Coal: Global and Indian Scenario

- AK Pandey, CEO

Gl b l C l S
GlobalCoalScenario
i

Global Coal Statistics

Global CoalProductionstoodaround7823milliontonin2013
2%

2%

1%

7%
4%

Coalprovidesaround30.1%of
gglobalprimaryenergy
p
y
gy
needs,generatesover40%ofthe
world'selectricityandisusedin
theproductionof70%ofthe
world'ssteel.

PRChina3561MT
SouthAfrica256MT
Poland143MT

Source:WorldCoalAssociation

5%

6%

51%
5
%

9%

USA904MT
Russia347MT
Colombia90MT

13%
3%

India613MT
Indonesia489MT

Australia459MT
Kazakhstan120MT

Global Coal Scenario

Production
ProvenReserves

Consumption

Worldcoalproductionincreased
by0.8%

Shareofcoalgloballyasaprimaryenergy
sourcehasreached30.1%

34.8%inEuropeandEurasia,

g
p
Highestproductionincrement
recordedinIndonesiaat9.4%.

32.3%inAsiaPacific,

FollowedbyAustraliaat7.3%

ConsumptionofcoaloutsideOECDroseby
Consumption
of coal outside OECD rose by
abelowaverage3.7%stillaccountingfor
89%ofglobalgrowth.

27.5%inNorthAmerica,

DeclineinUSof3.1%.

OECDconsumptionroseby1.4%

3.7%inMiddleEastAfrica

Chinarecordedtheweakest
volumetricgrowthinproduction
since2000at1.2%.

Chinaexperiencedtheweakestabsolute
growth,stillaccountingfor67%ofthe
globalgrowth.

Globalcoalreserves 891billion
tonsin2013

1.6%inSouthandCentral
America
6.8%inIndia(60.6Bt)

Source:WorldCoalAssociation

Indiaaccountedfor21%oftheglobal
growth

Global Coal Reserves Vs Consumption Pattern

GlobalConsumption
(MilliontonnesOilEquivalent)

GlobalCoalReserves
North
America
27%

Asia
Pacific
32%

South&
Central
Central
America
2%

3000
2500
2000
1500

Other
5%

1000
500

Europeand
Europe and
Eurasia
35%

MiddleEast
&Africa
4%

Abouttwothirdoftheglobal
coalreservesarebasedoutof
Asia Pacific and Europe
AsiaPacificandEurope.
Source:WorldCoalAssociation

0
2003

2005

2007

2009

2011

2013

NorthAmerica

South&CentralAmerica

Europe&Eurasia

MiddleEast

Africa

AsiaPacific

Onlygrowthintheconsumption
hascomefromAsiaPacific
region since last decade
regionsincelastdecade.

Global Coal Scenario Trade Fundamentals

CountryWiseImports

Sources:Accenture&IEA

CountryWiseExports

Sea-borne Coal Trade Thermal Coal

Source:Glencore InvestorUpdate

Sea-borne Coal Trade Metallurgical Coal

Source:Glencore InvestorUpdate

IndianCoalScenario
di C l S
i

Indian Coal Scenario Consumption Pattern

EstimatedSectorWiseCoal
Consumption201617

Source:IndiaEnergyBook

EstimatedSectorWiseCoal
Consumption203132

Indian Coal Scenario Production Vs Demand

1000

ProductioninMT PlanWise

800
600

Clearly,boththe
productionand
demandareslatedto
j
jumpdrasticallyfrom
d
i ll f
thecurrentlevelsto
catertocountrysfast
g
gy
risingenergyneeds.

400
200
0

1600

Importshaverisen
drasticallyinthelast
d d
decade,whichputs
hi h t
pressureonIndia
alreadystretchedCAD.

CoalDemandMatrix(inMT)

1200
800
400
0
200607

201112

201617

202122

Indian Coal Scenario Production

CompanyWiseCoalProduction201314
2%
7%

Technologyisclosely
linkedwithProductivity

9%

OutputperManShift(OMS)
82%

CIL

SCCL

Captive

Others

Particulars

201213

201112

Underground

0.77

0.75

Open Cast

11.48

10.40

Total

5.32

4.89

CoalProduction201314(MT)

CIL
SCCL
Captive
Others
T t l
Total

462.53
50.47
38.87
12.88
564 75
564.75

BasicIndianUsageofCoal
PowerGeneration
Metallurgical
Domestic&Heating

Indian Coal Scenario Opencast Vs Underground

450

300

150

0
20012002

20022003

20112012

UNDERGROUND

In201112Opencast(O/C) 91%&
U/G 9%compareto200102Open
castwas82%andU/Gwas18%

20122013

20132014

OPENCAST

OfincrementalproductionO/C
productionisincreasingvisavis the
U/Gproduction.

