CEE Jan-Mar 2012

• increase costs for both producers and consumers. A senior official of the power ministry told ET that the ministry had written to the coal ministry on December 30, 2011, saying the infrastructure for introducing the GCV system was not yet in place. Following the migration to the new system, NTPC, the largest consumer of the state– owned monopoly Coal India and the biggest power producer in the country, is set to see its coal bill rise 40%, to Rs.28,000 crore a year from Rs.20,000 crore. "We consume about one– third of the coal produced by Coal India and our preliminary estimates show that the price of C and D grade coal is expected to double following the introduction of the new system," an NTPC official who did not wish to be identified said . The official said NTPC had also requested the power ministry to take up the issue with the coal ministry. Despite the request, Coal India moved to the new system from January 1, the official of the power ministry quoted earlier said. "Nev– ertheless, the power ministry has now entered into talks with the coal ministry for keeping the migration at an abeyance. There is another meeting scheduled between all stakeholders next week," he said . GCV, which measures the amount of heat liberated by carbon and hydrogen in the coal when it is heated, is an internationally accepted pricing mechanism. Courtesy: The Economic Times, Kolkata, January 1, 2012 INDIA CEMENT ACQUIRES COAL MINE IN INDONESIA India Cements has acquired a coal mine in Indonesia for $20 million, which is expected to go on stream by January 2012. The coal mine acquisition is part of its plan to integrate its supply chain and reduce exposure to the fluctuating coal price Internationally. "At present 55-60 per cent of the coal requirement is being met by import. The coal mine acquisition is a strategic decision which will reduce our exposure to the fluctuating coal price Internationally," said N. Srinivasan, Vice Chairman & Managing Director, India Cements, which is also in the process of setting up a 50 MW power plant near Tirunelveli in Tamil Nadu. Courtesy: Konstruction Review, 21st Nov. 2011, P12. COAL DEMAND TO GROW BY 600,000 TID OVER NEXT FIVE YEARS, lEA WARN S Global coal demand will continue to expand "aggressively'' over the coming five years, the International Energy Agency's (lEA's) inaugural 'Medium-Term Coal Market Report 2011' states, while also warning that infrastructure bottlenecks and an expected shift to poorer quality deposits could place upward pressure on costs and prices. In fact, the lEA report, which was released this week, forecasts that average coal demand would grow by 600 000 tid over the period , despite calls for efforts to be intensified to remove carbon from the energy system. The growth of average daily coal demand during the last decade was over 700 000 t, when global hard coal demand grew by more than 70% from 3.7-billion tons in 2000 to an estimated 6.3-billion tons in 201 0 - a compound annual growth rate of 5.5% a year, which was the highest growth rate of all fossil fuels. Coal demand, the lEA said, would continue growing in the outlook period, but the pace of growth would slow. The increase in demand would be underpinned by surging power generation in emerging economies, especially China and India, and would place upward pressure on mining costs and coal prices, especially as poorer quality deposits were exploited to satisfy demand. Despite the rise of new exporting countries, such as Mongolia and Mozambique, traditional exporters were expected to meet the bulk of the demand growth. Six countries, including Indonesia, Australia, Russia, South Africa and Colombia, currently account for more than 80% of global coal exports. The report also cautioned that the infrastructure bottlenecks experienced in recent years, which had caused coal prices to more than triple, could again place pressure on markets and prices. This could, the lEA argued , test the traditional view of coal as a cheap and secure energy resource. Executive Director Maria van der Hoeven said the report served to highlight the significant challenges facing efforts to transform the global energy system into one that was sustainable, secure and low– carbon. "Policy makers must be aware of this when designing strategies to enhance energy security while tackling climate change," she said. The report raised particular concern about the global implications of China's coal appetite, noting that events and decisions in China could have an "outsized effect" on coal and electricity prices around the world. China's domestic coal market was more than three times the global coal trade. Further, while only 15% of global 35