Coal washeries in India_Infraline Energy

Coal Washeries in India: A $5 billion Opportunity

© 2010 InfralineEnergy Research & Informati on Services. htt p://www.infraline.com

Table of Contents

Executi ve Summary ............................................................................... 1

Chapter 1 - Introducti on .......................................................................................... 5

Indian Coal Industry ............................................................................................. 6

Coal Producti on and Consumpti on in India ........................................................ 7

Coal Imports in India ........................................................................................... 9

Chapter 2 - Coal Benefi ciati on in India .................................................................. 11

Coal Benefi ciati on in India ................................................................................... 11

Existi ng Scenario of Coal Benefi ciati on in India ................................................... 11

Chronology of Development of Coking Coal Plants in India ................................ 11

Future Scenario of Coal Benefi ciati on in India..................................................... 16

Chapter 3 - Benefi ts of Coal Washing ................................................................... 19

Savings in Transportati on Cost............................................................................. 19

Savings in the Capital and Operati ng Cost .......................................................... 23

Reducti on in Cost of Energy produced ................................................................ 23

Regulati ng the Quality of Coal Feed .................................................................... 24

Reducti on in Consumpti on of Secondary Specifi c Oil ......................................... 24

Thermal Effi ciency Imrovement .......................................................................... 24

Reducti on in Capital Investment in New Thermal Power Plants ......................... 24

Use of By-products of Coal Benefi ciati on ............................................................ 25

Chapter 4 - Technological Opti ons ........................................................................ 27

Existi ng Technology ............................................................................................. 27

Jigs ....................................................................................................................... 27

Coal Processing with Jigs ..................................................................................... 28

Batac and Baum Jig ........................................................................................ 28



Deshaling and Komag Jig .............................................................................. 28

Froth fl otati on ..................................................................................................... 30

Heavy Media Baths .............................................................................................. 31

Heavy Media Cyclone .......................................................................................... 33

Water Only Cyclone ............................................................................................. 34

Dense Media Separator ...................................................................................... 36

Emerging Technologies ....................................................................................... 37

Barrel Washer ................................................................................................ 38

Spiral Concentrator ....................................................................................... 39

Column Flotati on ........................................................................................... 40

Air dense fl uidised bed separator .................................................................. 42

Multi Gravity Separator ................................................................................. 43

Shaking Table ................................................................................................ 45

Pilot Study for Upcoming Technology .................................................................. 47

Indigenous Vs. Imported Coal Benefi ciati on Technology ..................................... 47

Current Status of Coal Preparati on Technologies in India,

China and South Africa ....................................................................................... 50

Chapter 5 - Pre-feasibility Analysis ....................................................................... 50

Project Preparati on Phase ................................................................................... 50

Environmental Scan ....................................................................................... 51

Raw Coal Characteristi cs ................................................................................ 53

Project Planning Phase ........................................................................................ 57

Process Flow Sheet ........................................................................................ 57

Layout Preparati on ....................................................................................... 58

Economic Planning ........................................................................................ 59

Implementati on Phase ........................................................................................ 60

Plant Scheduling for Coal Washing ................................................................ 60

Procurement Services .................................................................................... 60

Contracts ....................................................................................................... 60



Chapter 6 - Setti ng Coal Washery in India ............................................................. 62

Pre-constructi on Phase ....................................................................................... 63

Site Selecti on ................................................................................................. 63

Approvals and Clearances .............................................................................. 64

Constructi on Phase .............................................................................................. 69

Selecti on of the Flow Sheet .......................................................................... 69

Tie –Up/Associati on ....................................................................................... 71

Financing ....................................................................................................... 71

EPC ................................................................................................................ 72

Post Constructi on Phase ...................................................................................... 72

Trial Run ......................................................................................................... 72

Monitoring .................................................................................................... 72

Chapter 7 - Economics of Coal Washing ................................................................ 73

Structure of Economic Analysis ........................................................................... 75

Identi fy .......................................................................................................... 75

Evaluate ......................................................................................................... 76

Compare and Summarise .............................................................................. 77

Project Cost and Benefi t in Economic Terms ....................................................... 77

Project Cost ................................................................................................... 77

Cost Externaliti es ........................................................................................... 79

Sectoral Macro-economic Eff ects ........................................................................ 81

Imapct at the Mine Site ................................................................................. 81

Impact on Transport Infrastructure ............................................................... 82

Impact on Performance of Power Plants ....................................................... 83

Impact on Environment ................................................................................. 83

Impact on General Economy ......................................................................... 83

Project Benefi t ..................................................................................................... 84