Indian Coal Scenario Deficit

1600

Figureontheleftshows
thatIndiascoaldeficit
(gapindemandand
supply)hasrisen
l )h i
drastically,whichhas
resultedinincreased
imports.

1200

800

400

InMT 0
2006 07
200607

2011 12
201112

Demand

2016 17
201617

Supply

2021 22
202122

Gap

Itis,therefore,necessarytoattractprivateparticipationincoal
miningwiththeobjectiveofbridgingthislargegap.Thepresent
proposalis,therefore,aimedatbriningnewminesinto
production through private participation (MDO/PPP) in coal
productionthroughprivateparticipation(MDO/PPP)incoal
mining.

Indiaisalreadythe
secondlargestcoal
importerintheworld
after China
afterChina.
WithCoaldemandrising
byover10%annually
Indias Coal Imports have
IndiasCoalImportshave
risenatacompounded
growthofmorethan26%
inthelastfiveyears

Issues Plaguing Indian Coal Sector

DifficultyinLand
Acquisition

Lackoffocuson
Underground
Mining

Issues
Plaguing
IndiassVast
India
Vast
CoalSector

Bottleneckinterms
in
Infrastructure, e.g.
Infrastructure,e.g.
Railways

Difficultyin
obtainingStatuary
Clearances

Opportunities in Underground Mining

CoalIndiaLtd.

ProductionfromUGMines
Indiahasemergedasthethirdlargestcoal
producerintheworldafterChinaandUSA.
With total global coal production of 7 8
Withtotalglobalcoalproductionof7.8
billiontons,theshareofChina,USA&India
isabout51%,15%and9%
(8.7%),respectively.
Around60%ofthisworldcoalproductionis
fromundergroundmineswhile40%from
surfacemines.However,theproportionof
coalproductionfromundergroundcoal
mines varies widely in various countries.
minesvarieswidelyinvariouscountries.
Chinaaccountsforabout95%ofits
productionfromundergroundmines,while
correspondingfiguresforIndiastandsat
10%

ValuationofIndianUGMining
Value of Indian underground
commercial mining opportunity is
estimated to be USD 18 Billion over 25
years
Value of Indian underground contract
mining opportunity is estimated to be US $
30 Billion over 25 years

StrategyforUGmining
Identifying & short listing most viable
coal block based on intensive due
diligence & pre defined parameters.
Benchmarking with largest underground
mining companies to emerge as the
lowest cost miner for underground
mines in India.
Aggressively maintain cost & efficiency
standards with high safety standards to
become UG miner of choice in India.
Example
SCCL a government mining company
operates largest number of UG mines
with
i h per ton off cost production
d i being
b i Rs
R
3272 or US$ 50/tn.
VMR & Evan Energy have analysed the
cost structure of Indian UG production
and are confident of emerging as lowest
cost quartile miner of UG coal in India
while being extremely competitive with
any imported coal at FOB /FOR level.

Currentundergroundminingin
Indiaisbeingcarriedoutprimarily
byCoalIndiaLimited,whichhas
y
,
currentcapacityof70mtonnes
whicharerunningat65%capacity
utilization
Withitsnonmechanizedmines
andhighmanpower
deployment,CILisincurringlosses
onthesame.CILhasalsodecided
tooutsourceitsundergroundmine
tocontractminingcompanies
having requisite technical
havingrequisitetechnical
expertise.Over50underground
newminesofCILareexpectedto
beofferedforoutsourcing.
PrimaryreasonforCILsdismal
y
performancehasbeen
1.Clean&extensiveblockshave
notbeenidentified.Eventhe
smallerblocksidentifiedwereof
i f i
inferiorgrade.
d
2.Lackoftechnicalcapabilityin
undergroundmining.

Road Ahead of Indian Coal Sector

Needforfastdevelopment
of+10MTPAOpencastCoal
projectsbasedonsound
OpencastTechnology

FordeeperOpencast
,
y
mines,itisnecessaryto
avoiddieselbased
equipmentandtohave
electricallyoperatedInpit
crushingandconveying
systems.

PublicPrivatepartnershipin
developingU.G.mines

IntroductionofHighwall
miningtechnologywhich
canminimizeimpactson
forestgrowthand
environment.

Increaseduseofexpertsin
formofContractMiner/
MDO (Mine Develop and
MDO(Mine,Developand
Operate).

