3rd Annual Coal Market in India – 2013 conference Hotel ITC Sheraton, Saket, New Delhi

28th August 2013

Panel Discussion on MDO – PPP to augment Coal Production Sri D C Garg

Chairman cum MD Western Coalfields Limited

Brief Profile

Dinesh Chandra Garg• Well known for administrative acumen and astute leadership in Mining Industry • Experience of over 3 Decades in Coal Industry

• Chairman cum MD , WCL since May 2007

• Under his stewardship, Western Coalfields Limited has galvanized as a company which has maintained appreciable growth in coal production, excelled in corporate governance, earned consistent profit and at the same time maintained sustainability of environment- physical as well as social.

STRATEGIC IMPORTANCE OF COAL IN INDIA

Around 81 % of coal consumed was met through indigenous source

During FY 2012-13, CIL produced 452.33 million tonnes which is 81.12 % of

India’s current coal production (557.66 million tonnes) and met 65.41 % of coal demand (691.51 MT) equivalent to 37 % of India’s commercial energy needs

* Others 9.35 %

SCCL 9.53 %

CIL 81.12%

e-Auction 10.53 %

** Non Power 15.54 %

Power (U) 73.93 %

Coal Production : Company -wise Share Sector-wise Supply Share from CIL Sources

* Others include captive producer ,TATA STEEL, Meghalaya & Other PSUs

** Non Power include Steel, cement, sponge iron, fertilizer. Bricks etc

Coal60%

Solar11% Wind

10%Hy-dro11%

Nu-clear3%

Bio Mass5%

Coal58%

Gas9%

Nuclear2%

Hydro18%

Others12%

Xith Plan

XIIth Plan

XIIIth Plan

XVth Plan

0

200

400

600

800

199.87

295.36

419.62

778

Installed Capacity Power Generation Projections

(Giga Watts)

Projections of Major Coal Consumer Sectors - Power

Capacity Addition during Xth Plan was 27.28 GW, that during XIth plan was 67.55 GW. It has been envisaged to add 96 GW during XIIth plan.

Coal

will

rem

ain

mos

t pre

ferr

ed fu

el fo

r Ind

ian

Pow

er S

ecto

r

Xith Plan XIIth Plan XIIIth Plan0

200

400

600

800

228

407

710

Xith Plan XIIth Plan XIIIth Plan0

200

62.27

115.3

165

Steel Production Pro-jections (M T)

Projections of Major Coal Consumer Sectors – Steel- Cement

COAL DEMAND MATRIX

COAL SUPPLY MATRIX

COAL DEMAND SUPPLY SCENARIO

(Optimistic scenario)

SCCL : 57 MT 115 Captive Blocks : 100 MT Others (Six PSE companies -JKML, JSMDCL, DVC, IISCO), Tata Steel and Meghalaya) : 23 MT

2001-02 2006-07 2011-12 2016-170

20406080

100120140160180200

11.1 17.9 30.0 30.09.425.2

68.9

155.0

Coking Coal Non Coking Coal

20.6

98.93

43.08Mill

ion

Tonn

es

• India is likely to become the second largest importer of coal next to Japan.

• Power Sector is the biggest importer of Thermal Coal

• With Coal demand rising by over 10% annually India’s coal imports have risen at a compounded growth rate of 23% over past five years.

• India imported 135 million tonnes of Coal in 2012-13 valued at $15.5 billion

COAL IMPORTS185.0

It is, therefore, necessary to attract private participation in coal mining with the objective of bridging this large gap. The present proposal is, therefore, aimed at bringing new mines into production through private participation (MDO) in coal mining.

With Coal demand rising by over 10% annually and domestic supplies rising just 3-4%, India’s coal imports have risen at a compounded growth rate of 23% over past five years. In terms of Rupees the increase in coal imports have been about 15% (CAGR) during these years.

The coal import bill soared a whopping 75% between 2008-09 to 2012-13. Rising coal imports could potentially have a pronounced impact on CAD in short to medium term.

