INTRODUCTION TO COAL BUSINESS

BANGLADESH POWER DEVELOPMENT BOARD (BPDB)

• PRESENTED BY:
• ENGR. R.U.M RASHADUL HASAN, EXECUTIVE ENGINEER BPDB.
DATE AND PLACE: 3RD APRIL, 2023; CHITTAGONG TRAINING CENTER, BPDB.
AL TYPES AND ITS CHARACTERISTICS
Coals are fossil fuels formed through the oxidation and biodegradation of plant remains preserved by
water and mud.

HIGH MOISTURE CONTENT OF COAL

CARBON/ENERGY CONTENT OF COAL HIGH

Low Rank Coals Hard Coal

47% 53%
% of World
reseres

Lignite Sub-Bituminous Bituminous Anthracite

17% 30% 52% 1%
USES Largely power THERMAL COAL THERMAL & METALLURGICAL COAL Domestic/
generation Power generation Cement Power generation Cement Industrial
manufacture Industrial Manufacture Industrial uses including
uses Manufacture of iron and steel smokeless
fuel

CV: Calorific Values

GAR: Gross As Received
CV(GAR)
( kcal/kg)
4,000-5,000 5,000-6,000 6,000-6,700 6,800-7,000
AL VALUE CHAIN AND ITS APPLICATIONS
Upstream Intermediate Downstream End Use

Coal Mine

Coal Industry
Steel and Cement

LNG IGCC

Coalbed
Power Plants Electricity
Methane CH4
Feedstocks Fertilizers
Pipeline
CCS

SynGas
PETCHEM Plants Petrochemic
Chain

Gasification Products
Coal Liquefaction LPG
Cooking

Diesel/
Gasoline
Remark: IGCC = Integrated Gas Combined Cycle
SOURCE AND RESERVE CLASSIFICATION
Largest Coal Producing Country In The World

TOP FIVE COAL PRODUCING COUNTRIES (MILLION TONNES, 2021)

Top Coal
Exporting
Countries
ABORNE THERMAL COAL TRADE

Source: Barlow Jonk

• Total global seaborne thermal coal trade accounts for more than 600 mtpa
• Pacific Trade is the largest market for seaborne thermal coal
IA MARKET CONTINUES TO GROW

2.5% CAGR

4.6%
CAGR

9.8%
CAGR

Source: Barlow Junker

Coal demand growth is the highest among other fuels.

ERMAL COAL SALES AND MARKET OPTIONS

•Currently producers offer mid-term contract, lasting 2 or max 3 years, due to volatility in
Term production cost and market price
Contract •Pricing in the Pacific market is based on the Newcastle Thermal Coal benchmark at reference
energy 6322 kcal / kg GAR

One-year •Fixed terms, price is based on Newcastle Thermal Coal benchmark

contract •Adjustments are in line with those in long term contract on energy, ash, sulphur and moisture sub
bituminous coals)

•Commonly used by power utilities for a certain tonnage or cargoes if a shortage in stocks appears
Tender •One off contract, some on a delivered basis (C&F)

•Pricing reflects supply and demand balance

Spot market •Actual / physical settlements on the spot market is ~10 % of sales due to the volatility in pricing

•Popular in Europe where coal is commoditised

Derivatives •Regulations on credit and risk limit entry by Asian coal producers
•Reluctance by Asian buyers to move away from physical trade due to reliance on energy imports
 Newcastle Thermal Coal benchmark

Standard • 6,000 kcal/kg Net Calorific Value at Total Moisture

Specification received basis) of 15.0% maximum.

• The price benchmark for seaborne thermal

Why Important coal in the asia-pacific region.

• The coal that moves through NCIG is predomina

HELE thermal coal, which is exported to internati
Speciality markets such as Japan, South Korea, Tai
Singapore, and India.
International Commercial Term (Incoterm)
 Open
Pit

Mining
Method

Under Under
water ground
NING TECHNIQUES

Two types of mining techniques – Open Cut mining and Underground mining.
Depending on the location and depth of cover of the deposit, the mine will be developed
as either an open-cut or underground operation, or a combination of both

All operations in Indonesia are open-cut mining

 Powerful trucks and shovels can be used to
move large volumes of rock.
Open Pit

Equipment not restricted by the size of the

opening you are working in.
Lower cost to mine means lower grades of ore
are economic to mine.
Faster
production.
 COAL MINE
Illustration : from mine to
port
MINING
METHOD
SURFACE MINING OPEN PIT
DRAGLIN
E
UNDERGROUND MINING - LONGWALL
UNDERGROUND MINING ROOM & PILLAR
Handsome road trucks in action..
 COAL MINE
Equipment
Quality Control Equipment
Metal Detector Magnetic
Separator
 COAL MINE
Equipment

Automatic Sampling Unit Ensure

consistence sampling process for
quality analysis
The ore body is too deep to mine
profitably by open pit.

