India’s coal imports surge 40% owing to washery shortage

By: | Published: April 17, 2019 12:40 AM

The firms have warned that imports of the fuel, which could drive up India’s goods trade and current account deficit, could rise further if adequate number of domestic washeries are not set up in the public and private sectors.

India’s coal imports surge 40% owing to washery shortageIndia’s coal imports surge 40% owing to washery shortage

Coal India’s (CIL) delays in setting up coking-coal washeries inflated the country’s coal imports by $3 billion or over 40% in FY18, steel companies have estimated.

The firms have warned that imports of the fuel, which could drive up India’s goods trade and current account deficit, could rise further if adequate number of domestic washeries are not set up in the public and private sectors.

In letters sent to steel and coal ministries, the Indian Steel Association (ISA) has pointed out that if the situation does not improve, import bills would rise exponentially as the country strives to achieve the ambitious steel production target of 300 MTPA by FY31.

The letters, reviewed by FE, said capacities of CIL washeries are grossly under-utilised and become obsolete because they were primarily designed to handle coal with ash content much lower than what is currently mined. Since unwashed coking coal with high ash content can’t be used by the steel industry, it is being diverted to power plants.

“At present, if coking coal being sold to power plant is washed, there is potential to cut approximately 40% of import at current level of production (saving about $3 billion),” the letter from ISA added.

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Apart from a suitable augmentation plan for all existing washeries, the steel industry has requested the government to allocate or auction coking coal to steel plants interested in washing coal themselves for their exclusive use. They also want better coking coal blocks reserved for CIL to be offered to steel players.

The steel industry can use only a quarter of the coking coal produced in the country due to inadequate washing capacity. Coking coal having less than 18% ash can be used directly by consumers in the steel sector. Coal having higher ash content (18-35%) is termed washery grade coal and requires washing to make it suitable for use in production of steel. CIL runs 12 coking coal washeries with a total annual capacity of 22.18 MT.

The private sector runs four washeries with annual capacity of 7.7 MT. CIL proposes to construct eight more coking coal washeries by 2020 with total annual capacity of 26.5 MT.

In a review meeting held on January 31, coal secretary Sumanta Chaudhuri expressed his concerns on CIL’s delay in commissioning of washeries.

The washery in Jharkhand’s Dahibari could not be operated at full load because of local law and order problems. The Patherdih I washery could not be operationalised on time owing to the contractor, Monnet Ispat and Energy, not completing necessary infrastructure construction. The Patherdih II washery has got delayed owing to eviction and rehabilitation issues. The Dugda washery project is stuck because CMPDI had not completed the evaluation of the tender on time.

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