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TRANSCRIPT
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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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