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Challenges and Opportunities

before Coal India

09.05. 2016

K D PRASAD
General Manager(M)/(ViG)
BCCL

Challenges

Diminishing Reserve of shallow cover


Retirement of experienced work force
Increasing demand of energy
Outdated production technology
Competition from China
Devaluation Indian Currency
Less FDI in coal industry

Challenges

Poor strength of ruling party in Rajya Sabha


Poor Moral Value of Indians
Corruption
Bureaucratic delays as quoted by Coal
Secretary 5 Cs ( CAG, CIC, CVC, CBI &
Court)
Democratic government
Judicial Activism
Political Activism

Challenges

NGO funded by non friendly countries


Naxalite movement
RTI Activist with vested interest
Politically motivated medias
Lack in Co-ordination between State
Govt and Central Govt in some states
Legislation lagging behind technology
Poor civic sense in Indians

4th COAL SUMMIT 2012

Strategy for Bridging the


Gap to meet the future need
of
Coal Industry in India
20th Nov, 2012

N Kumar
Director (Tech)
Coal India Limited

INDIAN COAL RESOURCES (Bt) - As on 01.04.2012


Type -wise

Proved Indicate Inferred Total


d

Coking 17.93
13.65
2.11 33.69 11.48
Non-Coking 99.62 128.42 30.28 258.32 88.00
Tertiary
0.59
0.10
0.80
1.49 0.52
Total
118.14 142.17 33.18 293.50

Depth
-wise

0- 300 91.92
300- 600 11.04
0 600 13.71

71.46
58.42
0.50

10.76 174.14 59.33


16.26 85.72 29.21
0.00 14.21 4.84

(Jharia coalfield
only)

600
1200

1.47

11.79

6.17 19.43

6.62

Coal Resource Availability/ distribution Scenario


(As on 01.04.12)
293.50

Total Resource (Bt)


CIL Command area

66.00

Captive allocation

45.00
28.00

Power

17.00

Others
Others

12.00

Captive (Unallocated)

22.00

Unblocked

104.50

ALL INDIA DEMAND / SUPPLY SCENARIO- Past


Trend
Figs in Mt

TY IX
Plan

TY X
Plan

01-02

06-07

(Act)

(Act)

354

474

2.32

6.00

Demand
Materialization

352

464

504

549

588

593

636

Through Ind.
Supply

331

421

454

490

515

524

537

2.15

4.93

Demand

CAGR %

CAGR %
Through Import

XI Plan
07-08

08-09

09-10

10-11

11-12

656

650

(Act)

493

550

598

6.52

4.98

21

43

50

59

73

69

99

Coking

11

18

22

21

25

20

30

Non-coking

10

25

28

38

48

49

69

ALL INDIA DEMAND / SUPPLY SCENARIO Future


Projection
Figs in Mt

Demand
CAGR %
Through Ind
Supply

TY XI Plan

XII Plan

11-12

12-13 BE

16-17 Proj

21-22 Proj

650

773 *

980.50

1373

6.52

8.57

6.97

BE/AP 12-13

BAU

OPT

BAU

OPT

580

715 #

795 #

950

1100

5.85

6.71

423

273

536

CAGR %

XIII Plan

4.98

Gap

5.89
192.54

Coking
Non-coking

265.50

8.16
185

30.00
162.54

* Assessed by Planning Commission

# Considering CILs supply of 556.4 Mt & 615 Mt as mentioned in Working Group


Report XII Plan in BAU & OPT Scenarios respectively

Year-wise/Sector-wise Coal
Consumption/Demand-Mt
Sector

TY X
Plan
06-07

XI Plan
07-08

08-09

09-10

XII Plan
10-11

11-12

(Actual)
Steel
Power
(U)
CAGR %
Others
Total
CAGR %

35.17

39.00

307.92 332.40

16-17

TGT/AP
12-13

PROJ

52.30

67.20

37.66

41.14

36.81

42.08

362.08

378.30

390.0
9

399.09

512.00 682.08

5.32

11.31

4.32
120.78

12-13

132.89

149.28

167.77

166.10

194.45

208.54

463.87 504.29

549.02

587.81

593.0
0

635.62

772.84 980.50

6.50

9.06

5.70

231.22

Source-wise Production (Mt)


Past Trend & Programme for 12-13 & XII Plan (Mt)
TY of VIII
Plan
(96-97

TY of IX
Plan
(01-02)

Production

CIL

TY of X
Plan
(06-07)

TY XI Plan
(11-12)

Actual

250.62

279.65

XII Plan
(12-13)

XII Plan
(16-17)
(BAU)

