INTERNATIONAL PITTSBURGH COAL

CONFERENCE

PRESENTATION ON

INDIA’S COAL SITUATION AND TATA’S ROLE

Authored by: Anjan Bhattacharya & P.K. Murthy

Presented by: R Srinivasan

27th Sept 2006

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INDIAN SCENARIO

3

IMPORTANCE OF COAL IN INDIA

Hydro 6%

Nuclear 1%

Coal 54%

Oil 30%

Natural Gas 9%

Hydro 6%

Nuclear 6%

Coal 28%

Oil 37%

Natural Gas

23%

PRIMARY ENERGY SOURCE INDIAN SCENARIO

PRIMARY ENERGY SOURCE WORLD SCENARIO

4

SECTORWISE UTILISATION OF COAL IN INDIA

72%

12%

9% 6%

1%

Power

Steel Making

Cement

Fertiliser

Others

Utilization pattern expected to remain same through next decade

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COAL & LIGNITE RESERVES IN INDIA

79.325

16.541

106.316

13.453

35.564

35.958

0

50

100

150

200

250

Non-CokingCoal

Coking coal Lignite

x 10

3 M

illio

n To

nnes Inferred

IndicatedProved

221.205

32.096

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COAL PRODUCTION & DEMANDM

illio

n To

nnes

430.28 408.96

622 564.32

1050 1012

0

200

400

600

800

1000

1200

1400

2006-07 2011-12 2025-26Year

Demand

Production

Non-coking CoalShortfall2006-07: 21.52 MT2011-12: 57.68 MT2025-26: 38.00 MT

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Mill

ion

Tonn

es

42.7 18.54 54 29.2797 49

0

200

400

600

800

1000

1200

1400

2006-07 2011-12 2025-26Year

Demand

Production

Coking Coal

COAL PRODUCTION & DEMAND

Shortfall2006-07: 24.16 MT2011-12: 24.73 MT2025-26: 48.00 MT

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COAL PRODUCTION & DEMAND

• India is 3rd largest producer of coal

• India has about 10% of world coal reserves.

• At the current rate of production coal has an R/P ratio of more than 200 years (proved reserves)

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COAL CLASSIFICATION IN INDIA

3064 – 3814G

3814 - 4469F

4469 - 5042E

5042 - 5447D

5447 - 5997C

5997 - 6406B

> 6406A

GCV with 6% moisture, kCal/kgGradeNon-coking Coal

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COAL CLASSIFICATION IN INDIA

Ash + Moisture > 18% & < 24%IIAsh + Moisture ≤ 19%ISemi coking> 28% & < 35%IV> 24% & < 28%III> 21% & < 24%II> 18% & < 21%IWashery> 15% & < 18%IIAsh content ≤ 15%ISteel

PropertiesGradeType

Coking Coal

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COAL MINES IN INDIA

(1) Eastern Coalfields Ltd. (2) Bharat Coking Coal Ltd. (3) Central Coalfields Ltd.(4) Northern Coalfields Ltd. (5) Western Coalfields Ltd. (6) South Eastern Coalfields Ltd. (7) Mahanadi Coalfields Ltd. (8) North Eastern Coalfields

(9) Singareni Collieries Co. Ltd.

(10) Neyveli Lignite Corpn.

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COAL MINING

• Predominantly opencast mining

• Reasons:

Largely shallow reserve

Better production rate

Greater safety

• Considerable mechanization to meet demand growth

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COAL MININGPolicy Initiatives

• 100% mechanized mining by 2017

• Amendments to coal mines nationalization policy to allow

Private participation

Sell by captive miners to other consumers

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TYPICAL PROXIMATE ANALYSIS

> 1150> 1300> 1400

Ash fusion temperature in reducing atmosphere, 0C- Initial deformation temp- Softening temp - Hemispherical temp/Fluid temp

45 - 60Hardgrove Grindability Index (HGI)3000 - 5000Gross Calorific Value (GCV), kCal/kg< 0.7Sulphur , % by wt18 – 40Fixed carbon, % by wt17 – 30Volatile matter, % by wt25 – 45Ash, % by wt6 – 20Moisture, % by wt

AS RECEIVED BASIS - GRADES E, F & G

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CHARACTERISTICS OF INDIAN COAL

Low slagging and fouling potential

•Base to acid ratio < 0.3 & low sulphur and low alkali content

More coal inputExpensive coal & ash handling systemBurden on coal transportSolid waste management problem

• Low GCV & High ash

Environment friendly•Low sulphur

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CHARACTERISTICS OF INDIAN COAL

Highly abrasive and erosiveLower flue gas velocity in boiler convective passLower life of wearable parts in coal mills

• High silica and quartz content in ash

Non corrosive• Low sulphur and negligible chlorine content

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COAL BENEFICIATION

• Mandated for plants beyond 1000 km or more from mines

• Obstacles to coal washing

Availability of proven technology to handle high ash coal

Loss of carbon during washing increases coal demand

Additional capital investment

• Presently adopted mainly for coking coal to limit ash content

• Expected to play a major role in the years ahead

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COAL TRANSPORT

58%

20%

17%

5%

Indian Railways

MGR

Road

Others incl coastal shipping

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LOGISTICS - PORTS

Coal handling capacity needs to more than double

in the next five years

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7986

32.8

44.2

16.6

27.831.7

36.1

20.5

44.244.2

0

10

20

30

40

50

60

70

80

90

100

2000-01 2004-05 2009-10 2011-12

Mill

ion

Tonn

es InternalTradeImports

HandlingCapacity

Traffic and Handling Capacity

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AVERAGE PITHEAD COAL COST

Grade-E

Grade-F

Grade-G

0100200300400500600700800900

2000 2001 2002 2003 2004 2005 2006Year

Rup

ees p

er T

onne

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COST COMPARISON

6000 kCal/kg4000 kCal/kgAverage GCV

≈ USD 2.1≈ USD 2.1Cost per MBtu heating value

-≈ USD 17/t Railway freight for 1000 km

≈ USD 50/t≈ USD 32/t Landed cost at site at 1000 km away

-≈ USD 15/t Pithead coal cost

Imported coalDomestic coal

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DEVELOPMENT INITIATIVES

• Thrust on Coal Bed Methane and Abandoned Mine Methane Projects

• Coal Gasification Projects

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COAL USE BY TATA COMPANIES

Major coal users amongst the Tata Group of Companies are

• Tata Steel Co. – Mainly coking coal – Domestic & imported

• Tata Power Co. – Non coking coal – Domestic & imported

• Tata Chemicals – Coking & Non coking coal – Imported

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COAL USE BY TATA COMPANIES

TATA STEEL

• Only Private Co. to own coking coal mines in India

• Installed India’s first coal beneficiation plant

• Continuously improving coal beneficiation techniques to handle higher ash content coal and to achieve better yield

OTHER INITIATIVES

• Planning by Tata Group to set up a plant using washery middlingsand mine ventilated air as fuel

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WAY FORWARD

• Power sector growth will continue to drive coal demand

• Regulations would be the key factor determining the domestic supply

• Imports would play a major role

• Captive mining would be a major growth area

• New technology initiatives like CBM, CTL, IGCC would have serious considerations

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THANK YOU