Alternati ve Opti ons to Coal Washing .................................................................. 84

Key Findings of Economic Analysis ...................................................................... 85



Chapter 8 - Policies and Guidelines for Coal Washing in India ............................... 86

Coal Value Chain .................................................................................................. 86

Factors aff ecti ng Policy on Coal Washing ............................................................ 88

Coal Supply .................................................................................................... 89

Coal Pricing .................................................................................................... 90

Coal Distributi on ............................................................................................ 90

Coal and Environment ................................................................................... 91

Implicati ons of the MoEF Policy .......................................................................... 93

Chapter 9 - Financing of Coal Washery Project ..................................................... 95

Debt Financing ..................................................................................................... 96

Equity Financing .................................................................................................. 96

Third-party Financing .......................................................................................... 97

Lease Financing ............................................................................................. 97

Project Financing ........................................................................................... 98

Financing Perspecti ve of Lenders and Investors ............................................ 99

Financing Approaches ......................................................................................... 99

Addressing Project Risks ...................................................................................... 100

Capital Cost Eff ects of Financing Alternati ves ...................................................... 102

Case Study ........................................................................................................... 103

Chapter 10 - Managing Challenges and Business Risks .......................................... 104

Managing Challenges .......................................................................................... 104

Risks Associated ................................................................................................... 104

Market Risk .................................................................................................... 105

Legal and Regulatory Risk .............................................................................. 106

Financial Risks ................................................................................................ 107

Operati onal and Maintenance Risks .............................................................. 107

Project Risks................................................................................................... 109

Clearance Risks .............................................................................................. 109

Risks due to Mafi a/Naxalism ......................................................................... 110

Development of Risk Matrix for Diff erent States ................................................. 110



Chapter 11 - Restraints and Drivers ...................................................................... 112

Restraints ............................................................................................................. 112

High Cost of Coal Washing ............................................................................. 113

Pricing based on UHV Concept ...................................................................... 114

No Incenti ve to Switch to Washed Coal ......................................................... 114

Infrastructure Constraint to Coal Handling .................................................... 115

Availability of Water for Coal Washing .......................................................... 115

Land Availability for Coal Washing ................................................................. 116

Environmental Clearances ............................................................................. 116

Project Financing ........................................................................................... 117

Naxal Menace ................................................................................................ 117

Drivers ................................................................................................................. 117

CIL’s initi ati ve to set up Coal Washery ........................................................... 118

MoEF’s Directi ve to use Washed Coal ........................................................... 119

Internati onal Pressure to reduce Carbon Footprint ...................................... 119

High Price of Imported Coal .......................................................................... 120

Swing in favour of Coal Washing: .................................................................. 121

Chapter 12 - Opportunity and Business Case for Stake Holders ............................ 122

Recent Initi ati ves for Private Players ................................................................... 122

Opportuniti es for Financing Agencies ................................................................. 123

Higher Rate of Returns .................................................................................. 124

Lack of Long-term Financing .......................................................................... 124

CIL’s Expansion plans for coal washing faciliti es ............................................ 125

Shift from monopolisti c public control to private parti cipati on .................... 125

Opportuniti es for Equipment Manufacturers ...................................................... 125

Upcoming Washeries ..................................................................................... 125

Capacity additi on for existi ng washeries ....................................................... 127

Opportuniti es for EPC Contractors ...................................................................... 128

Opportuniti es for Promoters ............................................................................... 130

Increasing growth rate for Coal Washeries .................................................... 130

Augmentati on in the installed capacity of washeries .................................... 131



Case Study ........................................................................................................... 131

Chapter 13 - Market Assessment of Washed Coal ................................................. 134

Coal Crisis in India ................................................................................................ 134

Demand for Washed Coal from User Industries .................................................. 136

Market Assessment ............................................................................................. 137

Power Generati on................................................................................................ 138

Washed Coal Requirement for Power Sector ...................................................... 140

Washed Coal Requirement for Cement Sector .................................................... 141

Washed Coal Requirement for Steel Sector ........................................................ 142

Industrial Markets ............................................................................................... 143

Infraline Analysis on Market Potenti al ................................................................. 144

Chapter 14 - Business Models and best practi ces ................................................. 146

Existi ng Business Model ...................................................................................... 146

Business Model for Private Operators ................................................................. 149

BOM Model ................................................................................................... 151

BOOT Model .................................................................................................. 153

BOT Model ..................................................................................................... 154

Capti ve Washery Model ................................................................................ 154

Turnkey Model ............................................................................................... 155

MOU Model/BOO Model ............................................................................... 156

