Coal Insights, July 2013 3

Dear Readers,

You remember that Benjamin Disraeli quote, don’t you? There are three types of lies – lies, damn lies, and statistics!

Well, the Planning Commission of India has just come out with its latest discovery, that the poverty ratio in India has plunged 15 percent in the last nine years. Fifteen percent, I repeat, in nine years! That too, during a time when the global economy was marred by a prolonged recession and India, by its aftershock! The prices of farm produces shot up every other week. Realty prices hit the roof. Investments dried up. The job market shrank.

During this period, the share of both agriculture and manufacturing – sectors that employ the below- poverty-line (BPL) population – in the country’s GDP declined steadily and significantly. As of March this year (2013), the farm sector’s share has dropped to 17 percent and that of industry to 27 percent, while the services sector has ballooned to 56 percent of the GDP.

So what was the spell by which 180 million people were lifted to the higher stratum? Simple! The eligibility criterion, pointed out a Union minister, did the incredible trick. An individual earning `33.33 a day in cities or `27.20 a day in villages was thought of being comfortably enough placed to stay above the poverty line. Does it call to mind the NDA government’s ‘India Shining’ campaign in 2004? Well, that one happened before a general election. And another election is knocking on the door.

Why do we need to bother about these numbers? We shouldn’t, perhaps, and we generally don’t under a business-as-usual scenario. But the current situation is below par. The industry is facing a slowdown and investment levels are dwindling. There is hardly any new mega public project worth speaking of. Talk to any private sector manufacturer – big or small – and their sense of frustration is evident. Big- ticket investments are wrapping up, quietly.

The general slackness in the coal consuming segments is palpable. Suddenly, the power plants find themselves stacked with substantial stockpiles of coal. In fact, at least three state generators have asked the miners to go slow on supply. Except for pharmaceuticals, nearly all coal-consuming segments are showing reluctance towards fresh imports. Most of the steel plants in the country are operating at much below their rated capacities.

In such a situation, the first remedy that comes to mind is an enhancement of public expenditure by the government to pep up the economy and create employment. Alas, the incumbent, according to official sources, is considering a proposal to reduce public expenditure at this juncture!

The only positive the current scenario offers (for the coal sector) is a temporary relief for Coal India Ltd (CIL) from the constant pressure for producing more coal. This welcome break may allow the company to tend to its long-pending issues.

Meanwhile, the industry feels the economy doesn’t have much hope until the elections. But we are a patient lot. Let the government go to the polls well-prepared. Only if they could stop manufacturing these poverty numbers… even the man on the street is having a hearty laugh!

Happy reading,

(Rakesh Dubey)

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4 Coal Insights, July 2013

COnTEnTs

26 Imported steam coal prices remain soft in July

28 Seaborne coking coal prices firm up in July 32 CIL expects to sign remaining FSAs soon 36 Captive sector unlikely to deliver in 12th Plan 39 CIL to augment coking coal output by 30 mt 41 Construction slowdown hits cement sector 42 Lower coal linkages create fuel uncertainty

for cement industry 44 India’s power generation falls 9.6% in June

m-o-m 50 BKT takes a ‘specialised’ route 52 India is a low value market 54 Tricks of the (re)tread 58 Trident develops new range of solid tyres 60 Importance of tyre pressure monitoring

system for OTR tyres 68 Lack of demand for power hits NTPC’s

generation 69 Should Coal Controller’s organization be

strengthened? 70 US coal consumption expected to rise to

949.8 MMst in 2013 71 Prospective China ban a boon for India? 73 Coal imports: A national shame? 75 Fast-track coal block clearances to save

India 78 Traffic handling by major ports down 0.99%

in Apr-June 80 Railways’ coal handling falls 3.3% in June

m-o-m 82 E-auction data 84 Port data

46 | SpECiAl FEAtuREOtRs: For that extra mileage Constrained by limited growth opportunity in India, OTR majors focus on specialisation, exports.

62 | tEChnOlOgypolymer liners way forward for coal handling plantsRoechling Engineering brings industrial polymers as a replacement for steel in coal handling equipment.

30 | FEAtuRE30 india’s proven coal reserves rise to 123 bn tons The incremental reserves in 2012-13 come only in the proven category, GSI data shows.

64 | CORpORAtEMECl finds prospects for geothermal energy in lehThe company is waiting for defence ministry’s approval to kick-start the project.

6 | COvER StORyWCl’s survival mantraDepletion of opencast reserves compels WCL to focus on underground, seek new blocks, says DC Garg.

Call 9163348243 for more details

6 Coal Insights, July 2013

COvER sTORy

He aspired to be a surgeon but ended up as a geologist, instead. He

hadn’t even heard of Coal India (CIL) but spotted a job vacancy in a newspaper by chance, applied, was offered the post and, many years later, became the chairman-cum-managing director of Western Coalfields Limited (WCL), a CIL subsidiary!

