SUMMER TRAINING REPORT SUBMITTED TOWARDS THE

PARTIAL FULFILLMENT OF POST GRADUATE DEGREE IN

MANAGEMENT

Pricing And Distribution Of Coal By Coal India Limited (B.C.C.L)

SUBMITTED BY

AMRITRAJ

MBA-(2009-2011)

Enrollment No. : A30101909149

INDUSTRY GUIDE FACULTY GUIDE

Mr. M.CHANDRA MS. Kamal Deep Kaur

CGM

BHRAT COKING COAL LIMITED

AMITY GLOBAL BUSINESS SCHOOL, NOIDA

AMITTY UNIVERSITY- UTTAR PRADESH

CERTIFICATE OF ORIGIN

This is to certify that Mr. Amrit Raj , a student of Post Graduate Degree in

Management, Amity Global Business School, Noida has worked in the BHRAT

COKING COAL LIMITED., under the able guidance and supervision of

M.Chandra CGM of B.C.C.L

The period for which he was on training was for 8 weeks, starting from 07/06/2010

to 30/07/2010.This Summer Internship report has the requisite standard for the

partial fulfillment the Post Graduate Degree in International Business. To the best

of our knowledge no part of this report has been reproduced from any other report

and the contents are based on original research.

Signature Signature

(Faculty Guide) (Student)

ACKNOWLEDGEMENT

I express my sincere gratitude to my industry guide Mr, M Chandra Sir , CGM of

B.C.C.L , for his able guidance, continuous support and cooperation throughout

my project, without which the present work would not have been possible.

I would also like to thank the entire team of B.C.C.L , for the constant support and

help in the successful completion of my project.

Also, I am thankful to my faculty guide Ms. Kamal Deep Kaur of my institute , for

her continued guidance and invaluable encouragement.

AmritRaj

Enrollment no

A30101909149

Table of content

1) Executive summary2) Introduction

a)Types of coalb) production of coal in other parts of worldc) Objectived)Gradation of coal

3) Research methodology

a) Research objective

b) Business research desgin

c) Research Plan

4) Industry profile

a) review of literature

b) History

c)About CIL

d) Major companies

e)SWOT Analysis

5) Company Profile

a) History of B.C.C.L

b) organization chart

c) International Cooperation

d) Performance Graph

e) SWOT Analysis

6) Issue and challenges faced by organization

7) Findings of the project

8) Recommendation

9)Bibliography

EXECUTIVE SUMMARY

Topic : pricing and distribution of coal

INDUSTRY OVERVIEW

There are 21 coking coal washeries in production both in private and public sectors.

Production of clean coal in these washeries during 1989-90 was 12 million tonne and it is

expected to go upto 14 million, tone during 1990-91. There are 2 washeries under

construction now and these are expected to be completed by 1995. Present washeries face

problems in optimum production more on quality aspects than on quantity and it appears that

trend of using imported coking coal of low ash to blend with indigenous high ash coal for

steel sector requirement, may continue for some time to come on considerations of optimised

steel production. Besides the above coking coal washeries, Bina deshaling and Piparwar

beneficiation plants are in preliminary stages of construction in non-coking coal sector.

Future prospects of washeries for non- coking coal beneficiation, appear to be bright as, in

view of sharp rise in demand for coal, there is increasing trend in mechanised mining of

inferior seams resulting in deterioration in quality and consequent reluctance by consumers

to accept the same. Planning Commission has taken the decision that non-coking coal meant

for Thermal Power Plants situated far away from feeding coalfield, should be beneficiated.

The benefits of low ash coal burning in boilers are realised but reimbursement of extra cost

of beneficiation for washed non-coking coal needs to be considered.

The highlights of the outcomes from this study are:

o The major role CIL is the price fixation of the coal according to their grade

to achieve business results.

o A number of pricing challenges were found , These include

Government rules and international market competition.

Major consumer of coal are public sector undertakings like Thermal power station Bricks industries Agriculture Steel industries Cement power

INTRODUCTION

INTRODUCTION ABOUT COAL

Coal is a readily combustible black or brownish-black sedimentary rock normally occurring

in rock strata in layers or veins called coal beds. The harder forms, such as anthracite coal,

can be regarded as metamorphic rock because of later exposure to elevated temperature and

pressure. Coal is composed primarily of carbon along with variable quantities of other

elements, chiefly sulphur, hydrogen, oxygen and nitrogen.

Coal begins as layers of plant matter accumulate at the bottom of a body of water. For the

process to continue the plant matter must be protected from biodegradation and oxidization,

usually by mud or acidic water. The wide shallow seas of the Carboniferous period provided

such conditions. This trapped atmospheric carbon in the ground in immense peat bogs that

eventually were covered over and deeply buried by sediments under which they

metamorphosed into coal. Over time, the chemical and physical properties of the plant

remains (believed to mainly have been fern-like species antedating more modern plant and

tree species) were changed by geological action to create a solid material.

Coal, a fossil fuel, is the largest source of energy for the generation of electricity worldwide,

as well as one of the largest worldwide anthropogenic sources of carbon dioxide emissions.

Gross carbon dioxide emissions from coal usage are slightly more than those from petroleum

and about double the amount from natural gas.[1] Coal is extracted from the ground by

mining, either underground or in open pits.

Types

Believed approximate position of the proto-continents toward the end of the Carboniferous

period; the light blue represents shallow seas where many of today's coal deposits are found,

as opposed to deeper waters which gave rise to oil-bearing rocks derived from marine

species. As geological processes apply pressure to dead biotic material over time, under

suitable conditions it is transformed successively into

Peat , considered to be a precursor of coal, has industrial importance as a fuel in

some regions, for example, Ireland and Finland. In its dehydrated form, peat is a

highly effective absorbent for fuel and oil spills on land and water

Lignite , also referred to as brown coal, is the lowest rank of coal and used almost

exclusively as fuel for electric power generation. Jet is a compact form of lignite that

is sometimes polished and has been used as an ornamental stone since the Iron Age

Sub-bituminous coal , whose properties range from those of lignite to those of

bituminous coal are used primarily as fuel for steam-electric power generation.

Additionally, it is an important source of light aromatic hydrocarbons for the

chemical synthesis industry.

Bituminous coal , dense mineral, black but sometimes dark brown, often with

well-defined bands of bright and dull material, used primarily as fuel in steam-electric

power generation, with substantial quantities also used for heat and power

applications in manufacturing and to make coke

Steam coal is a grade between bituminous coal and anthracite, once widely used

as a fuel for steam locomotives. In this specialized use it is sometimes known as sea-

coal in the U.S.[2] Small steam coal (dry small steam nuts or DSSN) was used as a

fuel for domestic water heating

Anthracite , the highest rank; a harder, glossy, black coal used primarily for

residential and commercial space heating. It may be divided further into

metamorphically altered bituminous coal and petrified oil, as from the deposits in

Pennsylvania

Graphite , technically the highest rank, but difficult to ignite and is not so

commonly used as fuel: it is mostly used in pencils and, when powdered, as a

lubricant.

PRODUCTION OF COAL IN OTHER PARTS OF WORLD

Coal in Australia

Coal in Australia is mined in every state and territory of the country. It is used to generate

electricity and is exported. 75% of the coal mined in Australia is exported, mostly to eastern

Asia. In 2000/01, 258.5 million tonnes of coal was mined, and 193.6 million tonnes exported.

Coal also provides about 85% of Australia's electricity production. In fiscal year 2008/09,

487 million tonnes of coal was mined, and 261 million tonnes exported. Australia is the

world's leading coal exporter.

Coal mining in Australia is controversial because of the burning of exported and imported

coal which contributes to climate change, global warming, sea level rise and the effects of

global warming on Australia.. The burning of coal produces 42.1% of Australia's

greenhouse gas emissions, not counting export coal, based on 2004 GHG inventory.

FORMS OF COAL IN AUSTRAILIA

Two forms of coal are mined in Australia, depending on the region: high quality black coal

and lower quality brown coal.

Black coal is found in Queensland and New South Wales, and is used for both domestic

power generation and for export overseas. It is generally mined underground before being

transported by rail to power stations, or export shipping terminals. Black coal was also once

exported to other Australian states for power generation and industrial boilers.

Brown coal is found in Victoria and South Australia, and is of lower quality due a higher ash

and water content. As a result Victoria adopted German power station and briquette

technology in the 1920s to utilize the brown coal reserves of the Latrobe Valley. Today

there are three open cut brown coal mines in Victoria used for baseload power generation

Overview

Australia had 2009 coal production of 409.22 million tonnes, 6.68% of the world total. The

world's major producers are China, the USA, India, Australia, Russia, Indonesia and South

Africa. Australia had 2009 coal consumption of 50.82 million tonnes oil equivalent, 1.55%

of the world total.

Coal is Australia's major mineral export and accounts for nearly 25% of Australia's export

earnings. Australia is the world's 4th largest coal producer, and, according to the 2008 BP

Statistical Energy Survey, produced 393.92 million tonnes of coal in 2007. Australia is also

the world’s largest net exporter of coking and steaming coal. According to the 2008 BP

Statistical Energy Survey, Australia had end 2007 coal reserves of 76600 million tonnes,

9.03% of the world total and consumed 53.13 million tonnes oil equivalent. Australia

exported 340.79 million tonnes of coal in 2007. Japan is the destination for over 60 per cent

of Australia’s coal export.

98% of Australia’s export production coal deposits are located in Permian age sediments

(250 million years old) in the Bowen Basin in Queensland and the Hunter Valley basins in

New South Wales. Western Australia has some producing mines south of Perth. Australia

also has reserves of lower grade lignite coal, located in Victoria. Coal is exported from nine

terminals at seven ports along the east coast. Australia’s coal industry is dominated by BHP

Billiton, Anglo American (UK), Rio Tinto (Australia-UK), and Xstrata (Switzerland).

BHP Billiton is the world’s largest supplier of seaborne traded hard coking coal from its

predominantly open-cut mines at its low cost asset base in Queensland (owned in alliance

with Mitsubishi Corporation) and New South Wales (100 per cent owned).

COAL IN CANADA

The Canadian coal industry plays an important role in the Canadian economy, both as a

mining industry and as an energy provider. According to the 2008 BP Statistical Energy

Survey, Canada had 2007 coal production of 69.36 million tonnes, 1.17% of the world total,

while consuming 30.42 million tonnes oil equivalent. Close to one half of Canada’s coal

production is exported, primarily as metallurgical coal.

Canada is a major coal producer and consumer, with, according to the 2008 BP Statistical

Energy Survey, end 2007 coal reserves of 6578 million tonnes. Currently over half of

Canada’s coal production is bituminous, with sub bituminous and lignite the rest. Nearly

90% of Canada’s coal consumption is used for power generation, with the remainder used in

steelmaking. Coal only provides 10% of Canada’s energy requirements.

The main coal producing regions are in Alberta (nearly 50%), British Colombia and

Saskatchewan. Minor coal is produced along the east coast provinces of New Brunswick and

Nova Scotia.

Coal power in China

The People's Republic of China is the largest consumer of coal in the world and is about to

become the largest user of coal-derived electricity, generating 1.95 trillion kilowatt-hours per

year, or 68.7% of its electricity from coal as of 2006 (compared to 1.99 trillion kilowatt-

hours per year, or 49% for the US). Hydroelectric power supplied another 20.7% of

China's electricity needs in 2006. With approximately 13 percent of the world's proven

reserves, China has enough coal to sustain its economic growth for a century or more even

though demand is currently outpacing production. China's coal mining industry is the

deadliest in the world and has the world's worst safety record where an average of 13

people die every day in the coal pits, compared to 30 per year for coal power in the United

states Coal production rose 8.1% in 2006 over the previous year, reaching 2.38 billion

tons, and the nation's largest coal enterprises saw their profits exceed 67 billion yuan, or

$8.75 billion .

While China boasts the greatest use of coal power, it is third in the world in terms of total

coal reserves behind the United States and Russia. Most reserves are located in the north and

north-west of the country, which poses a large logistical problem for supplying electricity to

the more heavily populated coastal areas Coal power is managed by the State Power Grid

Corporation.

OBJECTIVE : Pricing and distribution policy of CIL (B.C.C.L)

Pricing policy

Pricing policy of coal is mainly based on the categories of coal or quality of coal produced.

Categories of coal given.

COKING COAL :

These coals, when heated in the absence of air, form coherent beads, free from volatiles,

with strong and porous mass, called coke.

