Professional Documents
Culture Documents
SUBMITTED BY
AMRITRAJ
MBA-(2009-2011)
Enrollment No. : A30101909149
This is to certify that Mr. Amrit Raj , a student of Post Graduate Degree in
Management, Amity Global Business School, Noida has worked in the BHRAT
The period for which he was on training was for 8 weeks, starting from 07/06/2010
to 30/07/2010.This Summer Internship report has the requisite standard for the
partial fulfillment the Post Graduate Degree in International Business. To the best
of our knowledge no part of this report has been reproduced from any other report
Signature Signature
AmritRaj
Enrollment no
A30101909149
Table of content
1) Executive summary
2) Introduction
a)Types of coal
b) production of coal in other parts of world
c) Objective
d)Gradation of coal
3) Research methodology
a) Research objective
c) Research Plan
4) Industry profile
a) review of literature
b) History
c)About CIL
d) Major companies
e)SWOT Analysis
5) Company Profile
a) History of B.C.C.L
b) organization chart
c) International Cooperation
d) Performance Graph
e) SWOT Analysis
6) Issue and challenges faced by organization
8) Recommendation
9)Bibliography
EXECUTIVE SUMMARY
Topic : pricing and distribution of coal
INDUSTRY OVERVIEW
There are 21 coking coal washeries in production both in private and public sectors.
Production of clean coal in these washeries during 1989-90 was 12 million tonne and it is
expected to go upto 14 million, tone during 1990-91. There are 2 washeries under
construction now and these are expected to be completed by 1995. Present washeries face
problems in optimum production more on quality aspects than on quantity and it appears that
trend of using imported coking coal of low ash to blend with indigenous high ash coal for
steel sector requirement, may continue for some time to come on considerations of optimised
steel production. Besides the above coking coal washeries, Bina deshaling and Piparwar
Future prospects of washeries for non- coking coal beneficiation, appear to be bright as, in
view of sharp rise in demand for coal, there is increasing trend in mechanised mining of
to accept the same. Planning Commission has taken the decision that non-coking coal meant
for Thermal Power Plants situated far away from feeding coalfield, should be beneficiated.
The benefits of low ash coal burning in boilers are realised but reimbursement of extra cost
o The major role CIL is the price fixation of the coal according to their grade
to achieve business results.
in rock strata in layers or veins called coal beds. The harder forms, such as anthracite coal,
can be regarded as metamorphic rock because of later exposure to elevated temperature and
pressure. Coal is composed primarily of carbon along with variable quantities of other
Coal begins as layers of plant matter accumulate at the bottom of a body of water. For the
process to continue the plant matter must be protected from biodegradation and oxidization,
usually by mud or acidic water. The wide shallow seas of the Carboniferous period provided
such conditions. This trapped atmospheric carbon in the ground in immense peat bogs that
eventually were covered over and deeply buried by sediments under which they
metamorphosed into coal. Over time, the chemical and physical properties of the plant
remains (believed to mainly have been fern-like species antedating more modern plant and
Coal, a fossil fuel, is the largest source of energy for the generation of electricity worldwide,
as well as one of the largest worldwide anthropogenic sources of carbon dioxide emissions.
Gross carbon dioxide emissions from coal usage are slightly more than those from petroleum
and about double the amount from natural gas.[1] Coal is extracted from the ground by
as opposed to deeper waters which gave rise to oil-bearing rocks derived from marine
species. As geological processes apply pressure to dead biotic material over time, under
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
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 coal is 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
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 and petrified 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.
Coal in Australia
Coal in Australia is mined in every state and territory of the country. It is used to generate
electricity and is exported. 75% of the coal mined in Australia is exported, mostly to eastern
Asia. In 2000/01, 258.5 million tonnes of coal was mined, and 193.6 million tonnes
exported.
Coal also provides about 85% of Australia's electricity production. In fiscal year 2008/09,
487 million tonnes of coal was mined, and 261 million tonnes exported. Australia is the
Coal mining in Australia is controversial because of the burning of exported and imported
coal which contributes to climate change, global warming, sea level rise and the effects of
greenhouse gas emissions, not counting export coal, based on 2004 GHG inventory.
Two forms of coal are mined in Australia, depending on the region: high quality black coal
Black coal is found in Queensland and New South Wales, and is used for both domestic
power generation and for export overseas. It is generally mined underground before being
transported by rail to power stations, or export shipping terminals. Black coal was also once
exported to other Australian states for power generation and industrial boilers.
Brown coal is found in Victoria and South Australia, and is of lower quality due a higher ash
and water content. As a result Victoria adopted German power station and briquette
technology in the 1920s to utilize the brown coal reserves of the Latrobe Valley. Today
there are three open cut brown coal mines in Victoria used for baseload power generation
Overview
Australia had 2009 coal production of 409.22 million tonnes, 6.68% of the world total. The
world's major producers are China, the USA, India, Australia, Russia, Indonesia and South
Africa. Australia had 2009 coal consumption of 50.82 million tonnes oil equivalent, 1.55%
Coal is Australia's major mineral export and accounts for nearly 25% of Australia's export
earnings. Australia is the world's 4th largest coal producer, and, according to the 2008 BP
Statistical Energy Survey, produced 393.92 million tonnes of coal in 2007. Australia is also
the world’s largest net exporter of coking and steaming coal. According to the 2008 BP
Statistical Energy Survey, Australia had end 2007 coal reserves of 76600 million tonnes,
9.03% of the world total and consumed 53.13 million tonnes oil equivalent. Australia
exported 340.79 million tonnes of coal in 2007. Japan is the destination for over 60 per cent
98% of Australia’s export production coal deposits are located in Permian age sediments
(250 million years old) in the Bowen Basin in Queensland and the Hunter Valley basins in
New South Wales. Western Australia has some producing mines south of Perth. Australia
also has reserves of lower grade lignite coal, located in Victoria. Coal is exported from nine
terminals at seven ports along the east coast. Australia’s coal industry is dominated by BHP
Billiton, Anglo American (UK), Rio Tinto (Australia-UK), and Xstrata (Switzerland).
BHP Billiton is the world’s largest supplier of seaborne traded hard coking coal from its
predominantly open-cut mines at its low cost asset base in Queensland (owned in alliance
with Mitsubishi Corporation) and New South Wales (100 per cent owned).
COAL IN CANADA
The Canadian coal industry plays an important role in the Canadian economy, both as a
mining industry and as an energy provider. According to the 2008 BP Statistical Energy
Survey, Canada had 2007 coal production of 69.36 million tonnes, 1.17% of the world total,
while consuming 30.42 million tonnes oil equivalent. Close to one half of Canada’s coal
Canada is a major coal producer and consumer, with, according to the 2008 BP Statistical
Energy Survey, end 2007 coal reserves of 6578 million tonnes. Currently over half of
Canada’s coal production is bituminous, with sub bituminous and lignite the rest. Nearly
90% of Canada’s coal consumption is used for power generation, with the remainder used in
The main coal producing regions are in Alberta (nearly 50%), British Colombia and
Saskatchewan. Minor coal is produced along the east coast provinces of New Brunswick and
Nova Scotia.
The People's Republic of China is the largest consumer of coal in the world and is about to
become the largest user of coal-derived electricity, generating 1.95 trillion kilowatt-hours per
year, or 68.7% of its electricity from coal as of 2006 (compared to 1.99 trillion kilowatt-
hours per year, or 49% for the US). Hydroelectric power supplied another 20.7% of
China's electricity needs in 2006. With approximately 13 percent of the world's proven
reserves, China has enough coal to sustain its economic growth for a century or more even
though demand is currently outpacing production. China's coal mining industry is the
deadliest in the world and has the world's worst safety record where an average of 13
people die every day in the coal pits, compared to 30 per year for coal power in the United
states Coal production rose 8.1% in 2006 over the previous year, reaching 2.38 billion
tons, and the nation's largest coal enterprises saw their profits exceed 67 billion yuan, or
$8.75 billion .
While China boasts the greatest use of coal power, it is third in the world in terms of total
coal reserves behind the United States and Russia. Most reserves are located in the north and
north-west of the country, which poses a large logistical problem for supplying electricity to
the more heavily populated coastal areas Coal power is managed by the State Power Grid
Corporation.
OBJECTIVE : Pricing and distribution policy of CIL (B.C.C.L)
Pricing policy
Pricing policy of coal is mainly based on the categories of coal or quality of coal produced.