Benefits of Mine

Developer Operator (MDO)

Scaling up coal production at an accelerated pace;

Harnessing additional capital and efficiencies in

the context of a long-term agreement

Risk of project completion and delivery

of agreed outputs will be borne by the separate entity.

Will help optimize life-cycle costs and thus reduce mining

costs;

MDO - The ConceptAs envisaged by Coal India Limited

MDO - essentially an arrangement where the “MDO” would participate in producing coal on behalf of CIL, while CIL would continue to remain owner of the mine as well as the coal.

This arrangement would be characterized by a Contract Agreement between CIL and the MDO with the latter undertaking to develop and operate the coal mines for delivering an agreed annual output of coal on payment of mining charges by CIL.

The contract period shall be the mine life as per the Project report or 25 years, whichever is less. This life however may vary on the basis of actual production vis-a-vis actual reserves.

MDO: SCOPE OF WORK

The selected “Mine Developer & Operator (MDO)” to develop & operate the mine in accordance to the approved PR.

Land will be acquired by owner and physical possession and rehabilitation of the PAPs to be done by MDO.

Land acquisition will be the joint and several responsibility of the Company and MDO.

Employment against Land to be given by Coal Companies and gainfully utilized somewhere.

The MDO shall finance, procure, construct, operate & maintain the mine to achieve coal production and OB removal targets for a specified duration as per calendar plan including land reclamation concurrently as per EMP and Mine Closure Plan.

The MDO shall construct & commission the CHP & Railway Sidings as per the specifications provided. Funding for construction, operation & maintenance of CHP and Railway Siding shall also be responsibility of the MDO.

All activities within mine premises & up to agreed discharge coal point to sustain production as per calendar plan shall be the responsibilities of successful bidder/MDO. Coal will be transported by the MDO from the faces to receiving pit/ bunker of CHP installed on the surface.

The requisition for the railway rakes and its loading will be the responsibility of the MDO. In case of coal dumping in the stockyard, the re-handling, will also be done by MDO, who shall be paid as per the dispatched quantity of coal.

MDO: SCOPE OF WORK

The MDO shall construct & Commission the Washery as per the specifications provided.

MDO shall plan & design, after due diligence study of likely quality of coal to be treated in the washery (including washability investigation test of the proposed raw coal composite feed).

The MDO shall select State-of-the-Art equipment to construct, commission , operate & maintain the washery including requisite infrastructure for Guaranteed Washed Coal Production in terms of quality & quantity by for entire life of mine keeping in view the likely quality variation of coal produced from mine

The MDO shall comply in all respects the various provisions as prevalent in India & environmental regulations & safeguards as per norms etc. laid down by SPCB/CPCB.

MDO: SCOPE OF WORK

CIL would prepare a Project Report which shall be provided to the prospective bidders.

a) Geological structures of the mine including strike, dip, faults, seam description, details of dirt-band, seam quality, geological reserve etc.

b) Description of mine including, mode and no. of entries to the underground mines, method of work, type and no. of machinery to be deployed, pumping and ventilation system, transport of coal, men and material, power distribution system, stowing arrangement if required etc;

c) Coal handling arrangements including storage, loading and despatch;

d) Civil construction including buildings, roads and culverts, etc.; and

e) Broad specifications of major equipment

Obligation of CIL/Subsidiary company CIL will specify the Indicative capital cost of the Project in the RFP Documents of the Project which excludes the cost of land and R&R cost. The assessment of actual costs, however, will have to be made by the Bidders.

Qualification Stage Bidding Stage

Two Stage Bidding Process

The first stage (the "Qualification Stage") of the process involves qualification of interested parties/ consortia who make an Application in accordance with the provisions of this RFQ (the "Applicant", which expression shall, unless repugnant to the context, include the Members of the Consortium).

