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Coal Washeries in India: A $5 billion Opportunity

Table of Contents
Executive Summary ............................................................................... 1
Chapter 1 - Introduction .......................................................................................... 5
Indian Coal Industry............................................................................................. 6
Coal Production and Consumption in India ........................................................ 7
Coal Imports in India ........................................................................................... 9
Chapter 2 - Coal Beneficiation in India.................................................................. 11
Coal Beneficiation in India ................................................................................... 11
Existing Scenario of Coal Beneficiation in India ................................................... 11
Chronology of Development of Coking Coal Plants in India ................................ 11
Future Scenario of Coal Beneficiation in India..................................................... 16

Chapter 3 - Benefits of Coal Washing ................................................................... 19


Savings in Transportation Cost............................................................................. 19
Savings in the Capital and Operating Cost .......................................................... 23
Reduction in Cost of Energy produced ................................................................ 23
Regulating the Quality of Coal Feed .................................................................... 24
Reduction in Consumption of Secondary Specific Oil ......................................... 24
Thermal Eciency Imrovement .......................................................................... 24
Reduction in Capital Investment in New Thermal Power Plants ......................... 24
Use of By-products of Coal Beneficiation ............................................................ 25
Chapter 4 - Technological Options ........................................................................ 27
Existing Technology ............................................................................................. 27
Jigs ....................................................................................................................... 27
Coal Processing with Jigs ..................................................................................... 28
Batac and Baum Jig ........................................................................................ 28

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Coal Washeries in India: A $5 billion Opportunity

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


Froth flotation ..................................................................................................... 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 Flotation ........................................................................................... 40
Air dense fluidised bed separator .................................................................. 42
Multi Gravity Separator ................................................................................. 43
Shaking Table ................................................................................................ 45
Pilot Study for Upcoming Technology.................................................................. 47
Indigenous Vs. Imported Coal Beneficiation Technology..................................... 47
Current Status of Coal Preparation Technologies in India,
China and South Africa ....................................................................................... 50
Chapter 5 - Pre-feasibility Analysis ....................................................................... 50
Project Preparation Phase ................................................................................... 50
Environmental Scan ....................................................................................... 51
Raw Coal Characteristics................................................................................ 53
Project Planning Phase ........................................................................................ 57
Process Flow Sheet ........................................................................................ 57
Layout Preparation ....................................................................................... 58
Economic Planning ........................................................................................ 59
Implementation Phase ........................................................................................ 60
Plant Scheduling for Coal Washing ................................................................ 60
Procurement Services .................................................................................... 60
Contracts ....................................................................................................... 60

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Coal Washeries in India: A $5 billion Opportunity

Chapter 6 - Setting Coal Washery in India ............................................................. 62


Pre-construction Phase ....................................................................................... 63
Site Selection ................................................................................................. 63
Approvals and Clearances.............................................................................. 64
Construction Phase.............................................................................................. 69
Selection of the Flow Sheet .......................................................................... 69
Tie Up/Association ....................................................................................... 71
Financing ....................................................................................................... 71
EPC ................................................................................................................ 72
Post Construction Phase ...................................................................................... 72
Trial Run ......................................................................................................... 72
Monitoring .................................................................................................... 72
Chapter 7 - Economics of Coal Washing ................................................................ 73
Structure of Economic Analysis ........................................................................... 75
Identify .......................................................................................................... 75
Evaluate ......................................................................................................... 76
Compare and Summarise .............................................................................. 77
Project Cost and Benefit in Economic Terms ....................................................... 77
Project Cost ................................................................................................... 77
Cost Externalities ........................................................................................... 79
Sectoral Macro-economic Eects ........................................................................ 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 Benefit ..................................................................................................... 84
Alternative Options to Coal Washing .................................................................. 84
Key Findings of Economic Analysis ...................................................................... 85

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Coal Washeries in India: A $5 billion Opportunity

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


Coal Value Chain .................................................................................................. 86
Factors aecting Policy on Coal Washing ............................................................ 88
Coal Supply .................................................................................................... 89
Coal Pricing .................................................................................................... 90
Coal Distribution ............................................................................................ 90
Coal and Environment ................................................................................... 91
Implications 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 Perspective of Lenders and Investors ............................................ 99
Financing Approaches ......................................................................................... 99
Addressing Project Risks ...................................................................................... 100
Capital Cost Eects of Financing Alternatives...................................................... 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
Operational and Maintenance Risks .............................................................. 107
Project Risks................................................................................................... 109
Clearance Risks .............................................................................................. 109
Risks due to Mafia/Naxalism ......................................................................... 110
Development of Risk Matrix for Dierent States ................................................. 110

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Coal Washeries in India: A $5 billion Opportunity

