnT, accoun ng for a difference of around 8 MnT.
With the aggressive steel produc on capacity expansion in India in place, the produc on capacity in the
country is expected to reach around 300 MnTPA by FY30. The ini a ves of raising the produc on capacity in
the country have merits as the steel is consumed domes cally and also in foreign countries
India’s posi on as a steel exporter will strengthen further in the future as the Chinese government has
implemented a slew of steel capacity cuts to reduce atmospheric pollu on. The produc on cuts in China will
shrink its export supply and the corresponding global demand is likely to shi towards other steel producing
na ons, such as India, which is speculated to play a major role in the global steel market, worth around USD
900 Bn.
The moot ques on is: is the government doing enough to nurture the globally relevant industry in the
country? The steel industry, nevertheless, is among the core industries in India with a contribu on of nearly
2% to the country’s GDP.
Looking at the Coking Coal import dependency and the apathy of the government towards the burning issue,
it seems that the burden of substan al cost pressure sustained by the country’s steel makers has not been
considered for an immediate solu on. The coal imports in India are subjected to an import duty of 2.5%; and
despite many succeeding requests by the industry to the government to eliminate the duty, no ac on has
been actuated.
The coal import dependency of the steel producers also exposes them to the vola lity in prices of the coal in
the interna onal markets, predominantly in Australia, where the frequent supply disrup ons cause the coal
prices to rise abruptly every now and then, forcing the country’s steel makers to bear the brunt.
COAL MONTHLY REVIEW
In India, despite availability of a huge Coking Coal reserve of around 34.40 BnT, the produc on is less as the
coal quality is inferior, mainly due to the possession of high ash content; rendering the coal as unfit for steel
making.
Therefore, in a country in which there is no adequacy of domes c Coking Coal, and at the same me,
the steel industry is making rapid strides, the imposi on of 2.5% import duty on the imports of the coal
is clearly not reasonable. In other words, the duty is unfriendly to the industry, and the removal of
which will apparently bring in at least some relief to the steel producers in the country.
So, should the duty be withdrawn? The Finance Ministry has to answer it in the next budget.
India: CIL Revise ROM Price of Non-Coking
Coal
Coal India Ltd (CIL) has updated ROM (Run-of-Mine) base price of Non-Coking coal produced across all
the 8 coal-producing subsidiaries including North Eastern Coalfields Ltd (NECL).
The revised ROM prices for all the coal grades shall be effec ve from 9 Jan'18. It is the first me over
the year that CIL has revised the base price of coal, with the previous price correc on being
implemented on 29 May'16.
The domes c coal in India is categorized into G1 to G17 based on the corresponding calorific values of
the coal. The calorific value of coal decreases as we move down from G1 to G17, accordingly, G1 has
the highest calorific value(ranging 7000 Kcal/kg and above), while G17 coal has the lowest calorific
value ranging between 2200-2500 Kcal/kg.
While observing the updated coal price, CoalMint has learnt that ROM prices of higher coal grades
(G2,G3, G5) and extreme lower coal grades (G15, G16, G17) have been reduced from the previous
term, whereas ROM prices of the remaining coal grades having calorific value ranging between 3100-
5800 Kcal/Kg has been increased.
Base Price of G4 grade of coal has been kept constant at INR 3000/MT. Price of highest grade G1
(calorific value exceeding 7000 Kcal/kg) is not fixed, albeit has been charged INR 100/MT extra over
and above the fixed coast of G2 grade coal, for increase in GCV (Gross Calorific Value) by every 100
Kcal/kg or part thereof.
The talks of increment in base coal price were going on ever since CIL had made the provision of INR
2300 Crore towards wage se lement in employee costs. The current price revision is suspected as a
step taken by CIL to combat the loss incurred in wage se lement.
The ROM price of Non-Coking coal Applicable for the 7 subsidiaries of CIL (SECL, MCL, CCL, NCL, ECL,
BCCL and NECL) except WCL has been listed below:
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 COAL MONTHLY REVIEW

ROM Coal Price of NON-Coking Coal Applicable for

CIL Subsidiaries (except WCL)
For Power Utilities, Fertilizer For Sectors Other than Power
Grade GCV Range Sector Utilities, Fertilizer Sector
New Price Old Price Difference New Price Old Price Difference