These have coking properties

Mainly used in steel making and metallurgical industries

Also used for hard coke manufacturing

SEMI COKING COAL :

These coals, when heated in the absence of air, form coherent beads not strong enough to

be directly fed into the blast furnace. Such coals are blended with coking coal in adequate

proportion to make coke.

These have comparatively less coking properties than coking coal

Mainly used as blend-able coal in steel making, merchant coke manufacturing and other

metallurgical industries

NLW COKING COAL :

This coal is not used in metallurgical industries. Because of higher ash content, this coal is

not acceptable for washing in washeries. This coal is used for power utilities and non-core

sector consumers.

NON-COKING COAL :

These are coals without coking properties.

Mainly used as thermal grade coal for power generation

Also used for cement, fertilizer, glass, ceramic, paper, chemical and brick manufacturing,

and for other heating purposes

HARD COAL :

Hard coke is formed from coking / semi-coking coal through the process of carbonisation.

Mainly used in metallurgical industries

Also used in industrial plants utilising furnaces

WASHED AND BENEFICIATED COAL :

These coals have undergone the process of coal washing or coal beneficiation, resulting in

value addition of coal due to reduction in ash percentage.

Used in manufacturing of hard coke for steel making

Beneficiated and washed non-coking coal is used mainly for power generation

Beneficiated non-coking coal is used by cement, sponge iron and other industrial plants

GRADATION OF COAL

A. COKING COAL

Grade Parameter

Steel – I Ash not exceeding 15%

Steel – II Ash exceeding 15% but not exceeding 18 %

Washery – I Ash exceeding 18% but not exceeding 21 %

Washery – II Ash exceeding 21% but not exceeding 24 %

Washery – III Ash exceeding 24% but not exceeding 28 %

Washery – IV Ash exceeding 28% but not exceeding 35 %

B. SEMI COKING COAL

Grade Parameter

Semi Coking – I Ash + moisture not exceeding 19 %

Semi Coking – II Ash + moisture exceeding 19 % but not exceeding 24 %

C. NON-COKING COAL

Grade UHV RANGE (KCALS/KG)

A Exceeding 6200

B Exceeding 5600 but not exceeding 6200

C Exceeding 4940 but not exceeding 5600

D Exceeding 4200 but not exceeding 4940

E Exceeding 3360 but not exceeding 4200

F Exceeding 2400 but not exceeding 3360

G Exceeding 1300 but not exceeding 2400

D. HARD COKE

Grade Ash %

By Product Premium Not exceeding 25 %

By Product Ordinary Exceeding 25 % but not exceeding 30 %

Beehive Premium Not exceeding 27 %

Beehive Superior Exceeding 27 % but not exceeding 31 %

Beehive Ordinary Exceeding 31 % but not exceeding 36 %

E. HARD COKE

Industry Type of Coal RequiredSteel making Coking and semi-coking coal, direct feed and washed;

blendable coal; low ash % Assam and Ranigunj coal

Cokeries / coke oven plants Coking and semi-coking coalBriquette making / domestic fuel making

Semi-coking and non-coking coal; middling & rejects of washeries

Special Smokeless Fuel (SSF) Semi-coking coal of Coking Index 8 – 10Power sector Non-coking coal; middlings of coking coal washeries; washed

coal of non-coking coal washeries

Cement sector -coking coal; middlings of coking coal washeriesGlass and potteries Long Flame non-coking coal

Cast iron castings Hard coke

Steel castings Non-coking coal

Bricks Non-coking coal middlings of coking coal washeries

Old boilers Superior grades of non-coking coal

Halwais, domestic use, hotels, etcNon-coking coal

DISTRIBUTION POLICY

Distribution of coal is done with the help of

E-Auction By Road Railways

E-Auction

Some of the small sector company purchase the coal by e-auction.the e-auction is

classified into two categories i.e.:-

1. spot e-auction2. forwarded e-auction

Objective:

Coal distribution through e-Auction has been introduced with a view toprovide

access to coal for such buyers who are not able to source coal through theavailable

institutional mechanism. In the long run it is expected that e-Auction mayhelp in

creating spot as well as future market of coal in the country.

The purpose of e-Auction is to provide equal opportunity to purchasecoal through

single window service to all intending Buyers.

E - Auction has been introduced to facilitate across the country wideranging access

to book coal on-line for all sections of coal Buyers enabling them to buy coal through

a simple, transparent and consumer friendly system of marketingand distribution of coal.

Terms & Conditions

With reference to para VI (4) of the ‘e-Auction Scheme 2007’ for Spote-Auction the

detailed terms and conditions are given below :

1. Eligibility:

Any Indian Buyer (viz. individual, partnership firm, companies etc.) canparticipate in e-

Auction for procurement of coal.

2. Registration:

2.1 Before participation in the e-Auction, a prospective Buyer shall berequired to get

itself / himself registered with the Service Provider appointed by the CIL / Coal

Companies for the purpose, by submitting an application in the prescribed format

available on the Website of the respective Service Providers. The application shall

be made along with the required documents such as copy of Income Tax

return(latest), PAN Number, Sales Tax / Vat Registration Certificate, SSI

Registration,Trade License, if applicable, Passport size photograph, etc. as

prescribed by the service provider. Registration can be done either online, or at any

of the front officesof the service provider.

2.2After the registration, all-prospective Buyers will have an auto generated

“Unique User ID” & a “password” based on which they can log in. Details of

the registration process with the service provider will be available in

theirrespective websites.

2.3The service provider shall issue “Photo Identity Card” to their registered

bidders duly authenticating the identity & signature, indicating a “Unique

Registration Number” allotted to them. The “Unique registration number” of

the registered bidders shall be communicated to the Coal Companies by the

service provider.

2.4Only one registration will be done against one PAN number. However,based

on more than one independent valid sales tax registration, more than one

registration against a PAN Number can be considered. In such cases, the

details of valid sales tax registration will be indicated in each ‘Photo Identity

Card’.2.5 All Buyers having been registered with the service providers shall also have

tofurnish non-interest bearing Earnest Money Deposit (EMD) at the rate of

Rs.200/- per tonne, with the Service Provider. This EMD shall not be specific

for a particular Subsidiary Coal Company and shall be available with the

Service Provider for participation in the e-Auction across the Subsidiary Coal

Companies of CIL, as long as the required amount of EMD is available in the

bidders a/c. with the Service Provider.

3. Notification:

3.1 Coal companies would draw program for conducting at least two e-Auctions per

month and notify the same, minimum 7(seven) days in advance,through display on

the Company’s notice board and putting the same on the CoalCompany’s websites

for wide publicity. The program will be intimated to the Service

providers accordingly for hoisting the same on their websites also.

3.2 There will be separate auction for dispatches by rail and road mode.The

minimum quantity for bidding would be 50 (fifty) tonnes for a source for Road mode,

where as in case of Rail the minimum quantity for bidding would be 1 (one)rake. The

rake size shall be as per prevalent Railway Rules. The quantity of coal ina rake shall

be as indicated in the notice of E-auction.

3.3 The Buyer should satisfy itself / himself about the Rake fit stations /destinations

from the Railways before participation in e-Auction by rail, Non acceptance of the

programme, even after the option exercised under extant Railway rules, on account

of rake-fit stations / destinations being not accepted by the Railways shall be treated

as a failure of the Buyer leading to forfeiture of relatable EMD.

4. Bidding Process

4.1 The registered Bidders shall be required to record their acceptanceafter login, of

the Terms & Conditions of the e-Auction before participation in theactual Bidding

Process.

4.2 Before participating in e-Auction, bidders are to satisfy themselves with the

quality of coal being offered from a source.

4.3 Prospective Bidders are entitled to Bid for the quantity to the extent of amount of

EMD for which is available with the service provider in the bidder’s account at the

time of bidding.

4.4 The Buyers while bidding shall quote their “Bid price” per tonne in Indian Rupee

as base coal price on FOR/FOB colliery basis, exclusive of other charges like

statutory levies, surface transportation charges, sizing/beneficiation charges, taxes,

cess, royalty, SED, & any other charges as will be applicable at the

time of delivery. These charges as well as freight etc. shall be on the Buyer’s

account.

4.5 The bidder has to bid for a price equal to or above the reserve price tosecure

consideration in the concerned e-Auction.

4.6 The date, time and period of e-Auction as notified in advance including closing

time on portal of service provider shall be adhered to but for the event offorce

majeure. However, the closing time of e-Auction will be automatically extended up to

last Bid time, plus 5 minutes, so that opportunity is given to other Bidders for making

an improved Bid on that item.

4.7 The Bidder shall offer his Bid price (per tonne) in the increment of 10/- (Rupees

ten) during the Normal e-Auction period. During the extendedperiod of first two (2)

hours, the Bidder shall offer his Bid price in the increment of Rs.20/-. Beyond this

extended period of two hours the bid price increment would be

Rs. 50/- (Rs.Fifty ) only.

4.8 While maintaining the secrecy of Bidder’s identity, the web site shall register and

display on screen the lowest successful Bid price at that point of time.The system

will not allow a Bidder to Bid in excess of his entitled quantity as per his EMD.

However once a Bidder is out-bided by another (in part or full) the particular Bidder

shall become eligible for making an improved Bid.

4.9 Following criteria would be adopted in deciding the successful bidders:-

(a) Precedence will be accorded to the highest bid price in the descending order

(H1, H2, H3 and so on) as long as the offered quantity is available for

allocation.

(b) If two or more buyers bid the same highest price, precedence for allotment

(c) will be accorded to the buyer who has placed the bid for the higher quantity.

(d) In case two or more buyers bid the same price and the same quantity,precedence will be given to the buyer who has accorded his bid first

with reference to time.

5. Post e-Auction process:

5.1 Each successful bidder will be intimated through e-mail / SMS by the Service

Provider on the same date after the closure of e-Auction. However, it will be the

responsibility of the bidder to personally see and download the result displayed on

website, on the same date after close of e-Auction.

5.2 The successful bidders after the e-Auction, will be required to deposit coal value

with the concerned coal company, within a period of seven working days,after the

date of closing of e-Auction. Seven working days would be reckoned as applicable

to the respective Subsidiary Coal companies’ office where the payment/deposit is

required to be made.

5.3 Equivalent amount of EMD of successful bidder corresponding to successful bid

quantity, shall be blocked and will be transferred to Coal Company by the service

provider along-with the bid sheet in respect of successful bidders.

6. Terms of payment:

6.1 The coal value to be deposited in advance by the successful bidders shall be

computed and deposited after making provision for the EMD amount for the

successful bid quantity already transferred by the service provider to the

subsidiary company. In other words, the coal value to be deposited and EMD

amount together, shall be equivalent to the 100 % coal value.

6.2 EMD amount shall not be treated as an adjustment towards the coal value but

would stand converted into a ‘Security Deposit’ for performance of the bidders

towards completion of the said transaction.

6.3 The above security deposit (as converted from the EMD amount) would be

adjusted as coal value, only after completion of lifting of coal covered under

coal value paid, excluding security deposit. However, in the event of default in

performance by the bidder, the provision of forfeiture of the ‘Security Deposit’

(asconverted from the EMD) as stipulated, would be applicable.6.4 In case of

road supplies, once the coal value is deposited by way of demand draft /pay

order, drawn in favour of the concerned coal company, along-with the debit

advice issued by the bank, certifying that the DD/pay order has been issued, by

debiting the account of the concerned Buyer, Sale/Delivery orders shall be issued

within seven days by the coal company after encashment of buyer’s financial

instrument.In case of successful bidders, if the coal value is deposited for less than

the allotted Quantity but not below 50% of the allotted quantity or, 50 tonne

whichever is higher, the coal company shall accept the payment for the said amount

and forfeit the EMD for the failed quantity. However if the buyer fails to deposit the

coal value for at least 50% of the allotted quantity or 50 tonnes whichever is higher

then the entire EMD of the allotted quantity shall be forfeited.

6.4 However, a successful bidder whose allotted quantity is only 50 tonnes will be

allowed to deposit coal value for minimum 90% i.e 45 tonnes within the

stipulated period of 7 days without which the amount shall not be accepted. In

such event they shall be permitted to deposit the balance fractional amount,

limited to 10% of the total coal value of 50 tonne, within the subsequent period of

3(three)working days. In spite of this, if they fail to deposit full coal value of 50

tonne(minimum bid quantity), EMD for entire 50 tonne shall be forfeited.

6.5 In case of rail borne supplies, there shall be two options available.While

submitting program, the bidder at his option can deposit 100 % BG on the

prescribed format from the buyers own account or else may deposit 100%

amount through demand draft /pay order, drawn in favour of the concerned coal

company,along with the debit advice, issued by the bank certifying that the

DD/pay order has been issued by debiting the account of the concerned Buyer.