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


Restraints ............................................................................................................. 112
High Cost of Coal Washing ............................................................................. 113
Pricing based on UHV Concept ...................................................................... 114
No Incentive 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
CILs initiative to set up Coal Washery ........................................................... 118
MoEFs Directive to use Washed Coal ........................................................... 119
International 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 Initiatives for Private Players ................................................................... 122
Opportunities for Financing Agencies ................................................................. 123
Higher Rate of Returns .................................................................................. 124
Lack of Long-term Financing.......................................................................... 124
CILs Expansion plans for coal washing facilities ............................................ 125
Shift from monopolistic public control to private participation .................... 125
Opportunities for Equipment Manufacturers ...................................................... 125
Upcoming Washeries ..................................................................................... 125
Capacity addition for existing washeries ....................................................... 127
Opportunities for EPC Contractors ...................................................................... 128
Opportunities for Promoters ............................................................................... 130
Increasing growth rate for Coal Washeries .................................................... 130
Augmentation in the installed capacity of washeries .................................... 131

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Coal Washeries in India: A $5 billion Opportunity

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 Generation................................................................................................ 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 Potential................................................................. 144
Chapter 14 - Business Models and best practices ................................................. 146
Existing Business Model ...................................................................................... 146
Business Model for Private Operators ................................................................. 149
BOM Model ................................................................................................... 151
BOOT Model .................................................................................................. 153
BOT Model ..................................................................................................... 154
Captive Washery Model ................................................................................ 154
Turnkey Model ............................................................................................... 155
MOU Model/BOO Model............................................................................... 156
Independent/Standalone/Merchant Model .................................................. 158
Competitive Bid Model .................................................................................. 159
Co-operative Model ....................................................................................... 159
Chapter 15 - Conclusion ....................................................................................... 162
Abbreviations ...................................................................................................... 221
Bibliography ......................................................................................................... 224

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Coal Washeries in India: A $5 billion Opportunity

Annexure I

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


Annexure-2: Existing 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 Characterization of Coal under Study................................ 170
Proximate Analysis .................................................................................................... 170
Size Analysis............................................................................................................... 171
Annexure-7: Practically achievable yield of washed coal in dierent washers.......... 171
Annexure-8: Coal Linkages to TPP and Non-coking coal washeries ........................... 172
Annexure-9: Annual/ Estimated Coal consumption and Ash generation by
Coal-based Thermal Power Plants ............................................................................. 173
Annexure-10: Economic advantages of Beneficiation ............................................... 173
Annexure-11: Variation of GCV of non coking coals ................................................. 173
Annexure-12: Petro Graphic Data of Low Volatile Coking Coal (LVCC) ...................... 174
Annexure 13: Chemical Data of Low Volatile Coking Coal (LVCC) .............................. 174
Annexure 14: Coke Properties of Low Volatile Coking Coal (LVCC)............................ 174
Annexure 15: Size Analysis of Washed Coal .............................................................. 175
Annexure-16: DM process Flow Chart .................................................................... 176
Annexure 17: Guidelines for setting up coal washery on Coal Companys land ........ 177
Annexure-18: Operating Guidelines for processing of consent to
establish application for establishment of coal washeries in the State of Orissa ...... 179
Annexure 19: NCV and C02 emission factors of
dierent types of fuel used for estimation ................................................................ 184

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Coal Washeries in India: A $5 billion Opportunity

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 Station Coals ....... 188
Annexure 24: Standard Flow Sheet for
Heavy Media Process for Power Station 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 Utilization of Rejects .................................... 191
Annexure 28: Consumers Coal quality need ............................................................ 192
Annexure 29: Indicative Quality of Thermal Coal of major coalfields in India........... 192
Annexure 30: Likely Product Balance at
34% ash level in Major Coalfields in India (for use in Power Plants) ......................... 192
Annexure 31: Estimation 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: Quantity of Disposable Ash generated at
dierent ash levels of Raw/Washed coal................................................................... 198
Annexure 35: Land Requirement for Disposable Ash at
Dierent Ash Levels of Raw/Washed Coal................................................................. 199
Annexure 36: Water Requirement for Disposable Ash at
dierent Ash Levels of Raw/Washed Coal ................................................................. 199
Annexure 37: Annual CO2 Emission at Stack of
a 1,000 MW Power Plant at dierent Ash Levels ...................................................... 199
Annexure 38: Achievable Yield of Washed coal by
dierent level of beneficiation .................................................................................. 200

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Coal Washeries in India: A $5 billion Opportunity

