Coal Buyers in Kandla port

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Coal in the Indian economy is like carbs in our body. Coal buyers in Kandla Port need the energy source and just cannot function without it, at least for now anyways. Coal is the most widely available, cheap, and densely packed energy source out there that is available locally across the globe and is easy to transport, without needing the complex logistical challenges and infrastructure requirements of either gas or oil. It is the major driver of efficient and economic use for most industries. It is still the strongest pillar for a stable grid electricity supply when compared to almost any other alternate in our modern advanced world.

Coal buyers in Kandla Port still requires coal despite of various environmental friendly alternatives. When first used in the steam engine, it was heralded to be at the heart of the industrial revolution and modernization of the world. It is only when coal became widely adopted and coal buyers and users in Kandla Port increased, that humanity started to realize its pitfalls. Same has happened with almost all the other alternates like nuclear which is touted as being too dangerous, with scary, long term aftereffects associated with radiation and spent fuel disposal. Renewable energy alternates like wind and hydro have had a hard time too, as even after being treated as nobly as coal by the coal buyers in Kandla Port, eventually they have too shown their own limitations when deployed at scale. They tend to change and disturb the local ecosystem of the places where they are built significantly.

Even the much touted solar has unfortunately a long way to go. Limitations include, a large area needed for installation and low efficiencies, which decreases with age. They are productive only during a part of the day. Event this productivity is at natures mercy with cloudy days reducing it, dust covers leading to huge energy consumption in maintenance and abrasion, which erodes the efficiency even further. When deployed at scale, even solar panels have shown to disturb the existing ecosystem by becoming heat absorption sinks in desert locations (where they get the best sunlight exposure for the longest of times), needing to be cooled to maintain optimum performance, again resulting in lower net output. The promising battery technology is still has miles to cover before it comes in to change the narrative.

Biomass or Agri waste is a another alternate of the Indian government as it can be used interchangeably with coal by the coal buyers in Kandla Port with little or no processing. It is also locally produced and helps kill two birds (coal induced pollution and Agri waste disposal) with one stone. The challenges here are completely different with seasonality of the input, logistical nightmare of collection and transportation, non-standardized practices in processing and the most important one of aggregation of the lakhs of farmers to be able to provide regular quality in meaningful quantities to entice the industry to make a permanent switch from coal. Recently a policy shift by the government of India has made a definitive shift towards biomass, by mandating a 5% co-firing of biomass pellets with coal within one year, which needs to be ramped up further by coal buyers in Kandla Port or by power plants.

With any Coal buyers at Kandla Port or at any power plant, coal is burned to produce heat, which is then converted into steam by boiling water (losing almost 60% energy), thus generating electricity by turning massive turbines, then transporting the electricity to end use industries (suffering transmission losses) and where it is used in various equipment for heating purposes. Hence, common sense and economics prevail, and coal buyers in Kandla Port take it directly to the end-use industries, where it can be burned in a controlled environment to directly use for the heating requirement, thereby avoiding massive scale of waste while having a smaller carbon footprint for the same application.

Coal is an important source of energy for Coal Buyers in Kandla Port and is critical for our energy security. It accounts for around 44% of our primary energy needs and powers around 75% of our entire electricity generation. Coal is so important for Coal buyers in Kandla Port despite concerns around global warming, our government is refusing to let the coal industry die without a credible long term phase out plan. In fact, the government of India has communicated even to the US that coal will remain a steadfast pillar supporting the Indian economy for the coming decades.

Coal buyers in Kandla Port or we may also say that the Indian economy is so dependent on the black gold, that the government predicts a rise in its consumption by around 50% in the coming years. The government has been steadily making strides towards a more market-based pricing approach in the benefit of coal buyers in Kandla Port and a freer coal economy than what we see today. This is apparent by the various market friendly policy decisions taken by the Indian government which will result in a freely flowing coal economy in the coming future:

Continuous auctions on rotational basis of coal mines for commercial mining with market linked pricing for the benefit of coal buyers at Kandla Port. Mines are continuously being added to the existing auction pool and auctions are being continuously being held by the government to keep investor interest strong in a bid to attract FDI to the space, along with domestic interest.
They’ve recently allowed captive mines to sell 50% of their production in open market. This landmark policy change has the potential to unlock more availability of the fuel to the industry, with market linked pricing thus increasing supply sources and hence deepening the market.
Coal India Ltd has been selling more and more coal being via the auctions route through MSTC and coaljunction. Government through this is hitting two targets with one stone by not having to subsidize energy costs of industries, which sell their product on market linked prices to coal buyers at Kandla Port, often making a killing, via long term, under-priced linkages. Secondly, this has resulted in the company realising much better prices and increasing its revenue.

Coal is a massive, 250 Bn $ sector in India. It is almost 10% of the Indian GDP. Our current consumption of almost a billion MT is met mostly by domestic mines operated by government-controlled Coal India Ltd and Singareni Collieries Coalfields Ltd and rest almost 25% via imports from various countries across the globe. Our major importing partners include Indonesia, South Africa, USA, Australia, and Russia.

