COAL

GROUP-3
 Origin of Coal
• The standard, uniformitarian process of coal formation begins in a swamp. In this water-
saturated environment, dead mosses, leaves, twigs, and other parts of trees do not
decompose completely. Instead, this plant matter becomes a layer of peat. At various
intervals, the swamp may be covered by sand and mud when a river floods or when ocean
levels rise. Under the weight of these sediments, the peat may lose some of its water and
gases, eventually turning into a soft brown coal called lignite.
• With increasing pressures or temperatures, more water and gases are driven off, forming the
common bituminous family of coals. Finally, high temperatures and pressures may cause
bituminous coal to turn into a hard black coal called anthracite. an increase in rank
represents an increase in the proportion of carbon within the coal.
• The type or rank of coal is thought to depend more on depth of burial than time. For
example, it is possible to find lignite and bituminous coals that seem to have formed at the
same time, but in different places. In other words, rank is not a good predictor of age.
 Contd…

• Hypothetical evolution of peat from a

Carboniferous swamp environment into coal:
(a) Partially decomposed plant material
accumulates slowly in a swamp.
(b) More fragile plant tissues are destroyed, while
woody material is preserved.
(c) If the peat is buried under a thick layer of
sediment, increasing pressures and temperatures
will reduce water content and cause chemical and
physical transformation of peat into coal.
 Types of Coal
As geological processes apply pressure to dead biotic material over time, under suitable
conditions it is transformed successively into:
• Peat
• Lignite
 Jet

• Bituminous coal
 Coke

• Sub-bituminous coal
• Anthracite
• Graphite
 Composition
• The organic component of coal consists of chemical compounds from carbon, hydrogen,
oxygen, sulfur, and nitrogen.
• With the exception of nitrogen, these elements are also found in the mineral species that
occur in coal.
- Ex. carbonates, sulfides, sulfates and hydrous clay minerals.
- The ash in coal is made of decomposed residues of silicate, carbonates and sulfides.
 Advantages and Disadvantages of Using
Coal Energy
Advantages Disadvantages
• Coal energy is an affordable energy • The burning of coal is not environment
source because of the coal’s stable friendly because burning of Coal produces
large amount of carbon dioxide and other
price compared to other fuel sources
harmful gases like SO2,NO2 etc which
• Coal is easy to burn leads to global warming and climate
• Coal produces high energy upon change
combustion because of high calorific • Coal energy is nonrenewable energy
value. source.
• Coal is fast depleting because we consume
• Coal energy is inexpensive compared
too much of it.
to another energy sources. • We import a huge amount of coal from
• Coal is abundant other county because of which we loose
• Coal energy is a reliable energy our currency.
source • Coal mining ruins the environment and
puts the lives of people specially the coal
miners in danger.
 Uses of coal
• Electricity
• Coal-fired power stations generate 40% of global electricity. Heat from burning coal boils
water, and steam spins a propeller. A machine turns this into electricity.
• Iron and steel
• About 70% of steel is created using coke, a high-carbon fuel made from coal. It is burned to
melt and remove impurities from iron ore during iron and steel production.
• Shampoo
• The dandruff and head lice-zapping power of some shampoos is thanks to coal tar, a thick,
dark-coloured liquid produced when goal is turned into coke or coal gas fuel.
• Plant fertiliser
• Coal can be turned into ammonia fertiliser by breaking it into carbon monoxide and hydrogen
gas. The hydrogen mixes with nitrogen to make ammo
• Concrete
• Concrete is a building material made with cement. Coal is burned to make heat for cement
production. Waste ash from coal-fired power stations can replace cement in concrete.
Other Important Industrial Uses
✧ Ceramics
✧ Synthetic rubber and fiber (rayon and nylon)
✧ Insecticides
✧ Solvents
✧ Paper
✧ Lubricants
✧ Resins
✧ Cosmetics
✧ Carbon fiber
✧ Activated carbon (used in water filtration and air purification)
 COAL PRICING AND PURCHASE (FOB)
FOB(FREE ON BOARD) :-
1) FOB shipping point 2)FOB destination point
World Scenario :-
COAL RESERVES COAL PRODUCTION
Note :-
One short ton =907.18474 kg
One Ton = 1000 kg
1 Long ton = 1016.046
kilograms

