Domestic and International Coal Market in India 2013 Understanding Demand Segmentation and Evolving Dynamics of Coal in India

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1 Domestic and International Coal Market in India 2013 Understanding Demand Segmentation and Evolving Dynamics of Coal in India October 2013 October 2013 Business Report Series Copyright 2013, All Rights Reserved

2 Investment Opportunity Factor Domestic and International Coal Market in India Research Base & Case 94 Mte Rise in Coal imports in India from FY-06 to FY-13 The sharp slowdown in the India s Coal Production growth from 8% in FY 10 to 1.4 % in FY 12 puts a question mark on the sustainability of domestic coal production of India The production of coal in the country has grown from a little over 407 Mte in to over mte in The growth in production of coal in the 10th plan was 5.6 % and in the 11th Plan was 4.6 %. There was a sharp slowdown in growth of production after which has resulted in a widening of the demand-supply gap and increase in share of coal in import basket of the country. ( refer Exhibit 01) Exhibit 01: Year Wise Trend in All India Production of Coal and Imports (Mte) Source: Research Domestic Production Imports ILLUSTRATIVE FY 06 FY 07 FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 This emerging trend point to increasing dependence on imported coal growing more than two fold from 43.1 Mte in to over Mte in While the impact of additional coal imports may well be positive in terms of availability of coal to downstream units (including the power sector), large scale import of coal has an adverse impact on the trade deficit and current account deficit adds to macroeconomic vulnerability of the economy. However the existing issues and challenges in terms of logistics and port infrastructure hinder the growth of coal imports to bridge the demand supply gap. So high degree of dependence on imports is a matter of concern at the micro level for the end use sectors. Coal being a bulk commodity is affected by variation in international prices. While its landed cost is also impacted by various factors that including variations in exchange rates, charter costs and bunker Prices etc. Apart from these changes in the regulatory regime in the exporting countries may also impact the price of coal as seen in a decision by Indonesia to impose a limit on export of certain grades of coal. Keeping all these burning issues in mind it becomes imperative to analyse the coal supply situation in India with an objective to provide insight about the coal markets dynamics both domestic and as well as international for Indian Coal consuming sectors. Copyright 2013, All Rights Reserved

3 Investment Opportunity Factor Domestic and International Coal Market in India Research Case Power Sector is likely to witness a three fold increase in coal imports with import volumes to cross 125 MT by 2020 The power generation sector relies on domestic source as far as meeting coal demand is concerned. Almost, 80 per cent of the coal required by the power industry is sources locally. The share of coal imports is on high since last five years due to lack of domestic production and low quality coal availability in India. The impending demand supply gap is likely to witness a 125 MT of coal coming from imports by 2020 ( refer Exhibit 02). The major challenge will be the unfazed monopoly of CIL making it unable to service the emerging demand. Considering the current levels production at 450 MT, and a 6% CAGR for the increase in production rate, the coal production will reach at 680 MT which depicts a shortage of over 200 MT. The attempt of privatization failed miserably as coal blocks allocated remained unexplored, which led to much hyped Coalgate Scam. As importing coal is the best option to narrow down the demand - supply gap, infrastructure inadequacy will not make it easy. Coal supply chain is a major problem and CIL now moving towards hiving off the same to power plants. Exhibit 02: Coal Supply Projection to Power Sector by 2020 ILLUSTRATIVE Key Issues concerning coal supplies to power sector FY 12 FY 13 FY 14 FY 15 FY 16 FY 17 FY 18 FY 19 FY 20 Imported Domestic Mining inefficiency of CIL Low quality of coal Higher coal logistics cost Large unmet demand Unexplored captive coal blocks Coal Supply chain ~ 60 GW Of planned capacities of 12 th FYP to be coal based Copyright 2013, All Rights Reserved