COKING COAL :
These coals, when heated in the absence of air, form coherent beads, free from volatiles,
These coals, when heated in the absence of air, form coherent beads not strong enough to
be directly fed into the blast furnace. Such coals are blended with coking coal in adequate
Mainly used as blend-able coal in steel making, merchant coke manufacturing and other
metallurgical industries
This coal is not used in metallurgical industries. Because of higher ash content, this coal is
not acceptable for washing in washeries. This coal is used for power utilities and non-core
sector consumers.
NON-COKING COAL :
Also used for cement, fertilizer, glass, ceramic, paper, chemical and brick manufacturing,
HARD COAL :
Hard coke is formed from coking / semi-coking coal through the process of carbonisation.
These coals have undergone the process of coal washing or coal beneficiation, resulting in
Beneficiated and washed non-coking coal is used mainly for power generation
Beneficiated non-coking coal is used by cement, sponge iron and other industrial plants
GRADATION OF COAL
A. COKING COAL
Grade Parameter
Grade Parameter
C. NON-COKING COAL
A Exceeding 6200
D. HARD COKE
Grade Ash %
E-Auction
By Road
Railways
E-Auction
Some of the small sector company purchase the coal by e-auction.the e-auction is
1. spot e-auction
2. forwarded e-auction
Objective:
Coal distribution through e-Auction has been introduced with a view toprovide
access to coal for such buyers who are not able to source coal through theavailable
E - Auction has been introduced to facilitate across the country wideranging access
to book coal on-line for all sections of coal Buyers enabling them to buy coal through
With reference to para VI (4) of the ‘e-Auction Scheme 2007’ for Spote-Auction the
detailed terms and conditions are given below :
1. Eligibility:
Any Indian Buyer (viz. individual, partnership firm, companies etc.) canparticipate in e-
2. Registration:
2.1 Before participation in the e-Auction, a prospective Buyer shall berequired to get
itself / himself registered with the Service Provider appointed by the CIL / Coal
available on the Website of the respective Service Providers. The application shall
be made along with the required documents such as copy of Income Tax
prescribed by the service provider. Registration can be done either online, or at any
2.2 After the registration, all-prospective Buyers will have an auto generated
“Unique User ID” & a “password” based on which they can log in. Details of
theirrespective websites.
2.3 The service provider shall issue “Photo Identity Card” to their registered
2.4Only one registration will be done against one PAN number. However,based
on more than one independent valid sales tax registration, more than one
details of valid sales tax registration will be indicated in each ‘Photo Identity
Card’.
2.5 All Buyers having been registered with the service providers shall also have
Rs.200/- per tonne, with the Service Provider. This EMD shall not be specific
for a particular Subsidiary Coal Company and shall be available with the
Service Provider for participation in the e-Auction across the Subsidiary Coal
3. Notification:
3.1 Coal companies would draw program for conducting at least two e-Auctions per
month and notify the same, minimum 7(seven) days in advance,through display on
the Company’s notice board and putting the same on the CoalCompany’s websites
3.2 There will be separate auction for dispatches by rail and road mode.The
minimum quantity for bidding would be 50 (fifty) tonnes for a source for Road mode,
where as in case of Rail the minimum quantity for bidding would be 1 (one)rake. The
rake size shall be as per prevalent Railway Rules. The quantity of coal ina rake shall
be as indicated in the notice of E-auction.
3.3 The Buyer should satisfy itself / himself about the Rake fit stations /destinations
from the Railways before participation in e-Auction by rail, Non acceptance of the
programme, even after the option exercised under extant Railway rules, on account
of rake-fit stations / destinations being not accepted by the Railways shall be treated
4. Bidding Process
4.1 The registered Bidders shall be required to record their acceptanceafter login, of
the Terms & Conditions of the e-Auction before participation in theactual Bidding
Process.
4.2 Before participating in e-Auction, bidders are to satisfy themselves with the
4.3 Prospective Bidders are entitled to Bid for the quantity to the extent of amount of
EMD for which is available with the service provider in the bidder’s account at the
time of bidding.
4.4 The Buyers while bidding shall quote their “Bid price” per tonne in Indian Rupee
as base coal price on FOR/FOB colliery basis, exclusive of other charges like
cess, royalty, SED, & any other charges as will be applicable at the
time of delivery. These charges as well as freight etc. shall be on the Buyer’s
account.
4.5 The bidder has to bid for a price equal to or above the reserve price tosecure
time on portal of service provider shall be adhered to but for the event offorce
last Bid time, plus 5 minutes, so that opportunity is given to other Bidders for making
4.7 The Bidder shall offer his Bid price (per tonne) in the increment of 10/- (Rupees
ten) during the Normal e-Auction period. During the extendedperiod of first two (2)
hours, the Bidder shall offer his Bid price in the increment of Rs.20/-. Beyond this
4.8 While maintaining the secrecy of Bidder’s identity, the web site shall register and
display on screen the lowest successful Bid price at that point of time.The system
will not allow a Bidder to Bid in excess of his entitled quantity as per his EMD.
However once a Bidder is out-bided by another (in part or full) the particular Bidder
(a) Precedence will be accorded to the highest bid price in the descending order
(H1, H2, H3 and so on) as long as the offered quantity is available for
allocation.
(b) If two or more buyers bid the same highest price, precedence for allotment
(c) will be accorded to the buyer who has placed the bid for the higher quantity.
(d) In case two or more buyers bid the same price and the same
quantity,precedence will be given to the buyer who has accorded his bid first
with reference to time.
5.1 Each successful bidder will be intimated through e-mail / SMS by the Service
Provider on the same date after the closure of e-Auction. However, it will be the
responsibility of the bidder to personally see and download the result displayed on
5.2 The successful bidders after the e-Auction, will be required to deposit coal value
with the concerned coal company, within a period of seven working days,after the
required to be made.
quantity, shall be blocked and will be transferred to Coal Company by the service
6. Terms of payment:
6.1 The coal value to be deposited in advance by the successful bidders shall be
computed and deposited after making provision for the EMD amount for the
subsidiary company. In other words, the coal value to be deposited and EMD
6.2 EMD amount shall not be treated as an adjustment towards the coal value but
would stand converted into a ‘Security Deposit’ for performance of the bidders
6.3 The above security deposit (as converted from the EMD amount) would be
adjusted as coal value, only after completion of lifting of coal covered under
coal value paid, excluding security deposit. However, in the event of default in
road supplies, once the coal value is deposited by way of demand draft /pay
order, drawn in favour of the concerned coal company, along-with the debit
advice issued by the bank, certifying that the DD/pay order has been issued, by
debiting the account of the concerned Buyer, Sale/Delivery orders shall be issued
within seven days by the coal company after encashment of buyer’s financial
instrument.In case of successful bidders, if the coal value is deposited for less than
the allotted Quantity but not below 50% of the allotted quantity or, 50 tonne
whichever is higher, the coal company shall accept the payment for the said amount
and forfeit the EMD for the failed quantity. However if the buyer fails to deposit the
coal value for at least 50% of the allotted quantity or 50 tonnes whichever is higher
6.4 However, a successful bidder whose allotted quantity is only 50 tonnes will be
allowed to deposit coal value for minimum 90% i.e 45 tonnes within the
stipulated period of 7 days without which the amount shall not be accepted. In
such event they shall be permitted to deposit the balance fractional amount,
limited to 10% of the total coal value of 50 tonne, within the subsequent period of
3(three)working days. In spite of this, if they fail to deposit full coal value of 50
6.5 In case of rail borne supplies, there shall be two options available.While
submitting program, the bidder at his option can deposit 100 % BG on the
prescribed format from the buyers own account or else may deposit 100%
amount through demand draft /pay order, drawn in favour of the concerned coal
company,along with the debit advice, issued by the bank certifying that the
DD/pay order has been issued by debiting the account of the concerned Buyer.
6.6 In case of Buyers who have booked their rail programme through BG, a notice
for deposition of coal value by way of DD/Pay order, will be displayed on the notice
board of the coal company, at least three working days in advance before the
expected date of offer to the Railways for allotment. The Buyer will be accordingly
required to deposit DD/Pay Order along with the debit advice to the tune of BG
involved in the programme, within 48 hours of such notice.In the event of non-
deposition of 100% coal value by the Bidder in terms of Clause-6.7 above, the
consent given against rake programme will bewithdrawn by the coal company and
1.8 The Buyers shall also have the option of e-Payment once the system in the
1.9 Coal companies is suitably developed & the same is notified on the websites
accordingly.
By Road:
1) Coal company shall issue Sale / Delivery Orders to the successful bidders in
terms of Clause 6.4 after realisation of payment. The Buyer has to submit the
option before the issue of the Sale / Delivery Order for movement of the coal
“within state” or “outside state” and the Sale / Delivery Order would indicate
the Same accordingly. However, the challan issued by the Coal Company
2) The validity period to complete lifting of coal by road shall be 45 days from
By Rail:
1) The seniority of buyers in case of rail borne supplies shall be guided by the
2) The quantity allotted against each rake is indicative quantity only and delivery
shall be made on the basis of actual weighment by the Seller at the loading end.