Independent/Standalone/Merchant Model .................................................. 158

Competi ti ve Bid Model .................................................................................. 159

Co-operati ve Model ....................................................................................... 159

Chapter 15 - Conclusion ....................................................................................... 162

Abbreviati ons ...................................................................................................... 221

Bibliography ......................................................................................................... 224



Annexure I

Annexure-1: Existi ng Coking Coal Washing Capacity in India .................................... 168

Annexure-2: Existi ng Non- Coking Coal Washing Capacity in India ........................... 168

Annexure-3: Coal quality requirements for Power plants ......................................... 169

Annexure-4: Coal quality requirements for cement industry .................................... 170

Annexure-5: Coal Quality requirements for Sponge Iron .......................................... 170

Annexure-6: Washability Characterizati on of Coal under Study................................ 170

Proximate Analysis .................................................................................................... 170

Size Analysis ............................................................................................................... 171

Annexure-7: Practi cally achievable yield of washed coal in diff erent washers .......... 171

Annexure-8: Coal Linkages to TPP and Non-coking coal washeries ........................... 172

Annexure-9: Annual/ Esti mated Coal consumpti on and Ash generati on by

Coal-based Thermal Power Plants ............................................................................. 173

Annexure-10: Economic advantages of Benefi ciati on ............................................... 173

Annexure-11: Variati on of GCV of non coking coals ................................................. 173

Annexure-12: Petro Graphic Data of Low Volati le Coking Coal (LVCC) ...................... 174

Annexure 13: Chemical Data of Low Volati le Coking Coal (LVCC) .............................. 174

Annexure 14: Coke Properti es of Low Volati le Coking Coal (LVCC) ............................ 174

Annexure 15: Size Analysis of Washed Coal .............................................................. 175

Annexure-16: DM process – Flow Chart .................................................................... 176

Annexure 17: Guidelines for setti ng up coal washery on Coal Company’s land ........ 177

Annexure-18: Operati ng Guidelines for processing of consent to

establish applicati on for establishment of coal washeries in the State of Orissa ...... 179

Annexure 19: NCV and C02 emission factors of

diff erent types of fuel used for esti mati on ................................................................ 184



Annexure 20: Environmental clearance process in India ........................................... 185

Annexure 21 Flow Sheet for Variant I (Deshaling with ROM JIG) .............................. 186

Annexure 22. Flow Sheet for Variant II ...................................................................... 187

Annexure 23: Standard Flow Sheet for Jigging process for Power Stati on Coals ....... 188

Annexure 24: Standard Flow Sheet for

Heavy Media Process for Power Stati on Coals .......................................................... 189

Annexure 25: Standard Flow Sheet

Heavy Media Single Stage Cyclone for Small Coal ..................................................... 189

Annexure 26: Flow Sheet for Two Stage Heavy Media Cyclone Process ................... 190

Annexure 27: Standard Flow Sheet for Uti lizati on of Rejects .................................... 191

Annexure 28: Consumer’s Coal quality need ............................................................ 192

Annexure 29: Indicati ve Quality of Thermal Coal of major coalfi elds in India ........... 192

Annexure 30: Likely Product Balance at

34% ash level in Major Coalfi elds in India (for use in Power Plants) ......................... 192

Annexure 31: Esti mati on of Coal washing problem from

the amount of near-gravity material (NGM) ............................................................. 193

Annexure 32: Washability Curves .............................................................................. 193

Annexure 33: GHG Emissions .................................................................................... 197

Annexure 34: Quanti ty of Disposable Ash generated at

diff erent ash levels of Raw/Washed coal................................................................... 198

Annexure 35: Land Requirement for Disposable Ash at

Diff erent Ash Levels of Raw/Washed Coal ................................................................. 199

Annexure 36: Water Requirement for Disposable Ash at

diff erent Ash Levels of Raw/Washed Coal ................................................................. 199

Annexure 37: Annual CO2 – Emission at Stack of

a 1,000 MW Power Plant at diff erent Ash Levels ...................................................... 199

Annexure 38: Achievable Yield of Washed coal by diff erent level of benefi ciati on .................................................................................. 200



Annexure II

Status for Coking and Non-Coking Coal Washeries in India ....................................... 201

List of Tables

Table 1.1: Coal Producti on in India (FY 2009-10) ....................................................... 8

Table 1.2:- Coal Dispatches in India ........................................................................... 8

Table 2.1 Existi ng Coal Washing capacity of CIL for Coking and Non-Coking Coal .... 13

Table 2.2 Existi ng Private Washing Capacity of Coal in India ..................................... 14