WORLD COAL PRICE SCENARIO

-The surge in coal price during 2008 was due to 2008 financial
crisis(Layman Bank)
-The coal price increased at tremendous rate.
-Earlier coal pricing were running smoothly due to low power
requirement but in 2004 there was large requirement of coal for
thermal power station.
There are three types of prices in coal purchase
1) Contract price 2)Spot price 3)Future price
-In india coal is traded at MCX.
INDIA’S COAL SCENARIO (IMPORT -EXPORT AND PRICING )

>Export

>Import
Why pulverized coal :-

-The basic requirement of coal combustion is that all the carbon particles in coal should get
sufficient air to burn and release the heat.
-Coal normally is available to power plants in large lumps ranging from 2 mm to 50 mm size
-coal used for combustion as coal particles in the range of 75 microns.

Import :-
-Taking into account A$15-20/t for 400-500km of rail transport, A$5-6/t for port charges and A$16/
for shipping , all in transportation costs of moving coal from the US to coastal India at A$35-40/t.
-free-on-board price is estimated around A$82 and A$79/t
-There has been surge in import from US is due to high calorific value.
-Last year india started import from Australia also.
-And while procuring coal some benchmarks are laid based on calorific values and since pakistan
coal was not up to the benchmark , so the import was stopped.

Export :-
-India’s coking coal import has reduced in comparison to last year which is used in steel industries
-the main importer of indian coal is Bhutan and india is selling it to bhutan at times the nominal
price that is the average price is of 6000 INR.
-But india is selling to bhutan at 30000 INR .
-india do not export large amount of pulverised coal.

NOTE – THER IS A DIFFERENCE OF 20 % IN PRICE OF COAL IMPORTED AND EXPORTED

Coal reserve in India and world
Distribution of Coal in India Coal-World Reserve
• Chhattisgarh 20.81%
• Orissa 19.58%
• Jharkhand 19.44%
• Bihar 14.58%
• Madhya Pradesh 14.30%
• Andhra Pradesh 9.59%
 Coal Scenario In India
• India has a long history of commercial coal mining covering nearly 220 years starting from 1774.

•India currently stands eighth in terms of total World Coal Resources.

•India ranks as the third largest coal producer of the World next to China and USA.

•It is endowed with less than one percent of world coal resources.

•There are 69 major coalfields located in the peninsular India besides, 17 located in the north-

eastern region.

•Coal deposits in India are confined to eastern, southern and central parts of the country,

consisting of 27 major coalfields.

•The coal occurrences in India are mainly distributed along the present day river valleys i.e.

DamodarValley, Sone-MahanadiValley, Pench-KanhanValley, Wardha-Godavari Valley etc.