The grades or quality of the orebody are

high enough to cover costs.

Underground mining has a lower ground

footprint than open pit mining.
RODUCTION PROCESS & INDONESIAN MINING COSTS
Production rates vary significantly across mines depending on
geological and operating conditions.

 Production  8-10% of reserves per annum

 40-50% of reserves produced by end of plateau period
 Mining method is location-specific

(Mining Cost Components)

• Digging soil & rock above coal seams • Digging coal in coal seam • Transfer coal to process area
Overburden Removal (46%) Coal Removal (5%) ROM Haul (9%)

Royalty
• Grinding and sieving • Transfer process coal to barge
Processing (3%) Product Haul (8%) & Barging (9%) (20%)
xtraction
in Open
ast Mine
OAL MINING DEVELOPMENT PROCESSES
General Survey
 Fischer-Tropsch synthesis (FTS

her-Tropsch synthesis
) is a catalytic process for
verting syngas (CO and
into a petroleum-like
duct termed as FT crude
dily upgradable into a
e range of transportation
de liquid hydrocarbons.
VESTMENT STRUCTURE
vest through “Lints
(Australian based)
mited” a fully-own PTT SRL
bsidiary of PTT
ernational)
60% 40%

Straits Salt
SBI
(Australian
(Coal Assets Holding Company) based)

35% 47.1% 33.5%

Brunei
SAR Madagascar
(Coal Greenfield (Coal Greenfield Project)
Project) (Singapore Based)

nesia Based
100% 100% 80%
Sebuku Jembayan (Coal Laung (Coal
(Coal Mine Operation) Mine Operation) Exploration
Project)
Transaction Drivers

Vision:

• SBI established as an energy coal platform, with the financial, technical and
operational capability to actively pursue and develop opportunities in the global coal
sector.

• Consolidate and expand existing operations and progress development of SBI

portfolio of high quality projects.

• Form a regionally significant, diversified and reliable supplier of energy coal to

global markets.

• Contribute and participate in providing energy security, economic growth and

environmental solutions to the emerging nations of Asia.
ey Assets of SBI
Sebuku
• One of the world’s lowest cost export coal operations.
• Top quality power station brand.
• Total production capacity target of 8Mtpa
• 3.5Mt of sales in 2008
• 381Mt JORC Resources
Jembayan
• Total production capacity increased to 11Mtpa Brunei
Jembayan
• Jembayan and Prangat recognised ‘enviro coals’ Seb
• Production target for 2009 of 7.0-7.5Mt
• 254Mt JORC Resources & 112Mt JORC Reserves
• Exploration target of 600-700 Mt.
Sakoa (Madagascar) Coal
• Coal inventory (non-JORC) estimated at greater than 100Mt.
Exploration target could exceed 500Mt.
• Feasibility study in 2009, targeting production of 3 to 5 million tonnes of
export thermal coal within 3 to 4 years
Madagascar
Brunei Coal (Sakoa Coal)
• Joint Venture with Far East Energy (FEE) to explore entire country
for coal projects.
• PL’s currently under application.
• Exploration and drilling in 2009 (under EL’s)
Coal’s Position in the Global Energy Equation

Source: IEA
 e global seaborne traded thermal coal market has grown steadily
nce its establishment
Global seaborne traded thermal coal market (Mt)

681 669
660
631
583
554
516
455 463
407
355
286 294 310 327 346
260 265
212 209 225 237
188 196 193
162
125 133 137 142
101 116