4 Investment Opportunity Factor Domestic and International Coal Market in India s DIFFERENCE Research reports delivering domain knowledge, market insights & future outlook S Difference Research Germinates from minds that think fresh to evolve path finding guide for all stake holders through quality information & analyses S Service Difference Gist of the report in.pdf format for ready use Business Stakeholders/Parti cipants Customized Research Solution Experts Insights/ Market view Validated data & analysis Research & Services Framework Opportunity mapping & Market sizing Research Reports Primary research inputs from F2F interviews Emanates from seamless integration of domain expertise with first hand industry knowledge and customized research solutions at a very competitive cost Free Author support on report & Competitive cost Research Desk First hand sector knowledge & inputs Copyright 2013, All Rights Reserved

5 Research Objective Research Results Investment Opportunity Factor Domestic and International Coal Market in India Research Objective & Results Domestic and International Coal Market in India Domestic and International Coal Market in India: Unfolds the emerging coal demand supply dynamics for the major coal consuming sector in the country tapping all the major factors that affect the coal supply situation and attempts to unveil the factual status and in depth analysis of domestic production and imports of coal in the country. The report also include the detailed track of opportunities for key stakeholders across the coal value chain. 1. What is the current and emerging scenario in India n Coal Sector 2. What lies ahead for the entire coal value chain in India 3. To analyse coal demand by different sector on likely emerging domestic and imported coal scenario 4. How the coal shortage is affecting the capex of companies 5. To study the coal import infrastructure in India 6. What are the impending challenges to raise coal production of India Copyright 2013, All Rights Reserved 1. To find the potential of mining for private players in India 2. To evaluate the next best destination for coal import in India 3. To track the areas offering maximum opportunity for private players 4. Huge investments and big push are required in which sectors of coal 5. Future of Captive Coal Blocks in India 6. Key challenges that affect coal import in India Coal Market Series- Dishing out the Domestic & Imported coal scenario in India Copyright 2013, All rights reserved

6 Investment Opportunity Factor Domestic and International Coal Market in India Key Queries Resolved Research reports delivering domain knowledge, market insights & future outlook What would be the likely coal supply in the country domestic as well as the imported coal? Identifying What are the coal sourcing options eccentric and models fro private players in India? opportunities What is the state wise coal requirement in India? What are the key driving factors for coal imports in new emerging Opportunities destinations? for What equipment are the most suitable countries Opportunities manufacturers for coal imports for PSUs and the savings for DISCOMs Opportunities for equipment manufacturers What would be opportunity pie key stake holders in the coal value chain? What has been the overseas assets acquisition trend and scenario? What has been the trend in International coal movement What would be the possible impacts on the planned capex of the coal consuming sectors due to coal shortage? Research agencies, Financial institutions Power Developers, Captive Power Plant Associated Industries What could be the challenges and issues for coal logistics infrastructure in the country? What is the market size and potential for key stakeholders in coal value chain? What could be the risk opportunity matrix for coal consuming sectors in the country? What are the sector wise future coal supply projections? Coal Consuming Sectors Govt. & Regulatory Bodies Must buy for Power Developers Captive Power Plants Power Distribution Companies O&M Solution Providers EPC Companies Generator Manufacturers Consulting Companies Bearing Manufacturers FII s/banks Government bodies Educational Institutions NGOs Consultants Research firms Research Bodies/Institutes Industry associations Copyright 2013, All Rights Reserved

