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Coal Leaders’ Network 18th October Lisbon

Coal India Limited & Indian Coal MarketLooking ahead

S. N. Prasad, Director (Marketing), Coal India Limited,Kolkata, India

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Discussion Plan

Coal in India & Coal India Limited

Indian Coal market – demand projection

Mitigating the demand– indigenous availability & imports

Key infrastructure initiatives

Future ahead

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Coal in India &

Coal India Limited (CIL)

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Coal in India

Inventory of Indian Coal Resources (as on 01-04-15) up to 1200 M depth

306.59 BT

(131.61 BT Proved, 143.24 BT Indicated , 31.74 BT Inferred)

11% Coking Coal and 89% non -Coking Coal

Production during 2015-16 : 638 MT

93% from Opencast mines, 7% from Underground Mines

Indian steaming Coal is of high Ash (average 40%) and of Low Sulphur; average heat value -

about 4400 Kcal/ Kg

Coking coal contains about 26-27% ash; after beneficiation ash reduces to 18-20% ash

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Coal & Lignite Resources in India

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Largest coal company in the world – operating 430 mines

Produced 539 Mt in 2015-16

Employs more than 300 thousand manpower

Meets 41% of India’s Primary Commercial Energy requirement

Net worth : US $ 05.08 Bn

Turnover : US $ 16.22 Bn

PBT : US $ 03.23 Bn

Share listed in stock exchange -- amongst the top in terms of Market Capitalization -- 80%

share owned by Govt. of India & 20% by Public

Awarded Maha-Ratna (Great Star) in April 2011 -- only five out of 217 Government Enterprise

are recipients of this rare feat

Coal India Limited (CIL)

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Indian Coal Market

Demand Projection

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Coal is the mainstay of India’s Energy sources, coal alone contributes

54% of commercial energy of the Country

Out of 303 GW of total power capacity about 61% is coal based.

However, coal consistently contributes plus 70% of the total

generation

Power consumes about 75% of the total coal traded in the Country.

Indian Coal Market

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Total Market size in 2015-16: 832 Million Tonnes

7%

68%

7%

4%3%

11%

Coking

Power

CPP

Cement

Sponge Iron

Others

Profile of Indian Coal MarketSector-wise Consumption

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CIL retained 64% of the 832Mt Indian market in 2015-16, followed by

imports (24%), SCCL (7%) and Others (5%)

Market Share of Different Sources

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20%

80%

Steaming coal -- total size 773Mt

Import

Indigenous

74%

26%

Coking coal -- total size 59Mt

Import

Indigenous

Steaming & Metallurgical CoalRole of Imports in 2015-16

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Power

Growth trajectory of India is fueled by cheap Power – coal based

Coal based power capacity grew by 14% in last five years

Coal based power generation grew by more than 9% during the same

period from 540TWh to 836TWh

Demand ProfileProjections

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Non-power

India plan to invest nearly a trillion dollars in infrastructure in next five

years, leading to growth of :

Steel demand by 9% from present level of 6.5%

Cement demand to increase by 9.5% against present increase of 6%

Demand from other sectors to follow the same growth trajectory

Demand ProfileProjections

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Sector 2015-16

(Actual)

2016-17

Projection

(WG)

2016-17

Annual Plan

2021-22

Perspective

Plan (WG)

Coking coal 59.11 67.20 56.62 105

Power 561.66 682.08 598.73 938

Captive Power* 59.76 56.36 91.11 78

Cement 34.52 47.31 34.37 79

Sponge Iron 27.50 50.33 24.05 81

Others# 89.07 77.22 80.00 92

Total Steaming 772.7 913.30 828.25 1268

Total coal 831.8 980.50 884.87 1373

Figs. in Mt

*Demand of mother plant and captive power plants cannot be segregated always

# Others comprises of undefined sectors and quantities moving through secondary distribution

channels

Demand ProfileProjections

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Till the beginning of the second decade of the millennium, import of steaming coal in

India was dominated by non-power sectors

Many fair-weather minor ports came up in west coast aiming to cater non-power

segments

With fall in international coal prices and availability of cheap petcoke, cement plants

started importing coal

For dwindling reserve of required coking coal quality, Indian steelmakers have been

depending on imports since long

Inadequate indigenous availability, led to large scale import by utilities from 2010

onwards – cost of import allowed to be passed on in power tariff

Evolution of Imported Coal Market in India

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India’s Overwhelming Dependence on Imports

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More than 15% of the feed stocks of the utilities depending on import – issue of energy

security

Changing regulations in Indonesia led to fluctuation in import price for coastal power

plants sourcing coal through ownership of Indonesian property or on long-term supply

contract

Fluctuation in cost of generation making many import based plant unviable

Currency devaluation increased cost of import – import bill increased from US$9.1 Billion

in 2011-12 to 16.5 Billion in 2012-13 and even with sharp fall in price in international

market continued to be US$17 Billion in 2014-15

Accordingly Government envisaged for ramping of indigenous coal production

Repercussions of Import

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Mitigating the Demand

Indigenous Availability & Imports

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With 280 Million people not having access to electricity, India’s per capita consumptionstands at 1010KWh, just one-third of world average 3047KWh

Government’s commitment to 24x7 power for all by 2020 – given the capacity build-up,low cost coal to remain a strategic fuel

The demand of coal remains relatively inelastic to GDP growth in India at about 0.88.For 8% GDP growth demand of coal to grow by about 7% -- demand to be about 2.4BT bynext 15 years

Commitment to Paris Protocol would call for reduction in coal consumption – likelydemand to be about 2Bt in 2032-33

Future of Demand of Indian CoalA long-term perspective

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Energy import dependence of India in 2014-15