 Contd…
• The Geological Survey of India at 285.8 billion tonnes–up to the depth of 1200m, as on
31.03.2011.
• It accounts for 63% of the country's energy .
• About 87 percent of coal resources lie within the depth range of 600 metres.
• Quality wise resource is 8.27 % Coking Coal and 91.73% Non Coking Coal.
• Basically, Indian coals have high mineral matter (ash) content unlike Pennsylvanian and
Carboniferous coals of America and Europe respectively
• Some of the positive features of Indian Coal are low sulphur, low toxic elements and high ash
fusion temperature.
 Coal Industry in India
• Sector wise coal distribution in India are
– Electricity- 59%
– Iron& Steel- 7%
– Cement- 4%
– Others- 10%
– Non-elect- 20%
• Coal India is the largest public sector company, about 80.86% of the total coal production in
the country comes from the collieries of Coal India Ltd (CIL)
• It has eight subsidiaries: Bharat Coking Coal Ltd., Central Coalfields Ltd., Eastern Coalfields
Ltd., Western Coalfields Ltd., South Eastern Coalfields Ltd., Northern Coalfields Ltd.,
Mahanadi Coalfields Ltd., Central Mine Planning & Design Institute Ltd.
• The Singareni Collieries Company Limited (SCCL) is a coal-mining company jointly owned by
the Government of Andhra Pradesh and Government of India.
 Method for Assessing Coal Reserve
• The first one is produced by the German Federal Institute for Geosciences and Natural
Resources (BGR) and is used by the IEA as the main source of information about coal
reserves.
• The second one is produced by the World Energy Council (WEC) and is used by the BP
Statistical Review of World Energy.
• According to BGR there are 1038 billion tonnes of coal reserves left, equivalent to 132 years
of global coal output in 2012. Coal reserves reported by WEC are much lower - 861 billion
tonnes, equivalent to 109 years of coal output.
 Major Exporter of Coal
• Australia
• Indonesia
• Russia
 Australia
• World 2nd largest coal exporter.
• Coal- largest export commodity.
• Coal production – 398050 million.
• As 2013 report, 301000million coal exported, which is 70% of total production.
• Coal Reserves – 76 billion tonnes (approx 8% of world).
• Top export market: Japan , China , India , South Korea.
• Major Export Terminals: Brisbane, Gladstone , NSW,
Port Kembla , Newcastle.
• Corporations responsible for the bulk of Australian exports:
Xstrata 24%
Rio 18%
BHP Billiton 14%
 Indonesia
• World largest Coal exporter.
• Coal production – 421000 million.
• As 2013 report , 349000 million coal exported.
• Enough Reserves for 83 years.
• Top export market : Japan(20%) , China(24%) , India(27%) , The republic of Korea(11%).
• Major Export Terminals : the islands of Sumatra, Java, Kalimantan, Sulawesi , Papua.
• Corporations responsible for the bulk of Indonesia's exports:

Bumi Resources 28%

Banpu 23%

Adaro Indonesia 18%

 Russia
• World 3rd largest exporter of coal.
• Coal Production – 359000 million.
• As 2013 report, 134000 million coal exported.
• Coal Reserves – 193.3 billion metric ton.
• Top export market : USA , China , Countries in Pacific Ocean.
• Major Export Terminals : Vostochny Port , Nakhodka Port.
• Corporations responsible for the bulk of Indonesia's exports:
SUEK
Raspadskaya coal mine
Kuzbassrazrezugol
 Major Importer Of Coal
• China
• Japan
• India
 China
• World largest importer of coal as well as largest producer of coal.

• Coal Production – 3549000 million(1/3 of world production).

• As 2013 report, 323000 million coal imported.

• Coal Reserves – 126 billion short ton.

• Types of coal produce – bituminous coal, anthracite coal , lignite coal.

• The industrial sector including steel, pig iron, cement, and coke currently, accounts for 45% of
coal use.

• China consume more than what it produce.

• Corporations which are beneficial from imports:

Shanxi Province

Shenhua Group

ChinaCoal
 Japan
• World 2nd largest importer of coal.
• Coal Production – 3549000 million(1/3 of world production).
• As 2012 report, 204000 million coal imported.
• Major use in steel & cement industries.
• Types of coal produce – bituminous coal, lignite coal.
• Fukushima Disaster.
• 27% coal used for electricity.
• Corporations which are beneficial from imports:
Hokutan
Mitsubishi
Sumitomo
 India
• World 3rd largest importer of coal.
• Coal Production – 595000 million.
• As 2013 report, 160000 million coal imported.
• Coal Reserves – 180 billion short ton which is available for next 30 years.
• Types of coal produce – bituminous coal(20%), lignite coal(70%).
• 28 coal block
• Corporations which are beneficial from imports:
Coal India
Tata Power
Adani Gropup
 Impact of Coal on Indian Economy
• Coal contributes to about more than 1.5% of the GDP of the country and contributes 50% of India
total primary energy production.
• The unavailability of coal will have significant impact on the power generation in the country
which in turn would impact new proposed projects in the manufacturing and cement sector in the
country and retard overall economic growth
• The GDP contribution of the mining industry varies from 2.2% to 2.5% only but going by the GDP
of the total industrial sector it contributes around 10% to 11%
• The demand for coal in india is rising because of its increase demand in electricity,iron,steel,
cement,bricks and ceramic industry.So coal is one of the important component in every industry
and to increase the economy of our country.
• Energy is a prerequisite in the economic development of any country. Coal dominates the
country's energy mix. It
• Coal accounted for 53 percent of India’s fuel consumption in 2010.
• We depend on others country for coal because of which we loose our money.
• Since the availability of gas in India is limited ,caol remains the major energy of power generation
so the shortage of coal and indiscipline in the grid will lead to more grid failures in the future
which indicate the bad impact for our country economy.
• India's coal industry is choking under a heap of problems, including inefficiency, corruption and
environmental concerns. With coal being India's main source of power, these issues pose
substantial risks to the country's economic growth
 Coal India
• Coal India limited(CIL)is an Indian state controlled coal mining company headquartered