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

List of Tables
Table 1.1: Coal Production in India (FY 2009-10) ....................................................... 8
Table 1.2:- Coal Dispatches in India ........................................................................... 8
Table 2.1 Existing Coal Washing capacity of CIL for Coking and Non-Coking Coal .... 13
Table 2.2 Existing Private Washing Capacity of Coal in India ..................................... 14
Table 2.3 Existing Technologies adopted by the Coal Washeries in India ................. 16
Table 2.4 Proposed Coal Washing Facilities 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 Existing in India with Washery and
Company Details........................................................................................................ 37
Table 6.1 Land approving authorities 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 taxation and duties ...................................................... 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 Indicative parameters .............................................. 111
Table 10.5 Ranking of States most suitable for Coal Washing ................................... 111

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Coal Washeries in India: A $5 billion Opportunity

Table 11.1 Loss of Coal Production 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 CILs Operating Washeries ........................................................ 147
Table 14.2 Washery built by Private developers on CILs Land .................................. 147
Table 14.3 CIL Coal washery details as per contractors ............................................. 148
Table 15.1 Deciding factors and
Subsequent implementation probability for Coal Washing List of Figures ................ 164

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Coal Washeries in India: A $5 billion Opportunity

List of Figures

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


Fig.1.2:- Sector Wise Coal Consumption in India ....................................................... 9
Fig.1.3:- Coal Production and Imports of India .......................................................... 9
Fig.2.1 Total Existing Washed Coal Capacity in
Million Tonnes for Coking and Non-Coking Coal ....................................................... 15
Fig. 2.2 Share of Private and Public Utilities in Washing Capacity addition ............... 18
Fig. 3.1 Variation 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 Variation 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 Flotation Chamber ............................................................................... 31
Fig.4.5 Heavy Media Bath Chamber .......................................................................... 32
Fig.4.6 Heavy Media Cyclone Chamber ..................................................................... 34
Fig.4.7 Water Only Cyclone Schematic ...................................................................... 35
Fig. 4.8 Dense Media Separator Configuration .......................................................... 36
Fig.4.9 Barrel Washer Configuration.......................................................................... 39
Fig. 4.10 Spiral Concentrator Configuration .............................................................. 40
Fig. 4.11 Column Flotation Configuration .................................................................. 41
Fig. 4.12 Air dense fluidised bed separator configuration ......................................... 43

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Coal Washeries in India: A $5 billion Opportunity

Fig.4.13 Multi-gravity Separator Configuration ......................................................... 44


Fig.4.14 Shaking Table Schematic .............................................................................. 45
Fig.4.15 Pilot Fine Coal Treatment Plant, CIMFR, Dhanbad ....................................... 46
Fig. 4.16:- Country Wise Technology Comparison Chart ........................................... 47
Fig.4.17:- Comparative Status of Technologies in India and China ............................ 48
Fig. 4.18 Comparative Status of Technologies in India and South Africa ................... 49
Fig.5.1Phases of Pre-feasibility study ........................................................................ 50
Fig. 5.2 Sub-Activities of Project Preparation 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 Characteristics ............................................................................... 53
Fig.5.6 Coal Characterisation ..................................................................................... 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 Implementation Phase ................................................................. 60
Fig.6.1:- Phases of Setting 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 flow for Environmental Clearances .................................................. 68
Fig. 6.5:- Process Flow Sheet block diagram for Variant II ......................................... 70
Fig. 7.1 Savings in the operation of Power Plants ...................................................... 73
Fig. 7.2 Structure of Economic Analysis ..................................................................... 75
Fig. 7.3 Additional Cost Components for Economic Analysis..................................... 77
Fig. 7.4 Macro-Economic Eects of Coal washing on dierent sectors .................... 81

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Coal Washeries in India: A $5 billion Opportunity

Fig. 7.5 Raw Coal Separation 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 eecting 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 Variation 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 flow for Raw Coal to Washed coal ................................................. 107
Fig. 11.1 Key Restraints for Coal Washing.................................................................. 113
Fig.11.2 Drivers for Setting 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 pattern in Coal Production ............................................................. 134
Fig. 13.2 Coal Production Trend in India .................................................................... 134
Fig.13.3 Coal Production and Import Trends ............................................................. 136
Fig. 13.4 Demand pattern for washed coal from user industries .............................. 136
Fig.13.5 Sector wise Consumption of washed coal ................................................... 137
Fig. 13.6 Indicative Parameters for market potential of washed coal ....................... 138
Fig.13.7 Growth pattern for Coal based power generation in India .......................... 139

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Coal Washeries in India: A $5 billion Opportunity

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


Fig 13.9 Cement Capacity growth vis--vis rise in demand of coal............................ 142
Fig. 13.10 Steel growth trend vis--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 Captive Washery Model .............................................................................. 155
Fig. 14.7 MoU Model ................................................................................................. 157
Fig. 14.8 Revised MoU Model.................................................................................... 158
Fig. 14.9 Co-operative Model .................................................................................... 160
Fig. 15.1 Coal Washing Matrix ................................................................................... 163

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Coal Washeries in India: A $5 billion Opportunity

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