Sunday, July 30, 2017

Alternative to Africa Coal
Jayanta Roy Chowdhury
Telegraph India
New Delhi, July 30

India is looking to gasify coal from ICVL's mines in Mozambique and bring it back to the country.

ICVL had bought a mine in Mozambique three years back, but shipping the coal back to India was found to be expensive.

An alternative plan was to set up a power plant to produce electricity in Mozambique. However, the proposal could not make much headway in the absence of a grid to distribute power.

"We are now evaluating a proposal by Niti Aayog to gasify the coal and turn it into methanol to be shipped back and used in gas-fired power plants in India," steel minister Chaudhury Birender Singh told The Telegraph.

India has 25,329MW of gas-based power plants, of which 14,305MW are either fully or partly non-functional because of the lack of gas. These plants are estimated to have cost Rs 1.24 lakh crore.

However, analysts said though gasification was an alternative and new technologies could help to produce cheaper coal-based gas, "the problem is that the bottom of the natural gas market has been knocked off by shale gas prices".

Last month, Goldman Sachs had lowered the projections for oil and gas prices over the next quarter on the back of a spurt in shale drilling not only in the US but also in other geographies.

Goldman Sachs had earlier forecast $55 a barrel, but in June revised the price to a three-month average of $47.50 per barrel.

Analysts said oil prices would have to fall to about $30 a barrel before US shale producers could be asked to cut output.

"The gasification idea is new... we will study its cost economics. The Niti Aayog is sure it can work. Once the government as a whole is convinced, we will go ahead," said Singh.

International Coal Ventures Pvt Ltd (ICVL), a five-way joint venture among SAIL, CIL, RINL, NMDC and NTPC, had acquired Benga, an operating coal mine, and other untapped reserves in Mozambique from Rio Tinto for $50 million in 2014.

Track record

ICVL, set up in 2009 to acquire coal assets for Indian steel units abroad, has been unsuccessful in buying mines abroad. The Benga mine has thermal coal used to generate electricity. The mine is located strategically in the coal-bearing region of the Moatize basin, stated to be the second-largest coal basin in the world after Bowen in Australia.

However, the acquisition has proven to be a failure till now because though the coal from the mine is of high quality, it is of little use as the cost of bringing it back is huge. The mine has also faced other problems, forcing it to be shut down at some stage.

The operating coal mine comes with a wash plant and surface infrastructure with a potential to expand raw coal production from 5 million tonnes per annum (mtpa) to 12mtpa. ICVL officials said, "There is significant potential for tapping coal-bed methane from the acquired coal resources."

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