3) The validity period for seeking allotment of rake in case of rail supplies shall be
45 days from the date of issue of consent by the coal company. Once the rake
is allotted it shall remain valid for supply of coal as per prevailing Railway
Rules.
4) Although loading will be the responsibility of the coal company, but to avoid any
complaint regarding over-loading, under loading and quality, the Buyer himself or
his authorized representative may supervise loading at the loading point. The
authorized representative must carry valid authority letter along with photocopy of
RESEARCH OBJECTIVE:
To find out pricing policy of coal done by CIL market.
To have the brief idea over fluctuation of price of coal.
To know about the distribution methods of coal
Descriptive Research Design is the design followed in the study. As a part of exploratory
research, primary data has been collected and for the descriptive purpose secondary data
has been collected. Both these types of data have been used for the study of derivative
market and its knowledge in the minds of the investors.
DATA:
The data which have been collected for this research purpose are taken from the market in
the form of primary data and secondary data.
a. Primary Data:
The primary data which have been used here is collect with the help interaction with CGM
of marketing and sales department , linkage, roadsales
b. Secondary Data:
The secondary data have been collected through available documents like articles on
derivative, news paper and websites.
RESEARCH PLAN:
Research plan for this study was to follow the collected information from the CGM of
various department and they told how they their plan works .
STASTICAL ANALYSIS:
engaged in the mining of coal and coal based products. Further, it is also engaged in
providing mining consultancy services across India and abroad. CIL is the largest
company in the world in terms of coal production. It operates through eight wholly
owned subsidiaries namely, Bharat Coking Coal Limited; Central Coalfields Limited;
Western Coalfields Limited; Eastern Coalfields Limited; Central Mine Planning and
Design Institute Limited; Mahanadi Coalfields Limited; South Eastern Coalfields Limited;
Coal India Ltd. (CIL), a holding company, is wholly owned by the Government of
India through the Department of Coal and the Ministry of Mines and Minerals. CIL is
responsible for 88 percent of coal output in India. In 1999, production was 256.5
million tons of raw coal, up from 250.6 million tons the previous year. However, like
many state-owned concerns, CIL’s financial performance has been generally poor.
During the financial year 2000-2001, CIL reported a loss of Rs 1,400-crore—a crore
is equal to 10 million. At the start of the new millennium, the company was under
scrutiny by the Indian government for its performance and business practices. Coal
provides more than 67 percent of India’s energy requirements. However, India’s per
capita energy consumption is among the lowest in the world. India has vast coal
reserves, and these can be mined cheaply, although the coal is generally of poor
quality and has a high ash content. In 1998, India’s total coal reserves were
estimated at 200 billion tons, of which over 69 billion tons were proven reserves. The
bulk of India’s coal reserves are in the states of Bengal, Bihar, Orissa, and Madhya
Pradesh. Due to the structure of the coal mining industry in India, CIL’s role is a
major one, and its performance and operations very much reflect the policies and
History of CIL
The Indian energy sector is largely dependent on coal as the prime source of energy. After
the Indian independence, a greater need for coal production was felt in the First Five Year
Plan. In 1951 a Working Party for the coal industry was set up, which suggested the
amalgamation of small and fragmented producing units. Thus the idea of a nationalised,
In the pre-nationalised era coal mining was controlled by private owners, and suffered from
their lack of interest in scientific methods, unhealthy mining practices and sole motive of
profiteering. The miners lived in sub-standard conditions as well. 1n 1956, the National Coal
Development Corporation (NCDC) was formed with 11 collieries with the task of exploring
Nationalisation of the Indian coal industry in the early 1970s was a fall-out of two events.
The first was the oil price shock, which led the country to take up a close scrutiny of its
energy options. A Fuel Policy Committee set up for this purpose identified coal as the
The objective of nationalisation was the conservation of the scarce coal resource,
particularly coking coal, in India by:
Government of India took over all coking coal mines on October 16, 1971 and nationalised
them on May 1, 1972. Bharat Coking Coal Limited (BCCL) was thus born. Following the state
takeover of non-coking coal mines, Coal Mines Authority Limited (CMAL) was formed in
1973, leading to the formation of a formal holding company - Coal India Limited – on
November 1, 1975.
Timeline
2007 : Coal India and four of its subsidiaries NCL, SECL, MCL, WCL accorded ‘Mini Ratna’
status
1992 : Mahanadi Coalfields Limited (MCL) formed out of SECL to manage the Talcher and IB
1985 : Northern Coalfields Limited (NCL) and South Eastern Coalfields Limited (SECL) carved
1975 : Coal India Limited formed as a holding company with 5 subsidiaries: Bharat Coking
Coal Limited (BCCL), Central Coalfields Limited (CCL), Western Coalfields Limited (WCL),
Eastern Coalfields Limited (ECL) and Central Mine Planning and Design Institute Limited
(CMPDIL).
1973 : Non-coking coal nationalised; Coal Mines Authority Limited (CMAL) set up to
manage these mines; NCDC operations bought under the ambit of CMAL
1972 : Coking coal industry nationalised; Bharat Coking Coal Limited (BCCL) formed to
1956 : National Coal Development Corporation (NCDC) formed to explore and expand coal
Upto 1900 : Minimal development; river transportation used to transport coal to Calcutta;
1843 : Bengal Coal Company takes over Ranigunj Coal Mines and others; is first Joint Stock
1835 : Carr, Tagore & Company takes over Ranigunj Coal Mines
1774 : Warren Hastings initiates commercial coal mining at Ranigunj (West Bengal)
Coal India Limited (CIL), a holding company, is a state-owned mining corporation and the
largest coal producer in India. In 1990, production was 179 million tons of hard coal, up
from 172 million tons the previous year. This comprised almost 88% of the coal output in
India. However, like many state-owned concerns, CIL’s financial performance has been
generally poor, and it has made profits in only two years since its creation in 1975. During
the financial year 1989-1990 CIL made a loss of Rs230 million. Although this loss was less
severe than those made in the period immediately after nationalization, it marked a decline
from the previous financial year when it made a profit of Rs82 million. Coal provides more
than 50% of India’s energy requirements. However, India’s per capita energy consumption is
among the lowest in the world. India has vast coal reserves, and these can be mined cheaply,
although the coal is generally of poor quality and has a high ash content. In 1991, India’s
total coal reserves were estimated at 176 billion tons, of which over 30 billion tons are
proven reserves, within 200 meters of the coal pit or the workings. Of the total, coking
coal—coal from which the volatile elements have been removed, making it suitable as a fuel,
and for metallurgical purposes—comprises 24 billion tons (11 billion tons proven). The bulk
of India’s coal reserves are in the Bengal-Bihar coalfields in the west of the country. Due to
the structure of the coal mining industry in India, CIL’s role is a major one, and its
performance and operations very much reflect the policies and priorities of the government
of India.
The Indian coal industry has its origins in the early 19th century, when mining activity
became commercial in conjunction with the expansion of the railway network, particularly in
the west of the country. The monopoly interests of the British East India Company were
revoked in 1813. Initially, the coal fields were operated by a large number of Indian private
companies which possessed captive—or company-owned—coalfields to support their iron
and steel works. By 1900 there were 34 companies producing 7 million tons of coal from 286
mines. Production continued to grow in the first half of the 20th century, especially during
World War I. Demand continued to grow during World War II, and production reached 29
million tons by 1945. By then, the number of companies had increased to 307, and the
number of mines to 673. The trend continued for almost a decade after India’s independence
demand for energy, and in the absence of alternative sources, coal was targeted as the major
source of power for industrialization. Under the government’s Second Five Year Economic
Development Plan 1957-1961, a target of 60 million tons was set for the end of the plan
period. However, government economic planners were convinced that the private sector
would be unable to meet this target. Hence, the National Coal Development Corporation
(NCDC) was formed, which took the old railway collieries as its nucleus and opened new
mines as well. Production of coal increased from 38 million tons in 1956 to 56 million tons
in 1961.