2009
197

197

198

198

198

198

198

198

198

198

198
198

199

199

199

199

199

199

199

199

199

199

200
200

200

200

200

200

200

200

200
8

8
9

0
1

8
Source: Australian Mineral Economics

E
The increased dependence on coal-fired power generation and declining domestic availability of coal continue to drive the
growth in seaborne traded thermal coal market
bal end uses of the primary sources of energy - coal, oil, and
ural gas
2010E global end uses of 2010E global end uses of 2010E global end uses of
COAL OIL NATURAL GAS
Transportati
Commercial Power
on
0.6% Transportati generation
Commercial Commercial 0.9%
Residential on 5.1%
2.7% 6.3% Industrial
2.4% 0.1%
Residential Transportati 42.8%
Residential
5.7% on
Industrial 17.1%
Power 54.2%
32.8%
generation
64.1%
Power
Industrial generation
32.3% 32.9%

Total consumption = 140.2 quadrillion Btu Total consumption = 181.1 quadrillion Btu Total consumption = 120.3 quadrillion Btu

 Essential commodity for base  Predominantly used in  Predominantly used in

load power generation, transportation, accounting for industrial and power
accounting for almost two- more than half of its demand generation (peaking
thirds of its end usage capacity)
Source: International Energy Outlook 2008, Energy Information Administration Note: Btu
stands for British Thermal Unit

Thermal coal is the key foundation energy source for power generation
al is the most cost competitive fuel source globally

Long Run Marginal Cost for new build base-load power stations
160

140

120 Thermal coal is the

essential commodity
100
for base load power
80 generation
60
Substantial long run
cost advantage
40
Fuel
OPEX over other energy
20
CAPEX sources
0
Import Coal ST Domestic Gas Nuclear Import Gas Fuel Oil Fired
CCGT CCGT ST

ource: WoodMackenzie
ST: Steam Turbine; CCGT: Combine Cycle Gas Turbine; Long term fuel price outlook (2008-2025); 2008 prices
al is the most sustainable energy source globally

Proved reserves (Bnt) World proved reserve life1 (years)

133
847
Significantly
longer
reserve life
~6.0x ~5.0x

60

42

142 169

2
Coal2 Gas Oil Coal Gas Oil

urce: BP Statistical review

e: Conversion rates used — 1 million tonne of oil equivalent = 7.33 million barrels of oil equivalent
1 Based on proved reserves as of 31 Dec 2007 and 2007A production
2 Coal includes Anthracite, bituminus, sub-bituminous and lignite quality coaloma
and gas continue to face rising finding and development costs
Global finding and development costs—actual for selected reporting
30 companies ($/boe)
$27.97

25 $24.10

20

15
$11.21
10
$7.27

0
199

199

199

199

199

199

199

199

199

200

200

200

200

200

200

200

200

200

200
1

9
Source: Independent Oil & Gas Consultant

Rapidly increasing F&D costs for oil & gas further establishes the long term cost
competitiveness of thermal coal as a fuel source
ply – Demand Fundamentals: The Price Equation
Newcastle coal benchmark prices (US$/ton) Comment

220 Coal price fell c. 68%

from historical high of
200
Newcastle Spot Contract US$192/t to US$62/t  2004 —2006, average thermal coa
180 price was around US$50/t
160  Market tightened significantly in20
Coal price increased c. and first half of 2008, where spot
140
270%
120 thermal coal prices rose by 270%
100 a peak of US$192/t in July 2008
Coal price average c. US$ 50/t
80
60  Spot coal price has come down
by approx 68% since its peak to
40
around US$62/t currently
20

0
Jan-05 Jan-06 Jan-07 Jan-08 Jan-09
Jan-04

Source: Bloomberg (as at April 10, 2009), AME

nsensus thermal coal price forecast

Benchmark thermal coal prices (December YE) Comment

220 Historical spot prices Current consensus forecast

Historical contract prices Consensus forecast (July 2008)
200  Near to medium term of
180 broker consensus forecasts
have come down
160
significantly as a result of the
140 recent economic slowdown
120
 However, the near term
100
LT: US$70/t
weakness does not deflect
80
from an increasingly bullish
60 LT: US$60/t long-term view — reflected
40 in increase in long term
Forecast
20 price forecasts
0

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Source: Bloomberg (as at April 10, 2009), CoalPortal, broker reports

Achieving efficiency
Coal Blending
Definition of Coal Blending
- May define as mixing two or more different types of coals to obtain a
product with desired properties.