Contract Mining / MDO Opportunities

TheConcept
MineDeveloper&Operator(MDO)concepthas
beendevelopedtocarryoutallthemining
operations.
MDOwouldworkoncontractualbasisfortheOwner
to develop and operate the mine at an agreed price
todevelopandoperatethemineatanagreedprice

FocusonPPP
PPPisaconceptormodelinwhichthepublicsector
awardstheworkofdevelopmentofamineora
projecttoPVTsector.PVTsectorisheldresponsible
fordesigning,constructing,financing,maintaining
andoperatingtheprojectforaperiodof20yearor
more.
Inthiscase,theprivatepartyisanequitypartnerat
CILssubsidiaryandwouldsharetheprofit/lossbasis
theequitysharingagreed

PrivateSector
Thereisanopportunitytoworkwithprivatecoal
blockallottees whohavethecoalblocksfortheir
owncaptiveuseofPower,SteelorCement
Companies

PublicSector
Theproposedmodelwouldinvolveajointventure
specialpurposevehicle(SPV)withCIL/PSUand
privatefirmasequitypartners.HerePSUandprivate
firmwouldmineandsellcoalandshareprofitsin
proportiontotheirequityshares

Advantages of Contract Miner/ MDO

ScalinguptheCoalProductionatanacceleratedpace

OptimizingLifeCycleCostandReducingMiningCosts

HarnessingAdditionalCapitalandbringefficienciesin
thecontextofLongTermAgreements

RiskofProjectCompletionandDeliveryofagreed
outputswillbebornebySeparateEntity

VirginiaMiningResources
i i i
i i

About Virginia Mining Resources

Professionally owned & managed Global Mining Company
VirginiaMiningResources(VMR)isafullyemployeeownedjuniorminingcompanypromotedbyteamof
professionalswithexperienceinvariousaspectsofminingacrossgeographiesandminerals.
WiththeholdingcompanyVirginiaMiningResourcesPlcincorporatedinSingapore,VMRhasoperationsin
USA,Canada&India.

Ethics & Values

Themanagement&advisoryboardofVMRbelievesthatsignificantvalueadditiontotheIndustrycanbe
madebytransformingthewayminingisdoneinitstargetedmarketbasedonhighestlevelofintegrity
,transparency,&stakeholderengagement.
Withitsorigininthejurisdictionofleadingglobalfinancialcenters,VMRhasembracedtransparency&
accountabilityattheoutset.
bili
h

Highly experienced management team with a proven track record globally

Highlycapablemanagementteamwithsignificantpriorexperienceinadvancingotherdevelopmentprojectsto
productionintheregion
Themanagementteambringsuniqueexperiencedealingwithentirelifecycleofmining due
diligence,resourceacquisition,mineconstruction,miningoperation,regulatorycompliancesapartfrom
handlingmanagementfunctionofmining&metalcompaniesofglobalscale.

About Virginia Mining Resources

Focused on entire mining value chain
Virginia Mining Resources (VMR) is focused on the entire value chain while optimally utilizing strength of its
knowledge base & geographic reach.
Focus area
Mining
Consulting
Equipment Leasing

Strategic
St t i Alliance
Alli
Evan
E
E
Energy
www.evanenergy.com
VMR has entered into a strategic alliance with Evan Energy USA for jointly working on mining & consultancy
projects in India & overseas with special emphasis on underground coal mining.
Evan Energy Investments was the founding shareholder of Asian American Coal in 1997. Asian American helped
revolutionize
l ti i the
th underground
d
d Chinese
Chi
coall mining
i i industry
i d t with
ith the
th introduction
i t d ti off a modern
d
singlepass
i l
longwall with multipleentry development, which is safer and more productive than traditional mining methods
used in China at the time. Evan Energy Investments ultimately negotiated a successful sale of Asian American
Coal to a subsidiary of Banpu Public Company Limited in 2008.
Evan Energy is majority owner of leading South American met coal producer Inter
InterAmerican
American Coal .
www.interamericancoal.com
Evan Energy has a representation on the Executive Advisory Board of VMR through Mr. Stanley C. Suboleski
, Senior Vice President of Evan Energy.
gy are now jjointlyy exploring
p
g & evaluatingg coal miningg assets for acquisition
q
& development.
p
VMR & Evan Energy

About Virginia Mining Resources

Present Activities in India
Currently VMR is providing technical consultancy for coal block bidding to power companies and steel producer for
due diligence services of ten coal mines for upcoming auction.
We are also offering assistance in preparation of business plan and selection of partner for one of the largest
cement company which desires to enter in to big size contract mining in coal and iron ore in India.
All these assignments are being taken with Feedback Infra Private Limited who would be responsible for
commercial aspect of the work.

Scope of Work
Preparation of Business Plan and search of partner for new business of large scale contract mining/Mine Developer
& Operator (MDO).
Outlining strategic objectives, market sizing and opportunity assessment, risk assessment and gap analysis, strategic
business plan, understanding the PQ requirements and organization structure, synergy assessment, etc.
Scope of work for coal bid advisory include reviewing the tender documents, geological report, mine plan, mine
closure plans, detailed study of all the clearances and approvals, followed by discussion of technical inputs by the
clients and submission of the Mine Assessment report.

Undertaken Work on Advising and Assessing Coal Mine/Block Acquisitions worth about USD 1 billion

ThankYou
h k

Offices :Singapore , USA , India , Canada

www.virginiamr.com