6.6 In case of Buyers who have booked their rail programme through BG, a notice

for deposition of coal value by way of DD/Pay order, will be displayed on the notice

board of the coal company, at least three working days in advance before the

expected date of offer to the Railways for allotment. The Buyer will be accordingly

required to deposit DD/Pay Order along with the debit advice to the tune of BG

involved in the programme, within 48 hours of such notice.In the event of non-

deposition of 100% coal value by the Bidder in terms of Clause-6.7 above, the

consent given against rake programme will bewithdrawn by the coal company and

EMD as per e-Auction scheme will be forfeited.

1.8The Buyers shall also have the option of e-Payment once the system in the

1.9Coal companies is suitably developed & the same is notified on the websites

accordingly.

By Road :

1) Coal company shall issue Sale / Delivery Orders to the successful bidders in

terms of Clause 6.4 after realisation of payment. The Buyer has to submit the

option before the issue of the Sale / Delivery Order for movement of the coal

“within state” or “outside state” and the Sale / Delivery Order would indicate

the Same accordingly. However, the challan issued by the Coal Company

shall indicate the destination.

2) The validity period to complete lifting of coal by road shall be 45 days from

the date of issue of Sale/Delivery Order. No extension of validity will be

allowed in any case.

By Rail:

1) The seniority of buyers in case of rail borne supplies shall be guided by the

seniority list as provided by the service provider based on buyer’s bids.

2) The quantity allotted against each rake is indicative quantity only and delivery

shall be made on the basis of actual weighment by the Seller at the loading end.

3) The validity period for seeking allotment of rake in case of rail supplies shall be

45 days from the date of issue of consent by the coal company. Once the rake

is allotted it shall remain valid for supply of coal as per prevailing Railway

Rules.

4) Although loading will be the responsibility of the coal company, but to avoid any

complaint regarding over-loading, under loading and quality, the Buyer himself or

his authorized representative may supervise loading at the loading point. The

authorized representative must carry valid authority letter along with photocopy of

Identity Card issued by Service Provider.

RESEARCH METHODOLOGY

RESEARCH OBJECTIVE:

To find out pricing policy of coal done by CIL market.

To have the brief idea over fluctuation of price of coal.

To know about the distribution methods of coal

BUSINESS RESEARCH DESIGN:

Descriptive Research Design is the design followed in the study. As a part of exploratory

research, primary data has been collected and for the descriptive purpose secondary data

has been collected. Both these types of data have been used for the study of derivative

market and its knowledge in the minds of the investors.

DATA:

The data which have been collected for this research purpose are taken from the market in

the form of primary data and secondary data.

a. Primary Data:

The primary data which have been used here is collect with the help interaction with CGM

of marketing and sales department , linkage, roadsales

b. Secondary Data:

The secondary data have been collected through available documents like articles on

derivative, news paper and websites.

RESEARCH PLAN:

Research plan for this study was to follow the collected information from the CGM of

various department and they told how they their plan works .

STASTICAL ANALYSIS:

Data analysis is done with the help of bar charts.

INDUSTRY PROFILE

Review of literature on Coal India limited

Coal India Limited (CIL) is one of the largest coal producers in India. The company is

engaged in the mining of coal and coal based products. Further, it is also engaged in

providing mining consultancy services across India and abroad. CIL is the largest

company in the world in terms of coal production. It operates through eight wholly

owned subsidiaries namely, Bharat Coking Coal Limited; Central Coalfields Limited;

Western Coalfields Limited; Eastern Coalfields Limited; Central Mine Planning and

Design Institute Limited; Mahanadi Coalfields Limited; South Eastern Coalfields Limited;

and Northern Coalfields Limited, Singrauli. The company is headquartered in Kolkata,

West Bengal, India

Coal India Ltd. (CIL), a holding company, is wholly owned by the Government of

India through the Department of Coal and the Ministry of Mines and Minerals. CIL is

responsible for 88 percent of coal output in India. In 1999, production was 256.5

million tons of raw coal, up from 250.6 million tons the previous year. However, like

many state-owned concerns, CIL’s financial performance has been generally poor.

During the financial year 2000-2001, CIL reported a loss of Rs 1,400-crore—a crore

is equal to 10 million. At the start of the new millennium, the company was under

scrutiny by the Indian government for its performance and business practices. Coal

provides more than 67 percent of India’s energy requirements. However, India’s per

capita energy consumption is among the lowest in the world. India has vast coal

reserves, and these can be mined cheaply, although the coal is generally of poor

quality and has a high ash content. In 1998, India’s total coal reserves were

estimated at 200 billion tons, of which over 69 billion tons were proven reserves. The bulk of India’s coal reserves are in the states of Bengal, Bihar, Orissa, and Madhya Pradesh. Due to the structure of the coal mining industry in India, CIL’s role is a

major one, and its performance and operations very much reflect the policies and

priorities of the government of India.

History of CIL

The Indian energy sector is largely dependent on coal as the prime source of energy. After

the Indian independence, a greater need for coal production was felt in the First Five Year

Plan. In 1951 a Working Party for the coal industry was set up, which suggested the

amalgamation of small and fragmented producing units. Thus the idea of a nationalised,

unified coal sector was born.

In the pre-nationalised era coal mining was controlled by private owners, and suffered from

their lack of interest in scientific methods, unhealthy mining practices and sole motive of

profiteering. The miners lived in sub-standard conditions as well. 1n 1956, the National Coal

Development Corporation (NCDC) was formed with 11 collieries with the task of exploring

new coalfields and expediting development of new coal mines.

Factors leading to the nationalisation of Indian coal industry

Nationalisation of the Indian coal industry in the early 1970s was a fall-out of two events.

The first was the oil price shock, which led the country to take up a close scrutiny of its

energy options. A Fuel Policy Committee set up for this purpose identified coal as the

primary source of commercial energy. Secondly, much-needed investment for growth of

this sector was not forthcoming from the private sector.

The objective of nationalisation was the conservation of the scarce coal resource,

particularly coking coal, in India by:

Stopping wasteful, selective and slaughter mining. Planned development of available coal resources Improvement in safety standards

Ensuring adequate investment for optimal utilisation consistent with growth needs Improving the quality of life of the workforce

Subsequently, in the context of safety, conservation and scientific development, the

Government of India took over all coking coal mines on October 16, 1971 and nationalised

them on May 1, 1972. Bharat Coking Coal Limited (BCCL) was thus born. Following the state

takeover of non-coking coal mines, Coal Mines Authority Limited (CMAL) was formed in

1973, leading to the formation of a formal holding company - Coal India Limited – on

November 1, 1975.

Timeline

2008 : Coal India accorded ‘Navratna’ status

2007 : Coal India and four of its subsidiaries NCL, SECL, MCL, WCL accorded ‘Mini Ratna’

status

2000 : De-regulation of coal pricing and distribution

1992 : Mahanadi Coalfields Limited (MCL) formed out of SECL to manage the Talcher and IB

Valley Coalfields in Orissa

1985 : Northern Coalfields Limited (NCL) and South Eastern Coalfields Limited (SECL) carved

out of CCL and WCL

1975 : Coal India Limited formed as a holding company with 5 subsidiaries: Bharat Coking

Coal Limited (BCCL), Central Coalfields Limited (CCL), Western Coalfields Limited (WCL),

Eastern Coalfields Limited (ECL) and Central Mine Planning and Design Institute Limited

(CMPDIL).

1973 : Non-coking coal nationalised; Coal Mines Authority Limited (CMAL) set up to

manage these mines; NCDC operations bought under the ambit of CMAL

1972 : Coking coal industry nationalised; Bharat Coking Coal Limited (BCCL) formed to

manage operations of all coking coal mines of Jharia Coalfield

1956 : National Coal Development Corporation (NCDC) formed to explore and expand coal

mining in the Public Sector

1955-56 : Focus on coal industry; capacity up to 38.4 million tonnes

Early 1900s : Capacity at 6 million tonnes per annum

Upto 1900 : Minimal development; river transportation used to transport coal to Calcutta;

railway lines at Calcutta leads to expansion of coal production

1843 : Bengal Coal Company takes over Ranigunj Coal Mines and others; is first Joint Stock

Coal Company in India

1835 : Carr, Tagore & Company takes over Ranigunj Coal Mines

1815 - 1820 : First Shaft Mine opened at Ranigunj

1774 : Warren Hastings initiates commercial coal mining at Ranigunj (West Bengal)

ABOUT COAL INDIA LIMITED

Coal India Limited (CIL), a holding company, is a state-owned mining corporation and the

largest coal producer in India. In 1990, production was 179 million tons of hard coal, up

from 172 million tons the previous year. This comprised almost 88% of the coal output in India. However, like many state-owned concerns, CIL’s financial performance has been

generally poor, and it has made profits in only two years since its creation in 1975. During

the financial year 1989-1990 CIL made a loss of Rs230 million. Although this loss was less

severe than those made in the period immediately after nationalization, it marked a decline

from the previous financial year when it made a profit of Rs82 million. Coal provides more

than 50% of India’s energy requirements. However, India’s per capita energy consumption is

among the lowest in the world. India has vast coal reserves, and these can be mined cheaply,

although the coal is generally of poor quality and has a high ash content. In 1991, India’s

total coal reserves were estimated at 176 billion tons, of which over 30 billion tons are

proven reserves, within 200 meters of the coal pit or the workings. Of the total, coking

coal—coal from which the volatile elements have been removed, making it suitable as a fuel,

and for metallurgical purposes—comprises 24 billion tons (11 billion tons proven). The bulk

of India’s coal reserves are in the Bengal-Bihar coalfields in the west of the country. Due to

the structure of the coal mining industry in India, CIL’s role is a major one, and its

performance and operations very much reflect the policies and priorities of the government

of India.

The Indian coal industry has its origins in the early 19th century, when mining activity

became commercial in conjunction with the expansion of the railway network, particularly in

the west of the country. The monopoly interests of the British East India Company were

revoked in 1813. Initially, the coal fields were operated by a large number of Indian private companies which possessed captive—or company-owned—coalfields to support their iron

and steel works. By 1900 there were 34 companies producing 7 million tons of coal from 286

mines. Production continued to grow in the first half of the 20th century, especially during

World War I. Demand continued to grow during World War II, and production reached 29

million tons by 1945. By then, the number of companies had increased to 307, and the

number of mines to 673. The trend continued for almost a decade after India’s independence

in 1947. However, India’s ambitious economic development plans led to a tremendous

demand for energy, and in the absence of alternative sources, coal was targeted as the major

source of power for industrialization. Under the government’s Second Five Year Economic

Development Plan 1957-1961, a target of 60 million tons was set for the end of the plan

period. However, government economic planners were convinced that the private sector

would be unable to meet this target. Hence, the National Coal Development Corporation

(NCDC) was formed, which took the old railway collieries as its nucleus and opened new

mines as well. Production of coal increased from 38 million tons in 1956 to 56 million tons

in 1961.

During the 1960s, most of India’s collieries continued to be operated by the private sector,

with the exception of NCDC and the Singareni Collieries, both in the public sector. At the

national level, three factors emerged to force the government to consider the nationalization

of the coal industry. First, there was a fear that contemporary mining methods were leading

to great wastage. Second, the government predicted that future demand for coal would be

particularly heavy in view of its industrial development priorities. Finally, during the Third

Five Year Plan 1962-1966, as well as the period 1966-1969, despite the increase in

production, there was a shortfall in private capital investment in the industry.

During the period 1971-1973, the government carried out a series of nationalizations of the

privately owned coal companies in a major effort to increase production and overcome the

shortage of coal. At the time of the nationalizations, total coal production in the country was

72 million tons, and the industry had been passing through cycles of shortages and surpluses

which prevented effective planning for expansion and modernization. There were over 900

mines in operation, some of which were producing only a few thousand tons of coal a month,

and methods of mining were obsolete.