Why is Precision Coal Blending Required

- As world reserves of compliant coal are rapidly exhausted, the most effective
solution is to optimize the utilization of non-compliant coal.
Considerations for Coal Blending

Reduce cost of generation

Coal blending in power stations is mainly adopted to reduce the cost of generation and
increase the availability of coal.

Understand the composition of the coals

means one will have to understand the origin of coal, the organic and inorganic
chemistry of coal, and the behavior of the coals in questions.
Make (design) acceptable feedstocks
Two unacceptable coals may make a suitable blend
One quality parameter or many
Cost Saving (able to use low cost coals) Providing uniform coal
quality
Easier to operate boilers Diversifying supply
Increased competition More security
Able to use domestic coals-Government policy
Sell unsaleable coals
Increase tonnages of unsaleable coals Make cheaper
(more competitive) products
Provide new products to continue (replace)
established products
Provide consistent quality

mutual advantage
Coal Blending Method - onshore
Blending underground

Blending on ground level

Coal Stockpile Stacking Equipment
Reclaiming Equipment
Advantages/ Disadvantages

Source: JT Body
118
Coal Procurement Benchmarks With International
Practices

Tender type
Shipping arrangement
Spot tender Long term
Long term shipping contract
tender
Spot contract shipping
Shipping contractual Coal type Bituminous Sub
arrangement bituminous
COA
CFR CVC
Dedicated vessel
Typical Coal Specification Range
Coal Quality Requirements
Each power station is designed to utilize different range of
coal which meets the boiler design range specifications.
The common specifications applicable are:

CV TM - Fuel Ratio: FC/VM

Ash - HGI
Sulphur - Coal sizing: >50mm
VM <3mm/2mm

Ash Fusion Temperature(Initial Deformation Temp)

Predictive Analysis
Predictive Analysis
 Potential problem?
mance Aspect Coal A Analysis Parameter Comments to Explain the Problem
or B

neous combustion at stockpile B Air-dried moisture Trend for high ADM coals to be prone to spontaneous combustion

y of conveyors, feeders B Calorific Value Lower CV means more tonnes/hr required

mill inlet B Total Moisture High temperature required to dry the coal. This could cause the mill fires or exceed heating
ature capacity.

mill capacity B HGI Low HGI low capacity (t/h)

B CV Low CV High t/h required

B High TM Reduced capacity (t/h)

PF fineness B HGI Low HGI coarser product

B CV Higher t/h coarser product

wear of mill components A Abrasion Index High Abbrasion Index high mill wear

A Ash Content High Ash high mineral content

A SiO2 High SiO2 suggests high quartz content

stability and turndown A Fuel Ratio and Volatile High Fuel Ratio and Low Volatile Matter poor Flame stability and
ty Matter turndown capability

B Total Moisture High TM poor flame stability and turndown capability

 Potential problem?
mance Aspect Coal A Analysis Parameter Comments to Explain the Problem
or B

t efficiency A Fuel ratio and Volatile High Fuel Ratio and Low Volatile matter poor burnout
Matter

position (slagging and fouling) B AFT Low AFT fusible (sticky) ash deposits

B Fe2O3, CaO, MgO, High levels suggest sticky ash

Na2O

A TM Low TM high flame temperature

articulate (ash) emissions A Sulfur, Na2O Low levels poor ESP efficiency

A Ash content High Ash more ash produced

ioxide emissions B S High S high SO2

A (CaO) Low CaO slightly less S retained on Ash but coal B will produce most SO2

ndling cost A Ash content More ash produced

dioxice emission B Carbon Higher emission factor

Potential Impact
Under Standing
Tender
Documents and
Evaluation 118
 Types of Coal Tender

Spot Tender for

Malaysian Spot Tender
Companies

Term Tender
 Tendering Process

• Tender Invitation is through email

• Tender Invitation is to the Selected Pre-
qualified Supplier (subject to the
requirements & type of tender)
• Submission can be via email or fax (subject to
the type of tender)
• Tender security is required for term tender and
Malaysian company tender (RM1million)
• Submission validity set by TNBF
Tender Document Requirements

