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Opportunities and Sustainability Assessment for India
InfralineEnergy Business Report Series
Global Coal Acquisitions and Imports:
Opportunities and Sustainability Assessment for India
Signiﬁcant highlights of the report are
Availability and production shortfall issues for coal in India Major Power Plants investments contingent upon imported coal in India Players shaping the global coal trade The bottlenecks around ports and logistics in India Volatility of coal pricing in international trade China’s strategy for energy diplomacy In-depth analysis of emerging destinations for coal import and acquisition Long term sustainability of imported coal for India In spite of all the excitement surrounding new and renewable sources of energy, coal is anticipated to contribute more than 50 percent of the primary commercial energy requirements of India till 2032 and beyond. Even though the domestic coal reserves are vast, the demand-supply deﬁcit of coal is estimated to grow at a CAGR of 17.2 percent till FY17. Exploration, technical, environmental and logistical issues have forced India to import 11 percent of total coal consumption, which is expected to rise to 15 percent for power sector alone by FY17. India’s planned investments of more than Rs. 2 lakh crore over the entire coal value chain may not be sufﬁcient to secure future coal requirements. Coal import is bound to rise and is reﬂected by the recent CEA notiﬁcation to design boilers with a 70:30 coal blending ratio (indigenous vs. import). Besides blending requirements, superior quality parameters and converging price trends of imported and domestic coal would lead to more imports. Indian companies have grabbed overseas coal assets at lucrative locations such as Mozambique, Indonesia and Australia. Future efforts require a planned politico-economic approach to effectively counteract aggressive players such as China and also de-risking from the rising coal prices and escalating price tag of overseas coal deposits. Australian ﬂoods and Japan earthquake have resulted in structural changes in global coal trade pattern, along with disruptions from pirate attacks to coal vessels which has resulted in a loss of around $ three billion in global seaborne trade in 2010. Associated infrastructure related to coal logistics would see a spurt in investment. The port sector in India needs a complete overhaul with ﬂuctuating global freight rates and growing need for panamax and supramax vessels for coal import to India. In this backdrop, Infraline Energy’s research team is coming up with its latest report on “Global Coal Acquisitions and Imports” which would focus on promising destinations for coal acquisition strategy by Indian companies. New frontiers such as New Zealand, Kazakhastan require proactive approach to reap the early mover advantage. Certain nations have been identiﬁed which offer a favourable prospect for clinching long-term import deals without owning the coal mines and there are others which require infrastructural development to encourage foreign investment. Taking a view of the changing dynamics in the race for global coal, InfralineEnergy identiﬁes the compelling grounds behind pursuit of foreign coal and the gap areas for the Indian companies in sourcing coal equity abroad. The requirements for improving the infrastructure in India for receiving high quality imported coal have also been identiﬁed in this report.
Key Questions Answered
Why the growth of coal sector is lagging in India? How India has fared against the competitors in the global coal chase? Which are the key regions for India to import coal? How India can achieve the required mix for sourcing foreign coal? What are the challenges and risks that India can face during ventures abroad? What strategies should India evolve to ensure continuous and sustainable coal supply?
A Must Buy for
Coal Producing Companies Coal Mine Developers Power Project Developers Steel Producers Cement Producers Environmental Groups Equipment Suppliers Logistics Providers including Shipping Companies Infrastructure Development Companies Regulatory Agencies Banks, Project Financers and Investment Bankers Consultants Research and Educational Institutes
Figure 1: Coal Import Requirement for Power Sector
Figure 2: Widening Demand-Supply Deﬁcit of Coal in India
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%
FY11 FY12 FY13 FY14 FY15 FY16 FY17 Domestic Supply Unfulfilled Gap Net Imports
FY FY FY FY FY FY 06-07 07-08 08-09 09-10 10-11 11-12 (E) Indigenous supply Demand-Supply Gap
Figure 3: Planned Coal Based Power Capacity Addition
Figure 4: Converging Price Trends: CIL vs. Imported Coal
Sales & Support
Sreya Majumder email@example.com 011 66250012 98996 77485
For Subject Related Queries
Radha Krishna Tripathy firstname.lastname@example.org 011 47522488 9015312681
Capacity under at 10th 11th Plan Plan
under 12th Plan
under Capacity 13th at 13th Plan Plan
CIL's Blended ASP Grade-Adjusted Landed Imported Price.