During the 1960s, most of India’s collieries continued to be operated by the private sector,
with the exception of NCDC and the Singareni Collieries, both in the public sector. At the
national level, three factors emerged to force the government to consider the nationalization
of the coal industry. First, there was a fear that contemporary mining methods were leading
to great wastage. Second, the government predicted that future demand for coal would be
particularly heavy in view of its industrial development priorities. Finally, during the Third
Five Year Plan 1962-1966, as well as the period 1966-1969, despite the increase in
During the period 1971-1973, the government carried out a series of nationalizations of the
privately owned coal companies in a major effort to increase production and overcome the
shortage of coal. At the time of the nationalizations, total coal production in the country was
72 million tons, and the industry had been passing through cycles of shortages and surpluses
which prevented effective planning for expansion and modernization. There were over 900
mines in operation, some of which were producing only a few thousand tons of coal a month,
Coking coal mines, with the exception of the Tata Iron and Steel Company, were
nationalized in May 1972, and a new public sector company, Bharat Coking Coal Limited
(BCCL), was floated to manage them. In May 1973, the non-coking coal mines were also
nationalized and brought under the control of the Coal Mines Authority (CMA). The
Department of Coal was set up in the Ministry of Energy to oversee the public sector
companies. Further reorganization of the industry led to the formation of Coal India Limited
(CIL), which also absorbed NCDC, in November 1975. The reorganization involved placing
the majority of the public sector coal companies under CIL. CIL has six subsidiaries. Five of
these are involved in production: BCCL, located at Dhanbad; Central Coalfields Limited at
Ranchi; Western Coalfields Limited (WCL) at Nagpur; Eastern Coalfields Limited (ECL) at
Sanctoria; and North Eastern Coalfields Limited (NECL) at Margherita; the sixth is the
Central Planning & Design Institute at Ranchi. Together with the Neyveli Lignite
Corporation (NLC), CIL is operated directly by the Indian government through the
Department of Coal in the Ministry of Energy. All the subsidiaries of CIL have the status of
independent companies, but the authority for framing broad policies and taking
The present structure of the Indian coal industry is a reflection of the priorities placed by the
government on coal as a source of fuel and energy in economic development. Most of the
production is the responsibility of the five subsidiaries of CIL, but there are four other coal
producers in the public sector: the Singareni Collieries Limited, the government of Jammu
and Kashmir collieries, the Damodar Valley Corporation, and the Indian Iron & Steel Co.
Ltd. These last four concerns are responsible for about 10% of the output. Some 2% of the
total output of coal is provided by the captive mines—company-owned mines which ensure
coal supplies—of the Tata Iron and Steel Company, the only coal producer in the private
sector.
Financially, the subsidiaries of CIL have an average authorized capital of Rsl.5 billion each.
Each employs between 100,000 and 180,000 people, and has an annual turnover of between
Rs.l.l and Rsl.7 billion. Their shares in the total production of coal vary from 25 % for the
Central and Western Coalfields, and about 20% for Bharat Coking Coal and Eastern
Coalfields. The financial performance of the subsidiaries varies. BCCL made cumulative
losses of Rs4.5 billon over the five year period 1981-1986. Similarly, Eastern Coalfields
made cumulative losses of Rs3.6 billion over the same five year period. In 1988, BCCL
made a loss of Rs900 million on a turnover of Rs5.3 billion. However, in the same year the
Neyveli Lignite Corporation Limited made a profit of Rs570 million on a turnover of Rsl.9
billion.
As a result of the nationalizations, some rationalization took place in the sector. The mines
were regrouped and reduced to 350 individual mines. New technology was introduced, and
there was a shift from pick mining to blast mining, which resulted in considerable increases
in production. The latter totaled 87 million tons in 1975, and 99 million tons in 1976. CIL’s
share of total production was about 88%. Nationalization was intended to provide the basis
for modernizing the coal industry, but after the initial increase in production, output
stagnated in the period 1976-1980. This was the result of shortages of power and explosives,
labor unrest, and absenteeism, excessive employment, technical inefficiencies, and problems
of flooding in the western coal fields, as well as fires in the vast Jharia coalfield. The latter
possesses the largest known coking coal reserves in the country and it has been estimated
that ongoing fires since around 1931 have accounted for the loss of some 40 billion tons of
coking coal. Consequently, CIL’S financial performance was poor during this period. It
suffered losses throughout the 1976-1981 period. These losses peaked at Rs2.4 billion in
1978-1979, but came down to Rs882 million the following year, and came down even further
to Rs337 million the year after. Total losses for the five year period were almost Rs6 billion.
Production picked up in 1980 when it finally exceeded 100 million tons, and increased to
115
million tons by 1983. However, the problems suffered by CIL in particular and the coal
industry in general had led to considerable shortages, especially for industrial users. This
shortage was compounded by the poor quality of India’s coking coal, which has difficult
washing characteristics and requires the coal preparation plants to run extremely complex
processes. The result was that the country had to import coal from abroad, a trend that still
persists. The bulk of the imported coal came from the United States, Australia, and Canada,
and was significantly more expensive than locally produced coal. This situation had two
implications. First, it became feasible for CIL to adopt more expensive mining methods,
since they were still cheaper than the imported coal. Second, a need was perceived to
improve the coal handling facilities at India’s major ports. This need was reflected in the
Sixth Five Year Plan, when it was projected that the ports would have to handle at least 4.4
million tons of imported coal by the mid-1980s.
During the Sixth Five Year Plan, coal production grew at 6.2% per year, especially in the
open-cast mines. Targeted production for the end of the plan period—1984-1985—was for
165 million tons per annum, although actual production fell short at 148 million tons. During
the first two years of the plan, CIL made a profit for the only time in its history. This was
largely due to the Indian government’s increasing the price of coal in both February 1981
and May 1982. The issue of pricing has always been a serious problem for the Indian coal
industry and for CIL. Coal prices have been administered by the government since 1941,
with the exception of a period of seven years, 1967-1974. The pricing formula is based on an
Indian industry-wide average with differentials for different grades, but in practice the price
is usually set below the industry’s average cost. This practice may explain in part CIL’s poor
Coal production in the year 1981-1982 was 125 million tons, above the targeted figure. Total
production of coal and lignite was 146 million metric tons in 1983-1984, and 155 million
tons in 1984-1985, 162 million tons in 1985-1986, 175 million tons in 1986-1987, 191
million tons in 1987-1988, and 207 million tons in 1988-1989. Despite the increase in
production, problems related to operations, such as cost-overruns, poor quality, and low
productivity, meant that targeted output was frequently revised downwards. Part of the
problem was the high cost of new equipment necessitating new investment, since targeted
budgets were overrun. Furthermore, the number of mines, which had been reduced
believed the output needed to increase by 25 million tons a year during the 1980s in order to
keep up with demand. Demand for coal was projected to reach 165 million tons by 1985, 230
million tons by 1990, and over 400 million tons by the year 2000. The structure of demand
for coal had changed. The railways were no longer the primary source of demand for coal.
Rather, demand now lay primarily with the steel plants, other industrial units, and thermal
power stations. The reliance on coal-fired thermal power plants for power generation led to a
steady increase in the demand for coal throughout this period. To satisfy this demand, CIL
relied primarily on the expansion of open-pit mines. Mining coal from shallow seams was
financially sound, but it resulted in a steady deterioration of coal quality over time. The
Seventh Five Year Plan of 1985 included some important changes introduced by CIL in the
The plan had set a production target of 226 million tons for coal, and by 1988-1989, output
for coal alone, excluding lignite, had reached 195 million tons. As a result of the greater need
for coal, new opportunities were created for international partnerships in the coal sector
Baharat coking
Central
coal ltd
coalfield ltd
COAL INDIA
LTD Mahana-nadi
Western Coal coalfield Ltd
field ltd
Northern Coal
South Eastern
field ltd
Coal Field ltd
North Eastern
Coalfield ltd
INTRODUCTION BHARAT COKING COAL LIMITED
Bharat Coking Coal Limited (BCCL) is a subsidiary of Coal India Limited with its
headquarters in Dhanbad. It was incorporated in January, 1972 to operate coking coal mines
(214 Nos) operating in the Jharia & Raniganj Coalfields, taken over by the Govt. of India on
16th Oct,1971
Currently, the Company operates 78 coal mines which include 41 underground, 16 opencast
& 21 mixed mines. The Company also runs 7 coking coal washeries, 3 non-coking coal
washeries, one Captive Power Plant (2x10 MW), and 5 bye-product coke plants. The mines
BCCL is the major producer of prime coking coal (raw and washed). Medium coking coal is
also produced in its mines in Mohuda and Barakar areas. In addition to production of hard
coke, BCCL operates a number of sand gathering plants, a network of aerial ropeways for
transport of sand and nine coal washeries, namely, Dugda, Mohuda, Bhojudih, Patherdih,
Bharat Coking Coal Limited (BCCL) is a subsidiary of Coal India Limited with its
headquarters in Dhanbad. It was incorporated in January, 1972 to operate coking coal mines
(214 Nos) operating in the Jharia & Raniganj Coalfields, taken over by the Govt. of India on
16th Oct,1971.
