Worried over domestic coking coal price hike effected by state-owned CIL, the country's largest steel maker SAIL today said it is in negotiations with the miner on the issue as it is difficult for the company to absorb the increase.

"We are under negotiations with them and working model will come out," Steel Authority of India Ltd (SAIL) Chairman P K Singh told Press Trust of Indida on Coal India Ltd's recent hike in coking coal prices.

CIL arm Bharat Coking Coal Ltd this month increased the prices of coking coal by about 20 per cent.

Another subsidiary of the world's largest miner Central Coalfields Ltd has also increased price of metallurgical coal this month.

"SAIL are in dialogue with CIL. We have told (them) that at this stage it is difficult for us to absorb (the hike in coking coal price). They have agreed to form a committee," Singh said.

The panel which will be constituted will have members from both the state-owned firms.

SAIL too is a state-owned firm and is a prime consumer of coking coal as well as a major customer of CIL's metallurgical coal.

"We have an MoU with Coal India. Once we are in that MoU, that pact remains applicable for the entire financial year. MoU means we also have an assured offtake from Coal India and We take coking coal from them. We take domestic coking coal supply only from Coal India," Singh said.

According to an official, the price of various grades of coking coal of CIL varies between Rs 2,400 and Rs 5,050 per tonne.

Asserting that SAIL was unable to recover its variable cost of production, he said there was a lot of pressure on its operations.

On possibility of price increase by the steel PSU, he said "it will depend on market situation". Of its total requirement, SAIL imports 86 per cent of metallurgical coal, while the rest is sourced indigenously.

The steel PSU has existing captive coking coal production of nearly 0.5 million tonnes per annum.

The global coking coal price, which was at USD 80 per tonne in January last year, rose to USD 283 per tonne in December, Indian Steel Association Secretary General Sanak Mishra said.

However, in early January, global price of metallurgical coal came down to USD 193 per tonne, Mishra said.

(Source: Economics Times, Janaury 30, 2017)

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• A CIL official told Financial Express that some plants are flush with coal while some others have neither coal supply nor power purchase agreement.

• Subhasri Chaudhuri of the Coal Consumers Association of India felt that the recent upward revision of washed coking coal was linked to the prices of international coking coal.

 A CIL official told Financial Express that some plants are flush with coal while some others have neither coal supply nor power purchase agreement. In some cases, they have coal supplies but do not have power purchase agreements with distribution companies. Also, some plants have the letter of assurance for coal supplies and have signed power purchase agreements but not getting the fuel. According to norms, plants with only valid power purchase agreements are entitled to get coal but in many cases plants with valid power purchase pacts are coal starved due to which they are unable to produce power and keep their supply obligation.

“We are trying to broaden the e-auction window so that it boosts demand and cuts down on the inventory cost of buyers. We will now allow lifting coal beyond one year of the purchase through e-auction, which, at the prevalent scheme, is allowed up to six months of the purchase. While this will help book larger volumes, users can lift whenever they want,” the CIL official said.

In fact, CIL was trying to improve on the demand of coal, which otherwise brought a tepid response to the e-auctions in 2016.

While the ministry didn’t agree that there was over supply of coal last year, it said the excess availability was because of the power plants operating at low PLF.

The ministry also adopted a 20% add on formula on fixing the floor price of coal above the notified price for e-auction for which there was less premium. However, the ministry cited that there was a 15% drop in imports, which saved R2,300 crore worth of foreign exchange.

According to mjunction CEO Vinay Verma, the average price gain over notified price during FY16 was 31.69%, while CIL could sell 14.81% through e-auction during the period.

CIL conducted 188 spot e-auctions, 13 forward e-auctions, 27 special forward e-auctions and 11 exclusive e-auctions as a new initiative during FY 16.

While Verma agreed that bringing about equilibrium in supplies to the power sector was important, he added that with larger availability of coal, small and non-core consumers like paper, ceramics, brick kilns and others – which were coal starved for years – got coal to their requirement. The situation would continue to remain so this year, Verma felt.

Subhasri Chaudhuri of the Coal Consumers Association of India felt that the recent upward revision of washed coking coal was linked to the prices of international coking coal.

Bharat Coking Coal hiked prices of washery 3 grade coal by 52% and washery 4 grade coal by 25%, which was directly linked to power utilities. Central Coalfields prices were linked to steel and a 99% increase – which put the price to R11,500 per tonne from R5,780 per tonne – would only encourage imports.

(Source:  Financial Express, 28 January 2017)

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Coal production from captive mines last fiscal wit-nessed a significant rise of 33.64 percent at 52.769 million tonnes (MT) over the previous year. Coal production in FY 2013-14 stood at 39.484 MT, according to provisional data from the last fiscal, according to provisional coal production data of the last fiscal. The government is eyeing to achieve 1.5 billion tonnes of coal production by 2020.

"During the year 2014-15, captive coal blocks contributed 52.769 MT of coal to all India coal production of 612.435 MT," it said. As per the government document, out of total allocated 218 mines 80 blocks were deallocated by the end of fiscal 2013-14. Thus at the end of 2013-14, 138 coal blocks remained allocated under the category of captive coal blocks.

However, by virtue of the Supreme Court order in September last year out of 218 captive coal mines, allocation of 204 blocks was cancelled for fresh allocation. Around 42 producing coal blocks were allowed to produce coal up to March 31, 2015 and allocation of 14 mines was not cancelled, it said. The government had earlier expressed confidence that the country will produce 1.5 billion tonnes of coal by 2020, including one billion tonnes by Coal India (CIL).

CIL accounts for over 80 percent of the domestic coal output. CIL achieved an output of 229.54 million tonnes (MT) in the first six months of the current fiscal, missing its target of 235.49 MT. Coal India's output target for the current fiscal stands at 550 MT as against the recorded figure of 494.23 MT last fiscal.

According to the government provisional data in 2014-15, the total production of raw coal in India increased by 8.25 percent to 612.435 MT from 565.765 MT in 2013-14.

(Source – Assorted with the Inputs from PTI)

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