Going by the current trend the energy import bill of US$ 150 Billion would be doubled to

US$ 300 Billion in 2030 impacting sustenance of economic growth

Steaming coal being abundantly available in the Country, India needs to be self-

sufficient in meeting its coal demand

Fuel Total Primary

Energy Supply

Net Import Import

dependence (%)

Crude Oil (Mt) 227 189.2 83%

Natural Gas (Bcm) 47.67 13.03 27%

Coal (Mt) 732 166.3 23%

Total commercial energy (Mtoe) 596.4 257.2 43%

Issue of Energy Security

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Supply side management -- Increasing indigenous quality production

One-window clearance and monitoring projects from highest level

Beneficiation of coal

Removing logistics bottleneck

Opening up coal sector further through:

Allotment of coal blocks through auctioning

Change in coal trade law and policy

Auctioning of linkages

Initiatives taken by Government of India

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Demand side management -- Bringing efficiency in usage

Emphasis on super critical technology in power generation

Minimizing transmission and distribution loss

Using energy efficient equipment

Initiatives taken by Government of India

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403.73462.41 494.23 538.76

598.61

908

2008-09 2013-14 2014-15 2015-16 2016-17 2019-20

PRODUCTION in Million Tonnes

From 400 Mt in 2008-09, it took 7years to move to 500Mt mark in 2015-16

Increase in production in last two fiscals (76Mt) accounts for 56% of the total

increase

Increment of 100Mt/year is the ambition for next three financial year

Coal India LimitedOn Growth Path

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In comparison to 2016-17, in 2019-20:

Existing and completed mining projects to have a negative contribution of

21Mt

On-going and future projects to contribute 331Mt – contribution of CCL (19%),

SECL(29%) and MCL (28%) together to contribute 76% of growth

Mine type 2016-17 2017-18 2018-19 2019-20

Existing 46.67 49.86 50.59 55.09

Completed 139.26 127.38 127.05 109.87

On-going 399.76 437.56 502.65 561.48

Future 12.81 45.89 93.40 181.66

Total 598.50 660.69 773.69 908.10

Figs. in Mt

Anatomy of Envisaged production Growth of CIL

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Key Infrastructure Initiatives

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• Augmenting rail capacity in trunk routes

• Developing Dedicated Freight Corridors (DFC) covering East &

North and West & North

• Launching high capacity rolling stock to increase train load

• Harness inland river waterways

• Utilizing vast coast line through ‘Sagar Mala’ Projects linking

ports with hinterland for inter-modal transport

Initiatives taken by Government of India

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Railway infrastructure projects undertaken by CIL through SPV jointly promotedwith concerned State Government & Indian Railways

Project Objective Promoters Project Cost Completion Schedule

Tori-Shivpur-Kathotia railway track

Movement of about 80 MTPA coal from Auranga-North Karanpura Coalfield of CCL

CCL, IRCON & Govt. of Jharkhand

US $240 Million for Tori-Shivpur & US $300 Million for Shivpur-Kathotia

Tori-Shivpur by March,2019

Jharsuguda-Barapali Rail Link

Evacuation of 90 MTPA coal from Gopalpur-MonoharpurBlock Of MCL

MCL US $248 Million March,2017

Connectivity of Baroud-Bijuri coal blocks

About 40 MTPA evacuation from 9 mining projects of SECL

SECL, IRCON & Govt. of Chhatisgarh

East Corridor US $388 MillionEast-West Corridor US $755 Million

Both projects in March’19

Tie-up with bulk pithead consumers for developing cross-country pipe conveyors from

dedicated mines

CIL’s Initiatives for Creating Matching Infrastructure

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Status No. of plants Capacity (MTPA) Commissioning

Schedule

A Plant under construction 3 11.6 March, 2017

B LOI/LOA issued 5 34.5 March, 2018

C Tender under evaluation 2 12.5 September, 2018

D Tendering under process 5 54.0 March, 2019

Total 15 112.6

15 NEW WASHERIES OF

112.6 MTPA CAPACITY

6 COKING COAL

(18.6 MTPA) 9 NON-COKING COAL

(94.0 MTPA)

CIL’s Initiatives for Creating Coal Beneficiation Infrastructure

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Coking coal will be the target product as India’s import dependence on coking coal will

continue for perpetuity

Target consumers will be preferably Indian Steel PSUs with long term back to back

contract. Presently, more than 95% imports are from Australia ( Queensland Bowen Basin

coal)

Acquisition structure can be the following:

Operating mine - Strategic equity(minority stake)+ Life-of-Mine(LOM) offtake right

Near to Production asset – Majority ( Controlling stake)

Greenfield Asset – Acquire PL from Govt. / JV with Govt. Co. / Total buy out from

pvt.co.

Investment will be made in those assets which has complete value chain for export i.e

allocation of railway and port capacities

Hurdle rate for IRR – 12% ( USD terms)

CIL’s Initiatives for Creating Coking Coal Assets Abroad

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Australia

USA

Mozambique

Poland

Information / Data

Cost

Russia

Zimbabwe

Scouting for Coal Blocks in Different CountriesProperty Value – Overall Findings

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Future Ahead

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Extending detailed exploration of coal resources in virgin blocks – use of

non-invasive technology

Improving productivity & mining technology --deploying high capacity

equipment, use of IT, tailoring equipment on geo-mining condition

Beneficiation of coal – management of rejects, coking coal beneficiation,

implementing dry process

Development of coal bed methane, under ground coal gasification in

mining areas of CIL, technology for coal to liquid

R&D initiatives for safe and green mining

Development of the state of the art logistics and coal handling for

bringing environment-friendly efficiency in surface transport

CIL’s Vision 2030Areas of Collaboration

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Thank You

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