in Kolkata, West Bengal India. It is the largest coal producer company in the world and

contributes around 81% of the coal production in India.

• In April 2011, CIL was conferred the Maharatna status by the Union Government of India.

• Government of India held 100% of its shares from 1975 till 2010.

• In October 2010, Government of India offered 10% of the equity shares of CIL

(631.6 million equity shares) to public for sale at an offer price of INR 245 per share.

• Coal India produces coal through seven of its wholly owned subsidiaries ie Bharat Coking

Coal Limited, Central Coalfields Limited, Eastern Coalfields Limited, Mahanadi Coalfields

Limited, Northern Coalfields Limited, South Eastern Coalfields Limited, Western Coalfields

Limited.
 Role of Coal India
• India is one of the fastest growing economies of world.Coal is the mainstay of India’s energy
and 55% of primary energy supply and 70% of power generation in the country are coal
based. India ranks third in coal production globally after China and USA.India total primary
energy production which caters the need of industries like power,steel,cement,fertilizer and
others.It plays a crucial role in meeting India future need.CIL account for about 81% of the
total coal produced in the country during fiscal year 2013.
• To produce and market the planned quantity of coal and coal products efficiently and
economically in an eco-friendly manner with due regard to safety, conservation and quality.
 Current Situation of Coal India
• There is a gap between the supply and demand of coal in india because of system corruption in

coal india and policies paralysis at the decision making body.

• Given the stagnation in coal output from the state-run monopoly Coal India Limited (CIL) and

importing coal from Indonesia and Australia becoming costlier.

• With a large no of captive coal blocks struck in various pre-implementation stage companies

depending on coal import has increased.

• Lot of illegal coal mining is happening in our country because of which coal india is going on less

and the coal didn’t reach at right place.

• India ranks fourth in the coal import demand. It also accounts for about 10% of the world import

coal demand.
 Auctioning of Coal Blocks
• Bidding methodology to be followed
 Production linked payment

• Criteria of selection to be followed

• Methodology for fixing floor/reserve price
 The floor price
 Setting up of reserve price of allotment of blocks to the government companies
 Setting up of reserve price of coal blocks to be allotted through tariff based bidding
 COAL- GATE
• What is coal scam:
• Simply put it is a corruption scandal where in the comptroller
and auditor general of india CAG office has accused the
government of india for providing the nation’s coal deposits to
private and state run entities in an irregular and arbitrary
manner instead of publically them off to highest bidder.

• 1.87 LAKH crore rupees

• Biggest scam in india by now
• Report authenticated by Comptroller and Auditor General of
india
 BACKGROUND TO SCAM

● Coal Mines National Amendment Bill

● Captive Mining Inherent Drawbacks

● Approval of open bidding by prime minister

● Mr Soren Kills Proposal of open bidding

 CAG Report on Coal Scam
○ Screening Committee

○ Role of Audit

○ Delay in implementing Policy

○ Computation of Undue Gain

SUPREME COURT MONITERED CASE

Talibara and Hindalco coal block allocation

FIR Against K M Birla and P C Parakh

 WAY FORWARD
• Following things can be considered :
• Denationalize the sector
• Revisit captive mining route
• Introduce incentive structure where state
government themselves participate in coal
mining in their own state.
• Give EPC contracts to foreign contractors.
In all cases above multiple players with core
competence is way forward.