November 2008 15

Lignite: A Cost Effective Substitute for Coal

O

ften referred to as brown coal, lignite is the lowest rank of coal and used exclusively as fuel for steam-electric power generation. Lately, the mineral has found

applications in metals production in India in absence of high quality coal and coke. It is brownish-black and has a high inherent moisture content, sometimes as high as 66 per cent, and very high ash (50 per cent) content compared with bituminous coal. Because of its low energy density, brown coal is inefficient to transport and is not traded extensively on the world market compared with higher coal grades. It is often burnt in power stations constructed within 1000 km to its mines. Lignite is primarily used as substitute for coal. But, however, it is preferred for coal only when consumed from pit-head for power generation. The cheapest source of power generation is using natural gas (INR 0.63/ Kwh) followed by pit-head mines of coal (INR 0.77/ Kwh) and pithead lignite (INR 0.95/Kwh). Transporting lignite is not feasible option as the cost of power generation goes up to as high as INR 1.77/ Kwh.

- Metalworld Research Team

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November 2008 16

Application In IndiaWorldwide about 79 per cent of lignite coal Coal and lignite industry in India operates is used to generate electricity, 13.5 per cent under a strictly controlled regime and is still is used to generate synthetic natural gas, and under government control. The Mines and 7.55 per cent is used to produce fertilizer Mineral Act, 1957 constitutes basic laws products (anhydrous ammonia and governing the mining sector in India and the ammonium sulfate). A very small coal sector also comes under its purview. percentage is used as home heating fuel, for Before notification No.38035/2/97-CA use as fertilizer and for use as oil well dated 12th December, 2001 only Central drilling mud. government was allowed for coal and

lignite mining. But the notification allowed s t a t e g o v e r n m e n t c o m p a n i e s o r undertakings to mine coal and lignite anywhere in the country with following conditions:a) For coal and lignite mining, the willing companies need to obtain permission from the government controlled Coal India Ltd (CIL) and Neyveli Lignite Corporation (NLC) respectively?b) Mining leases can be granted to state government companies or undertakings only if CIL and NLC have no plan or willingness to undertake mining operations

Besides its application in power generation, for coal or lignite in the concerned area.the mineral also finds applications in c) The proposed mining area has not been various other sectors including cement, allotted to any captive mining company. paper, soda ash and chemicals, bricks and (Can be any private or public company). ceramics, textiles, and many other Occurrence of lignite in India is confined to miscellaneous sectors. Demand for lignite the southern states of Tamil Nadu and from such sectors is expected to grow at a Kerala, western states of Gujarat and compounded annual growth rate (CAGR) Rajasthan and eastern states of Pondicherry, of 12 per cent from 8.3 million tons in 2007- Jammu & Kashmir, where coal availability

08 to 20 million tons in 2011-12. is almost 'nil'. In view of rapidly increasing R e q u i r e m e n t b y t h e s e s e c t o r s demand for energy, non availability of coal independently are very miniscule in deposits for exploitation in the states of comparison to power sector standalone. For Tamil Nadu, Gujarat and Rajasthan, limited requirement by these industries, it is problems faced in the transportation of coal not feasible for them to have their captive from far off coalfields and high cost lignite mines and as a result such industries involved in transporting coal over a long meet their lignite needs from merchant distance, it is considered necessary that the sellers. lignite deposits available in these states are

Worldwide about 79

per cent of lignite coal

is used to generate

electricity, 13.5 per

cent is used to

generate synthetic

natural gas, and 7.55

per cent is used to

produce fertilizer

products (anhydrous

ammonia and

ammonium sulfate).

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17 November 2008

exploited for power generation which from lignite fueled power stations. NLC, would be the best economic and viable Gujarat Industrial and power company Ltd option. (GIPCL), Gujarat Mineral Development

Corporation Ltd (GMDC) are some of the

Prices of coal and lignite are based on costing and a particular profit margin. Costing generally includes cost of land, cost of forestation, other capital costs (appropriately apportioned over the life of the project, and other operating costs.

companies who have been setting up lignite-based power plants in their respective states. As a result of such continuously rising demand for lignite, its production has increased from 20.8 million tons in 1999-00 to 32 million tons in 2006-07 at a compounded annual growth rate (CAGR) of 7 per cent.

Lignite production in India has been The low cost of power generation using

continuously increasing, backed by demand

Cost and Pricing Structure

Rising Production

Demand Rationale

Source: Ministry of power

Lignite production in

India has been

continuously

increasing, backed by

demand from lignite

fueled power

stations.

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coal/lignite, and the availability of huge which coal and lignite accounts for nearly coal/lignite reserves in India, are some of 83 per cent.the major incentives for setting up Demand is expected to grow at a CAGR 12 coal / l igni te-based power plants . per cent from 35.84 million tons in 2007-Currently, in India, thermal power account 08 to 55.93 per cent tons in 2011-12 for 65 per cent of total power generation of especially from Rajasthan and Gujarat

with several initiatives taken by these governments.Nearly 2225 MW lignite based power plants are expected to be installed in XI plan to be completed by 2012.

With growing energy demand from domestic and industry sectors alike, lignite is likely to remain in forefront in future.

Conclusion

Demand is expected

to grow at a CAGR 12

per cent from 35.84

million tons in 2007-

08 to 55.93 per cent

tons in 2011-12

especially from

Rajasthan and

Gujarat with several

initiatives taken by

these governments.

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