Coal news and updates

J K Lakshmi sees pet coke as future cement raw material

September 22: The lack of domestic coal availability through linkages, coupled with the recent government directive to coal companies to reduce sale of coal through e-auction, is likely to severely restrict availability of domestic steam coal to the cement sector in India. Consequently, petroleum coke (fuel grade) will play an important role in meeting the sectors’ fuel requirements in the future, said an official from J K Lakshmi Cement Ltd.

“In future, pet coke will play an important role in the cement sector because the government has messed up supply of domestic coal to non-linked consumers by reducing the e-auction quantity by 50%,” the official said.

“It is rumoured that in 2015-16 or 2016-17, the government will completely stop sale of coal through the e-auction route,” the official said.

The company has already started making arrangements to secure its fuel requirements through alternative sources in view of the reduction in e-auction quantities, the official said.

Asked whether there was any benefit to the power sector in terms of increase in coal supplies after the reduction in e-auction volumes, the official said, “The coal diverted from e-auction is supposed to go to the power sector. But the power sector says that it does not have coal and some of the plants have shut because of want of coal. I do not know where exactly the diverted coal is going to, but the fact is that e-auction prices have sky-rocketed.”

“It (increase in coal supplies to the power sector) is not visible as of now, but the government has taken a decision and, because of this, the non-FSA consumers, who were actually depending on e-auctioned coal have been affected. In addition, e-auction prices in August have gone up significantly due to severe cut in offerings by coal mining companies,” the official said.

“So, cement plants or consumers, which do not have FSAs, are bound to face a hike in their input costs as they will either have to buy coal from e-auction at higher costs or go for imported coal or imported pet coke, especially those plants located in the eastern states of Chhattisgarh, Odisha, West Bengal and Jharkhand,” the official said, adding, consumers in the north and west coast are in a slightly comfortable situation because of availability of domestic pet coke from Reliance and IOC etc.