3rd Annual Coal Market in India – 2013 conference
Hotel ITC Sheraton, Saket, New Delhi
28th August 2013
Panel Discussion on MDO – PPP to augment Coal Production
Sri D C Garg
Chairman cum MD
Western Coalfields Limited
Brief Profile
Dinesh Chandra Garg
• Well known for administrative acumen and astute leadership in
Mining Industry
• Experience of over 3 Decades in Coal Industry
• Chairman cum MD , WCL since May 2007
• Under his stewardship, Western Coalfields Limited
has
galvanized as a company which has maintained appreciable growth
in coal production, excelled in corporate governance, earned
consistent profit and at the same time maintained sustainability of
environment- physical as well as social.
STRATEGIC IMPORTANCE OF COAL IN INDIA
 Around 81 % of coal consumed was met through indigenous source
 During FY 2012-13, CIL produced 452.33 million tonnes which is 81.12 % of
India’s current coal production (557.66 million tonnes) and met 65.41 % of coal
demand (691.51 MT) equivalent to 37 % of India’s commercial energy needs
* Others 9.35 %
e-Auction 10.53 %
SCCL 9.53 %
** Non Power 15.54 %
CIL 81.12%
Coal Production : Company -wise Share
* Others include captive producer ,TATA STEEL,
Meghalaya & Other PSUs
Power (U) 73.93 %
Sector-wise Supply Share from CIL Sources
** Non Power include Steel, cement, sponge iron,
fertilizer. Bricks etc
Gas
9%
Hydro
18%
Others
12%
Coal
58%
Solar
11%
Coal
60%
Nuclear
2%
Wind
9%
Hydro
11%
Nuclear
3%
Bio Mass
5%
Coal will remain most preferred fuel for Indian Power Sector
Projections of Major Coal Consumer Sectors - Power
Installed Capacity Power
Generation Projections
(Giga Watts)
778
800
600
419.62
400
295.36
199.87
200
0
Xith XIIth XIIIth XVth
Plan Plan Plan Plan
Capacity Addition during Xth Plan was 27.28 GW, that during XIth plan was 67.55 GW.
It has been envisaged to add 96 GW during XIIth plan.
Projections of Major Coal Consumer Sectors – Steel- Cement
Steel Production
Projections (M T)
800
710
600
200
165
407
115.3
62.27
0
Xith Plan XIIth Plan XIIIth Plan
400
228
200
0
Xith Plan XIIth Plan XIIIth Plan
COAL DEMAND SUPPLY SCENARIO
COAL DEMAND MATRIX
COAL SUPPLY MATRIX
(Optimistic scenario)
SCCL : 57 MT 115 Captive Blocks : 100 MT
Others (Six PSE companies -JKML, JSMDCL, DVC, IISCO), Tata Steel and Meghalaya) : 23 MT
COAL IMPORTS
185.0
200
Million Tonnes
180
160
• Power Sector is the biggest importer of Thermal Coal
140
98.93
120
155.0
100
80
60
40
20
0
• India is likely to become the second largest importer of coal
next to Japan.
43.08
• With Coal demand rising by over 10% annually India’s coal imports
have risen at a compounded growth rate of 23% over past five years.
68.9
20.6
25.2
9.4
11.1
17.9
30.0
30.0
2001-02
2006-07
2011-12
2016-17
Coking Coal
Non Coking Coal
• India imported 135 million tonnes of Coal in 2012-13 valued at
$15.5 billion
With Coal demand rising by over 10% annually and domestic supplies rising just 3-4%,
India’s coal imports have risen at a compounded growth rate of 23% over past five
years. In terms of Rupees the increase in coal imports have been about 15% (CAGR)
during these years.
The coal import bill soared a whopping 75% between 2008-09 to 2012-13. Rising coal
imports could potentially have a pronounced impact on CAD in short to medium term.
It is, therefore, necessary to attract private participation in coal mining with the
objective of bridging this large gap. The present proposal is, therefore, aimed at bringing
new mines into production through private participation (MDO) in coal mining.
Scaling up coal production at an
accelerated pace;
Will help optimize
life-cycle costs and
thus reduce mining
costs;
Benefits of
Mine
Developer
Operator
(MDO)
Risk of project
completion and delivery
of agreed outputs will
be borne by the
separate entity.
Harnessing
additional capital
and efficiencies in
the context of a
long-term
agreement
MDO - The Concept
As envisaged by Coal India Limited
MDO - essentially an arrangement where the “MDO” would participate in
producing coal on behalf of CIL, while CIL would continue to remain owner
of the mine as well as the coal.