TGT

360.91

( 6.48)
*

556.40

2.22

Non-CIL

38.70

48.14

69.92

103.95

110.30

158.60

180.00

All India

289.32

327.79

430.83

539.79

574.40

715.00

795.00

2.53

5.62

4.61 (6.42)*

5.00

615.00 #

4.19

4.44

3.84

464.10

PROJ

CAGR %

CAGR %

5.23

435.84

XII Plan
(16-17)
(OPT)

5.78

7.13

8.05

* Growth% over previous year


# The production in Optimistic Scenario is available only if the requisite clearances are
processed in fast-tracked route and delivered within the specified time schedule. The issues
affecting land acquisition, R & R, law & order and evacuation infrastructure in particular will also
11
have to be addressed in a time bound manner

COAL PRODUCTION PROGRAMME OF CIL


GROUP-WISE BREAK-UP
Group

11-12

12 - 13

13 - 14

Act

BE

Target
proposed
by Sub.

Existing +
Completed

224.44

229.31

214.56

202.35 197.26

192.42

-32.02

Ongoing
Projects

212.40

232.89

259.15

286.49 306.86

325.78

113.38

Future
Projects

0.00

1.90

8.29

41.91

70.38

96.80

96.80

435.84

464.10

482.00

530.75

574.5
0

615.00

178.16

TOTAL

14 15

15 - 16 16 - 17
Projection

Plan
Period
Growth

Production from the existing & completed projects shall register a


decline in production of around 32 Mt.
The likely increase in production from the ongoing projects shall be
about 113 Mt
The future/ new projects is likely to be 97 Mt during the terminal year of
the XII Plan period.
12

ON-GOING PROJECTS
147 Projects & approved schemes are under
execution (Ultimate Capacity about 437 Mty,
approved Capital Rs30,000 Crs) projected to
contribute 333 Mt in 16-17.
Plan period growth
115 Mt.
Bulk of incremental production to come from 54
projects - incremental production - 190 Mt.
Out of these 147 projects required clearances are
available in 82 projects, 34 projects are awaiting
forestry clearances, 13 projects are awaiting
environmental clearances & 18 projects require both
the environmental & forestry clearances. About 42
major projects are affected due to delays in Land
acquisition.
All identified activities of these 54 projects to
achieve desired level of production are being
monitored stringently at appropriate level.

NEW / EXPANSION PROJECTS


XII Plan
Envisaged to take up 126 new projects in XII
Plan . (58 spill-over from XI Plan + 63 new)
PR Cap 422 mty ., Env. Cap Inv 85,000 Crs
60 projects(PR cap- 214 Mty) to contribute around
93 Mt
Projected production - 98 Mt in 16-17.
Bulk of projected growth will come from - from
coalfields of N.Karanpura, Ib, Talcher & MandRaigarh.

Based on LOAs granted by SLC(LT) & other commitments, the future


coal balance for CIL is to a large extent (-) ve
Figs in Mt
Projected Production
Total Commitment based on LoAs
Coal Balance
Ratio of Coal Deficit to Proj Prod

1000

911

12-13
464
911
-447
96

913

13-14
488
913
-425
87

917

16-17
615
926
-311
51

926
615

575

531

488

15-16
575
922
-347
60

922

800
600 464

14-15
531
917
-387
73

400
200

96

87

73

60

51

0
-200

12-13

13-14

-400
-600

-447

-425

14-15
-387

15-16
-347

16-17
-311

Projected Production

Total Commitment based on LoAs

Coal Balance

Ratio of Coal Deficit to Proj Prod

The envisaged
production of CIL is
less than the
commitments
already made
The peak deficit of
(447 Mt) 96 % is in
FY 2013
This necessitates to
augment the
domestic coal
production. Increase
in domestic
production is very
much uncertain and
as such requires
enhance import
facilities
The responsibility of CIL
will be huge given the
New Coal Distribution
Policy which envisage
total demand of the
country to be met by
CIL
including
coal
imports, if required.

Challenges for Enhancing Domestic Coal Production


Land Acquisition is the biggest bottleneck in coal mining operations
CIL has faced prolonged delays in many of its projects leading to loss of production
Even after acquisition, possession of land presents another problem to the company
Performance Indicator

Under the XI Plan, the envisaged


land acquisition was > 62
Thousands Ha

Reason for Delay

Forest Land

Against it, during XI Plan, CIL


was able to acquire only approx
25,000 Ha, i.e. ~ 40 % of the
target

Under the XII Plan, envisaged


land acquisition is approx 65
Thousands Ha
Bulk of land envisaged for
acquisition in XI plan was tenancy
land
However,
proportion
increase

going
ahead
of forest land

the
will

Involvement of multiple state and central


government
agencies
in
forest
land
acquisition leading to inordinate procedural
delay

Tenancy Land

Proper Record of Rights (RoR) not being


available
with State
Governments for
identification of ownership of land causes
problems in ascertaining the actual ownership
of the land. This complicates the R & R
process thus delaying the land acquisition.

