Jindal Steel scouting tech partner for coal-to-liquid foray

Jindal Steel and Power Ltd (JSPL), one of the top two firms under the $12 billion O P Jindal banner, could turn out to be the first company in India to start a coal-to-liquid (CTL) plant.

The company is currently scouting for technology outside India for a joint venture or simple sourcing of the technology for the CTL project to be implemented in its Orissa coal block.

“There are several technology parameters to start the project and so we are looking at various technology suppliers currently,” said Sushil Maroo, group chief financial officer, JSPL.

He said tentatively the target is to start the project by 2015-16, but so far no definitive timeframe has been set.

“We are working on it and as and when the project progresses, deadlines will be finalised,” he said.

In 2009 two companies — JSPL and the Tata Group — were allotted coal blocks in Orissa for a CTL project but both the companies have not made any major headstart so far. While the Tata Group had roped in South African chemical major Sasol, JSPL is still to take a call.

There were reports in September that JSPL was pulled up by the coal ministry for not going ahead with its plans for the block.

Maroo said the company is currently working on the finer details of the project and soon a memorandum of understanding (MoU) will be signed with the Orissa government, although he refrained from sharing any more details about the timeframe.

The coal ministry had allotted the Ramchandi promotional coal block in the Angul district of Orissa with estimated reserves of 1,500 million tonne of coal to the company. Out of this, JSPL plans to use 30-35 million tonne for its CTL project to produce close to 80,000 barrels of oil per day. It plans to invest `45,000 crore in the project.

A typical CTL project involves converting coal mined from coal blocks into liquid fuel. According to the World Coal Association’s website, the process of converting coal to liquid fuel is called coal liquefaction, which allows coal to be utilised as an alternative to oil. There are two methods for converting coal into liquid: direct liquefaction and indirect liquefaction. In the first method, coal is dissolved in a solvent at very high temperatures to produce the desired products. While this process is said to be very efficient, it requires further refining of the products and hence cost involved is more.

Under the second process, which both JSPL and Tata are planning to go for, coal is gassified to produce syngas, a mixture of hydrogen and carbon monoxide. The syngas is then condensed over a catalyst to produce high quality, ultra-clean products.

An array of products can be made via these processes — ultra-clean petroleum and diesel, as well as synthetic waxes, lubricants, chemical feedstock and alternative liquid fuels such as methanol and dimethyl ether.

Anish De, chief executive officer of Mercados Energy Markets, an energy consulting firm, said a CTL project is highly capital intensive and also not very environment friendly. But of late, companies are getting interested in such projects as it is an alternative to crude and also cheaper. South Africa and Russia are the leaders in CTL technology, De said.