Overall scenario
Bharat Coking Coal Limited is one of the consistently loss-making subsidiary company of
Coal India Limited. The losses incurred by the company during 2002-03, 2003-04 and 2004-
05 were Rs. 507.13 crore, and Rs. 569.85 crore and Rs. 959.43 crore respectively . The
company has made a turn around in the current fiscal year and has registered a profit of
The paid up capital of the company as on 31.03.2005 is Rs. 2,118.00 crore. The company has
The total manpower as on 1.4.05 was 92,268 and as on 1.1.06 was 88,901.
percentage
3%
4% 3% 1%
16% middlings
NCW/coal
steel
cement
fertilizer
brk&others
cons
1% power
72%
SWOT ANALYSIS OF CIL
Strengths:
alia:
saving equipment and certain other equipment eligible for 100 percent
depreciation.
of certain minerals during five years ending with the first year of
Weakness:
capital market
There is a lack of respect for the mining industry and it suffers from
human resources.
The Opportunities
Threats:
POSCO, Mittal Steel and Alcan have announced plans for expansion
in India
HISTORY OF B.C.C.L
Bharat Coking Coal Limited (BCCL) is a subsidiary of Coal India Limited with its headquarters
in Dhanbad. It was incorporated in January, 1972 to operate coking coal mines (214 Nos)
operating in the Jharia & Raniganj Coalfields, taken over by the Govt. of India on 16th
Oct,1971. Currently, the Company operates 78 coal mines which include 41 underground,
16 opencast & 21 mixed mines. The Company also runs 7 coking coal washeries, 3 non-
coking coal washeries, one Captive PowerPlant (2x10 MW), and 5 bye-product coke plants.
BCCL is the major producer of prime coking coal (raw and washed). Medium coking coal is
also produced in its mines in Mohuda and Barakar areas. In addition to production of hard
coke, BCCL operates a number of sand gathering plants, a network of aerial ropeways for
transport of sand and nine coal washeries, namely, Dugda, Mohuda, Bhojudih, Patherdih,
Bharat Coking Coal Limited is one of the consistently loss-making subsidiary company of
Coal India Limited. The losses incurred by the company during 2002-03, 2003-04 and 2004-
05 were Rs. 507.13 crore, and Rs. 569.85 crore and Rs. 959.43 crore respectively . The
company has made a turn around in the current fiscal year and has registered a profit of
The paid up capital of the company as on 31.03.2005 is Rs. 2,118.00 crore. The company has
The total manpower as on 1.4.05 was 92,268 and as on 1.1.06 was 88,901.
ORGANIZATION CHART
INTERNATIONAL CO-OPERATION
FOREIGN COLLABORATION
for efficient management in the coal industry and skill development and training
etc.
the country.
Bringing foreign financial assistance to meet the investment requirement.
Continuous Miners at SECL and WCL. Bilateral co-operation mode has been adopted
COOPERATION WITH CANADA
24th –30th June, 2003. Indian delegation led by the then JS&FA and CMD, ECL
COOPERATION WITH FRANCE
ECL. GDK-10 (Block B) and GDK-8 incline projects in SCL were taken up for
introducing blasting gallery technology in collaboration with France.
COOPERATION WITH U.K.
In January,1997 an Indo-British Coal Forum (IBCF)
was established to foster greater cooperation between
the two countries in coal sector. The
Forum provides a platform for mutual consultat
the MOU include sharing of latest know-
skill development etc.
CO-OPERATION WITH RUSSIA
in India will be in touch with CIL about the tenders that are likely to be floated.
(ii) Indian side requested Russian side to expedite response from
COOPERATION WITH KAZAKHSTAN
project relating to extraction & realization of coal. CIL, NLC and SCCL had not shown
CO-OPERATION WITH GERMANY
(iii) High pressure water jet technology for extinguishing mine fire and
excavation.
CO-OPERATION WITH AUSTRALIA
Indian companies report no significant barriers or constraints to trade and
mining technology services and equipment and export opportunities – under the
COOPERATION WITH CHINA
9th meeting of the Indo-China Joint Working Group on Coal held during 9 th –
2. Jhanjra project of ECL.
13. Madhuban project( BCCL).
21. Method of Fly Ash Utilization from lignite based thermal Power stations.
22. Extraction and utilization of Lignite Bed Methane.
of Coal, Govt. of India with Director General (Coal & Mines) Republic of South Africa as Co-
Beneficiation of Coal
Govt. of South Africa has been requested for an early convenient date and place for the
meeting of the Working Group of Coal between the two countries. Response is awaited.
Performance growth of B.C.C.L
GRAPH
.
RAW COAL PRODUCTION
450
400
350
300
250
200
150
100
50
0
1974-75 1991-92 1996-97 2001-02 2006-07 2007-08 2008-09
MAN POWER
800000
700000
600000
500000
400000
300000
200000
100000
0
1.4.1975 1.4.1992 1.4.1997 1.4.2002 1.4.2006 1.4.2007 1.4.2009
PRODUCTIVITY
4.5
3.5
2.5
1.5
0.5
0
1974-75 1991-92 1996-97 2001-02 2006-07 2007-08
obligation.
and lignite & barytes; ranks among the top producers of iron
Weekness
Mining operations are not environment friendly. Least importance is
given to environment concerns.
The output per miner per annum in India varies from 150 to 2,650
matter;
deal with the fly ash generated at coal power stations through use
of Indian coal.
Opportunities
Threats
licenses have been issued till date for prospecting an area of around
POSCO, Mittal Steel and Alcan have announced plans for expansion
in India
illegal activities.
Safety
Findings of my project
B.C.C.L don’t proper distribution system of coal.
Prices are set by the ministry of coal which is not up to the mark.
Recommendation
Bibliography
www.google.com
http://www.coalindia.in/
http://www.bccl.cmpdi.co.in/
Magazines of navratan company
News paper
A case study on clean coal technologies
There are many reasons for performing a case study on coal. First, the current importance of
coal in world emissions makes this study more than a mere example of successful or
unsuccessful technology collaboration and experiences providing lessons for other areas.
Some lessons might have direct implications on coal with large implications for future global
CO2 emissions. This is all the more true as coal is simultaneously the fossil fuel with the
highest carbon content per unit of energy and the fossil fuelwith the most abundant resources
in the world. Second, clean or cleaner or more efficient coal use is already the subject of
numerous forms of international collaboration, aiming either at reducing local polluting
emissions or global CO2 emissions from coal use.
Collaboration on Research, Development and Demonstration (R, D&D) occurs, in particular,
through collaborative efforts such as the five technology “implementing agreements” under
the auspices of the International Energy Agency that relate entirely or partially to coal
technologies. Policy collaboration takes place within various institutions and international
bodies, including the recent Carbon Sequestration Leadership Forum. Professional
associations also play a role in the internationalisation of clean coal concepts and
technologies. More specific to clean coal are the many efforts undertaken by industrialised
countries’ governments and industries, independently or together, to transfer efficient
technologies or equipment to developing countries. These efforts include, in particular,
bilateral cooperation, and more collective efforts through regional cooperative frameworks
such as the Asia Pacific Economic Cooperation (APEC), the regional development banks,
the World Bank and the Global Environment Facility (GEF). Many such efforts – and
probably the best documented ones – are in China, which is currently by far the largest and
most active market for coal technologies. They include, in particular, numerous bilateral
efforts
with varying degrees of success, various projects supported by the World Bank and regional
development banks, and perhaps the most successful project ever undertaken and financed by
the GEF – a project on industrial boilers.
An analysis of recent and on-going international collaboration with China on clean coal
highlights lessons learned that are not discussed in other case studies on international
technology collaboration and climate change mitigation. This is why it is given an important
place in this paper. Section 2 briefly defines and reviews clean and efficient coal
technologies; Section 3 describes the broadlandscape of international collaboration on clean
coal; Section 4 analyses the successes and failures of collaborative efforts with China
undertaken by various industrialised countries, development banks and the GEF; and Section
5 draws some lessons from that analysis.
Efficient coal use is currently the primary means of reducing coal’s GHG impacts as carbon
dioxidecapture and storage are a long way from being commercially viable. Another
possibility is to use coalplants to increase the share of biomass in the electricity mix through
co-firing of biomass and coal. A third dimension is the reduction of methane emissions; but
will not be considered in this paper.
The average efficiency of coal-fired generation in the OECD is 36% in 2002 compared with
30% in developing countries. As a result, one kilowatt-hour produced from coal in
developing countries emits 20% more carbon dioxide than in industrialised countries.