Meet Dinesh Chandra Garg, CMD, WCL, who attributes his success to fate but also believes that human beings have the power to shape their future.

The company had registered phenomenal growth under him, with a record coal output of 45.74 mt in 2009-10. However, today, the challenges faced by WCL are many. It is not blessed with the rich and thick coal seams as found in other CIL subsidiaries like SECL, MCL and NCL. The opencast mines are depleting and there are pricing issues.

But the potential surgeon in Garg has a growth prescription ready. WCL needs to be allotted underground coal blocks in Chhattisgarh, because that is

where the future coal lies, he asserts. WCL also needs more equipment and manpower to sustain production levels.

In a candid interview to Coal Insights, he speaks of the immense challenges facing WCL and also CIL (by virtue of his position, Garg is a permanent invitee on the CIL board), but hastens to add that behind his charming smile lies a hard task master. And he talks at length about a series of initiatives lined up to maintain production levels and achieve the PSU’s financial targets.

WCL’s survival mantra Look underground, go overboard

Rakesh Dubey

8 Coal Insights, July 2013

COvER sTORy

Excerpts:

Let’s start from the end. Where do you see WCL, say five years down the line?At the outset, let me be clear on one point, that not much production growth is expected of this company, the reason being that Mother Nature has not bestowed adequate quantities of coal reserves to Western Coalfields Ltd (WCL). There is hardly any thick coal seam here similar to that found in South Eastern Coalfields Ltd (SECL), Mahanadi Coalfields Ltd (MCL) or Central Coalfields Ltd (CCL). There are good deposits in Rajmahal and Mand Raigarh where mega opencast (OC) projects could be launched, not only to sustain coal production but to give a considerable boost to growth.

In WCL, the highest production that we achieved in the past was around 3-3.5 million tons (mt) from a particular mine.

If we compare WCL’s assets to the mines in SECL, where a single one produces 45 mt, or MCL which has several 10-15 mt capacity mines, or even NCL…we stand nowhere!

However, we definitely need more mines, equipment and manpower to sustain coal production in this company.

Sustainability of production will be a challenge.

Switching over from opencast to

underground technology and use of modern techniques are the requirements one has to take into account if one wants to give the right direction to this company. Currently, we produce 8-9 mt from underground (UG)mines and, according to projections, this is to be doubled to around 16 mt.

But opencast production will come down, because these will not last forever, to 23-24 mt, while that from underground mines will be around 18 mt. So, a balance would be maintained to sustain a production level of 42-plus or 44 mt, as per projections.

We are trying to implement the best technology in UG mines through the use of continuous miners and Longwall projects, along with other technologies.

As for Longwall, we have been mulling plans to deploy this technology at two of our mines – Morpar and Borda. Here, we plan to use Longwall through an MDO.

Two of our UG mines located in Madhya Pradesh – which are the largest coal-producing UG mines within Coal India with capacities of 1 and 0.72 mt – will be using the continuous miner technology.

In OC mines, unfortunately, we are unable to deploy large equipment because of the nature of deposits and the mining conditions there. At best, we can use around 60 tonner dumpers with 4.8 cu m shovels. Earlier, we used 35-tonner dumpers with

2.8 cu m shovels. Likewise, we have about four draglines in our company, but after the Urmer incident, when River Amb inundated the quarry in 2010, two became non-operational. One was totally damaged and the second dragline could not work due to the restrictions imposed by the DGMS there. That had to be dismantled and shifted to other mines in the Wardha Valley coalfields. A lot of problems still persist.

How has WCL fared in terms of production growth over the last few years? What is the production target for 2013-14 and the achievement to date?There has been a phenomenal growth in coal production of the company from 37.01 mt in 2001-02 to 45.74 mt in 2009-10. The trend was, however, reversed during 2010-11 subsequent to the landslide at the Umrer OC project. The landslide resulted in the breaching of the embankment between the mine and River Amb. The river entered

Revival of mining at Urmer block

WCL restored mining conditions at Urmer. The mine contributed roughly 1 mt last year, as against the targeted 300,000 tons.

“But, unfortunately, the reserves are not much,” said WCL CMD D C Garg.

“So far, work has been allowed only in the western quarry and we are yet to touch the eastern quarry. The reserves are not much, so we will now divert the wall. Around 25 mt of reserves would be released due to this diversion and that will enhance the mine’s life and it will regain its lost glory in the days to come,” he said.

Noting that the diversion process is time-consuming, he added: “We had placed the proposal before the board and it approved the contract. It will take at least two years to build the diversion as per the design plan of CGM, Nashik. After that, operations will start at full capacity three years from now.”