• Tender Submission should only be on the pre-

qualified coal brand & from the pre-qualified coal
mine of the relevant country
• Price quoted can be on FOBT, CFR or DAP
(subject to the tender requirement)
• Tender Submission should offer the coal on Fixed
/ Index linked Price (subject to the tender
requirement)
• Paid-up capital requirements of RM10 million is
required under Spot Tender for Malaysian Company
• All the forms, documents, information and data
 Pricing Mechanism
• Offered Coal Price should be on the coal typical CV i
USD65.00 at 5200 kcal/kg GAR per metric tonne (pm
• Price Adjustment would be done on the following:
Contract GCV, kcal/kg, on As Received Basis (arb)
• Contract Total Moisture (%) on As Received Basis
(arb)
• Contract Ash (%) on As Received Basis (arb)
Contract Sulfur (%) on As Received Basis (arb)
• For DAP, freight rate (pmt) is to be quoted
separately i.e. USD6.00 pmt
Pricing Mechanism

Contract Price
Pa, Adjusted C&F Price = C&F Price Adjusted to
5500 kcal/kg (GAR basis)
=((Pc + Fr) x 5500)
CVC
Pc = FOBT Price in USD pmt at the Contractual Quality
Freight, Fr= Freight Rate in USD pmt
CVC = Contract GCV, kcal/kg, on As Received Basis (arb
 Pricing Mechanism

Evaluated Coal Price shall be determined as follows:-

Pe = Evaluated Bid Price Pa +

= Fm + Fa + Fs

Fm = TM Deviation Factor
= (TMC TMbenchmark) x USD TMf

Fa = Ash Deviation Factor

= (AshC - Ashbenchmark) x USD Ashf

Fs = Sulphur Deviation Factor

 Definition
CVC =Contract GCV, kcal/kg, on As Received Basis (arb) TMC
=Contract Total Moisture (%) on As Received Basis (arb) AshC
=Contract Ash (%) on As Received Basis (arb)
SC =Contract Sulphur (%) on As Received Basis (arb) Pc =FOBT
Price in USD/T at the
Properties Contractual Quality
Benchmark Penalty factor Basis

TM 30% -$0.13 1%

Ash 9% -$0.40 1%

Sulphur 1.0% -$0.40 0.1%

Pricing Mechanism
Evaluated Coal Price shall be determined as follows:-
Pa, Adjusted C&F Price = (65+6) x5500/5200

= US$75.10
Fm
= TM Deviation Factor
= (20-30) x US$0.13 = -US$1.30
Fa = Ash Deviation Factor
= (7-9) x US$0.40 = -US$0.80
Fs = Sulphur Deviation Factor
= (0.6-1.0)/ 0.1 x US$0.40 = -US$1.60
Pe = Evaluated Bid Price = Pa + Fm + Fa + Fs

= 75.10 -1.30 -0.80 -1.60

= US$71.40
Pricing Mechanism

The Evaluated Coal Price would reflect TNBF

preference for:
High CV coal
Lower Total Moisture Coal Lower Ash
Coal
Lower Sulfur Coal
The most competitive coal price offer in
accordance with the coal quality would be
shortlisted for consideration to award.
218
 HOW COAL
Freight IS EXPORTED
arrangement

Free on Board (FOB) Cost and Freight (CFR)

Cost Insurance and Freight (CIF) Delivered at Place
(DAP)
 ALL ABOUT LAYTIME
What is laytime?
Allowable time to load or discharge the cargo
Bill of Lading Quantity
Allowable Time =
Loading / Discharging Rate
 ALL ABOUT LAYTIME
Exercise 1

Given the declared loading rate is 15,000 mt/day. Please calculate

the allowable time for below quantity;
4.66667 days
i.70,000 mt :
4.93233 days
ii.73,985 mt :
5.51333 days
iii.82,700 mt:
 ALL ABOUT LAYTIME
Exercise 2 BL
Quantity : 78,235 mt
Loading rate : 35,000 mt Demurrage rate
: USD 15,000 DHD
Question :
Actual loading time : 5.27123 days
DEMURRAGE
Is it despatch or demurrage? How
much is the cost?
3.03594 days : USD 45,539.10
230
FLOODING OF MINE PITS
233
OVERSIZED COAL
COAL SUPPLY CHALLENGES
Weather related Far East Region
winter season
i.e. icy coal, icy port

East Kalimantan dry

season (Mar
Jun)
South Kalimantan dry
season (Mar
Jun)

Queensland typhoon,
flood & bad weather
(Dec Mar)
New South Wales
typhoon, flood & bad
weather (Dec
Mar)
THANK YOU