06 Nov 2020

India’s Jindal Power Looks to End Coal Imports

06 Nov 2020  by Saurabh Chaturvedi   

Indian private-sector utility Jindal Power is aiming to completely stop importing thermal coal and meet its coal requirements from local sources.

The company has emerged as the top bidder for an operational block in India's auctions for coal reserves for commercial mining and is eyeing one more block, which will go under the hammer on 9 November, the last day of the auctions. The names of the highest bidders for each block will be recommended to the authorities for final allocation on 11 November.

Jindal Power, which is part of Jindal Steel and Power (JSPL), made the highest bid yesterday for Gare-Palma-IV/1 coal block in Chhattisgarh, the central Indian state were the company's 3.4GW of coal-fired power generation capacity is located.

The open cast mine has a peak rated production capacity of 6mn t/yr with an explored reserve base of 84.26mn t. Its geological resource is estimated at 159mn t. The block was with JSPL until 2014, when it was deallocated as part of mass coal mining license cancellation by India's Supreme Court.

The company is also looking at the adjoining block, Gare Palma IV/7, which is partly an open cast and partly underground. It has a peak rated production capacity of 1.2mn t/yr and geological resource of 239mn t.

"With this, I don't think Jindal Power will need to import coal," JSPL managing director VR Sharma told Argus.

Jindal Power bought 140,000t of seaborne coal in the 2019-20 financial year that ended in March, down from 180,000t in 2018-19. Imported coal typically accounted for 2-5pc of the company's annual coal requirements, with the company mainly importing coal with a calorific value of GAR 5,000 kcal/kg and higher.

The utility has not imported thermal coal so far in 2020-21 given ample supply from state-controlled coal producer Coal India through contracted dispatches and electronic-auctions. This follows government efforts to discourage the use of imported coal.

Jindal Power has only been able to operate at around half of its capacity in recent years following the mass cancellation of captive coal block licenses six years earlier.

Jindal Power's turnover rose to 9.90bn Indian rupees ($133.3mn) in July-September, up by 5pc from a year earlier. This was led by 21pc rise in generation during the quarter from a year earlier, aided by a rise in power demand after Covid-19 lockdown restrictions in the country eased from June.

Coal import for sponge iron

Jindal Steel will continue to import high-grade thermal coal from South Africa for its sponge iron operations, Sharma said.

The company buys about 600,000t/yr of South African coal for its 1.32mn t/yr sponge iron production capacity in Chhattisgarh, he said. JSPL also has a 1.5mn t/yr sponge iron production line in eastern Orissa state but it is run on syngas derived from domestic coal.

Besides thermal coal, JSPL also imports about 5mn t/yr of coking coal for other steel making operations, he said.

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