Coking coal mines, with the exception of the Tata Iron and Steel Company, were

nationalized in May 1972, and a new public sector company, Bharat Coking Coal Limited

(BCCL), was floated to manage them. In May 1973, the non-coking coal mines were also

nationalized and brought under the control of the Coal Mines Authority (CMA). The

Department of Coal was set up in the Ministry of Energy to oversee the public sector

companies. Further reorganization of the industry led to the formation of Coal India Limited

(CIL), which also absorbed NCDC, in November 1975. The reorganization involved placing

the majority of the public sector coal companies under CIL. CIL has six subsidiaries. Five of

these are involved in production: BCCL, located at Dhanbad; Central Coalfields Limited at

Ranchi; Western Coalfields Limited (WCL) at Nagpur; Eastern Coalfields Limited (ECL) at

Sanctoria; and North Eastern Coalfields Limited (NECL) at Margherita; the sixth is the

Central Planning & Design Institute at Ranchi. Together with the Neyveli Lignite

Corporation (NLC), CIL is operated directly by the Indian government through the

Department of Coal in the Ministry of Energy. All the subsidiaries of CIL have the status of

independent companies, but the authority for framing broad policies and taking

administrative decisions rests with CIL.

The present structure of the Indian coal industry is a reflection of the priorities placed by the

government on coal as a source of fuel and energy in economic development. Most of the

production is the responsibility of the five subsidiaries of CIL, but there are four other coal

producers in the public sector: the Singareni Collieries Limited, the government of Jammu

and Kashmir collieries, the Damodar Valley Corporation, and the Indian Iron & Steel Co.

Ltd. These last four concerns are responsible for about 10% of the output. Some 2% of the

total output of coal is provided by the captive mines—company-owned mines which ensure

coal supplies—of the Tata Iron and Steel Company, the only coal producer in the private

sector.

Financially, the subsidiaries of CIL have an average authorized capital of Rsl.5 billion each.

Each employs between 100,000 and 180,000 people, and has an annual turnover of between

Rs.l.l and Rsl.7 billion. Their shares in the total production of coal vary from 25 % for the

Central and Western Coalfields, and about 20% for Bharat Coking Coal and Eastern

Coalfields. The financial performance of the subsidiaries varies. BCCL made cumulative

losses of Rs4.5 billon over the five year period 1981-1986. Similarly, Eastern Coalfields

made cumulative losses of Rs3.6 billion over the same five year period. In 1988, BCCL

made a loss of Rs900 million on a turnover of Rs5.3 billion. However, in the same year the

Neyveli Lignite Corporation Limited made a profit of Rs570 million on a turnover of Rsl.9

billion.

As a result of the nationalizations, some rationalization took place in the sector. The mines

were regrouped and reduced to 350 individual mines. New technology was introduced, and

there was a shift from pick mining to blast mining, which resulted in considerable increases

in production. The latter totaled 87 million tons in 1975, and 99 million tons in 1976. CIL’s

share of total production was about 88%. Nationalization was intended to provide the basis

for modernizing the coal industry, but after the initial increase in production, output

stagnated in the period 1976-1980. This was the result of shortages of power and explosives,

labor unrest, and absenteeism, excessive employment, technical inefficiencies, and problems

of flooding in the western coal fields, as well as fires in the vast Jharia coalfield. The latter

possesses the largest known coking coal reserves in the country and it has been estimated

that ongoing fires since around 1931 have accounted for the loss of some 40 billion tons of

coking coal. Consequently, CIL’S financial performance was poor during this period. It

suffered losses throughout the 1976-1981 period. These losses peaked at Rs2.4 billion in

1978-1979, but came down to Rs882 million the following year, and came down even further

to Rs337 million the year after. Total losses for the five year period were almost Rs6 billion.

Production picked up in 1980 when it finally exceeded 100 million tons, and increased to 115

million tons by 1983. However, the problems suffered by CIL in particular and the coal

industry in general had led to considerable shortages, especially for industrial users. This

shortage was compounded by the poor quality of India’s coking coal, which has difficult

washing characteristics and requires the coal preparation plants to run extremely complex

processes. The result was that the country had to import coal from abroad, a trend that still

persists. The bulk of the imported coal came from the United States, Australia, and Canada,

and was significantly more expensive than locally produced coal. This situation had two

implications. First, it became feasible for CIL to adopt more expensive mining methods,

since they were still cheaper than the imported coal. Second, a need was perceived to

improve the coal handling facilities at India’s major ports. This need was reflected in the

Sixth Five Year Plan, when it was projected that the ports would have to handle at least 4.4

million tons of imported coal by the mid-1980s.

During the Sixth Five Year Plan, coal production grew at 6.2% per year, especially in the

open-cast mines. Targeted production for the end of the plan period—1984-1985—was for

165 million tons per annum, although actual production fell short at 148 million tons. During

the first two years of the plan, CIL made a profit for the only time in its history. This was

largely due to the Indian government’s increasing the price of coal in both February 1981

and May 1982. The issue of pricing has always been a serious problem for the Indian coal

industry and for CIL. Coal prices have been administered by the government since 1941,

with the exception of a period of seven years, 1967-1974. The pricing formula is based on an

Indian industry-wide average with differentials for different grades, but in practice the price

is usually set below the industry’s average cost. This practice may explain in part CIL’s poor

overall financial performance.

Coal production in the year 1981-1982 was 125 million tons, above the targeted figure. Total

production of coal and lignite was 146 million metric tons in 1983-1984, and 155 million

tons in 1984-1985, 162 million tons in 1985-1986, 175 million tons in 1986-1987, 191

million tons in 1987-1988, and 207 million tons in 1988-1989. Despite the increase in

production, problems related to operations, such as cost-overruns, poor quality, and low

productivity, meant that targeted output was frequently revised downwards. Part of the

problem was the high cost of new equipment necessitating new investment, since targeted

budgets were overrun. Furthermore, the number of mines, which had been reduced

immediately following nationalization, had again increased, to 684 by 1982, thereby negating

some of the initial cost reduction benefits of reorganization.

Since coal was meeting over 70% of the energy requirements of Indian industry, CIL

believed the output needed to increase by 25 million tons a year during the 1980s in order to

keep up with demand. Demand for coal was projected to reach 165 million tons by 1985, 230

million tons by 1990, and over 400 million tons by the year 2000. The structure of demand

for coal had changed. The railways were no longer the primary source of demand for coal.

Rather, demand now lay primarily with the steel plants, other industrial units, and thermal

power stations. The reliance on coal-fired thermal power plants for power generation led to a

steady increase in the demand for coal throughout this period. To satisfy this demand, CIL

relied primarily on the expansion of open-pit mines. Mining coal from shallow seams was

financially sound, but it resulted in a steady deterioration of coal quality over time. The

Seventh Five Year Plan of 1985 included some important changes introduced by CIL in the

structure of its production.

The plan had set a production target of 226 million tons for coal, and by 1988-1989, output

for coal alone, excluding lignite, had reached 195 million tons. As a result of the greater need

for coal, new opportunities were created for international partnerships in the coal sector

throughout the 1980s.

MAJOR COMPANIES

Central coalfield ltd

Estern Coal field ltd

Singareni Collieries

company ltd

Baharat coking coal ltd

INTRODUCTION BHARAT COKING COAL LIMITED

Bharat Coking Coal Limited (BCCL) is a subsidiary of Coal India Limited with its

headquarters in Dhanbad. It was incorporated in January, 1972 to operate coking coal mines

(214 Nos) operating in the Jharia & Raniganj Coalfields, taken over by the Govt. of India on

16th Oct,1971

COAL INDIA LTD Mahana-nadi

coalfield Ltd

Northern Coal field ltd

North Eastern Coalfield ltd

South Eastern Coal Field ltd

Western Coal field ltd

Currently, the Company operates 78 coal mines which include 41 underground, 16 opencast

& 21 mixed mines. The Company also runs 7 coking coal washeries, 3 non-coking coal

washeries, one Captive Power Plant (2x10 MW), and 5 bye-product coke plants. The mines

are grouped into 13 areas for administrative convenience.

BCCL is the major producer of prime coking coal (raw and washed). Medium coking coal is

also produced in its mines in Mohuda and Barakar areas. In addition to production of hard

coke, BCCL operates a number of sand gathering plants, a network of aerial ropeways for

transport of sand and nine coal washeries, namely, Dugda, Mohuda, Bhojudih, Patherdih,

Lodna, Sudamdih, Barora, Moonidih and Madhubhan.

Bharat Coking Coal Limited (BCCL) is a subsidiary of Coal India Limited with its

headquarters in Dhanbad. It was incorporated in January, 1972 to operate coking coal mines

(214 Nos) operating in the Jharia & Raniganj Coalfields, taken over by the Govt. of India on

16th Oct,1971.

Overall scenario

Bharat Coking Coal Limited is one of the consistently loss-making subsidiary company of

Coal India Limited. The losses incurred by the company during 2002-03, 2003-04 and 2004-

05 were Rs. 507.13 crore, and Rs. 569.85 crore and Rs. 959.43 crore respectively . The

company has made a turn around in the current fiscal year and has registered a profit of

1.66 crores during April to December 2005

The paid up capital of the company as on 31.03.2005 is Rs. 2,118.00 crore. The company has

accumulated losses of Rs. 7,044.02 crore as on 31.03.2005

The total manpower as on 1.4.05 was 92,268 and as on 1.1.06 was 88,901.

Major consumer of coal industries

3%4% 3% 1%

16%

1%

72%

percentage

middlingsNCW/coalsteelcementfertilizerbrk&othersconspower

SWOT ANALYSIS OF CILStrengths:

1. The government offers a wide range of concessions to investors in

India, engaged in mining activity. The main concessions include, inter

alia:

* Mining in specified backward districts is eligible for a complete tax

holiday for a period of 5 years from commencement of production and a

30 percent tax holiday for 5 years thereafter.

* Environment protection equipment, pollution control equipment, energy

saving equipment and certain other equipment eligible for 100 percent

depreciation.

* One tenth of the expenditure on prospecting or extracting or production

of certain minerals during five years ending with the first year of

commercial production is allowed as a deduction from the total income.

Weakness:

Most of the Indian mining companies do not have access to Indian

capital market

There is a lack of respect for the mining industry and it suffers from

the incorrect perception that ore deposits are depleted.

There is limited access to capital, and mines are increasingly more

costly to find, acquire, develop and produce.

There are long lead times on production decisions.

The Indian mining industry suffers from an out-dated, unattractive

approach to mining education that is partly to blame for insufficient

human resources.

The Opportunities

Considerable potential exists for setting up manufacturing units

for value added products.

There exists considerable opportunities for future discoveries of

sub-surface deposits with the application of modern techniques.

Current economic mining practices are generally limited to depths of 300 meters and 25 percent of the reserves of the country are

beyond this depth Strengthening of logistics in coal distribution - In India, the

logistics infrastructure such as ports and railways are overburdened

and costly and act as bottlenecks in development of free market.

Privatization of ports may bring the needed efficiencies and

capacities. In addition, capacity addition by the Indian Railways is

necessary to increase freight capacity from the coal producing

regions to demand centers in the northern and central parts of the

country. On the Indian rail network, freight trains get a lower

priority than passenger trains, a problem that promotes delays and

inefficiency. Special freight corridors would raise speeds, cut costs,

and increase the system's reliability.

Threats:

Large integrated international metal manufacturers including

POSCO, Mittal Steel and Alcan have announced plans for expansion

in India

Mining companies and equipment suppliers are under the constant

threat of being taken over by foreign companies.

A heavy tax burden discourages further investment.

Politicians undervalue the industry's contributions to the economy.

Stricter environment rules restricting mining activities

COMPANY PROFILE

HISTORY OF B.C.C.L

Bharat Coking Coal Limited (BCCL) is a subsidiary of Coal India Limited with its headquarters

in Dhanbad. It was incorporated in January, 1972 to operate coking coal mines (214 Nos)

operating in the Jharia & Raniganj Coalfields, taken over by the Govt. of India on 16th

Oct,1971. Currently, the Company operates 78 coal mines which include 41 underground,

16 opencast & 21 mixed mines. The Company also runs 7 coking coal washeries, 3 non-

coking coal washeries, one Captive PowerPlant (2x10 MW), and 5 bye-product coke plants.

The mines are grouped into 13 areas for administrative convenience.

BCCL is the major producer of prime coking coal (raw and washed). Medium coking coal is

also produced in its mines in Mohuda and Barakar areas. In addition to production of hard

coke, BCCL operates a number of sand gathering plants, a network of aerial ropeways for

transport of sand and nine coal washeries, namely, Dugda, Mohuda, Bhojudih, Patherdih,

Lodna, Sudamdih, Barora, Moonidih and Madhubhan.