New installations can differ markedly with respect to CO2 intensity. The latest full-size state
of the artplants in industrialised countries rely on supercritical technology with efficiency
exceeding 45% with favourable cooling water conditions, while new sub-critical plants can
reach an efficiency of 38-39%. Increased working temperatures will further increase the
efficiency of supercritical plants, with efficiency of more than 50% being envisaged. Current
demonstration plants based on gasification have an efficiency of 42-43%. Further
deployment and development indicate that this could exceed 50% in a similar time
frame for advanced forms of supercritical pulverised coal firing. Where demand for heat
exists, either for some industries or for district heating, combined heat and power (CHP, or
cogeneration) can increase the energy efficiency of coal plants to much higher levels – 80%
or more. Coal-fired generating capacity of about 1,000 GW is installed worldwide. Almost
two-thirds of the international coal-fired power plants over 20 years old have an average
efficiency of 29%, emitting almost 4 gigatonnes (Gt) of CO2 per year. If they are replaced
after 40 years with modern plants of 45% efficiency, total GHG emissions will be reduced by
about 1.4 Gt per year (global energy-related emissions are about 24 Gt).
There are many options for improving plant performance and reducing emissions. Low to
medium cost improvements can increase fossil-fuelled plant efficiency by 2 to 3.5 percentage
points. Current and emerging re-powering technologies can achieve much larger reductions
in CO2 emissions, but are only cost-effective in plants close to the end of their technical life.
They include: co-firing and re-powering with biomass; re-powering with super critical boiler;
re-powering with CHP or gasification. According to an APEC (2004) study, re-powering
enables large increases in power generation for a similar fuel demand, as well as large CO2
emission reductions, with the use of existing infrastructure, thus reducing costs and
implementation time. Refurbishment of older thermal power stations gives up to a 12%
reduction in greenhouse intensity as well as significant increases in power generation (at a
significantly lower unit cost than that of a new power plant). Taking into account changes in
operating costs and revenue from power generation and the annualised capital cost,
refurbishing can often be beneficial and CO2 emissions reduced at no cost.
Deep emission cuts may require deployment of geological carbon capture and storage
technologies. CO2 capture technologies are not new; a number of proven methods exist to
separate CO2 from gas mixtures.
For the past sixty years these technologies have been routinely used on a small scale by the
oil, gas and chemical industries. While technically sound, none of today’s commercial CO2
capture technologies were developed for large power plants and scaling them up is expensive
and energy intensive. There are currently three main CO2 capture approaches. The most
conventional approach is to capture the CO2 from combustion products in power plant flue
gas or industrial exhaust. This is known as post combustion capture. Two other approaches
to capturing CO2 happen before fossil fuel combustion. In the oxygen combustion (usually
called oxy-fuel combustion) approach, O2 and recycled flue gas is used to increase CO2
concentrations in flue gas prior to capture. In the hydrogen/syngas approach, coal is gasified
or natural gas is reformed to produce synthesis gas (syngas) of carbon monoxide (CO) and
H2; a water/CO shift then takes place to produce H2 and CO2 for CO2 capture. Both
approaches increase CO2 concentrations in the exhaust gas stream making CO2 easier to
capture. The capture step incurs most of the cost of carbon capture and storage processes.
Hence, the main challenges associated with capturing CO2 are reducing costs and the amount
of energy required for capture. Carbon in the form of coal, oil and natural gas is stored
throughout the earth. There are also naturally occurring CO2 deposits that supply CO2 to the
oil and chemical industries. The concept of CO2 capture is linked with CO2 storage in
natural geological formations that may have once held carbon (depleted oil reservoirs and
deep coal seams) or in saline formations, which have enormous storage capacity. The main
challenge associated with geological storage is the prevention of CO2 leakage. Furthermore,
measurement systems which monitor and verify carbon dioxide storage must be developed.
Sufficient proof of storage permanence is essential for any credible carbon dioxide capture
and storage strategy (IEA CCC 2004). It is important to match sources of captured CO2 and
storage sites, as much as possible, to reduce CO2 transportation needs.
IPCC estimates for geological storage capacities range from 1,500 to 14,000 Gt of CO2; this
scale suggests that storage capacity is unlikely to be a major constraint on CO2 removal,
provided current knowledge is improved and long-term storage guaranteed. The concept of
injecting CO2 in plain ocean waters raises serious environmental concerns and is highly
controversial.
Besides R&D challenges, prospective deployment of carbon dioxide capture and storage
technologies requires appropriate legal and regulatory frameworks and policies. These new
policies are needed to create a level-playing field for capture and storage technologies
alongside other climate change mitigation measures. Public awareness of CO2 capture and
storage technologies, which is the first step towards gaining public acceptance, is still very
limited.Atmospheric CO2 concentration stabilisation will be less costly if capture and
storage are included in the mitigation options – but leakage rates or even the risk of large-
scale leakage from underground reservoirs might be a critical issue. A recent modelling
exercise at the IEA (2004b) suggests that at a carbon price of US$50/t CO2 – translating into
an electricity production cost increase of 1 to 2 US cents per kWh – introduction of CO2
capture and storage amongst all other options would lead to additional emission cuts on a
Gigatonne scale (4.9 Gt CO2 in 2030; 7.9 Gt CO2 in 2050).
The IEA Clean Coal Centre (CCC) was formed in 1975 in the wake of the oil crisis. It is the
world’s foremost provider of information on efficient coal supply and use, in a balanced and
objective way without political or commercial bias. It shows, where appropriate, the
opportunities for technology transfer worldwide. Based in London with a staff of 23, its
annual budget is € 2 million1. CCC technical review and assessment reports are distributed
widely to nominated parties as part of the membership subscription. These are a core product
and about 15 are produced each year. Topics include mining, transport, combustion, the
disposal of residues and emission control. Market studies have remained in demand and the
emphasis in recent years has focused on power generation and the environmental
consequences of coal use. The CCC is in the process of producing the Clean Coal
Compendium which will soon be available on the Centre’s website. This will be an
encyclopaedia on topics related to coal use. There is also a Coal
Abstracts database and eight databases which make up CoalPower5. Coal Abstracts is a
searchable database of the world’s literature on coal containing about 200,000 abstracts of
coal literature. CoalPower5 contains details of the world’s coal-fired power plants, their
individual units, emission control equipment, as well as emission standards applicable to
these plants.
3.1.2 Greenhouse Gas R&D Programme
IEA GHG was set up as an international collaborative activity in 1991. The initial focus was
on capture and storage of CO2 produced in power stations fired on both coal and natural gas.
Since then, activities have expanded to cover a wide range of technologies aimed at reducing
the emissions of greenhouse gases. It is highly recognised as a source of impartial
information in this area. IEA GHG is a cost sharing IA in which participants contribute to a
common fund to finance the activities. Operational management of the IA is assigned to an
Operating Agent who is accountable to the Executive 1 There are currently 16 members. At
country level there are Austria, Canada, Italy, Japan, Sweden, the UK, the USA and the
European Union. Sponsors include the South African Anglo Coal and Eskom, the Australian
CoalIndustry Consortium, the Beijing Research Institute of Coal Chemistry (BRICC), the
Indian BHEL, the Coal Committee. The Operating Agent for the IEA GHG is IEA
Environment Projects Ltd., a UK registered
company2. The main activities are the production of technology and market information;
confidence building by promotion of technology development and the organisation of
research networks (e.g. a network of researchers on solvent capture of CO2, and one on
monitoring of underground CO2 storage); and information dissemination, to governmental
and other policy makers, industry leaders, technology developers, and public audiences such
as environmental NGOs.
The focus of the Implementing Agreement on Clean Coal Science is the basic science of coal
combustion3. The specific objectives are to encourage, support and promote research and
development that will lead to improved understanding and characterisation of conventional
combustion processes; develop techniques that control and reduce solid, liquid and gaseous
emissions associated with combustion processes; improve operating efficiency, and identify
methods for the effective utilisation of combustion by-products.
This Agreement has led to numerous commercial applications, including the development of
a new generation of low-NOx burners which has already achieved sales of over $400 million
in one participating country. Current work includes modelling and diagnostic methods to co-
firing with other fuels and biocoprocessing. The work programme is conducted using both
task sharing and cost sharing. The cost shared component involves a common fund which is
used to support coal research studies at the International Flame Research Foundation in the
Netherlands.