Last 5 Awarded Deals

Coal Type	Country	Port	Vessel/Mine
Thermal Coal	Indonesia	Navlakhi Port	4800 GAR +/- 100
Thermal Coal	Russia	Kandla Port	6100 NAR +/- 100
Thermal Coal	Indonesia	Navlakhi Port	4800 GAR +/- 100
Thermal Coal	Russia	Kandla Port	6100 NAR +/- 100
Thermal Coal	Indonesia	Kandla Port	5200 GAR +/- 100

All About kandla Port

The Indian port of Kandla serves as a crucial link in the maritime network for boats entering India via the Arabian Sea. The port of Kandla, located in the Gulf of Kutch in the Gujarat Kutch province, has been in operation since the mid-1900s, and was built to address a lack of marine harbours along the country’s western sea route.

The port of Kandla, a protected natural cove, was initially thought to take over the mantle of being India’s preferred western port in the mid-19th century. Even though the port provided a suitable marine interface at the time of the British conquest of India, the building and subsequent existence of the Karachi port made it the major marine harbour in all of western, undivided India.

Following the partition of India and Pakistan, and the natural merger of the Karachi Port with the whole country, a major effort was made to expand the Kandla port. The over-utilization of Mumbai’s port served as another driver, necessitating a wide range of infrastructure improvements.

Each transit ship berthed at the port has an average turnaround time of four days, which is a remarkable number.

For the fiscal year 2011-2012, the port had a vessel traffic production of little more than 82 million tonnes (825 lac tonnes).

The port was recently in the news for successfully berthing a ship with a dead weight tonnage of almost 900,000 tonnes.

Given the port’s draught handling capacity, this success storey strongly establishes the port’s and its infrastructural assets’ viability.

The establishment of the Kandla port has played a significant role in defining India’s worldwide maritime presence. While the vessel currently has a draught handling capacity of 12.5 metres, the Kandla Port Trust has requested that this capacity be expanded to 14 metres as part of its long-term port development strategy.

In addition, the Port Trust has outlined growth strategies that include:

New berthing is being built.
Ensure a more environmentally friendly port system.
Better service facilities that are well-equipped to meet international standards.
Providing a cost-effective yet high-quality port infrastructure for ships in transit.

The port of Kandla, which has received ISO-9001 certification, has changed the face of India’s maritime presence. Because to the Kandla Port, a high degree of practicality of maritime transportation both within and outside the country has been accomplished, which has reflected back on the nation’s overall attempts to be a part of some of the world’s most developed economies.

The Port of Kandla Special Economic Zone (KASEZ) was the country’s and Asia’s first special economic zone. The Port of Kandla SEZ, which opened in 1965, is the country’s largest multi-product SEZ. Kandla was India’s first export processing zone. The special economic zone, which spans 310 acres, is approximately nine kilometres from Kandla’s port. Petroleum, chemicals, iron and steel, and iron machinery are among the most common imports into the Port of Kandla, although it also handles salt, textiles, and grain. A settlement has sprung up around it.

According to the Koppen-Geiger climate classification, Kandla has a semi-desert climate (BSh/BWh). The yearly average temperature is 24.8 degrees Celsius. The average annual rainfall is 410 millimetres.

This vast quantity of coal is getting delivered to a large number of coal buyer and coal consumer industries in Kandla Port, across wide variety of sectors. This distribution of coal buyers and coal consumers industries in Kandla Port can be observed based on majorly two factors: location and origin of coal.

Let us pick up locational aspect of the coal buyers first:

Near to the Raw Material

Coal is a cheap commodity (usually). The main part of the costing of coal, which forms up to 90% of the plant delivered cost to a consumer or coal buyer at Kandla Port, constitutes of handling and transportation costs, thus making it very sensitive to its location of mining and final consumption. Thus, a large number of price sensitive industries tend to locate themselves nearer to the imported sources, ports or domestic sources, near mines.

a. India is blessed with a very long coastline, 7500+ Km. This gives us a distinct advantage in terms of commerce and the ability to import and export via cheaper sea routes from global sources. As mentioned before almost 25% of our needs are satisfied by imported coal. Some of the prominent coal ports include Mundra port, Kandla port, Tuna port, Navlakhi port, Dahej port, Hazira port, Magdalla ports in Gujarat. Dharamtar port, JSW Jaigadh port in Maharashtra, Marmugao port of Karnataka, Kochi port in Kerela, Tuticorin Port, Ennore Port, Karaijal port in Tamil Nadu, Krishnapatnam port, Vizag port, Gangavaram port in Andhra Pradesh, Paradip port, Dhaamra port in Odisha and Haldia port in West Bengal.

Large trading concerns with big banking limits and often overseas presence import coal from other countries in to India, taking advantage of pricing differentials between different grades and origins and delivery times. They are mostly present in major cities, and across various ports. They have operations teams to support the evacuation of coal from ports in a time bound manner and cater to the coal buyers in target markets.