G2 6700-7000 3288 3450 -162 3288 3450 -162

G3 6400-6700 3144 3210 -66 3144 3210 -66

G4 6100-6400 3000 3000 0 3000 3000 0

G5 5800-6100 2737 2750 -13 2737 2750 -13

G6 5500-5800 2317 1900 417 2524 2280 244

G7 5200-5500 1926 1600 326 2311 1920 391

G8 4900-5200 1465 1420 45 1757 1700 57

G9 4600-4900 1140 1100 40 1368 1320 48

G10 4300-4600 1024 980 44 1228 1180 48

G11 4000-4300 955 810 145 1145 970 175

G12 3700-4000 886 760 126 1063 910 153

G13 3400-3700 817 720 97 980 860 120

G14 3100-3400 748 650 98 897 780 117

G15 2800-3100 590 600 -10 708 720 -12

G16 2500-2800 504 530 -26 604 640 -36

G17 2200-2500 447 470 -23 536 570 -34

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 COAL MONTHLY REVIEW

ROM Coal Prices Applicable for WCL

New ROM Coal Price
Grade GCV Range For Power Utilities Sectors Other than Power
and Fertilizer sector Utilities and Fertilizer Sector

G2 Exceeding 6700 and not exceeding 7000 3288 3288

G3 Exceeding 6400 and not exceeding 6700 3144 3144

G4 Exceeding 6100 and not exceeding 6400 3000 3000

G5 Exceeding 5800 and not exceeding 6100 2737 2737
G6 Exceeding 5500 and not exceeding 5800 2524 2580
G7 Exceeding 5200 and not exceeding 5500 2311 2423
G8 Exceeding 4900 and not exceeding 5200 1757 2109
G9 Exceeding 4600 and not exceeding 4900 1368 1642
G10 Exceeding 4300 and not exceeding 4600 1228 1474
G11 Exceeding 4000 and not exceeding 4300 1145 1374
G12 Exceeding 3700 and not exceeding 4000 1063 1275
G13 Exceeding 3400 and not exceeding 3700 980 1176
G14 Exceeding 3100 and not exceeding 3400 897 1076
G15 Exceeding 2800 and not exceeding 3100 708 850
G16 Exceeding 2500 and not exceeding 2800 604 725
G17 Exceeding 2200 and not exceeding 2500 536 643

Pg 09
 COAL MONTHLY REVIEW

The elements of other charges in coal price have been kept unchanged by CIL. Accordingly, Slack coal would be Out of these 15 blocks, 6 blocks were not opera onal due to legal hurdles involved; however, the
charged INR 30/MT extra on ROM coal, whereas Steam coal would be charges INR 270/MT extra on the basic remaining 9 blocks are expected to be start produc on in Fy19
ROM coal prices.

The current altera on in ROM coal prices is likely to make power genera on costlier, which in turn would affect
the produc on cost of the associated industries.
CIL earlier had also imposed addi onal charge of INR 50/MT on domes c coal, for all customers except those
who are availing rapid loading facility.
The addi onal cost would be imposed under the tle of evacua on charges and was made effec ve from 20
Dec'17.
New Coal Pricing Method
CIL is also mulling to change its pricing policy from INR/MT to Paise/ Energy Unit w.e.f 1 Apr’18.This will mean
that the price of every MT of coal will be determined on the basis of the intrinsic energy content; unlike in the
prevailing system in which price is the same for a range of energy content, and at the same me, the range is
divided into grades of specific energy.
Under the new system, the number of coal grades will be reduced to 10 from the exis ng 17. The broad
categories of grades will be three: High Energy, Medium Energy and Low Energy.
The ra onale behind the new system of pricing—based on global prac ces-- to provide a more accurate and
transparent system method of coal pricing. As the new system will involve customers paying different prices for
different energy content, mine managers are expected to be incen vized to maintain quality.
Coal Block Allocation in India Likely to Shift
towards Oil &Gas Model: Details
Nalco to Keep Merchant Mining Plan in
Abeyance
Navratna company- National Aluminium Company (Nalco) has
decided to freeze its foray into merchant mining operations for now.
Nalco would rather focus on its core smelter and alumina expansion
plans, a senior company executive said.
“We had announced to enter merchant mining as it figured in our business restructuring ini a ves. But,
Nalco has decided not to deal with merchant mining plans now and instead concentrate on its core
aluminium business”, he said.
Nalco plans to set up a new greenfield smelter in Odisha at Kamakhyanagar. The site chosen for the new
smelter is close to Gajamara in Dhenkanal district where Nalco is teaming up with power u lity NTPC for
se ng up a 2400 Mw c0al-fired power sta on. This power project es mated to cost Rs 14,000 crore,
will be implemented by a joint venture company tled NTPC-Nalco Power Company Ltd.
The proposed smelter’s capacity is pegged at 0.6 million tonne per annum. Power generated from the
planned super thermal power sta on will feed this greenfield smelter.
The smelter’s loca on is also advantageous as water would be easily available at Gajamara, said he. The
new smelter is expected to go on stream in nearly four years. This state-of-the-art smelter will make use
of the latest in aluminium smel ng technology.