Clean Fossil Fuels have been a subject of the 5th (1999-2002) and 6th (2003-2006)
Framework Programmes supported by the Commission of the European Communities. In the
5th Programme, key actions 5 and 6 concerned energy R&D and were respectively “cleaner
energy systems, including renewables” and “economic and efficient energy for a competitive
Europe”. A list of actions included, among others: “large scale generation of electricity
and/or heat with reduced CO2 emissions from coal, biomass and other fuels, including
combined heat and power” (financing received: €160 million), and “cost effective
environmental abatement technologies for power production” (financing received: €40
million). Many of these projects concerned clean coal technologies. In the 6th Framework
Programme, the Energy Research Area includes longer term actions aimed at
"Capture and Sequestration of CO2 associated with cleaner fossil fuel plants" and is the only
fossil fuelrelated research priority in this Programme. Several already approved projects
receive funding of around €36 million. Third call in the 6th FP included funds of around €30
Million available for CO2 capture and storage projects including clean hydrogen production
from fossil fuels.
The relatively new area of carbon capture and storage has international R&D projects on
clean coal, for a global value above $100 million (IEA 2004b). R&D on the permanence of
CO2 storage, necessary to gain confidence and public acceptance of this option, is an area of
special interest for international collaboration. Scientific monitoring of the CO2 storage in oil
fields at Weyburn (Canada) and in saline aquifer deep below sea floor at Sleipner (Norway)
are the flagships of this international collaboration. Another form of international scientific
collaboration is the on-going assessment of carbon dioxide capture and storage technologies
undertaken under the auspices of the Intergovernmental Panel on Climate Change (IPCC). A
special report will be published in 2005.
Policy collaboration
The World Coal Institute (WCI) is a global non-profit, non-governmental association of coal
enterprises, working worldwide on behalf of coal producers and coal consumers.
The objectives of the World Coal Institute are to:
Provide a voice for coal in international policy debates on energy and the environment;
Improve public awareness of the merits and importance of coal as the single largest source
of fuelfor electricity generation;
Ensure that decision makers - and public opinion generally - are fully informed of
advances in modern Clean Coal Technologies that steadily improve the efficient use of coal
and greatly reduce the impact of coal on the environment;
Broaden understanding of the vital role that metallurgical coal fulfils in the worldwide
production of the steel on which all industry depends;
Support other sectors of the worldwide coal industry in emphasising the importance of coal
and its qualities as a plentiful, clean, safe and economical energy resource Promote the
merits of coal and upgrade the image of coal as a clean, efficient fuel, essential to worldwide
generation of electricity and steel manufacture.
Membership is open to coal enterprises worldwide. Present membership is drawn from six
continents, with member companies represented at Chief Executive level. The WCI has
numerous publications, conferences and workshops and a website: www.wci-coal.com
The Coal Industry Advisory Board (CIAB) is a group of high level executives from coal-
related industrial enterprises advising the IEA on measures to encourage investment in coal
production, transport and power generation. Current members are from 17 countries
accounting for about 75% of world coal production.
In recent years, the CIAB has focused attention on clean-coal technologies for power
generation. The current work programme continues with work on near-zero emission
technologies for coal-fired power generation and on sustainable development and coal,
thereby acknowledging that coal security is as important as the effects on the environment.
The EURACOAL
The European Association for Coal and Lignite (EURACOAL) integrates associations and
companies representing the coal industries of Austria, Belgium, France, Germany, Great
Britain, Greece and Spain, and the relevant organisations of the New Member States: Poland,
the Czech Republic and Hungary, as well as Romania, Bulgaria, Slovenia and Serbia.
EURACOAL is the voice of the coal industry in Brussels. Its task is to promote coal's
contribution to security of energy supply within the enlarged EU and to price stability.
EURACOAL provides a meeting platform for its members and represents their interests in
Europe by dealing with European institutions and political organizations and distributes coal
information
China expects its power generation to at least triple in the next twenty years, and coal, which
currentlyprovides three quarters of power generation, is expected to show the biggest
increase. The IEA (2004a) projects a total capacity of 1187 GW in 2030 against 360 GW (in
2002). Coal-fired plants would total 776 GW – a decrease due to rapid growth of gas-fired
generation and renewables. More than three quarters of electricity generated in China is from
coal combustion. Power plants, however, represent only half of Chinese coal consumption –
a much lower share than the world average of about 69%. Various direct and indirect usages
in industry and energy sectors account for another 42%, while end-use consumption in the
residential and commercial sectors account for the remainder. About 40% of Chinese coal is
burnt in half million “industrial boilers” in industry and in district heating systems.
Conversely, over 95 % of industrial boilers in China burn coal. The two most important
sources of demand for industrial boilers are light industry and the textile industry,
which require process heat and power; and space heating for individual apartment buildings,
districtresidential areas and commercial buildings, particularly in northern Chinese cities.
Industrial boilers in China have small unit sizes by international standards. Over half of them
in the mid1990s produced only 1 to 4 tonnes of steam per hour. Chinese industrial boiler
designs and production methods were based on pre-1950 design principles. Typical
efficiency levels for Chinese boilers are in the range of 60-65%, compared to at least 80% in
developed countries.
Major cities in China are some of the most polluted cities in the world, largely due to high
rates of coal use. More than 500 Chinese cities are said to have air quality standards below
the World Health Organisation’s (WHO) criteria. Particulate and sulphur levels exceed WHO
and Chinese standards by a factor of two to five. Chronic obstructive pulmonary disease is
the leading cause of death in China, partly because of ambient outdoor and indoor pollution
levels. The latter, mostly from burning coal or biomass for cooking and heating, is estimated
to cause 110,000 premature deaths each year. The expected increase in coal use would,
however, raise sulphur dioxide emissions from power plants from 8.5 million tonnes in
1995 to 21 million tonnes in 2015.An investigation based on data for 50 million people in 26
cities showed that the average PM10 pollution in urban districts and in control districts were
460 μg/m3 and 220 μg/m3, respectively, and the corresponding average mortality from lung
cancer was 14 per cent and 7 per cent, respectively. Every 100 μg/m3 increase in total
suspended particulate concentrations also led to a 6.75 per cent increase in the
incidence of chronic broncho-pneumonia in coal-burning areas (WHO, 2000).
With respect to energy-related CO2 emissions, China is comparable with the European
Union at about 15% of world emissions – behind the largest emitter, the US. However, coal
is responsible for 80% of China’s emissions against 26.3% in Europe. Increased coal
consumption in China has also important price consequences for other consumers.
Clean coal
Primarily for domestic environmental motives, the interest of the Chinese government in
clean coal technologies is beyond any doubt. As in other countries, advanced clean coal
technologies have substantial potential to improve the efficiency of coal-based power
generation and to reduce the harmful impacts of power generation. The average cost of
power generation from clean coal technologies is declining and
might make them eventually competitive with conventional pulverized coal (PC) steam
plants. The dominant installed technology is pulverised coal combustion with a subcritical
steam cycle. Units range widely in sizes from less than 25 to 660 MW. There are still a large
number of these subcritical units under construction. Ten supercritical units were in
operation in 2003 and twenty more units were approved
for construction. There will likely be a surge towards 1000 MW power plants with ultra-
supercritical steam conditions (Minchener 2004). The National Development and Reform
Commission (NRDC) has recommended advanced supercritical plants for large scale power
generation and most recent orders have been for supercritical units. IEA experts indicate that
supercritical plants totalling more than 60 GW of capacity were recently ordered.
Since the 1960s, Chinese engineers have developed their own designs of small fluidised bed
combustion equipment independently of early efforts in other countries (Watson & Oldham
1999). Over 1000 commercial circulating fluidised bed (CFB) boilers have been put into
operation since 1989 and fifteen 300 MWe CFB boilers are in the planning or construction
stage (Minchener 2004). More than 30 GW of cogeneration plants are currently in operation,
notably in the coldest parts of China.
IGCC is not yet a fully mature technology, even in developed countries, where it delivers
electricity at a higher cost of about 20%. The main risk factors include capital cost over-run,
construction delay, and shortfalls in plant availability and performance. The cost and the risk
disadvantages are substantially higher in China, where the average cost of power generation
from an IGCC plant would be 32% higher than power from a PC plant; the overall risk factor
would be 23% greater, according to the Nautilus Institute (1999). Consequently, there is only
1 IGCC prospect currently in China, for a demonstration plant at Yantai. There is however,
considerable knowledge of coal gasification with many examples in the chemical industry
for production of fertiliser chemicals. This explains why polygeneration has been suggested
as a
more realistic alternative for China (Zheng et alii 2003; TFEST 2003). Based on coal
gasification (“syngas”), polygeneration systems can produce a variety of energy products:
clean synthesis gas and electricity, high-value-added chemicals, high-value-added fuels for
vehicles, residential and industrial uses, and other possible energy products. Gasification
enables conversion of coal – including high-sulphur coal resources - with very low levels of
air pollution compared to most existing coal combustion technologies in China. A
recommendation of the China Council for International Cooperation on Environment and
Developed made in 2003 to the Chinese Government essentially equates coal
modernisation with polygeneration through gasification.