At the end of this stage, the Company shall announce a list of pre-qualified Applicants who shall be eligible for participation in the second stage of the Bidding Process (the "Bid Stage"), i.e. Request for Proposals (the “Request for Proposals” or “RFP”) as invitation by the Company for Proposal for the Project.

Mining charges for the quantity of coal fed into the receiving hopper/loaded into the wagon as the case may be, as per applicable rate of coal mining charges per tonne.

Mine Development charges i.e. shaft sinking with furnishing, incline/drift drivage with supports as per the rates provided in RFP

Re-handling charge per tonne of coal (as provided in RFP) in case of non-availability of wagons, wherever applicable

Payment Mechanism to MDO

Status of progress of MDO in CIL

Summary of projects/mines offered through MDO route

1. First Phase – 7 Projects/MinesOC – 5 Nos. (Total Cap – 14.00 Mty)UG – 2 Nos. (Total Cap 2.52 Mty)

2. Other Prospective Projects/MinesOC –7 Nos. (Total Cap – 113 Mty)

3. Additional Projects/Mines UG – 6 Nos. (Total Cap 6.42 Mty)

Itapara OC, ECL: RFQ document uploaded on ECL website on 29.06.13. Last date of submission: 01.08.13. Date of opening: 02.09.13.

Malachua OC, SECL: RFQ document has been uploaded on 06.07.2013 on relevant websites and published in newspapers. Last date of submission: 06.08.13. Date of opening: 06.08.13.

Bidding Status

Status of 7 Projects being offered through MDO in First Phase

MDO – Salient Details of 7 Mines Identified (1st Phase)

Sl. No Block/ mine Cap

(MTY)

Exploration /PR Status

Reserve (MT)

SR (M3/T) Grade

Eastern Coalfields Ltd. 1 Itapara OC, Dist.

Bardhaman, WB3 PR prepared

(03/2011)80.38 (M)

6.92 F

Central Coalfields Ltd. 2 Ara OC, Dist. Ramgarh,

Jharkhand2 PR under

preparation38.00 (M)

4.86 W-II, III

3 DRD OC Project, Dist. Bokaro, Jharkhand

4 PR approved in principle

69.26 (M)

2.53 W II

Sub-total 6 Northern Coalfields Ltd.

4 Jhingurdah Bottom OC, Dist. Singrauli, MP

2 PR available 15.10 (M)

6.18 F-G

OC PROJECTS

20 (M ) - Mineable Reserve, (G) – Geological Reserve

Sl. No Block/ mine Cap

(MTY)Exploration /

PR StatusReserve (MT)

SR (M3/T) Grade

South Eastern Coalfields Ltd. 5 Malachua OC, Johilla

Area, Dist. Shahdol, MP

3 PR approved in principle

57.54 (M)

13.78 D-G

UG PROJECTS Mahanadi Coalfields Ltd.

6 Talcher(W) UG, Dist. Angul, Talcher CF

0.52 PR approved 17.93 (M)

- A-C

Western Coalfields Ltd.7 Murpar Expansion UG,

Umrer Area, Dist. Chandrapur, MH

2.00 PR available 278.79 (G)

- B-F

Grand Total 16.52 21

Sl no Block/ mine Cap

(MTY)Exploration /

PR StatusReserve

(MT)SR

(M3/T) Grade

Central Coalfields Ltd.

1 Magadh OC, Dist. Chatra & Latehar,

J’khand

20 PR approved 351 (M) 1.51 F

2 Amrapali OC, Dist. Chatra, J’khand

12 PR approved 291.1 (M)

1.58 F

Sub-total 32

MDO – Salient Details of other prospective OC Mines/projects

Sl no Block/ mine Cap

(MTY)Exploration /

PR StatusReserve

(MT)SR

(M3/T) Grade

South Eastern Coalfields Ltd.3 Pelma OC, Dist.