In the next year, there is likelihood for a change in the mode of coal block Nalco is also going for brownfield expansion of its exis ng smelter project at Angul whose nameplate
allocation in the lines of the production/revenue sharing model practiced capacity is 0.46 mtpa. The navratna company has a Capex (capital expenditure) of Rs 10,000 crore to
in the oil and gas industry. add 0.5 mtpa capacity to this smelter. Land and associated infrastructure needed for this smelter

The Coal Ministry of the Government of India has formed an expert commi ee, comprising of representa ves expansion is in place. With the expansion, Nalco hopes to prune cost of produc on and achieve
economy of scale. The company will also deploy the latest technology to ensure reduced energy
of the NITI Aayog, Department of Industrial Policy and Promo on and the Coal Ministry; to study the rela ve
consump on and high produc vity
merits and demerits of the current system of bidding and the produc on/revenue sharing model. It is expected
Besides, Nalco is going ahead with its plan to hunt for strategic mineral assets overseas. The aluminium
that the proposed system will gain more enthusiasm in the industry.
company is all set to forge a joint venture (JV) company with Mineral Explora on Corpora on Ltd
At the same me, the panel will also discuss and suggest possible changes in the bidding process in vogue, and (MECL) and Hindustan Copper Ltd (HCL).
a meframe of one month will be given for the submission of the complete report. The Ministry has taken the
In the JV company to be tled 'Khanij Bidesh India Ltd' (KABIL), Nalco would have an equity of 34 per
ini a ve of forming the commi ee due to the tepid response elicited from the industry during the auc ons. cent. Both MECL and HCL's shareholding is pegged at 33 per cent each.
The fourth and fi h rounds of coal mine auc ons for non-power firms were annulled due to the poor response. The JV is tasked with iden fying, exploring, acquiring, developing and processing the strategic minerals
overseas for commercial use and for supplying to India to meet the domes c requirements due to its
During FY17, coal produc on from the opera onal auc oned/allo ed mines was 15.3 MnT as compared with
non-availability in the country and giving a boost to Make in India drive of the Government of India.
15.8 MnT in FY15. Also, produc on from the cap ve coal mines was lower due to some mines yet to resume The iden fied strategic minerals include n, tungsten, tanium, gallium, lithium, tantalum, cobalt,
produc on. niobium, selenium and indium. The objec ve is to make the country self-sufficient in such minerals.
Ac on has been already ini ated against the 5 non-opera onal coal auc oned mines, and show-cause no ces The JV firm would hunt for such mineral assets primarily in South Africa and other African countries. It
were issued for 15 allo ed coal mines for devia on from the scheduled produc on melines. can either go for outright buyouts of the assets or forge e-ups with local companies there.