This arrangement would be characterized by a Contract Agreement
between CIL and the MDO with the latter undertaking to develop and
operate the coal mines for delivering an agreed annual output of coal on
payment of mining charges by CIL.
The contract period shall be the mine life as per the Project report or 25
years, whichever is less. This life however may vary on the basis of actual
production vis-a-vis actual reserves.
MDO: SCOPE OF WORK
The selected “Mine Developer & Operator (MDO)” to develop & operate the mine in
accordance to the approved PR.
Land will be acquired by owner and physical possession and rehabilitation of the
PAPs to be done by MDO.
Land acquisition will be the joint and several responsibility of the Company and
MDO.
Employment against Land to be given by Coal Companies and gainfully utilized
somewhere.
The MDO shall finance, procure, construct, operate & maintain the mine to achieve
coal production and OB removal targets for a specified duration as per calendar plan
including land reclamation concurrently as per EMP and Mine Closure Plan.
MDO: SCOPE OF WORK
The MDO shall construct & commission the CHP & Railway Sidings as
per the specifications provided. Funding for construction, operation
& maintenance of CHP and Railway Siding shall also be responsibility
of the MDO.
All activities within mine premises & up to agreed discharge coal
point to sustain production as per calendar plan shall be the
responsibilities of successful bidder/MDO. Coal will be transported
by the MDO from the faces to receiving pit/ bunker of CHP installed
on the surface.
The requisition for the railway rakes and its loading will be the
responsibility of the MDO. In case of coal dumping in the stockyard,
the re-handling, will also be done by MDO, who shall be paid as per
the dispatched quantity of coal.
MDO: SCOPE OF WORK
The MDO shall construct & Commission the Washery as per the specifications
provided.
MDO shall plan & design, after due diligence study of likely quality of coal to be
treated in the washery (including washability investigation test of the proposed raw
coal composite feed).
The MDO shall select State-of-the-Art equipment to construct, commission ,
operate & maintain the washery including requisite infrastructure for Guaranteed
Washed Coal Production in terms of quality & quantity by for entire life of mine
keeping in view the likely quality variation of coal produced from mine
The MDO shall comply in all respects the various provisions as prevalent in India &
environmental regulations & safeguards as per norms etc. laid down by SPCB/CPCB.
Obligation of CIL/Subsidiary company
CIL will specify the Indicative capital cost of the Project in the RFP Documents of the
Project which excludes the cost of land and R&R cost. The assessment of actual costs,
however, will have to be made by the Bidders.
a) Geological structures of the mine including strike, dip, faults,
seam description, details of dirt-band, seam quality, geological
reserve etc.
CIL would
prepare a
Project
Report which
shall be
provided to
the
prospective
bidders.
a) Description of mine including, mode and no. of entries to the
underground mines, method of work, type and no. of
machinery to be deployed, pumping and ventilation system,
transport of coal, men and material, power distribution system,
stowing arrangement if required etc;
b) Coal handling arrangements including storage, loading and
despatch;
c) Civil construction including buildings, roads and culverts, etc.;
and
d) Broad specifications of major equipment
Qualification Stage
Bidding Stage
The first stage (the "Qualification Stage") of the process involves qualification of interested
parties/ consortia who make an Application in accordance with the provisions of this RFQ (the
"Applicant", which expression shall, unless repugnant to the context, include the Members of the
Consortium).
At the end of this stage, the Company shall announce a list of pre-qualified Applicants who shall be
eligible for participation in the second stage of the Bidding Process (the "Bid Stage"), i.e. Request
for Proposals (the “Request for Proposals” or “RFP”) as invitation by the Company for Proposal
for the Project.
Mining charges for the quantity of coal fed into the
receiving hopper/loaded into the wagon as the case may
be, as per applicable rate of coal mining charges per tonne.
Mine Development charges i.e. shaft sinking with
furnishing, incline/drift drivage with supports as per the
rates provided in RFP
Re-handling charge per tonne of coal (as provided in
RFP) in case of non-availability of wagons, wherever
applicable
Status of progress of MDO in
CIL
Summary of projects/mines offered
through MDO route
1. First Phase – 7 Projects/Mines
OC – 5 Nos. (Total Cap – 14.00 Mty)
UG – 2 Nos. (Total Cap 2.52 Mty)
2. Other Prospective Projects/Mines
OC –7 Nos. (Total Cap – 113 Mty)
3. Additional Projects/Mines
UG – 6 Nos. (Total Cap 6.42 Mty)
Bidding Status
 Itapara OC, ECL: RFQ document uploaded on ECL
website on 29.06.13.
Last date of submission: 01.08.13. Date of opening:
02.09.13.
 Malachua OC, SECL: RFQ document has been
uploaded on 06.07.2013 on relevant websites and
published in newspapers.