Bharat Coking Coal Limited is one of the consistently loss-making subsidiary company of

Coal India Limited. The losses incurred by the company during 2002-03, 2003-04 and 2004-

05 were Rs. 507.13 crore, and Rs. 569.85 crore and Rs. 959.43 crore respectively . The

company has made a turn around in the current fiscal year and has registered a profit of

1.66 crores during April to December 2005

The paid up capital of the company as on 31.03.2005 is Rs. 2,118.00 crore. The company has

accumulated losses of Rs. 7,044.02 crore as on 31.03.2005

The total manpower as on 1.4.05 was 92,268 and as on 1.1.06 was 88,901.

ORGANIZATION CHART

INTERNATIONAL CO-OPERATION

FOREIGN COLLABORATION

To meet country's growing demand for coal foreign collaboration with

the advanced coal producing countries are considered for:

· Bringing in new technologies both in underground and opencast sectors

for efficient management in the coal industry and skill development and training

etc.

Seeking bilateral funds for import of equipment, which are not manufactured in

the country.

Bringing foreign financial assistance to meet the investment requirement.

The latest policy pursued by CIL is to encourage technology up gradation through

Global Tender. Bilateral co-operation, although limited, continues to play an

important role for search of new technologies and process improvement. Global

tender approach has been used towards introduction of high productivity

Continuous Miners at SECL and WCL. Bilateral co-operation mode has been adopted

for the introduction of PSLW mining at 3 mines in SECL.

COOPERATION WITH CANADA

The meeting of Indo-Canada Working Group on Coal was held in Canada during

24th –30th June, 2003. Indian delegation led by the then JS&FA and CMD, ECL

discussed overRajmahal Expansion Project of ECL during the meeting.

COOPERATION WITH FRANCE

France has developed expertise in thick seam underground mining with the

introduction of advance technologies like Blasting Galleries and Longwall Sub-level

Caving. It has assisted India in introduction of blasting gallery method

at East Katras (Bharat Coking Coal Limited) and Chora (Eastern Coalfields

Limited). France has also assisted in the introduction of sub-level caving technology

at East Katras mine of Bharat Coking Coal Limited. France had also cooperated in the

introduction of high face long wall mining technology in Kottadih Project of

ECL. GDK-10 (Block B) and GDK-8 incline projects in SCL were taken up for

introducing blasting gallery technology in collaboration with France.

COOPERATION WITH U.K.

In January,1997 an Indo-British Coal Forum (IBCF)

was established to foster greater cooperation between

the two countries in coal sector. The

Forum provides a platform for mutual consultat

ions and cooperation between the coal industries of both the countries under the

auspices of the Govt. of the India and U.K.. The activities which are envisaged under

the MOU include sharing of latest know-

how technology, organization of meetings for exchange of information, identification of

suitable projects as well as methods of funding, introduction of compatible

technology for more efficient management in Indian Coal Industry and

skill development etc.

CO-OPERATION WITH RUSSIA

(i) The Russian side is interest in participating in tendering for

design and construction of the existing coal mining enterprises in India. Indian

side intimated that CIL’s policy is to procure equipment, materials and spare

parts through tendering process/Global tendering. Amarpali and Magadh OC

project of CCL will be developed through outsourcing. Russiawas requested to

participate in the tendering process. Representative of Russian companies

in India will be in touch with CIL about the tenders that are likely to be floated.

(ii) Indian side requested Russian side to expedite response from

Zarubezhugol Company in respect of Indian investment in the

coal sector of the Russian economy.

COOPERATION WITH KAZAKHSTAN

A proposal has been received from embassy of the Republic of Kazakhstan regarding

various projects for Industrial & Innovation development of Kazakhstan. There is a

project relating to extraction & realization of coal. CIL, NLC and SCCL had not shown

any interest in any of the proposal.

CO-OPERATION WITH GERMANY

(i) Joint Venture for mining abroad with technological cooperation from Germany.

(ii) Cooperation in capacity building specially in underground mines.

(iii) High pressure water jet technology for extinguishing mine fire and excavation.

(iv) Exchange of expertise in coal mine safety, technology and equipment through training, seminar, workshop etc.

CO-OPERATION WITH AUSTRALIA

Indian companies report no significant barriers or constraints to trade and

investment into Australia apart from shortages of skilled labour and some minerals inputs ;

Significant impediments remain for trade and investment in India, particularly

high WTO bindings for tariffs on many products, onerous requirements on foreign companies with existing or former joint ventures in the Indian market.

Delays and unpredictable costs due to the actions of sub-national governments and high costs associated with inefficient customs clearance systems.

Australia and India agreed to support further work to develop industry collaboration on

mining technology services and equipment and export opportunities – under the

framework of the Australia-India Resources Strategy and/or as part of a broader Asia

Pacific Partnership strategy in relation to sustainable use of fossil fuels.

COOPERATION WITH CHINA

9th meeting of the Indo-China Joint Working Group on Coal held during 9th –

11th February 2004 in India (New Delhi). Chinese delegation was led by Mr.

Zhao Tiechui, Deputy Administrator of State of Administration of Work Safety

(SWAS) State Administration of Coal Mines Safety (SACCS), PR China and Indian

delegation led by Dr. P.K.Mishra, Secretary (Coal) and the following bilateral

issues/projects were discussed in the meeting.

1. BCCL -Moonidih project-Seam RXVI Top.

2. Jhanjra project of ECL.

3. Performance of existing Longwall faces at SECL.

4. Co-manufacturing of spares in India.

5. Spare parts catalogue & price list.

6. Short Longwall equipment for Balrampur project of SECL.

7. The strengthening of the power support of three Longwall projects at SECL.

8. Foreclosure of Deferred Guarantee Payment issued by SBI to CMEI&E towards 3 sets of Longwall equipment of SECL.

9. Hard Roof management techniques of Churcha west mine of SECL.

10. Development of opencast mine in China with co-operation from Indian side.

11. Re-training and Rehabilitation of mine workers.

12. Resin capsule manufacturing.

13. Madhuban project( BCCL).

14. Co-manufacturing of spare parts.

15. Short supply of spares.

16. Joint review on status of Longwalls supplied by CME.

17. Extraction of pillars developed by Board and pillar by Longwall equipment.

18. Longwall mining in deep seated reserves.

19. Extraction of deep seated and coastal lignite deposits by hydro excavation technology.

20. Latest reconditioning technique to improve the life of reconditioned belt from 50% to 80% of new one.

21. Method of Fly Ash Utilization from lignite based thermal Power stations.

22. Extraction and utilization of Lignite Bed Methane.

23. Method of Marcasite segregation from RCM Lignite.

COOPERATION WITH SOUTH AFRICA

A Working Group was constituted on 3rd March, 2003 Chaired by the Secretary, Ministry

of Coal, Govt. of India with Director General (Coal & Mines) Republic of South Africa as Co-

Chairman. The following areas were identified for co operation by the visiting South

Africa delegation in August, 2002.

Mechanisation in Bord and Pillar System of Mining.

Beneficiation of Coal

Technology for conversion from coal to oil.

Govt. of South Africa has been requested for an early convenient date and place for the

meeting of the Working Group of Coal between the two countries. Response is awaited.

Performance growth of B.C.C.L

GRAPH

.

RAW COAL PRODUCTION

1974-75 1991-92 1996-97 2001-02 2006-07 2007-08 2008-090

50

100

150

200

250

300

350

400

450

MAN POWER

1.4.1975 1.4.1992 1.4.1997 1.4.2002 1.4.2006 1.4.2007 1.4.20090

100000

200000

300000

400000

500000

600000

700000

800000

PRODUCTIVITY

1974-75 1991-92 1996-97 2001-02 2006-07 2007-080

0.5

1

1.5

2

2.5

3

3.5

4

4.5

SWOT Analysis of B.C.C.L

1.* Export profits from specified minerals and ores are eligible for

certain concessions under the Income tax Act.

* Minerals in their finished form exempt from excise duty.

* Low customs duty on capital equipment used for minerals; on

nickel, tin, pig iron, unwrought aluminium.

* Capital goods imported for mining under EPCG scheme qualify

for concessional customs duty subject to certain export

obligation.

2. World's largest producer of mica; third largest producer of coal

and lignite & barytes; ranks among the top producers of iron

ore, bauxite, manganese ore and aluminium.

3. Labours easily available

4. Low labour and conversion costs

5. Large quantity of high quality reserves

6. Exports iron-ore to China and Japan on a large scale

Weekness

Mining operations are not environment friendly. Least importance is

given to environment concerns.

High rate of illegal mining

Coal mining in India is associated with poor employee productivity.

The output per miner per annum in India varies from 150 to 2,650

tonnes compared to an average of around 12,000  tonnes in the

U.S. and Australia; and

Historically, opencast mining has been favored over underground

mining. This has led to land degradation, environmental pollution

and reduced quality of coal as it tends to get mixed with other

matter;

India has still not been able to develop a comprehensive solution to

deal with the fly ash generated at coal power stations through use

of Indian coal.

Opportunities

Considerable potential exists for setting up manufacturing units for

value added products.

There exists considerable opportunities for future discoveries of

sub-surface deposits with the application of modern techniques.

Current economic mining practices are generally limited to depths

of 300 meters and 25 percent of the reserves of the country are

beyond this depth

Strengthening of logistics in coal distribution - In India, the

logistics infrastructure such as ports and railways are overburdened

and costly and act as bottlenecks in development of free market.

Privatization of ports may bring the needed efficiencies and

capacities. In addition, capacity addition by the Indian Railways is

necessary to increase freight capacity from the coal producing

regions to demand centers in the northern and central parts of the

country. On the Indian rail network, freight trains get a lower

priority than passenger trains, a problem that promotes delays and

inefficiency. Special freight corridors would raise speeds, cut costs,

and increase the system's reliability.

Threats

Foreign Investment in the Mining Sector

During 1999, the Government had cleared 7 more proposals of

leading international mining companies for prospecting and

exploration in the mineral sector to the tune of US$ 62.5 million. 65

licenses have been issued till date for prospecting an area of around

90,142 sqkms in the states of Rajasthan, Maharashtra, Gujarat,

Bihar, Haryana and Madhya Pradesh. Prospecting licenses have

been granted in favour of Indian subsidiaries of well-known mining

companies. These include BHP Minerals, CRA Exploration supported

by Rio Tinto (RTZ-CRA), Phelps Dodge of USA, Metmin Finance and

Holding supported by Metdist Group of Companies UK, Meridien

Minerals of Canada, RBW Mineral Industries supported by White

Tiger Resources of Australia, etc.

Large integrated international metal manufacturers including

POSCO, Mittal Steel and Alcan have announced plans for expansion

in India

A heavy tax burden discourages further investment. Politicians undervalue the industry's contributions to the economy. Stricter environment rules restricting mining activities

ISSUE AND CHALLENGES FACED BY ORGANISATION  

coal supply to power sector is to be improved further.

Rules and regulation of the government .

Less number of rakes or wagon are used

strict monitoring and strong deployment of security forces to curb the

illegal activities.

Coal India will address the problem of shortage of man power

particularlarly the statutory category

Delay in supply of equipment.

Poor performance by one party to whom the outsourcing contract was

awarded and non-commencement of work by another party who was

awarded outsourcing job for removal of OB

Ageing of equipment deployed in mines

Safety

Findings of my project

B.C.C.L don’t proper distribution system of coal.

Public sector companies are major consumer of coal.

Here is the competition of coal is with international market.

Prices are set by the ministry of coal which is not up to the mark.

It has very limited area to work.

Recommendation

use new technology for mining.

They should take more safety measures for mining.

Increase the number of rakes and wagans.

Bibliography

www.google.com http://www.coalindia.in/ http://www.bccl.cmpdi.co.in/ Magazines of navratan company News paper

A case study on clean coal technologies

There are many reasons for performing a case study on coal. First, the current importance of coal in world emissions makes this study more than a mere example of successful or unsuccessful technology collaboration and experiences providing lessons for other areas. Some lessons might have direct implications on coal with large implications for future global CO2 emissions. This is all the more true as coal is simultaneously the fossil fuel with the highest carbon content per unit of energy and the fossil fuelwith the most abundant resources in the world. Second, clean or cleaner or more efficient coal use is already the subject of numerous forms of international collaboration, aiming either at reducing local polluting emissions or global CO2 emissions from coal use.Collaboration on Research, Development and Demonstration (R, D&D) occurs, in particular, through collaborative efforts such as the five technology “implementing agreements” under the auspices of the International Energy Agency that relate entirely or partially to coal technologies. Policy collaboration takes place within various institutions and international bodies, including the recent Carbon Sequestration Leadership Forum. Professional associations also play a role in the internationalisation of clean coal concepts and technologies. More specific to clean coal are the many efforts undertaken by industrialised countries’ governments and industries, independently or together, to transfer efficient technologies or equipment to developing countries. These efforts include, in particular, bilateral cooperation, and more collective efforts through regional cooperative frameworks such as the Asia Pacific Economic Cooperation (APEC), the regional development banks, the World Bank and the Global Environment Facility (GEF). Many such efforts – and probably the best documented ones – are in China, which is currently by far the largest and most active market for coal technologies. They include, in particular, numerous bilateral effortswith varying degrees of success, various projects supported by the World Bank and regional development banks, and perhaps the most successful project ever undertaken and financed by the GEF – a project on industrial boilers.An analysis of recent and on-going international collaboration with China on clean coal highlights lessons learned that are not discussed in other case studies on international technology collaboration and climate change mitigation. This is why it is given an important place in this paper. Section 2 briefly defines and reviews clean and efficient coal technologies; Section 3 describes the broadlandscape of international collaboration on clean coal; Section 4 analyses the successes and failures of collaborative efforts with China undertaken by various industrialised countries, development banks and the GEF; and Section 5 draws some lessons from that analysis.