7 Contents & Coverage 1. Executive Summary 2. Coal in India- A Brief Know How 2.1 Coal in Primary Energy Mix 2.2 Coal Consumption Trend in India 2.3 Coal Import Trend in India 2.4 Coal Mining Growth Trend in India 2.5 Regulatory Policy & Framework 2.6 Private Sector Participation 2.7 Coal India s Accountability 2.8 Impending Issues & Challenges 3. Existing Demand-Supply Dynamics of Coal in India 3.1 Demand Supply Position for Coal Consuming Sectors 3.2 Risk Opportunity Matrix for Coal Consuming Sectors 3.3 Current & Future Consumption Analysis for Coal Consuming Sector 3.4 Factors Dampening Growth of Coal Consuming Industries in India 4. Coal for Power Generation in India 4.1 Region Wise Coal Fired Power Plants in India & their Coal Requirement 4.2 Supply Dynamics for Power Generation- Fuel Linkage, E-auction & Imports 4.3 Coal Sourcing Options & Model for Power Sector 4.4 Key Coal Consuming Companies in Power Sector - Profile Analysis Existing Operation Planned Capex/ Expansion Coal Demand Coal Sourcing Imports Volume Fuel Linkages 4.6 Future Outlook- Coal for Power Generation in India 2020 Domestic and International Coal Market in India Coal for Cement Production in India 5.1 Region Wise Cement Plants in India & their Coal Requirement 5.2 Coal Demand and Supply Source 5.3 Coal Sourcing Options and Model for Cement Industry 5.4 Case Study- Impact of Coal Shortage 5.5 Key Coal Consuming Companies in Cement Industry- Profile Analysis Existing Operations Planned Capex/ Expansion Coal Demand Import Volume Coal Source- Fuel Linkages 5.6 Future Outlook- Coal Demand for Cement Industry Coal for Sponge Iron Industry in India 6.1 Region Wise Sponge Iron Plants in India & their Coal Requirement 6.2 Coal Demand and Supply Source 6.3 Coal Sourcing Options and Model for Sponge Iron Industry 6.5 Case Study- Impact of Coal Shortage 6.6 Key Coal Consuming Companies in Sponge Iron Industry- Profile Analysis Existing Operations Planned Capex/ Expansion Coal Demand Import Volume Coal Source- Fuel Linkages 6.6 Future Outlook- Coal Demand for Sponge Iron Industry Coal Requirement in Steel and Process Industry in India Region Wise Steel and Process in India & their Coal Requirement 7.2 Coal Demand and Supply Source 7.3 Coal Sourcing Options and Model for Steel and Process Industry Copyright 2013, All Rights Reserved

8 Contents & Coverage Domestic and International Coal Market in India Case Study- Impact of Coal Shortage 7.5 Key Coal Consuming Companies in Steel and Process Industry- Profile Analysis Existing Operations Planned Capex/ Expansion Coal Demand Import Volume Coal Source- Fuel Linkages 7.6 Future Outlook- Coal Demand for Cement Industry Domestic Coal Supply in India 8.1 Coal Supply Structure 8.2 Region Wise Mine Update Open Cast Mines Under Ground Mines 8.3 Coal Production Trends Coal India s Production Trend Coal Block Production Trends 8.4 Coal Production Outlook Imported Coal Supply in India 9.1 Global Coal Supply Dynamics 9.2 Country Wise Analysis of Coal Supply to India 9.3 Seaborne Coal Supply to India Seaborne Coal Supply to India Outlook Impact of Logistics and Port Infrastructure 10. Coal Import Destinations for India 10.1 Country Specific Analysis 10.2 Country Wise Comparative Analysis Logistics Pricing Coal Resource Other Parameters 10.3 Risk/ Opportunity Matrix 10.4 Impact Assessment 11. Coal Import Infrastructure in India 11.1 Port Wise Analysis Coal Handling Capacities Coal Handling Infrastructure at Major Ports 11.2 Coal Transportation and Disposition Issues 11.3 Shortfall in Coal Import Infrastructure Key Challenges Way Forward 11.4 Relevance Matrix for Major Consumers 11.5 Imported Coal Deficit- Future Dynamics 11.6 Opportunities for Major Stakeholders vis-à-vis deficit 12. International Coal Market-Trade and Movement 12.1 Trend Analysis 12.2 Coal Movement across the Globe 12.3 Factors affecting Coal Trade 12.4 International Coal Pricing Spot Medium term Long Term 12.5 Global Coal trade Models 12.6 Global Benchmarks and Best Practices for Coal Trade- Leaning s for India 12.7 Profile of Key Players Copyright 2013, All Rights Reserved

9 Contents & Coverage Domestic and International Coal Market in India Opportunity Assessment for Key Stakeholders in Indian Coal Sector 13.1 Value Chain Analysis for Stakeholders 13.2 Assessment of Market Size and Potential 13.3 Opportunities in Store- Short, Medium and Long Term Analysis 13.4 Overseas Asset Acquisition- Trend and Scenario 14. s Findings 15. Recommendations Copyright 2013, All Rights Reserved