An extensive review of the norms and standards for existing and new plants of different
types in various parts of China, and other instruments such as effluent charges, are beyond
the scope of this paper. Theyare usually less stringent than equivalent norms and standards in
OECD countries, but are frequently revised and tightened. However, they might have little
impact given the widespread absence of monitoring equipment, which leads to poor
enforcement (Watson & Oldham 1999).
Jin & Liu (1999) listed patent acquisitions of various clean coal technologies by Chinese
enterprises: for coal extraction & preparation equipment; for power equipment design and
manufacture technology; for industry boiler design and manufacture technology and for
desulphurization and dust-removal technology for coal-boilers. The acquired technology
mainly includes dust-removal devices. There is only one project for desulphurisation. All
were fully mature technologies in developed economies. Analysing these patent acquisitions,
Jin & Liu note that the acquiring entities of technologies are mainly large or super-large
enterprises. By contrast, most of medium or small enterprises are the major producers
of thermal-energy equipment with high energy consumption and high GHG emission. But
few of them have taken part in the transfer process of industry boilers. There are three
reasons for this: their limited capital and weak technology strength, the lack of necessary
information and technology transfer experience, and the government’s approval procedure
and policies for technology transfer. They note, however, that the pace of patent acquisition
has slowed after 1992 while the number of direct imports grew, which they attribute to the
economy reforms and the breaking off of the mechanisms for technology transfer previously
dominated by the government. This was, however, before the GEF project on industrial
boilers took place
Bilateral collaboration
In 2001, China emphasised its desire to explore measures to accelerate the deployment of
clean coal technologies and requested the IEA to look into this and help develop
recommendations on how to accelerate the clean coal technology deployment in China. A
study (Novem 2003) was made considering collaboration with the World Bank, the Asian
Development Bank and the United Nations Development Programme, as well as with the
EU, Australia, Germany, Japan, the Netherlands, the United Kingdom and
the United States. All the programmes considered aimed at assisting China in improving the
environment. Most bilateral programmes aimed also to generate economic gains for Western
companies through trade or technology transfer – traditionally in such programmes,
governments tend to promote their own industries. The German programme was different in
that economic gain was less an objective than poverty alleviation
in China. Industrialised countries adopted different approaches in this cooperation:
Australia focused on the coal trade position and blended coal combustion;
Germany focused on mature technologies, towards easy adoption in China;
Japan worked on almost all possible technologies and made a great number of
demonstration projects;
The Netherlands focused on their own technologies;
The UK focused on the technologies that China might need and appreciate;
The US made great efforts on IGCC and advanced combustion technologies.
Meanwhile, the World Bank, up to 2000, and the Asian Development Bank have participated
in the financing of various large coal-fired plants and related projects (see below), while the
UNDP has focused on other energy sources and the EU has focused on management, training
and knowledge transfer. The results of these efforts are somewhat mixed. Most
demonstration projects have worked, such as those of Japan (circulating fluidised bed
boilers, simplified flue gas desulphurisation, coal briquetting plants, coal preparation
technologies, etc.) but most have not led to dissemination of these technologies beyond
the demonstration projects (Oshita & Ortolano 2002, 2003). One possible exception is that of
coal washing, which appears widespread in China and may be due to early collaboration with
Japan. A number of German efforts, especially power plant performance optimisation, are
said to have contributed to significant emission reductions (Novem 2003), but the report
gives very little detail. One project deals with performance optimisation with fifteen
measuring vehicles financed with a €10M loan from Germany’s development bank KfW,
which travel to power plants across China. The Australian collaboration on two 125 MW
existing units at the Banshan Power plant showed that increasing efficiency from 35% to
40% was possible and affordable using blended coals (Boyd 2004). In 1995 the US DOE
proposed an initiative for US government support for the promotion of CCTs in developing
countries, requesting a $75 million budget necessary to support a small number of operations
in China and Eastern Europe. The US Congress did not approve this additional allocation of
financial resources to the Program. This refusal, according to the Nautilus Institute (1999)
“emphasised the need for coordination of existing channels rather than adding a new
mechanism for the financial support of CCTs in developing countries”. The US DOE’s
effort, thereafter, shifted. It has, since then, focused on low-costinitiatives in the areas of
information dissemination and training.
Amongst other collaborative efforts from the UK, one project aims at developing clean
underground coal gasification (UCG) in China. However, as fully acknowledged on the
British side, “Whilst Chinese experts recognise the potential benefits of deep UCG
technology, they have reservations regarding the high technology guided drilling, the cost of
oxygen generation and the fact that deep UCG is unproven in large scale and sustained
operation.”Meanwhile, several large new plants were built in China by Western companies,
including the first supercritical pressure steam plants in Shanghai (1200 MW) build by a
consortium led by Alstom and Sargent&Lundy.
After the study mentioned earlier (Novem 2003) another collaborative efforts with China
was undertaken under the auspices of IEA, “Best Practices in Chinese Power Plants”. A team
of experts from IEA member countries undertook a detailed audit of two typical Chinese
power plants and formulated recommendations of cost-effective efficiency and
environmental improvements. Their report was presented to a wide audience from the
Chinese power sector. Development banks
In the power sector, the World Bank helped build 20 percent of the transmission lines and 20
GW of generating capacity, including the first 300-megawatt, 600-megawatt, and 900-
megawatt generating plants
in China. Apart from its direct contribution to supply expansion, the Bank leveraged its
influence in two ways. First, Bank analytical and advisory activities (AAA) contributed
significantly to sector policy reform and institutional development, especially in the power
sector. Over the course of the decade, and especially in the past five years, China introduced
extensive policy and institutional changes that were first outlined in a 1994 Bank report on
power sector reform and further developed in other AAA and through pilot projects.
These changes include price reform, separation of management and regulation,
corporatisation of government energy production units, introduction of competitive power
markets, and improvements in the policy framework for private participation in
infrastructure. The energy sector is perhaps the most successful example of the Bank’s dual
track approach to lending and policy reform.
The GEF
China has been the host of the largest-ever GEF project, launched in 1996 to introduce
efficient industrial boilers in the country. As noted by the designers of the original GEF
project: “if the thermal efficiency of the current stock of industrial boilers in China could be
raised to those of similar sizes in the developed countries, coal consumption by small boilers
could be reduced by 60 million tons per year-a saving of about 17 percent” (GEF 1996).
One must note, however, that efficient industrial boilers had been imported into China in
previous years,mainly from Germany, the US and Japan (Jin & Liu 1999).
Retrofitting existing boilers had been deemed insufficient for sustaining efficiency
improvements in the sector, as the demand for new boiler technology in China grew, making
existing boilers an ever-smaller percentage of the total market; the lifespan of a typical boiler
in China was only about 15 years; and improved boiler production techniques was
considered crucial for raising thermal efficiency by minimizing exit gas temperature and
excess air in the boiler. There are good examples, however, of 10% increases of thermal
efficiencies with existing industrial boilers, in particular as a result of an earlier UKChina
technical assistance project (Minchener 2004). A more ambitious project was envisioned by
GEF: “Upgrading existing Chinese boiler models through the introduction from abroad of
advanced combustion systems and auxiliary equipment, especially the application of simple
automatic controls; adoption of new high efficiency boiler models through the introduction
of modem manufacturing techniques and boiler designs suitable for burning Chinese coals;
and technical assistance and training for boiler producers and consumers”, for a total cost of
$100M with GEF contributing a third of this amount. Investment funding was provided to
nine Chinese boiler manufacturing enterprises in two phases. Under
Phase 1, GEF funds were used to acquire advanced international technologies for new and
existing Chinese industrial boilers models and produce the model industrial boiler units
Phase 2. Under Phase 2, GEF grant funds were used to acquire advanced production
equipment from abroad to upgrade their production lines to allow mass production of the
successful models. Emission reductions from this project have been estimated over the total
lifetime of the investments to 637 Mt representing a third of the total 1.7 Gt for all 104
active climate-related GEF projects (GEF 2004). This resulted in a cost per avoided tonne of
CO2 of about 3 US cents. However, Minchener (2004) note that the
new boilers have achieved efficiency levels in the range 80-85% “under the artificial
conditions of a verification test”. Under normal conditions of operation, with typical boiler-
house operating staff and typical supplies of raw coal, the benefits can be much lower.
Minchener (2004) concludes that coal quality remains a critical issue.
SYNOPSIS