Performance Indicator

Reason for Delay


Delay in registration of applications for
delay in furnishing NoC from the Collector
for diversion of revenue forest land for
non-forestry purpose.

Forestry
Clearance

Average time for Stage I


Forestry clearance is about 4
years
Average time for Stage II
clearance is about 3 years

Proposals have to pass through various


channels of State & Central Govts.

There is overlapping of land records


Thus the total time for
Forestry Clearance is 7 years being maintained by the Revenue Deptt &
the Forest Deptt. The reconciliation is time
against the normative time
taking.
of 2-3 years.

Certificate under Forest Rights Act


no
specific
-2006 is mandatory for obtaining As
guideline/procedure/proforma
for
forestry clearance.
obtaining Gramsabha resolution and NoC
Forests Rights
from the District Magistrate is available,
Act 2006
Any delay in issue of NoC under majority of forestry clearance cases are
the said Act has cascading effect held up.
on issue of forestry clearance.

Certificate under Forest Rights Act


-2006 has been made mandatory
even for renewal cases of Forest
Clearances also.

Performance Indicator

Environmental
Clearance

Reason for Delay

Considerable time is taken in


obtaining Consent to Establish
and
Consent
to
Operate
certificates.
Delay occurs in receipt of TOR.
Delay in holding the public
consultation process. EIA 2006
indicates a time limit of 45 days
For every coal project
for completion of the Public
it is mandatory.
Consultation Process which is
not fulfilled.
It takes long time than
Environment
Clearance
is
statute
normally granted up-to a certain
peak capacity (projected peak
production) for a specific project.
Capacity enhancement of any
project
requires
further
environment clearance for the
enhanced capacity from MoEF,
which is also time consuming.

Performance Indicator

In last 7 years coal


stock was increased
by approx 48 Mt due
to non-availability of,

Evacuation
Infrastructure

Reason for Delay

Sufficient railway rakes


Matching feeder lines
as well as loading
facilities in IB Valley,
Korba & N.Karanpura
fields
Bulk
of
future
production will come
from 5 coal fields of CIL
and it is imperative that
continuous investment
is made in logistics
infrastructure

The progress of new railway


line projects related to coal
evacuation have not achieved
the desired progress in the last
few
years
(Tori-ShivpurHazaribagh,
Angul-Kalinga,
Gopalpur-Manoharpur,
Non-availability of sufficient
number of railway rakes. This
has improved
in 2012-13
because of monitoring at the
level of Chairman, Railway
Board.

CCL , MCL & BCCL are


particularly
facing
the
problems in dispatch of coal
and increasing coal inventory
levels

INITIATIVES FROM CIL TO MEET GROWING DEMAND


~ CIL, has formulated Vision 2020 document in view of the
increasing requirements on the organization.
CIL Vision 2020

~ Six Strategic Themes has been identified, namely, Scalability of


Production,
Operational
Excellence,
Employer
of
Choice,
Sustainability, Customer Orientation and Diversification.
~ Multiple initiatives have been discussed under each strategic
theme to bring about the transformational change in the
organization.
CIL is taking initiatives to enhance annual drilling capacity to
0.70 mn meters by FY2013 from 0.498 mn meters achieved in
FY2012

Exploration
Activities

The company has intends to achieve conversion of inferred and


indicated to proved reserves 3 times the historical performance.
CIL is also undertaking systematic exploration to arrive at
reliable estimate of coal reserves and application of information
technology to create geo database.

Identification of
Projects

58 coal projects of XI Plan spilled over to XII Plan and about 68


new projects tentatively identified for XII Plan period.

Initiatives continued

Implementation of
Master Plans

CIL is actively working various control measures currently available


for controlling underground mine fire (in Jharia and Raniganj)
delineated in Master Plans. Implementation of Master Plan towards
fire control, surface stabilization, rehabilitation with an estimated
capital out lay to the tune of Rs.7112.11 crores, in turn CIL may able
to recover locked coal to the tune of 1453 Mt to the possible extent.
At the time of Nationalisation, no of fires were 70. Affected surface
area was 17.32 Km. After taking proper mitigation measures, the
affected area reduced to 8.90 Km

Coal Beneficiation

Underground
Mining

As on date, CIL is operating 17 washeries with cumulative throughput


capacity of 39.04 Mty.
CIL is going to set up another 20 integrated coal washaries with total
capacity of 111.10 Mty to supply washed metallurgical as well as
thermal coal to consumers.
This will not only save transportation cost of high amount of ash
contained in Indian coal but also able to supply coal with much higher
calorific value vis-a-vis higher fixed carbon contained in steel and
power sectors.
CIL has turned its focus back on UG Mining for sustainable
development.
It has identified a number of UG Greenfield properties.
Envisaged to enhance production of about 55 Mt in 16-17 from existing
level of 40 Mt.

