Coal news and updates

Cement makers seek probe into grade slippage in CIL supplies

November 18: The Cement Manufacturers Association (CMA) has urged the chairman of Coal India Ltd (CIL) and the Ministry of Coal to investigate the matter of slippage in quality of coal supplied from four collieries and siding – Robertson, North Kusmunda, Burhar and Gevra  – of South Eastern Coalfields Ltd (SECL).

The association has also urged the coal miner to provide the facility of third party sampling mechanism to the non-power consumers also, including the cement sector, without any embargo of 4 lakh tons.

The facility of third party sampling was introduced by CIL from October 1, 2013 for power utilities and for the other consumers having annual contracted quantity (ACQ) of 4 lakh tons and above.

Under the newly introduced system, the FSA norm has been modified to allow a third party to collect samples at the delivery points for determining the quality of coal. The sample of coal is collected in the presence of representatives of the seller and the purchaser.

In a letter addressed to CIL Chairman and Secretary (Coal) on November 13, the CMA's Secretary General, N A Viswanathan, said that day-to-day coal supplies from SECL mines is deteriorating and a sharp variation in the declared and the actual grade is being registered in supply of coal to its member cement companies.

In support of its claim, CMA said in the letter that its member company, Vikram Cement Works, was actually given for its captive power plant a total of around 23,000 tons of G12, G13 and G15 grades of coal during the period April and September 2013, but invoice was raised for the G11 grade.

Similarly, the cement maker had been supplied about 11,200 tons of G8, G9 and G10 grades for its cement plant but invoices of G6 and G7 grades had been raised, Viswanathan said.

"Similar variation in coal quality is being reported regularly by our other member cement plants drawing coal supplies from SECL, MCL, CCL and ECL," Viswanathan alleged.

Following the introduction of third party sampling Viswanathan, in his letter, said that the cement industry is suffering immensely because sub-standard quality of coal is supplied to them after good quality of coal is segregated and diverted for sale through e-auction.

He pointed out that, at present, 10% of the coal produced by CIL is sold through e-auction route and another 70% of the production is supplied to the power sector under third party sampling.

"Consequently, with the implementation of third party sampling, the consumers, other than the power sectors, including the cement industry, are being supplied with the leftover inferior quality of coal which is not covered under the third party sampling," Viswanathan alleged.

In this connection, the CMA's secretary general pointed that the cement sector is supplied coal at non-regulated price which is 35% more than the notified price of G5 to G17 grades supplied to the power utilities.

"Despite paying higher prices compared to power sector, cement makers are deprived of third party sampling," he pointed.

It is not only the higher price, but cement makers are not even supplied the fully quantity of their required coal as they get only 25% of the ACQ quantity offered in the FSA he said.

Consistent supply of poor quality of coal leads to reduced production of clinker and lower power generation by CPPs besides leading to an increase in the cost of cement production, Viswanathan said.