Coal based Installed Capacity Coal Based Capacity Additions
Table of Contents and Storyboard
1. Coal: Vital Enabler and Driver of Indian Economy Contribution in Primary Energy – India’s Energy Mix Major Consumption Industries Distribution of Coal Reserves in India – Formation-wise Coal Resources – Region-wise – Quality-wise Backbone of Economic Growth Prominent Tables & Figures: GDP Growth Rate vis-à-vis Demand Growth of Coal 2. Production and Demand Dynamics Production Trends – Domestic Production – Coal Production by Region – Major Producers Consumption Trends – Coal Consumption by Sectors/Industries Increasing Consumption: A Compelling Pre-condition to Growth – Economic Growth – Infrastructure Investment – Demand for Power – Other Sectors Growth – Expected Demand Forecast by Sectors Over-reliance on Coal vis-à-vis other Fuels – Huge Reserves – Ease of Combustion and Handling – Price – Logistics Coal: The Choice of Economists for Power Sector – Cheap energy source – Low cost power generation – Present boiler characteristics best suited for Indian coal – High PLF can be achieved The Yawning Production-Demand Gap Prominent Tables & Figures: Coal Production Plan during XI Plan Projected Public and Private Sector Infrastructural Investmenst in XI Plan Planned Coal Based Power Capacity Addition Coal Demand Forecast by Major Sectors Widening Demand-Supply Deﬁcit of Indian Coal 3. Evolving Coal Sector Dynamics in India Coal Sector Supply Chain – Coal: Enabling Transportation – Compelling Motives Behind Coal Transportation – Modes of Coal Transportation – The Ailments of Coal Supply Chain Technological Advancements – Enhancing the Reserve Base – Strengthening the Mining Techniques – Addressing the Health, Safety & Environment (HSE) Needs – Coal Beneﬁciation Coal Pricing – Phased Deregulation of Coal Prices – Indian vs. International Coal Prices – Pricing under FSA – Pricing under E-Auction – Pricing under MoU – Pricing of Beneﬁciated Coal – Statutory Levies – Cost of Raw Coal Production – Absence of Private Pricing Power Major Planned Investments – Resource Mapping – Inducting New Technologies – New Capacity: By Creation and Expansion – Renewed Focus on Underground Mines – Investments in Coal Washeries – Addressing Logistics Needs – Alternative Logistics – Coal Vision 2025 Prominent Tables & Figures: Comparison of Freight Carrying Capacity: India vs. International Grade-wise Coal Pricing by CIL (Feb. 2011) Coal Pricing by CIL in E-Auction Cost of Coal Production of CIL Investments as per Coal Vision 2025 4. Regulations Governing Coal Sector in India Regulatory Stakeholders and their Roles Existing Policies – Laws relating to Coal Mines in India – Laws relating to Mines Safety – Regulations on Quality Control and Coal Distribution – Environment Laws – The Environment Act – Coal Block Allocation – Distribution and Marketing Policy New Initiatives: Impacts Thereof – Competitive Bidding – Go/No-Go Classiﬁcation – Recent Price Hike Coveted Policy Advancements – Market Driven Pricing – Privatisation – Foreign Direct Investment – Need for Independent Coal Regulator Prominent Tables & Figures: Coal Mining Acts Role of NCDP Coal Block Allocation Routes Advantages and Disadvantages of Competitive Bidding 5. Bottlenecks Plaguing Growth of Coal Sector in India Unexplored Coal Basins – Lack of Exploration Sluggish Transition from Resources to Reserves Technological Barriers Poor Conditions of Inland Transportation Structure – Roadways – Railways Lacking Port Infrastructure – Issues with handling coal at Ports – Number of Major and Minor Ports – Port Capacity – Draft – Vessel Size Mounting