The Technologies and Their Potential

2.1 Coal and the local and global environment

Coal is the least clean fossil fuel with respect to both local and global environment issues. Theenvironmental impacts include those of the mining industry and coal transportation – on the landscape,rivers, water tables and other environmental media. This paper, however, focuses on the impact of coal combustion on air quality and greenhouse gas concentrations.

Coal combustion emits particulates, sulphur oxides, nitrogen oxides, mercury and other metals, including some radioactive materials, in a much higher proportion than oil or natural gas and, therefore, causes local and regional pollution problems (contributing to acid rain and increased ground-level ozone levels), and global climate change. It entails relatively higher emissions of CO2 than other fossil fuels, as coal’s ratio of hydrogen atoms over carbon atoms and power generation efficiency are relatively low compared to other fossil fuels. Coal is also responsible for methane emissions, notably from mining. While oil accounts for 36% of total primary energy supply (TPES), against 23% for coal, both fuels areresponsible for 38% each of global energy-related CO2 emissions. According to recent IEA projections,based on existing energy policies in both the industrialised and developing world, the share of coal in TPES will fall to 22% and coal will be overtaken by natural gas, but its absolute consumption will continue to increase, at least in the next three decades.Coal is primarily burnt for electricity generation. Steam coal is also used for process and comfort heat in many industries and in the residential and commercial sectors. Coal is burnt in isolated stoves or industrial boilers for central heating systems. Coking coal is used in the steel industry. Coal plays a small role intransport, either directly in old steam locomotives in various developing countries, or as a source for liquid fuels (mostly in South Africa). It is also a source of gaseous fuels (synthetic gas). Stronger policies favouring energy efficiency improvements and non-carbon emitting energy sources can modify the picture – but coal will remain an important energy source in the coming decades. Fuel switching in favour of natural gas is occurring world-wide but will be limited by resource availability. Inthe longer run, while oil and gas will become progressively depleted, coal will remain the largest fossil fuel resource available.Increased use of coal will exacerbate local, regional and global pollution problems unless cleaner and more efficient coal technologies are used. Ultimately, CO2 capture and storage could be necessary to reduce global CO2 emissions. This can be illustrated, for example, by a publication from the US Department of Energy’s Energy Information Administration (EIA 2003). In analysing the “Climate Stewardship Act”, a proposal sponsored by Senators McCain and Lieberman to bring overall US emissions back to 2000 levels by 2025, the EIA forecasts a decline in US coal-fired generating capacity from 315 GW in 2001 to 147 GW in 2025, the net result of 38 GW of projected new integrated gasification combined cycle coal plants with carbon capture and sequestration equipment, less 206 GW of retirements. Mitigating climate change will not eliminate coal use in any foreseeable future, but GHGabatement combined with air quality issues will make clean coal technologies essential.

Efficient coal use

Efficient coal use is currently the primary means of reducing coal’s GHG impacts as carbon dioxidecapture and storage are a long way from being commercially viable. Another possibility is to use coalplants to increase the share of biomass in the electricity mix through co-firing of biomass and coal. A third dimension is the reduction of methane emissions; but will not be considered in this paper.The average efficiency of coal-fired generation in the OECD is 36% in 2002 compared with 30% in developing countries. As a result, one kilowatt-hour produced from coal in developing countries emits 20% more carbon dioxide than in industrialised countries.

New installations can differ markedly with respect to CO2 intensity. The latest full-size state of the artplants in industrialised countries rely on supercritical technology with efficiency exceeding 45% with favourable cooling water conditions, while new sub-critical plants can reach an efficiency of 38-39%. Increased working temperatures will further increase the efficiency of supercritical plants, with efficiency of more than 50% being envisaged. Current demonstration plants based on gasification have an efficiency of 42-43%. Further deployment and development indicate that this could exceed 50% in a similar timeframe for advanced forms of supercritical pulverised coal firing. Where demand for heat exists, either for some industries or for district heating, combined heat and power (CHP, or cogeneration) can increase the energy efficiency of coal plants to much higher levels – 80% or more. Coal-fired generating capacity of about 1,000 GW is installed worldwide. Almost two-thirds of the international coal-fired power plants over 20 years old have an average efficiency of 29%, emitting almost 4 gigatonnes (Gt) of CO2 per year. If they are replaced after 40 years with modern plants of 45% efficiency, total GHG emissions will be reduced by about 1.4 Gt per year (global energy-related emissions are about 24 Gt).There are many options for improving plant performance and reducing emissions. Low to medium cost improvements can increase fossil-fuelled plant efficiency by 2 to 3.5 percentage points. Current and emerging re-powering technologies can achieve much larger reductions in CO2 emissions, but are only cost-effective in plants close to the end of their technical life. They include: co-firing and re-powering with biomass; re-powering with super critical boiler; re-powering with CHP or gasification. According to an APEC (2004) study, re-powering enables large increases in power generation for a similar fuel demand, as well as large CO2 emission reductions, with the use of existing infrastructure, thus reducing costs and implementation time. Refurbishment of older thermal power stations gives up to a 12%reduction in greenhouse intensity as well as significant increases in power generation (at a significantly lower unit cost than that of a new power plant). Taking into account changes in operating costs and revenue from power generation and the annualised capital cost, refurbishing can often be beneficial and CO2 emissions reduced at no cost.

Clean coal use

Environmental control technologies were developed to remove or prevent the formation of SO2, NOx andparticulates when coal is burned to generate electricity at conventional, coal-fired power stations. These “clean coal” technologies extend from coal washing to combustion to end-of-pipe techniques. Coal washing reduces the amount of ash in raw coal to facilitate combustion and increase the energy content per tonne. In many cases, it is also possible to reduce the sulphur content in coal in order to decrease the production of sulphur dioxide when burnt. Coal blending and briquetting are also efficient fuel preparation methods. At the other end of the process, particulate control is generally the first step and often relies on electrostatic precipitators. Flue gas desulphurisation units can remove 90% of the SO2 or more and arewidely adopted. Many NOx reduction technologies are employed at commercial plants: low-NOx burners,over-fire air, reburn, non-catalytic reduction techniques and, to meet the most demanding standards, selective catalytic reduction.Legislative pressures in OECD countries have driven these developments and are expected to continue and push the technologies into ever greater performance. Also, more recently,

concern over the emission of heavy metals into the air have become an important issue in the USA where legislation has been enforced. Other OECD countries may follow with their own regulations in due course. Advanced combustion technologies offer an alternative approach to these conventional emission abatement measures. The two main technologies are Fluidised-Bed Combustion (FBC) and Integrated Gasification Combined Cycle (IGCC).FBC reduces emissions of SO2 and NOx by the controlled combustion of crushed coal in a bed fluidized with jets of air. Sulphur released from coal as SO2 is absorbed by a sorbent such as limestone, which is injected into the combustion chamber along with the coal. Around 90% of the sulphur can be removed as a solid compound with the ash. FBCs operate at a much lower temperature than conventional pulverized coal boilers, greatly reducing the amount of thermal NOx formed. The FBC is particularly suited to poorer quality fuels; this relatively low-cost, clean and efficient technology, though complex to operate, could bemore widely used in developing countries. There are a number of expressions of FBC technology, but the one gaining most market penetration is known as Circulating Fluidised Bed Combustion (CFBC). IGCC systems involve gasification of coal, usually by high temperature reaction with oxygen, cleaning the gas produced, and combusting it in a gas turbine to produce electricity. Residual heat in the exhaust gas from the gas turbine is recovered in a heat recovery boiler as steam, which can be used to produce additional electricity in a steam turbine generator. IGCC systems are among the cleanest and mostefficient of the emerging clean coal technologies: sulphur, nitrogen compounds, and particulates are removed before the gas is burned in the gas turbine and thermal efficiencies of over 50% are likely in the future.Another option is that of “polygeneration”: gasification of coal, possibly with other fuels (from biomass or petroleum residues) provides heat, power and synthetic fuels. Many more poly-generation plants are found in the oil industry than in the coal industry.Finally, gasification could also be operated in situ with underground coal gasification (UCG). In the UCG process, water/steam and air or oxygen are injected into a coal seam. The injected gases react with coal to form a combustible gas which is brought to the surface and cleaned prior to utilisation. This relatively new technology is being used to exploit coal seams that are otherwise impossible to mine. While efficiency improvements and advanced combustion technologies tend to reduce all polluting emissions, the opposite may not be true: the removal of local pollutants has an energy cost and thus tends to slightly increase CO2 emissions.

CO2 Capture and storage

Deep emission cuts may require deployment of geological carbon capture and storage technologies. CO2 capture technologies are not new; a number of proven methods exist to separate CO2 from gas mixtures.For the past sixty years these technologies have been routinely used on a small scale by the oil, gas and chemical industries. While technically sound, none of today’s commercial CO2 capture technologies were developed for large power plants and scaling them up is expensive and energy intensive. There are currently three main CO2 capture approaches. The most conventional approach is to capture the CO2 from combustion products in power plant flue gas or industrial exhaust. This is known as post combustion capture. Two other approaches

to capturing CO2 happen before fossil fuel combustion. In the oxygen combustion (usually called oxy-fuel combustion) approach, O2 and recycled flue gas is used to increase CO2 concentrations in flue gas prior to capture. In the hydrogen/syngas approach, coal is gasifiedor natural gas is reformed to produce synthesis gas (syngas) of carbon monoxide (CO) and H2; a water/CO shift then takes place to produce H2 and CO2 for CO2 capture. Both approaches increase CO2 concentrations in the exhaust gas stream making CO2 easier to capture. The capture step incurs most of the cost of carbon capture and storage processes. Hence, the main challenges associated with capturing CO2 are reducing costs and the amount of energy required for capture. Carbon in the form of coal, oil and natural gas is stored throughout the earth. There are also naturally occurring CO2 deposits that supply CO2 to the oil and chemical industries. The concept of CO2 capture is linked with CO2 storage in natural geological formations that may have once held carbon (depleted oil reservoirs and deep coal seams) or in saline formations, which have enormous storage capacity. The mainchallenge associated with geological storage is the prevention of CO2 leakage. Furthermore, measurement systems which monitor and verify carbon dioxide storage must be developed. Sufficient proof of storage permanence is essential for any credible carbon dioxide capture and storage strategy (IEA CCC 2004). It is important to match sources of captured CO2 and storage sites, as much as possible, to reduce CO2 transportation needs.IPCC estimates for geological storage capacities range from 1,500 to 14,000 Gt of CO2; this scale suggests that storage capacity is unlikely to be a major constraint on CO2 removal, provided current knowledge is improved and long-term storage guaranteed. The concept of injecting CO2 in plain ocean waters raises serious environmental concerns and is highly controversial.Besides R&D challenges, prospective deployment of carbon dioxide capture and storage technologies requires appropriate legal and regulatory frameworks and policies. These new policies are needed to create a level-playing field for capture and storage technologies alongside other climate change mitigation measures. Public awareness of CO2 capture and storage technologies, which is the first step towards gaining public acceptance, is still very limited.Atmospheric CO2 concentration stabilisation will be less costly if capture and storage are included in the mitigation options – but leakage rates or even the risk of large-scale leakage from underground reservoirs might be a critical issue. A recent modelling exercise at the IEA (2004b) suggests that at a carbon price of US$50/t CO2 – translating into an electricity production cost increase of 1 to 2 US cents per kWh – introduction of CO2 capture and storage amongst all other options would lead to additional emission cuts on a Gigatonne scale (4.9 Gt CO2 in 2030; 7.9 Gt CO2 in 2050).