Availability of liquidity and low logistics charges have thus been a common characteristic of many coal buyer industries to blossom like Morbi in Gujarat for ceramics manufacturers or steel rolling mills near Vishakhapatnam in Andhra Pradesh or sponge iron or direct reduced iron, DRI plants in Odisha.

b. Domestic mines are mostly located near the central, eastern and south eastern parts of the country. They are operated mostly by Coal India Limited (CIL) via its numerous subsidiaries including:

Northern Coalfields Ltd, NCL
Central Coalfields Ltd, CCL
Eastern Coalfields Ltd, ECL
North Eastern Coalfields Ltd, NECL
South Eastern Coalfields Ltd, SECL
Western Coalfields Ltd, WCL
Mahanadi Coalfields Ltd, MCL

Apart from CIL, Singareni Collieries Coalfields Ltd, SCCL is also a state-owned coal mining company supplying to the Telangana and Andhra Pradesh markets. Presently, captive mines allotted to various end coal user companies or coal buyers at Kandla Port including power plants, cement plants, steel companies etc, have been allowed to sell up to 50% of their production in open market.

These regional supply sources have attracted huge coal buyers like steel industry clusters of Chhattisgarh, ferro alloy manufacturers in West Bengal, aluminium smelters in Odisha etc, apart from smaller industries like dyeing, brick kilns, paper mills etc peppered across the landscape to take the locational advantage of the locally available coal and have set up shop and generated massive employment and created wealth.

Apart from coal other significant raw materials, also become major aspect for locational consideration of clusters for coal buyers at Kandla Port. Examples of it can be seen in cement, burnt lime, plaster of paris clusters in Rajasthan and Andhra Pradesh, sugar mills of Uttar Pradesh,

2. Near Consumption Markets

A large number of coal buyer industries in Kandla Port are located nearer to the markets they serve. These include food processing and milk processing units in Uttar Pradesh & Haryana, dyeing clusters across Delhi NCR region, leather processors in Uttar Pradesh, brick kilns or bhatta’s across India, paper mills in Muzaffarnagar, Meerut and Punjab.

3. In the historical trade hubs and routes

Many industrial clusters have been historically built along major arterial roads connecting various large cities across India. Due to abundance of labor, easier access to clients and raw material these trade towns and major cities developed into manufacturing hubs having coal buyer clusters in and arounf Kandla Port. Many examples of such coal buyer clusters are in various locations across the country like Indore in Madhya Pradesh, Kolhapur in Maharashtra, Allahabad in Uttar Pradesh, Patna in Bihar, Tirupur in Tamil Nadu etc.

Let us now explore the Origin of Coal:

Coal from different origins is used in a variety of applications across the coal buyers at Kandla Port. These uses vary with industry, its location and nearby supply sources.

Indonesian coal: Indonesia is the world’s largest exporter of coal. With its landscape being criss-crossed by rivers, its location very near to the Indian sub-continent, it is relatively cheaper for us to source coal from here. Hence, it is no surprise that India is its second largest market. Indonesia is the largest source for our imported thermal coal needs. Being complimentary in its physical characteristics to our domestically available coal, Indonesian variety is often used for blending with ours. It is used in a very wide variety of industries across the country.

Coastal power plants have been built specifically to be able to utilize cheaper varieties of Indonesian coal to produce power. Steel rolling mills in Mandi Gobindgarh and Ludhiana in north and Telangana in south use it for heating applications. Indonesian coal is used by boilers in dyeing industry across Haryana, Uttar Pradesh and Rajasthan as a suitable, low sulphur, replacement to highly polluting petcoke. Ceramics industry of Gujarat and captive power producers across the country have been using fuel from Indonesia to run their industries.

South African coal: South Africa is another large exporter of coal. India has been its largest market accounting for over 50% of its total exports. Grades of RB1 (6000 NAR), RB2 (5700 NAR), RB3 (5500 NAR) and 4800 NAR are exported from South Africa into India. This coal is used across India mainly by sponge iron makers and ferro alloy manufacturers. It is utilized for its high fixed carbon content almost as a chemical. It directly competes with domestic varieties in south and south-east India.

USA coal: US coal has the best net calorific value of any coal in the world. Originates from the regions of North Appalachian and Illinois Basin in US. It has been a favourite of the brick kiln owners across the entire northern belt of India. Cement manufacturers across the country have used US coal interchangeably with petcoke, a refinery by product, basis on pricing arbitrage, whenever available. Paper mills up north have also been occasional users, whenever domestic coal has been in shortage.

Australian coal: It is mostly used by the cement industry, which act as swing buyers. This has also been often used by power plants across the coastline, whenever there is an arbitrage opportunity.

Indian coal: Domestic coal is mainly mined by Coal India via its subsidiary companies and Singareni Collieries Coalfields Ltd. is mostly consumed within a short distance of the mine itself. These are the source for majority of the coal for coal buyers in Kandla Port or rather across India. There are some smaller mines in Gujarat & Rajasthan also, which produce lignite, consumed by local coal buyer industries like bricks, dyeing, ceramics, paper etc.