Raigarh, CG 15 10 mty PR

approved, 15 Mty PR under

preparation

443.065(M)

3.52 F

4 Durgapur OC, Dist. Raigarh, CG

6 PR approved in principle

140.5 (M)

6.04 E

5 Madan Nagar OC, Dist Surajpur, CG. Bhatgaon Area.

10 Draft PR under preparation at

CMPDIL

240.22(G)

NA

Sub-total 31

Continued…

Sl no Block/ mine Cap

(MTY)Exploration /

PR StatusReserve

(MT)SR

(M3/T) Grade

Mahanadi Coalfields Ltd.6 Siarmal OC

Dist. Sundargarh (Odisha)

40 Draft PR submitted by

CMPDIL

1547.82 (M)

1.47 C-G (mostly

F)

7 Garjanbahal OC, Dist. Sundargarh

(Odisha)

10 PR prepared, advance action

approved

229.25 (M)

0.98 D-G (mostly

F)

Sub-total 50 Grand Total 113

Continued…

Sl no Block/ mine Cap

(MTY)Exploration /

PR StatusReserve

(MT) Grade

Western Coalfields Ltd1 Borda UG 2.00 GR available 212.09

(G) D-E

2 Jamunia 0.72 PR approved In-principle

22.76 (M)

C

3 Dhankasa UG 1.00 PR approved In-principle

17.71(M)

D

Sub-total 3.72

Salient Details of 6 additional UG Mines/projects

Sl no Block/ mine Cap

(MTY)Exploration /

PR StatusReserve

(MT) Grade

Central Coalfields Ltd.4 Piparwar

Mangardaha UG1.38 PR approval

under process25.27 (M)

B-C

5 Churi Benti UG (Cont. Miner Panels Only)

0.81 PR approved 5.13 (M)

B

6 Parej East UG 0.51 PR approved 17.61 (M)

W- I to IV

Sub-total 2.70Grand Total 6.42

Continued…

WCL Projects offered for MDO

WCL – MURPAR EXPN. UG

LAND 525 Ha notified u/s 4(i) of CBA. Application under section 7(i) to be submitted after approval of PR.

R&R InvolvedFC Forest land involved. FC application to be

submitted. EC Required, WCL proposes that EMP to be prepared

by MDO Eva-cuation

Railway siding proposed near Murpar UG mine. Till then coal is to be transported by road to Umrer Railway siding, 72 Km away from the project. It is further proposed to extend the railway line upto Murpar Expansion project, matter being taken up with RITES.

Bidding Status

Part I opened on 09.07.13, two bidders participated.

WCL – Borda UG

LAND 3341 Ha notified u/s 4(i) of CBA on 20.07.13. Proposal u/s 7(i) to be submitted after approval of PR.

R&R InvolvedFC Forest land involved. FC application to

be submitted. EC Required, WCL proposes that EMP to be

prepared by MDO Eva-cuation

For evacuation extension of track taken with RITES.

Bidding Status

Part I opened on 10.07.13. Three bidders participated.

WCL – Jamuniya UG

LAND Tenancy 407 Ha, Forest 74.70 Ha, Govt 9.06 Ha. 369.94 Ha land vested u/s 11(i) on 29.08.12.

R&R InvolvedFC FC application submitted on 17.01.12.

Under process.EC Required, WCL proposes that EMP to be prepared

by MDO Eva-cuation

Available

Bidding Status

Draft RFQ document for UG mines prepared by CMPDIL and circulated to subsidiary companies for their comments.

WCL – Dhankasa UG

LAND Total 582.65 Ha (Tenancy 193.23 ha, Forest 371.43 ha, Govt 17.99 ha. Proposal for notification u/s 11(i) submitted to MOC on 16.05.13.

R&R InvolvedFC FC application submitted on 20.11.09.

Under process.EC Required, WCL proposes that EMP to be prepared

by MDO Eva-cuation

Available

Bidding Status

Draft RFQ document for UG mines prepared by CMPDIL and circulated to subsidiary companies for their comments.

Thank You