International Technology Collaboration

This section describes on-going collaborative efforts on clean coal technologies, including research,development and demonstration (R, D&D) and information exchange, policy collaboration and the role ofprofessional associations. A brief analysis underlines the usefulness of international collaboration. R, D&D collaboration and information exchange

Since its creation in 1974, the International Energy Agency has provided a structure for international cooperationin energy technology R, D&D, and for dissemination of related information: the IEA “Implementing Agreements”. Six out of the more than forty existing implementing agreements have activities partially or wholly related to coal. The European Union is providing financing for cooperation among its Member States. Carbon dioxide capture and storage has drawn the attention of the international scientific community, governments and industry.

IEA Clean Coal Centre

The IEA Clean Coal Centre (CCC) was formed in 1975 in the wake of the oil crisis. It is the world’s foremost provider of information on efficient coal supply and use, in a balanced and objective way without political or commercial bias. It shows, where appropriate, the opportunities for technology transfer worldwide. Based in London with a staff of 23, its annual budget is € 2 million1. CCC technical review and assessment reports are distributed widely to nominated parties as part of the membership subscription. These are a core product and about 15 are produced each year. Topics include mining, transport, combustion, the disposal of residues and emission control. Market studies have remained in demand and the emphasis in recent years has focused on power generation and the environmental consequences of coal use. The CCC is in the process of producing the Clean Coal Compendium which will soon be available on the Centre’s website. This will be an encyclopaedia on topics related to coal use. There is also a CoalAbstracts database and eight databases which make up CoalPower5. Coal Abstracts is a searchable database of the world’s literature on coal containing about 200,000 abstracts of coal literature. CoalPower5 contains details of the world’s coal-fired power plants, their individual units, emission control equipment, as well as emission standards applicable to these plants.3.1.2 Greenhouse Gas R&D ProgrammeIEA GHG was set up as an international collaborative activity in 1991. The initial focus was on capture and storage of CO2 produced in power stations fired on both coal and natural gas. Since then, activities have expanded to cover a wide range of technologies aimed at reducing the emissions of greenhouse gases. It is highly recognised as a source of impartial information in this area. IEA GHG is a cost sharing IA in which participants contribute to a common fund to finance the activities. Operational management of the IA is assigned to an Operating Agent who is accountable to the Executive 1 There are currently 16 members. At country level there are Austria, Canada, Italy, Japan, Sweden, the UK, the USA and the European Union. Sponsors include the South African Anglo Coal and Eskom, the Australian CoalIndustry Consortium, the Beijing Research Institute of Coal Chemistry (BRICC), the Indian BHEL, the Coal Committee. The Operating Agent for the IEA GHG is IEA Environment Projects Ltd., a UK registeredcompany2. The main activities are the production of technology and market information; confidence building by promotion of technology development and the organisation of research networks (e.g. a network of researchers on solvent capture of CO2, and one on monitoring of underground CO2 storage); and information dissemination, to governmental

and other policy makers, industry leaders, technology developers, and public audiences such as environmental NGOs.

Clean Coal Sciences

The focus of the Implementing Agreement on Clean Coal Science is the basic science of coalcombustion3. The specific objectives are to encourage, support and promote research and development that will lead to improved understanding and characterisation of conventional combustion processes; develop techniques that control and reduce solid, liquid and gaseous emissions associated with combustion processes; improve operating efficiency, and identify methods for the effective utilisation of combustion by-products.This Agreement has led to numerous commercial applications, including the development of a new generation of low-NOx burners which has already achieved sales of over $400 million in one participating country. Current work includes modelling and diagnostic methods to co-firing with other fuels and biocoprocessing. The work programme is conducted using both task sharing and cost sharing. The cost shared component involves a common fund which is used to support coal research studies at the International Flame Research Foundation in the Netherlands. Energy Conservation and Emission Reduction in Combustion

The Implementing Agreement on Energy Conservation and Emissions Reduction in Combustion aims at accelerating the development of combustion technologies for use by industry that demonstrate reduced fuel consumption and have lower pollutant emissions. The focus on emissions is primarily concerned with toxic or noxious emissions, rather than greenhouse gases4. The work programme is conducted through task-sharing and information exchange between participants. Participants also undertake collaborative work at each others’ facilities.

R, D & D cooperation within the EU

Clean Fossil Fuels have been a subject of the 5th (1999-2002) and 6th (2003-2006) Framework Programmes supported by the Commission of the European Communities. In the 5th Programme, key actions 5 and 6 concerned energy R&D and were respectively “cleaner energy systems, including renewables” and “economic and efficient energy for a competitive Europe”. A list of actions included, among others: “large scale generation of electricity and/or heat with reduced CO2 emissions from coal, biomass and other fuels, including combined heat and power” (financing received: €160 million), and “cost effective environmental abatement technologies for power production” (financing received: €40million). Many of these projects concerned clean coal technologies. In the 6th Framework Programme, the Energy Research Area includes longer term actions aimed at"Capture and Sequestration of CO2 associated with cleaner fossil fuel plants" and is the only fossil fuelrelated research priority in this Programme. Several already approved projects receive funding of around €36 million. Third call in the 6th FP included funds of around €30

Million available for CO2 capture and storage projects including clean hydrogen production from fossil fuels.

International R, D&D projects

The relatively new area of carbon capture and storage has international R&D projects on clean coal, for a global value above $100 million (IEA 2004b). R&D on the permanence of CO2 storage, necessary to gain confidence and public acceptance of this option, is an area of special interest for international collaboration. Scientific monitoring of the CO2 storage in oil fields at Weyburn (Canada) and in saline aquifer deep below sea floor at Sleipner (Norway) are the flagships of this international collaboration. Another form of international scientific collaboration is the on-going assessment of carbon dioxide capture and storage technologies undertaken under the auspices of the Intergovernmental Panel on Climate Change (IPCC). A special report will be published in 2005.

Policy collaboration

The Carbon Sequestration Leadership Forum (CSLF) is an international climate change initiative of theUS Government focusing on development of improved cost-effective technologies for the separation and capture of carbon dioxide. The purpose of the CSLF is to make these technologies broadly available internationally; and to identify and address wider issues relating to carbon capture and storage. This could include promoting the appropriate technical, political, and regulatory environments for the development of such technology.The CSLF charter was signed on June 25, 2003 in Washington, DC by representatives of 13 countries and the European Commission. Since then, Germany, South Africa, and France have joined, bringing the total number of members to 17. The charter will stay in effect for 10 years. While there are several large scale international CO2 sequestration projects underway, this first-ever ministerial-level sequestration forum underscores the new importance given to international cooperation. The activities of the CSLF are conducted by a Policy Group, which governs the overall framework and policies of the CSLF, and a Technical Group, which reviews the progress of collaborative projects andmakes recommendations to the Policy Group on any required action. Collaborative projects may be undertaken by the CSLF as authorised by the Policy Group at the recommendation of the Technical Group. This specifically includes projects involving the following: information exchange and networking; planning and road-mapping; facilitation of collaboration; research and development; demonstrations; public perception and outreach; economic and market studies; institutional, regulatory, and legal constraints and issues; support to policy formulation; and others as authorised by the Policy Group

Several multilateral environmental agreements dealing in particular with various forms of air pollutionhave also had an enormous impact on clean coal technologies. An example is the 1979 Geneva Convention on Long-range Transboundary Air Pollution and its seven protocols currently in force, whichinitially focused on mitigating acid rains in Europe, and had tremendous implications for clean coal technologies. The UN Framework Convention on Climate Change and its Kyoto

Protocol as well as other possible future approaches for international co-operation on mitigating climate change – some of which directly target clean coal technology dissemination – may also have important implications.Professional associations

The World Coal Institute.

The World Coal Institute (WCI) is a global non-profit, non-governmental association of coal enterprises, working worldwide on behalf of coal producers and coal consumers.The objectives of the World Coal Institute are to:Provide a voice for coal in international policy debates on energy and the environment;Improve public awareness of the merits and importance of coal as the single largest source of fuelfor electricity generation;Ensure that decision makers - and public opinion generally - are fully informed of advances in modern Clean Coal Technologies that steadily improve the efficient use of coal and greatly reduce the impact of coal on the environment;Broaden understanding of the vital role that metallurgical coal fulfils in the worldwide production of the steel on which all industry depends;Support other sectors of the worldwide coal industry in emphasising the importance of coal and its qualities as a plentiful, clean, safe and economical energy resource Promote the merits of coal and upgrade the image of coal as a clean, efficient fuel, essential to worldwide generation of electricity and steel manufacture.Membership is open to coal enterprises worldwide. Present membership is drawn from six continents, with member companies represented at Chief Executive level. The WCI has numerous publications, conferences and workshops and a website: www.wci-coal.com

The Coal Industry Advisory Board

The Coal Industry Advisory Board (CIAB) is a group of high level executives from coal-related industrial enterprises advising the IEA on measures to encourage investment in coal production, transport and power generation. Current members are from 17 countries accounting for about 75% of world coal production.In recent years, the CIAB has focused attention on clean-coal technologies for power generation. The current work programme continues with work on near-zero emission technologies for coal-fired power generation and on sustainable development and coal, thereby acknowledging that coal security is as important as the effects on the environment.

The EURACOAL

The European Association for Coal and Lignite (EURACOAL) integrates associations and companies representing the coal industries of Austria, Belgium, France, Germany, Great

Britain, Greece and Spain, and the relevant organisations of the New Member States: Poland, the Czech Republic and Hungary, as well as Romania, Bulgaria, Slovenia and Serbia.EURACOAL is the voice of the coal industry in Brussels. Its task is to promote coal's contribution to security of energy supply within the enlarged EU and to price stability. EURACOAL provides a meeting platform for its members and represents their interests in Europe by dealing with European institutions and political organizations and distributes coal information

The role of technology collaboration

Wide technology deployment usually needs to be preceded by major R&D efforts, demonstration phase and market introduction. Clean and efficient coal technologies show various levels of maturity in this respect. Direct treatment of coal and flue gases encompasses well established, proven, and commercialized technologies – but carbon dioxide capture and storage is in its infancy for large scale applications.Regarding efficient power generation technologies, the situation varies. Supercritical steam and CFBC plants are commercial, while Pressurised FBD and IGCC are subsidised demonstration projects. The clean coal case suggests that the form of international collaboration depends heavily on the degree of maturity of a particular technology: open international collaboration is possible only for the very new and risky technologies, such as carbon dioxide capture and storage. Public-private partnership arrangements, also at international level, are being created for the proven but not yet competitive technologies and for demonstration purposes; for the mature technologies, more competitive framework is created. In this latter case international information exchange is still possible,although joint collaborative projects face major constraints resulting from property rights andconfidentiality agreements. International collaboration may have played an important role in keeping some renewable energy technologies alive during times of weak or inexistent policy support in most countries (e.g. concentrating power solar technologies, Philibert 2004b). The role it plays with clean coal technologies is of a different nature. Cost-shared RD&D programmes naturally save money. Exchanging, processing and synthesisingabundant information may play an even more important role by accelerating diffusion of knowledge and understanding on technologies and their environmental, economic, social and policy implications. Arguably, with respect to engineering, this role can be played by multinational industries and consulting companies. The more political aspects may be better dealt with under the various forms of international technology collaboration considered here.In accelerating economic growth, current globalisation simultaneously increases the pressures on the environment, accelerate learning-by-doing processes and economies of scale that reduce the costs of new technologies, and provides more opportunities for cleaner technology diffusion and transfer (Philibert 2004a). It is important that governments develop both domestic and international environmental policiesso that these conflicting trends result in an overall improvement in the environment. Coal use in China

China expects its power generation to at least triple in the next twenty years, and coal, which

currentlyprovides three quarters of power generation, is expected to show the biggest increase. The IEA (2004a) projects a total capacity of 1187 GW in 2030 against 360 GW (in 2002). Coal-fired plants would total 776 GW – a decrease due to rapid growth of gas-fired generation and renewables. More than three quarters of electricity generated in China is from coal combustion. Power plants, however, represent only half of Chinese coal consumption – a much lower share than the world average of about 69%. Various direct and indirect usages in industry and energy sectors account for another 42%, while end-use consumption in the residential and commercial sectors account for the remainder. About 40% of Chinese coal is burnt in half million “industrial boilers” in industry and in district heating systems.Conversely, over 95 % of industrial boilers in China burn coal. The two most important sources of demand for industrial boilers are light industry and the textile industry,which require process heat and power; and space heating for individual apartment buildings, districtresidential areas and commercial buildings, particularly in northern Chinese cities.Industrial boilers in China have small unit sizes by international standards. Over half of them in the mid1990s produced only 1 to 4 tonnes of steam per hour. Chinese industrial boiler designs and production methods were based on pre-1950 design principles. Typical efficiency levels for Chinese boilers are in the range of 60-65%, compared to at least 80% in developed countries.