Table 2.3 Existi ng Technologies adopted by the Coal Washeries in India ................. 16

Table 2.4 Proposed Coal Washing Faciliti es in India .................................................. 17

Table 3.1 Annual Coal Requirements (as per GCV and Ash Content) ........................ 20

Table 3.2 Annual Freight Savings ............................................................................... 21

Table 4.1 List of Technologies Existi ng in India with Washery and

Company Details ........................................................................................................ 37

Table 6.1 Land approving authoriti es according ti Type of land ................................ 66

Table 7.1 Coal Washing Comparison with technologies like CBM and CTL ............... 76

Table 7.2 Excluded items for taxati on and duti es ...................................................... 78

Table 7.3 Factors for Screening Criteria ..................................................................... 80

Table 9.1 Financing Sources of Infrastructure and other Projects ............................. 95

Table 9.2 Addressing Coal Washery Project Risks ...................................................... 101

Table 10.1 Market risk scenario ................................................................................. 106

Table 10.2 Risk Matrix ............................................................................................... 110

Table 10.3 Parameters for Ranking of States ............................................................. 111

Table 10.4 Scale and Points for Indicati ve parameters .............................................. 111

Table 10.5 Ranking of States most suitable for Coal Washing ................................... 111



Table 11.1 Loss of Coal Producti on of CCL ................................................................. 118

Table 12.2 Major Contractors for Coal Washing in India ........................................... 126

Table 12.3 Scope of Work for Contractors ................................................................. 129

Table 12.4 Current Capacity: Monnet Ispat and Energy Ltd. ..................................... 132

Table 13.1 Coal Requirement for 2011 & 2012.......................................................... 133

Table 13.2 Infraline Analysis on Washing of Coal in future........................................ 144

Table 14.1 Details of CIL’s Operati ng Washeries ........................................................ 147

Table 14.2 Washery built by Private developers on CIL’s Land .................................. 147

Table 14.3 CIL Coal washery details as per contractors ............................................. 148

Table 15.1 Deciding factors and

Subsequent implementati on probability for Coal Washing List of Figures ................ 164



List of Figures

Fig.1.1:- Geological Resources of Coal in India .......................................................... 7

Fig.1.2:- Sector Wise Coal Consumpti on in India ....................................................... 9

Fig.1.3:- Coal Producti on and Imports of India .......................................................... 9

Fig.2.1 Total Existi ng Washed Coal Capacity in

Million Tonnes for Coking and Non-Coking Coal ....................................................... 15

Fig. 2.2 Share of Private and Public Uti liti es in Washing Capacity additi on ............... 18

Fig. 3.1 Variati on of Coal requirement as per GCV .................................................... 20

Fig. 3.2 Distance wise Freight Savings at 34% ash levels ........................................... 22

Fig.3.3 Distance wise Freight Savings at 30% ash levels ............................................ 22

Fig. 3.4 Variati on of Freight, Freight Savings and RoM Coal ...................................... 23

Fig.3.5 Single Stage Washing (According to Products) ............................................... 25

Fig.3.6 Multi Stage Washing (According to Products) ................................................ 26

Fig.4.1 Baum Jig ......................................................................................................... 29

Fig.4.2 Batac Jig ......................................................................................................... 29

Fig.4.3 Deshaling Jig .................................................................................................. 30

Fig. 4.4 Froth Flotati on Chamber ............................................................................... 31

Fig.4.5 Heavy Media Bath Chamber .......................................................................... 32

Fig.4.6 Heavy Media Cyclone Chamber ..................................................................... 34

Fig.4.7 Water Only Cyclone Schemati c ...................................................................... 35

Fig. 4.8 Dense Media Separator Confi gurati on .......................................................... 36

Fig.4.9 Barrel Washer Confi gurati on .......................................................................... 39

Fig. 4.10 Spiral Concentrator Confi gurati on .............................................................. 40

Fig. 4.11 Column Flotati on Confi gurati on .................................................................. 41

Fig. 4.12 Air dense fl uidised bed separator confi gurati on ......................................... 43



Fig.4.13 Multi -gravity Separator Confi gurati on ......................................................... 44

Fig.4.14 Shaking Table Schemati c .............................................................................. 45

Fig.4.15 Pilot Fine Coal Treatment Plant, CIMFR, Dhanbad ....................................... 46

Fig. 4.16:- Country Wise Technology Comparison Chart ........................................... 47

Fig.4.17:- Comparati ve Status of Technologies in India and China ............................ 48

Fig. 4.18 Comparati ve Status of Technologies in India and South Africa ................... 49