Initiatives
MoC
continued

has decided to tentatively assign 119 coal


blocks to CIL and requested for submitting a detailed
time frame in which these blocks would be brought
into production.

Engagement of Mine
Development &
Operators (MDO)

CIL has seriously thought of starting mining in the


above blocks on priority basis by engaging Mine
Development & Operators (MDOs).
Subsidiaries of CIL have proposed 27 Mines/Blocks of
total capacity of about 136.50 Mt for operation under
MDO/PPP concept.
Out of 27 Mines/Blocks, 12 are underground having
about 14.5 Mt capacity and 15 are opencast having
capacity of about 122 Mt.

Use of Higher Size of


Equipment

Higher size of Heavy Equipment Mining Machinery


being commissioned in OC mines.
Surface Miners in OC mines & Continuous Miner in UG
mines are being commissioned wherever feasible to
avoid drilling and blasting.

Foreign Acquisitions - Strategy


Framework

BUSINESS MODEL:

Equity Model

Stake with off take contract in brown field assets

100% or majority stake in green field assets

Off-take Model :

Long term contract essentially with coal miners

Short term contract

TARGET PRODUCTS & DESTINATIONS:


Mozambique

Coking & thermal from own assets

Indonesia

- Thermal coal [ > 4000 kcal/kg (ARB)]

South Africa

- Thermal Coal [ > 5500 kcal/kg(ARB)]

USA

- Thermal Coal [ > 6000 kcal/kg(ARB)]

Australia

- Thermal Coal [ > 5500 kcal/kg(ARB)]


23

Initiatives taken so far Equity


Model
Mozambique:
2 coal blocks acquired in Mozambique , Area - 224 sq km

Location Moatize district, Tete Province


Wholly owned subsidiary Coal India Africana Limitada
registered in Mozambique, Office opened in Tete in March 2012
Team of senior officers posted
Drilling started

24

Initiatives taken so far Equity Model


South Africa:
MoU signed with Provincial Govt. of Limpopo in 2011
Strategic alliance for exploration and development of coal
assets in Limpopo Province
Potential zones for coal resources identified

25

CIL Vision 2020, adopted by the Board of Coal


India, makes several fundamental suggestions to
improve domestic supply
Recommendatio
ns
Establishment of a
Project
Management
Office (PMO) for
large future
projects

Key actions

Increased delegation of power of a Multi-Tier Org spanning CIL


level, Subsidiary HQ and Project
Specialized training (PMP certifications etc.) and full-staffing of
all roles
Modern way of working

Development of
Attractive contract terms to encourage private sector
Contractor Market participation, esp. those with superior technologies and good
practices
Road-shows to attract potential partners (esp. in UG mining,
exploration & technical services etc.)
Investment in
Logistics

Investment in last-mile connectivity


Improvement of pit-head to siding infrastructure
Creation of logistics as a separate function to build expertise
Formation of suitable JVs to execute projects

Continuous
Improvement
Program

Improvements linked to incentives to increase motivation for


participation
Large scale up-gradation of employee-skills to detect and
report inefficiencies

Actions being taken by Coal India to enhance


domestic supply
Capacity augmentation by 180 MT planned during the 12 th Plan
period
Investment of Rs. 7500 Crores in Logistics over the next plan
period
Road show for partners in UG Mining
New flexible R&R policy has been framed
Focus has been given on increased capacity of washed coal tenders for 4 washeries (22.5 MT) out of 20 planned during the
12th plan completed
Special focus is being given to recruitment and back-fill of open
positions in critical departments
CIL is engaged with Governments to a greater degree to
expedite various clearances (PMO intervention sought for 178
clearances)
Pooling of coal prices may pave the way for linkage
rationalization

Opportunities
Educated Youth Population
Absolute majority Government in centre
Volatile world economy compared to
stable Indian Economy
Maha Ratna Status of Coal India
Less dependence on coal for energy of
developed countries
Merging of Energy, Coal and Power
Ministry

Opportunities
Outsourcing of work
MDO mode of contract
Employing mass production technology
in UG mines
Thrust on clean coal and renewable
energy
Lifting of sanction from Iran and
development of CHARBAHAR Port in Iran
by India

THANK YOU