Environmental consequences of coal use

Major cities in China are some of the most polluted cities in the world, largely due to high rates of coal use. More than 500 Chinese cities are said to have air quality standards below the World Health Organisation’s (WHO) criteria. Particulate and sulphur levels exceed WHO and Chinese standards by a factor of two to five. Chronic obstructive pulmonary disease is the leading cause of death in China, partly because of ambient outdoor and indoor pollution levels. The latter, mostly from burning coal or biomass for cooking and heating, is estimated to cause 110,000 premature deaths each year. The expected increase in coal use would, however, raise sulphur dioxide emissions from power plants from 8.5 million tonnes in1995 to 21 million tonnes in 2015.An investigation based on data for 50 million people in 26 cities showed that the average PM10 pollution in urban districts and in control districts were 460 μg/m3 and 220 μg/m3, respectively, and the corresponding average mortality from lung cancer was 14 per cent and 7 per cent, respectively. Every 100 μg/m3 increase in total suspended particulate concentrations also led to a 6.75 per cent increase in theincidence of chronic broncho-pneumonia in coal-burning areas (WHO, 2000).With respect to energy-related CO2 emissions, China is comparable with the European Union at about 15% of world emissions – behind the largest emitter, the US. However, coal is responsible for 80% of China’s emissions against 26.3% in Europe. Increased coal consumption in China has also important price consequences for other consumers.

Clean coal

Primarily for domestic environmental motives, the interest of the Chinese government in clean coal technologies is beyond any doubt. As in other countries, advanced clean coal technologies have substantial potential to improve the efficiency of coal-based power generation and to reduce the harmful impacts of power generation. The average cost of power generation from clean coal technologies is declining andmight make them eventually competitive with conventional pulverized coal (PC) steam plants. The dominant installed technology is pulverised coal combustion with a subcritical steam cycle. Units range widely in sizes from less than 25 to 660 MW. There are still a large number of these subcritical units under construction. Ten supercritical units were in operation in 2003 and twenty more units were approvedfor construction. There will likely be a surge towards 1000 MW power plants with ultra-supercritical steam conditions (Minchener 2004). The National Development and Reform Commission (NRDC) has recommended advanced supercritical plants for large scale power generation and most recent orders have been for supercritical units. IEA experts indicate that supercritical plants totalling more than 60 GW of capacity were recently ordered.Since the 1960s, Chinese engineers have developed their own designs of small fluidised bed combustion equipment independently of early efforts in other countries (Watson & Oldham 1999). Over 1000 commercial circulating fluidised bed (CFB) boilers have been put into operation since 1989 and fifteen 300 MWe CFB boilers are in the planning or construction stage (Minchener 2004). More than 30 GW of cogeneration plants are currently in operation, notably in the coldest parts of China.IGCC is not yet a fully mature technology, even in developed countries, where it delivers electricity at a higher cost of about 20%. The main risk factors include capital cost over-run, construction delay, and shortfalls in plant availability and performance. The cost and the risk disadvantages are substantially higher in China, where the average cost of power generation from an IGCC plant would be 32% higher than power from a PC plant; the overall risk factor would be 23% greater, according to the Nautilus Institute (1999). Consequently, there is only 1 IGCC prospect currently in China, for a demonstration plant at Yantai. There is however, considerable knowledge of coal gasification with many examples in the chemical industry for production of fertiliser chemicals. This explains why polygeneration has been suggested as amore realistic alternative for China (Zheng et alii 2003; TFEST 2003). Based on coal gasification (“syngas”), polygeneration systems can produce a variety of energy products: clean synthesis gas and electricity, high-value-added chemicals, high-value-added fuels for vehicles, residential and industrial uses, and other possible energy products. Gasification enables conversion of coal – including high-sulphur coal resources - with very low levels of air pollution compared to most existing coal combustion technologies in China. A recommendation of the China Council for International Cooperation on Environment and Developed made in 2003 to the Chinese Government essentially equates coalmodernisation with polygeneration through gasification.An extensive review of the norms and standards for existing and new plants of different types in various parts of China, and other instruments such as effluent charges, are beyond the scope of this paper. Theyare usually less stringent than equivalent norms and standards in OECD countries, but are frequently revised and tightened. However, they might have little

impact given the widespread absence of monitoring equipment, which leads to poor enforcement (Watson & Oldham 1999). Technology transfer through patent acquisitions

Jin & Liu (1999) listed patent acquisitions of various clean coal technologies by Chinese enterprises: for coal extraction & preparation equipment; for power equipment design and manufacture technology; for industry boiler design and manufacture technology and for desulphurization and dust-removal technology for coal-boilers. The acquired technology mainly includes dust-removal devices. There is only one project for desulphurisation. All were fully mature technologies in developed economies. Analysing these patent acquisitions, Jin & Liu note that the acquiring entities of technologies are mainly large or super-large enterprises. By contrast, most of medium or small enterprises are the major producersof thermal-energy equipment with high energy consumption and high GHG emission. But few of them have taken part in the transfer process of industry boilers. There are three reasons for this: their limited capital and weak technology strength, the lack of necessary information and technology transfer experience, and the government’s approval procedure and policies for technology transfer. They note, however, that the pace of patent acquisition has slowed after 1992 while the number of direct imports grew, which they attribute to the economy reforms and the breaking off of the mechanisms for technology transfer previously dominated by the government. This was, however, before the GEF project on industrialboilers took place

Bilateral collaboration

In 2001, China emphasised its desire to explore measures to accelerate the deployment of clean coal technologies and requested the IEA to look into this and help develop recommendations on how to accelerate the clean coal technology deployment in China. A study (Novem 2003) was made considering collaboration with the World Bank, the Asian Development Bank and the United Nations Development Programme, as well as with the EU, Australia, Germany, Japan, the Netherlands, the United Kingdom andthe United States. All the programmes considered aimed at assisting China in improving the environment. Most bilateral programmes aimed also to generate economic gains for Western companies through trade or technology transfer – traditionally in such programmes, governments tend to promote their own industries. The German programme was different in that economic gain was less an objective than poverty alleviationin China. Industrialised countries adopted different approaches in this cooperation:Australia focused on the coal trade position and blended coal combustion;Germany focused on mature technologies, towards easy adoption in China;Japan worked on almost all possible technologies and made a great number of demonstration projects;The Netherlands focused on their own technologies;The UK focused on the technologies that China might need and appreciate;The US made great efforts on IGCC and advanced combustion technologies.

Meanwhile, the World Bank, up to 2000, and the Asian Development Bank have participated in the financing of various large coal-fired plants and related projects (see below), while the UNDP has focused on other energy sources and the EU has focused on management, training and knowledge transfer. The results of these efforts are somewhat mixed. Most demonstration projects have worked, such as those of Japan (circulating fluidised bed boilers, simplified flue gas desulphurisation, coal briquetting plants, coal preparation technologies, etc.) but most have not led to dissemination of these technologies beyondthe demonstration projects (Oshita & Ortolano 2002, 2003). One possible exception is that of coal washing, which appears widespread in China and may be due to early collaboration with Japan. A number of German efforts, especially power plant performance optimisation, are said to have contributed to significant emission reductions (Novem 2003), but the report gives very little detail. One project deals with performance optimisation with fifteen measuring vehicles financed with a €10M loan from Germany’s development bank KfW, which travel to power plants across China. The Australian collaboration on two 125 MW existing units at the Banshan Power plant showed that increasing efficiency from 35% to 40% was possible and affordable using blended coals (Boyd 2004). In 1995 the US DOE proposed an initiative for US government support for the promotion of CCTs in developing countries, requesting a $75 million budget necessary to support a small number of operationsin China and Eastern Europe. The US Congress did not approve this additional allocation of financial resources to the Program. This refusal, according to the Nautilus Institute (1999) “emphasised the need for coordination of existing channels rather than adding a new mechanism for the financial support of CCTs in developing countries”. The US DOE’s effort, thereafter, shifted. It has, since then, focused on low-costinitiatives in the areas of information dissemination and training.Amongst other collaborative efforts from the UK, one project aims at developing clean underground coal gasification (UCG) in China. However, as fully acknowledged on the British side, “Whilst Chinese experts recognise the potential benefits of deep UCG technology, they have reservations regarding the high technology guided drilling, the cost of oxygen generation and the fact that deep UCG is unproven in large scale and sustained operation.”Meanwhile, several large new plants were built in China by Western companies, including the first supercritical pressure steam plants in Shanghai (1200 MW) build by a consortium led by Alstom and Sargent&Lundy.After the study mentioned earlier (Novem 2003) another collaborative efforts with China was undertaken under the auspices of IEA, “Best Practices in Chinese Power Plants”. A team of experts from IEA member countries undertook a detailed audit of two typical Chinese power plants and formulated recommendations of cost-effective efficiency and environmental improvements. Their report was presented to a wide audience from the Chinese power sector. Development banksIn the power sector, the World Bank helped build 20 percent of the transmission lines and 20 GW of generating capacity, including the first 300-megawatt, 600-megawatt, and 900-megawatt generating plantsin China. Apart from its direct contribution to supply expansion, the Bank leveraged its influence in two ways. First, Bank analytical and advisory activities (AAA) contributed significantly to sector policy reform and institutional development, especially in the power

sector. Over the course of the decade, and especially in the past five years, China introduced extensive policy and institutional changes that were first outlined in a 1994 Bank report on power sector reform and further developed in other AAA and through pilot projects.These changes include price reform, separation of management and regulation, corporatisation of government energy production units, introduction of competitive power markets, and improvements in the policy framework for private participation in infrastructure. The energy sector is perhaps the most successful example of the Bank’s dual track approach to lending and policy reform.

The GEF

China has been the host of the largest-ever GEF project, launched in 1996 to introduce efficient industrial boilers in the country. As noted by the designers of the original GEF project: “if the thermal efficiency of the current stock of industrial boilers in China could be raised to those of similar sizes in the developed countries, coal consumption by small boilers could be reduced by 60 million tons per year-a saving of about 17 percent” (GEF 1996).One must note, however, that efficient industrial boilers had been imported into China in previous years,mainly from Germany, the US and Japan (Jin & Liu 1999).Retrofitting existing boilers had been deemed insufficient for sustaining efficiency improvements in the sector, as the demand for new boiler technology in China grew, making existing boilers an ever-smaller percentage of the total market; the lifespan of a typical boiler in China was only about 15 years; and improved boiler production techniques was considered crucial for raising thermal efficiency by minimizing exit gas temperature and excess air in the boiler. There are good examples, however, of 10% increases of thermal efficiencies with existing industrial boilers, in particular as a result of an earlier UKChinatechnical assistance project (Minchener 2004). A more ambitious project was envisioned by GEF: “Upgrading existing Chinese boiler models through the introduction from abroad of advanced combustion systems and auxiliary equipment, especially the application of simple automatic controls; adoption of new high efficiency boiler models through the introduction of modem manufacturing techniques and boiler designs suitable for burning Chinese coals;and technical assistance and training for boiler producers and consumers”, for a total cost of $100M with GEF contributing a third of this amount. Investment funding was provided to nine Chinese boiler manufacturing enterprises in two phases. UnderPhase 1, GEF funds were used to acquire advanced international technologies for new and existing Chinese industrial boilers models and produce the model industrial boiler unitsPhase 2. Under Phase 2, GEF grant funds were used to acquire advanced production equipment from abroad to upgrade their production lines to allow mass production of the successful models. Emission reductions from this project have been estimated over the total lifetime of the investments to 637 Mt representing a third of the total 1.7 Gt for all 104 active climate-related GEF projects (GEF 2004). This resulted in a cost per avoided tonne of CO2 of about 3 US cents. However, Minchener (2004) note that thenew boilers have achieved efficiency levels in the range 80-85% “under the artificial conditions of a verification test”. Under normal conditions of operation, with typical boiler-house operating staff and typical supplies of raw coal, the benefits can be much lower. Minchener (2004) concludes that coal quality remains a critical issue.

Findings and Conclusion of the case study

Strong demand growth may slow supply-side progress

Technology transfer is more than equipment transfer

IPR protection matters for transferees as well

SYNOPSIS

Pricing and distribution of coal