Environmental Concerns Insurgency and Coal Maﬁa Prominent Tables & Figures: Issues with handling coal at Ports Vessel size handled at Indian ports 6. Pressing Need for Coal Imports Demand Supply Imbalance – Stagnating Growth Rates of CIL – CIL: Production Shortfalls – Ageing Reserves – Captive Coal Blocks: Woeful Production Coal Quality Issues – Low Grade Coals Rule the Domestic Production – High Ash Content: Another Persistent Worry – Open Cast Mining: A Diminishing Effect on Coal GCV – A Deeper Look at Domestic Coal – Concerns of Indian Power Sector – Comparing Indian & US Coal – CEA: Nursing the Grievances of Power Sector – Twisting Events in Domestic Coal Sector Transportation Issues – Organisational Bottlenecks – Rolling Stock & Rakes: A Case of Recurrent Short Supply – Non-Progress on Alternative Transportation Front – High Freight Rates Laggard Indigenous Capacity and Technology of Coal Washeries – Economic Beneﬁts of Coal Washing – Private Sector Leading the Way in Coal Beneﬁciation – Inadequate Coal Washing Capacity – Absence of Upgraded Technology Process Speciﬁc Demand for High Grade Coal – Ash Content Determining the Coal Use Pattern – Coal Quality for Use in Steel Sector – Coal Blending Requirements in Power Sector – Cost-Economics Cap the Use of Imported Coal Emerging Import Trends – Proximity Governs Coal Imports to India – Australia: The Preferred Destination for Coking Coal – South Africa: The Emerging Terminus for Non-Coking Coal Prominent Tables & Figures: Coal Blocks Allocated to Public and Private Sector, Status & Production Thermal Coal Quality of Major Coalﬁelds of India Comparison of Indian and US Coal Coal based Power Plants with Critical & Super-Critical Fuel Stock Country Wise Coal Washing Technologies
Table of Contents and Storyboard
Coal Import Requirement for Power Sector Coking and Non-Coking Coal Import Trends for India 7. The Promises of Imported Coal Quality – Low Ash Content: A Comparative Advantage – High Caloriﬁc Value: Energy Content Polarizing User Industries Supply Dynamics – Economics of Delivery – Savings on Scheduled Deliveries Price Parity – On CV basis Major Coastal Investments Banked upon Imported Coal Prominent Tables & Figures: Coal Quality Comparison: Indian vs. Imported NCV for Steam Coal of Major Global Producers Delivered Price of Coal: Indian vs. Imported (on energy equivalence) Converging Price Trends: CIL vs. Imported Coal Power Generation Loss due to Coal Related Issues International Coking and Non-Coking Coal Prices in 2010 Coastal Power Plants based on Imported Coal in India 8. World Coal: Geographic Economics Global Resources and Reserves – Regional Distribution – Grade-wise Distribution Production and Consumption Trends Global Dynamics Major Exporting and Importing Nations Prominent Tables & Figures: Leading Coking and Non-Coking Coal Exporters and Importers (million tons) 9. Transportation Economics of Coal Global Coal Supply Chain and Transportation Infrastructure – Coal Supply Chain – Supplementing Infrastructural Facilities such as Ports and Railways Prominent Coal Transportation Routes – Graph of Global Coal Trade Cost of Different Modes – By Sea and Land Transportation Soaring Developments Facilitating Coal Trade – Increasing Ports Capacity – Growing Vessel Size – Expansion of Panama Canal Prominent Tables & Figures: Global Seaborne Coal Trade Logistics Performance Index 2010 Shares of Commodity on Global Bulk Trade Freight Rate Movements during FY- 2010 Global Charter Rate Supramax Freight Rates including Forecast for FY 2011 Panamax Freight Rates including Forecast for FY 2011 10. Global Coal Politics, Policies