Pg 10

Indonesia May Limit Coal Output Increase by 5% in 2018
Indonesia may allow companies to raise their produc on by maximum 5% this year, from actual produc on in
2017, as the country seeks to control output.
With 5% maximum raise in produc on, Indonesia may produce 485 MnT of coal this year, from 461 MnT of
actual coal produc on in 2017, Bambang Gatot Ariyono, director general of coal and minerals at the Energy
and Mineral Resources Ministry, said.
Indonesia has been struggling to curb coal produc on as it wants to preserve deposit for future power plants.
But the country's annual coal output has been steadily exceeding the government's target, even when prices
were low, as producers tried to cash in to repay debts.
The government's official coal output target for 2018 is 425 MnT.
Australia: Adani to Develop Coal Mine on an Owner Operator Basis
Indian mul na onal conglomerate company, Adani group has decided to develop and operate its Carmichael
coal mine in Australia on an owner operator basis, a er failing to raise funds to outsource the project.
Adani Group had earlier offered Australian company, Downer to carry-out the opera ons of its mine, and was
desperately looking for financiers who can invest in the coal mine and the associated infrastructure.
The Indian company was also seeking support from the Federal and State governments in Queensland region,
including a NAIF (Northern Australian Infrastructure Facility) loan, which was aimed to provide financial
stability to the coal project.
However, any hope of receiving the NAIF loan was sha ered, when the newly elected Queensland government
had vetoed against the coal project.
COAL MONTHLY REVIEW
The Carmichael coal project had been highlighted for the wrong reasons amid local protest related to
environmental concerns, thereby forcing several banks to stay away from the project. The NAIF loan
rejec on had le the Adani group with no choice than to terminate its contract with Downer and run
the project by itself.
China: NDRC Aims to Supersize Coal Sector through Mergers
The Na onal Development and Reform Commission (NDRC) of China has said that by 2020 large coal
mining companies in that country, each with the produc on capacity of more than 100 MnTPA, will be
consolidated to form mega-miners. The underlying intent is to create globally compe ve mining
companies, and also to modernize the sector.
As in 2017, the country had more than 4,000 coal mines, with the total capacity of around 3.41 BnTPA.
India: Coal Price Hike to Impact Secondary Steel Makers
The hike in prices of coal by state-run Coal India Limited (CIL) is likely to make producing steel for
secondary steel players costly by up to INR 500, Indian credit ra ng agency ICRA, said in its report.
The increase in coal prices was followed by an addi onal levy on evacua on facility charges (EFC), of
INR 50/MT, from 20 December.
The quantum of impact would however depend on the grade of coal used in the sponge iron kiln and
cap ve power plant. This is due to the fact that the level of coal price increase implemented by CIL for
the non-regulated sector was uneven across various grades.
Pg 11
 CIL Production December 2017 Indonesian Coal
What Happened

16.00
Indonesian coal prices witnessed a hike of USD 2-3/MT
14.90
14.41 during the month majorly on account of winter restocking
58.89 54.64
14.00 13.27 13.49
by Chinese buyers.
12.00
What May Happen?
10.00 9.50
8.65
8.00 7.50
Even if buying from China is halted after the beginning of
5.68
their New Year Holidays, the need to preserve or rebuild
6.00
5.00 4.72
4.65 4.36 inventories at Indian power plants will continue to offer
3.99
4.00 3.22 support to the Indonesian coal prices.
2.00

0.00
0.08 0.11 South African Coal:
SECL MCL NCL CCL WCL ECL BCCL NEC
What Happened

South African coal prices had maintained stability during

the month supported by strong demand from India.

What May Happen

Coal Prices are expected to rise under the confluence of the
supply tightness resulting from congestion at RBCT; and
coal miners’ obligations to gain higher price in export

256
Australian Coking Coal Prices:
244 232.68 What Happened
232 227.37

220 Absence of fresh supply in Australia during the winter

207.33
208 holidays, which commenced on 20Dec’17, had resulted in
198.7 187.5
FoB Prices in USD

196 186.5 193.2 abrupt rise in Coking Coal prices. Spot prices of the Premium
184 HCC had reached around USD 262.25/MT FoB Australia.
187.17
172 163.88
160 160.97 162

148 What May Happen

146.6
136
As mining activity will resume after the holidays, from 9th
124
Jan’18, the prices are likely to come down.
112

Pg 12
 COAL MONTHLY REVIEW [Jan 2018]

Dec'17 Nov'17 Oct'17

113.08 109.26 110.47

92.54 90.18 88.07

55.36 54.06 56.31

46.33 45.35 47.18