Fig.5.1Phases of Pre-feasibility study ........................................................................ 50

Fig. 5.2 Sub-Acti viti es of Project Preparati on Phase .................................................. 51

Fig.5.3 Fragmented Environmental Structure............................................................ 52

Fig. 5.4 Break of Main land area required for Coal Washery ..................................... 53

Fig. 5.5 Raw Coal Characteristi cs ............................................................................... 53

Fig.5.6 Coal Characterisati on ..................................................................................... 54

Fig.5.7 Washability curve for Variant II ...................................................................... 56

Fig.5.8 Stages of Planning Phase ............................................................................... 57

Fig.5.9 Stages of Raw Coal processing ....................................................................... 58

Fig.5.10 Stages of Implementati on Phase ................................................................. 60

Fig.6.1:- Phases of Setti ng a Coal Washery ................................................................ 62

Fig.6.2 Time Schedule for a washery Project ............................................................. 63

Fig.6.3:- List of Clearances required forestablishing a Coal Washing Facility ............ 65

Fig. 6.4 Process fl ow for Environmental Clearances .................................................. 68

Fig. 6.5:- Process Flow Sheet block diagram for Variant II ......................................... 70

Fig. 7.1 Savings in the operati on of Power Plants ...................................................... 73

Fig. 7.2 Structure of Economic Analysis ..................................................................... 75

Fig. 7.3 Additi onal Cost Components for Economic Analysis ..................................... 77

Fig. 7.4 Macro-Economic Eff ects of Coal washing on diff erent sectors .................... 81



Fig. 7.5 Raw Coal Separati on into Clean Coal and

Rejects (With Heat Loss involved in the process) ...................................................... 82

Fig. 8.1 Coal Value Chain ........................................................................................... 87

Fig. 8.2 Stake Holders in Policy making for Coal Washing ......................................... 87

Fig. 8.3 Factors eff ecti ng Coal washing policy............................................................ 89

Fig. 8.4 Major Environmental Concerns .................................................................... 92

Fig. 8.5 Policies on Coal Washing ............................................................................... 92

Fig.9.1 Methods of Equity Financing ......................................................................... 97

Fig.9.2 Lease Variati on Concepts ............................................................................... 98

Fig.9.3 Financing Strategy Decision Process .............................................................. 100

Fig.9.4 Ranking of Financing Methods....................................................................... 102

Fig.10.1 Challenges for Coal Washeries ..................................................................... 104

Fig.10.2 Risks associated with Coal Washeries .......................................................... 105

Fig. 10.3 Process fl ow for Raw Coal to Washed coal ................................................. 107

Fig. 11.1 Key Restraints for Coal Washing .................................................................. 113

Fig.11.2 Drivers for Setti ng up of Coal Washery ........................................................ 118

Fig.12.1 Financing Agencies for Coal Washing........................................................... 123

Fig.12.2 Long term sources of Finance ..................................................................... 124

Fig. 13.1 Growth patt ern in Coal Producti on ............................................................. 134

Fig. 13.2 Coal Producti on Trend in India .................................................................... 134

Fig.13.3 Coal Producti on and Import Trends ............................................................. 136

Fig. 13.4 Demand patt ern for washed coal from user industries .............................. 136

Fig.13.5 Sector wise Consumpti on of washed coal ................................................... 137

Fig. 13.6 Indicati ve Parameters for market potenti al of washed coal ....................... 138

Fig.13.7 Growth patt ern for Coal based power generati on in India .......................... 139



Fig. 13.8 Fuel-wise Capacity Shift by 2015, GW ......................................................... 139

Fig 13.9 Cement Capacity growth vis-à-vis rise in demand of coal ............................ 142

Fig. 13.10 Steel growth trend vis-à-vis rise in coal demand ...................................... 143

Fig. 14.1 Components for successful business strategy for coal washing .................. 145

Fig. 14.2 Business Model for Private Developers....................................................... 150

Fig. 14.3 BOM Model ................................................................................................. 151

Fig. 14.4 Procedure for BOM Scheme ....................................................................... 152

Fig. 14.5 Features of BOM Model .............................................................................. 153

Fig. 14.6 Capti ve Washery Model .............................................................................. 155

Fig. 14.7 MoU Model ................................................................................................. 157

Fig. 14.8 Revised MoU Model .................................................................................... 158

Fig. 14.9 Co-operati ve Model .................................................................................... 160

Fig. 15.1 Coal Washing Matrix ................................................................................... 163


© 2010. InfralineEnergy Research & Information Services. http://www.infraline.com

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Coal washeries in India_Infraline Energy

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