Optimal exploitation of coal resources

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Christopher McDaniel
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1 Optimal exploitation of coal resources through Coal to Chemicals Industry February 2015 New Delhi

2 Coverage Indian context Global context Adani Proposal Support from Govt. 2

3 India has significant shortfall of key chemicals Demand of Key chemicals and import dependence Natural Gas (MT) Urea (MT) Methanol (in KT) % 33% 36% 26% 24% 28% 93% 85% 92% Consumption Imports Imports % of Consumption India can leverage coal reserves to meet shortfall in above products Methanol : IDS Market survey for Methanol Ministry of Chemicals & Fertilizers, DGCI &S-kolkata Urea: 2014 Fertilizer Scenario, Department of Fertilizers SNG Source: PNG statistics, GAIL, DGIC& S- Kolkata 3

4 Possible Foreign Exchange Savings by Coal to Chemicals Urea, Methanol & LNG : Foreign Exchange Outgo In Crores Urea LNG Methanol Cumulative Outgo Foreign Exchange in INR Crore Billion US $ India had spent US $ 53 Billions on imports of Urea, Natural Gas & Methanol in the last 5 years. 4

5 Economics support coal-to-chemical conversion Value addition per ton of coal Coal to Chemical conversion is very attractive use of Indian coal Value addition to the coal is defined as the Value addition in US $ per ton of coal net value added to the coal in the manufacturing process. Power 17 Urea adds more value to coal than any Methanol 54 other products SNG, Methanol & Methanol derivatives Urea 69 also seems attractive SNG 38 Value addition to Coal through Chemicals seems very attractive Note : Source: Internal estimates 5

CTC applications will result in significant benefits >10 Bn$ Of Foreign exchange

>100000 Jobs 5-7% Of railway capacity to be freed up 1 Supply security for

over the project life as Taxes, Duties, Coal Royalty etc.

6 CTC applications will result in significant benefits >10 Bn$ Of Foreign exchange savings per annum by indigenous production Over 30 yrs, Potential to create > Jobs 5-7% Of railway capacity to be freed up 1 Supply security for Enhanced Energy, Fertilizer & Speciality Chemicals 5-7% Revenue to the Govt. over the project life as Taxes, Duties, Coal Royalty etc. 99% Recovery of Sulphur in coal as saleable Sulphur; CO2 in ready to capture form 6 1. Assumes usage of 110 MT coal per annum

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8 India also has large reserves of coal Top 10 coal rich countries in world In Billion Tones Years Reserves R / P India has over 100 years of recoverable coal reserves at current consumption rate Note R/P refers to Reserves to production ratio Data for 2011 India s reserves of coal as brought by GSI is much higher 8 Source:IEA, BP Stats, KPMG

9 Coal is the most dominant source of Energy Most of the coal is used for power generation Coal consumption by sectors in India Others 15% Sponge Iron 3% Cement 3% Steel 7% Power 72% Coal-fired power generation accounting for ~3/4 of total coal consumption Source: Energy statistics 2015 report by MINISTRY OF STATISTICS AND PROGRAMME IMPLEMENTATION, GoI

10 Coverage Indian context Global context Adani Proposal Support from Govt. 10

11 China is a coal-rich country with large production base China-Sector-wise Distribution of Coal 2013 (Total 4 Bn Tons) Coal to Chemicals 5% Building Materials 15% Other purposes 1% Combustion & Heating 12% Household 4% Steel 15% Power 48% Total coal production in China in 2013 is ~4 billion Tons Out of this 220 million Tons of coal used for coal to chemical production Source: 11

China is leveraging coal resources to meet Energy and Petrochem needs Chinese NRDC plan boosted CTC / CTL production Many Coal to Chemicals projects have been planned in response to the policy

12 China is leveraging coal resources to meet Energy and Petrochem needs Chinese NRDC plan boosted CTC / CTL production Many Coal to Chemicals projects have been planned in response to the policy Product Production in 2015, Mt Exp. production in 2020, Mt Methanol LPG 4* 5 DME Olefin Ethylene glycol 1.7 n/a Oil products Urea 60 n/a * - Planned in NRDC (National Development Source: BCG ; Research papers and company analysis 12

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14 Coverage Global context Indian context Adani Proposal Support from Govt. 14

15 Adani - Targeted Products Feedstock Process End Products Coal Gasification Urea SNG Methanol Power 15

16 CTP Project Configuration: Jharkhand Product Urea Methanol SNG Power Plant (CPP) Capex Capacity 2 X 1.3 MMTPA 2 X 1.65 MMTPA 2 X 1 MMTPA 4000 MW 10 Billion USD MoU with Jharkhand Govt. has been signed on 25 th June 15 16

17 CTP Project Configuration: Chhattisgarh Product Urea Capacity 2 X 1.3 MMTPA SNG 1 MMTPA Power Plant (CPP) 1000 MW Capex 4 Billion USD MoU with Chhattisgarh Govt. has been signed on 24 th August

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20 Coverage Global context Indian context Adani Proposal Support from Govt. 20

21 Support From Govt. that can create enabling conditions for CTP Projects Coal allocation to end use sector Coal to Chemicals Need to encourage private participation Special Incentives in form of : GST/VAT reimbursement Capital subsidy Land availability at concessional rates Electricity duty exemption Zero import duty on imported capital goods 21

Methanol to Olefins. IOCL Conclave February 7, 2014

Methanol to Olefins. IOCL Conclave February 7, 2014 Methanol to Olefins A Pillar of Capacity Additions in China, but Does MTO have a Role in India? IOCL Conclave February 7, 2014 UOP LLC Des Plaines, Illinois, USA 2014 UOP LLC. All rights reserved. Topics