and Structures Political Compulsions Guiding Global Coal Trade – Pertinent Need for Steel and Electricity Major Players Inﬂuencing International Coal Trade – Steel & Power Consumers Cast the Most Inﬂuence – Emergence of Regional Coal Trade Powers International Coal Pricing – Movement of Coal Prices – Current Trend in Coal Prices – Factors Determining Coal Pricing – Reasons for Price Volatility The Rise of Environmental Patrons – Environmental Concerns Arising From Coal Usage – Environmental Costs of Trade Off – Emergence of Protagonists Prominent Tables & Figures: Global Seaborne Thermal Coal Trade Prominent Seaborne Thermal Coal Trade Stakeholders in 2006 Thermal Coal Prices in Australia and South Africa Recent and Forecasted Coal Prices Forward Coal Prices Domestic and Imported Coal Prices in Chinese Ports (April 2011) Coal Reference Price in Indonesia (April 2011) Coal Prices in USA 11. Underlying Economics Behind Chase for Global Coal Assets Securing Future Needs – Depleting Domestic Reserves of Coal (R/P Ratio) – Diminishing Life of other Fossil Fuels Compelling Domestic Scenario – Socio-Economic Growth – Dependence on Coal Diversiﬁcation of Portfolio – Minimising Geographic, Logistics and Quality Risk Shielding from International Price Volatility – Ease Pressure on Margins 12. Venturing Abroad: A Bridge too Far for India Success Stories so far – Case Studies of Indian Companies A Step Too Late for India – Best Deals Already Executed – Rising Coal Asset Prices What Ails the Indian Efforts – Lack of Government Initiatives – Laggard Decision Making – Lengthy Normative Timelines The Missing Enablers – Financial Strength – G2G Interaction – Irrefutable Proposals 13. Strategies Adopted by Other Nations Dream Run of Competing Nations – China – Other Nations such as Japan, Brazil, UK, Australia etc. Contagious Effect in Sourcing other Resources like Oil & Gas – Preferred Partners for Exploring other Resources – Case Study Proposition of Win-Win Strategies – Country Speciﬁc – Case Study of China Strong Politico-Economic Back-up – Government Backed and Funded Companies 14. PESTEL Analysis for Coal Imports / Acquisitions Destinations Abroad (Australia, Indonesia, South Africa, Mozambique, USA, China etc.) Identifying the Regions of Political Uncertainty Mapping the Areas Favouring Economic Case for Coal Imports Inﬂuence of Social Factors Technological Barriers across Geographies Environmental Issues Restricting Access to Coal Assets Legal Hurdles in Nations Identiﬁcation of New Frontiers (New Zealand, Kazakhastan, Mongolia, Bangladesh, African Region etc.) Prominent Tables & Figures: PESTLE Analysis for Investment in various Countries and Options for Sourcing Coal 15. Challenges and Opportunities in Coal Imports and Acquisitions Abroad Challenges & Risks – Authenticated Data Sourcing – Due Diligence – Regional Integration Priority Nations for Coal Assets – Factors Favoring Acquisition – Nations Offering Attractive Opportunities Securing Long-Term Coal Import Deals or Acquiring Coal Assets? Achieving the Right Mix 16. Strategies for Acquiring Coal Equity Abroad Entry in Right Geographies Timing the Investments Scope for Arbitrage Strengthening the Financial Muscles Thwarting Competition from China Back to Back Infrastructural Investments Needed at Home Country Formulating the Future Road Map – Efﬁcient Use of Resources – Enhancing Domestic Production – Reaping Most from Foreign Investments Sustainability Assessment – Short Term (0-2 years) – Medium Term (2-5 years) – Long Term (> 5 years) 17. Conclusion 18. Annexure
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