The Indian government has proposed a new set of grades to differentiate between the various specifications of lignite that are produced in the country.
It is to be noted that lignite, generally yellow to dark brown in colour, is regarded as brown coal. It is characterised by low fixed carbon percentage and calorific value, and primarily used for electricity generation.
Similar to non-coking coal, lignite is grouped into different categories based on gross calorific value (GCV), with individual grades having a uniform GCV band width of 300 kcal/kg.
In total, 9 groups have been proposed ranging between GL1 and GL9. The upper limit of GCV exceeding 4,000 kcal/kg corresponds to GL1, while the lowermost limit of GCV is in the range of 1,601-1,900 kcal/kg corresponds to GL9.
In addition to these standard grades, two additional categories have been formed for lower GCV lignite specifications.
Lignite having GCV below 1,600 kcal/kg and up to 1,300 kcal/kg would be referred to as ‘Below Grade High’. On the other hand, lignite having GCV below 1,300 kcal/kg and up to 1,000 kcal/kg shall be treated as ‘Below Grade Low’.
Meanwhile, lignite having GCV below 1,000 kcal/kg shall be treated as ungraded.
Lignite market in India
Lignite is treated as a separate energy source than coal majorly due to the difference in inherent properties.
During FY22-23, India’s lignite production jumped to a 7-year high of 47.49 million tonnes (mnt), rising 25% y-o-y. This is comparatively meagre compared to annual coal production of 777.26 mnt during the fiscal.
At present, there are 20 lignite mines spread across Gujarat, Tamil Nadu and Rajasthan that are owned by 8 private and public sector companies. However, there was no standardised grade and price channel for sale which leads to discrimination.
The new grading system will help in tracking price movements of lignite especially when the government has initiated sale of lignite blocks for commercial mining based on revenue sharing model.
For the ongoing sixth tranche, 8 lignite blocks are being offered along with 125 coal blocks for auction. The due date for technical bid submission has been revised to 30 January, 2023.
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