Last date of submission: 06.08.13. Date of opening:
06.08.13.
Status of 7 Projects being offered
through MDO in First Phase
MDO – Salient Details of 7 Mines Identified (1st Phase)
OC PROJECTS
Sl.
Block/ mine
No
Eastern Coalfields Ltd.
1 Itapara OC, Dist.
Bardhaman, WB
Central Coalfields Ltd.
2 Ara OC, Dist. Ramgarh,
Jharkhand
3
DRD OC Project, Dist.
Bokaro, Jharkhand
Sub-total
Northern Coalfields Ltd.
4 Jhingurdah Bottom OC,
Dist. Singrauli, MP
Cap Exploration Reserve SR
Grade
(MTY) /PR Status (MT) (M3/T)
3
PR prepared 80.38 6.92
(03/2011) (M)
F
2
PR under 38.00 4.86 W-II,
preparation (M)
III
4
PR approved 69.26 2.53 W II
in principle (M)
6
2
PR available 15.10 6.18
(M)
(M ) - Mineable Reserve, (G) – Geological Reserve
F-G
20
Sl.
Block/ mine
No
Cap Exploration Reserve SR
Grade
(MTY) /PR Status (MT) (M3/T)
South Eastern Coalfields Ltd.
5 Malachua OC, Johilla
3 PR approved 57.54 13.78 D-G
Area, Dist. Shahdol,
in principle
(M)
MP
UG PROJECTS
Mahanadi Coalfields Ltd.
6 Talcher(W) UG, Dist.
0.52 PR approved 17.93
A-C
Angul, Talcher CF
(M)
Western Coalfields Ltd.
7
Murpar Expansion UG, 2.00 PR available 278.79
Umrer Area, Dist.
(G)
Chandrapur, MH
Grand Total
16.52
-
B-F
21
MDO – Salient Details of other prospective OC Mines/projects
Sl
no
Block/ mine
Cap Exploration / Reserve
SR
Grade
(MTY) PR Status
(MT) (M3/T)
Central Coalfields Ltd.
1
2
Magadh OC, Dist.
Chatra & Latehar,
J’khand
Amrapali OC, Dist.
Chatra, J’khand
Sub-total
20
PR approved 351 (M)
1.51
F
12
PR approved
1.58
F
32
291.1
(M)
Continued…
Sl
no
Block/ mine
Cap
(MTY)
Exploration /
PR Status
Reserve SR
Grade
(MT) (M3/T)
South Eastern Coalfields Ltd.
3 Pelma OC, Dist. 15
10 mty PR
443.065 3.52
Raigarh, CG
approved, 15 Mty (M)
PR under
preparation
4
Durgapur OC,
Dist. Raigarh, CG
6
PR approved in
principle
140.5
(M)
6.04
5 Madan Nagar OC, 10
Dist Surajpur, CG.
Bhatgaon Area.
Draft PR under
preparation at
CMPDIL
240.22
(G)
NA
Sub-total
31
F
E
Continued…
Sl
no
6
7
Block/ mine
Siarmal OC
Dist. Sundargarh
(Odisha)
Garjanbahal OC,
Dist. Sundargarh
(Odisha)
Sub-total
Grand Total
Cap Exploration / Reserve SR
Grade
(MTY)
PR Status
(MT) (M3/T)
Mahanadi Coalfields Ltd.
40
Draft PR
1547.82 1.47
C-G
submitted by
(M)
(mostly
CMPDIL
F)
10
PR prepared, 229.25 0.98
D-G
advance action (M)
(mostly
approved
F)
50
113
Salient Details of 6 additional UG Mines/projects
Sl
no
Block/ mine
1 Borda UG
2 Jamunia
Cap
(MTY)
Exploration /
PR Status
Reserve
(MT)
Western Coalfields Ltd
2.00 GR available 212.09
(G)
0.72 PR approved 22.76
In-principle
(M)
3 Dhankasa UG
1.00
Sub-total
3.72
PR approved
In-principle
17.71
(M)
Grade
D-E
C
D
Continued…
Sl
no
Block/ mine
Cap
(MTY)
Exploration /
PR Status
Reserve
(MT)
Central Coalfields Ltd.
4 Piparwar
1.38 PR approval 25.27
Mangardaha UG
under process (M)
5 Churi Benti UG
0.81 PR approved 5.13
(Cont. Miner
(M)
Panels Only)
6 Parej East UG
0.51 PR approved 17.61
(M)
Sub-total
2.70
Grand Total
6.42
Grade
B-C
B
W- I
to IV
WCL – MURPAR EXPN. UG
LAND
525 Ha notified u/s 4(i) of CBA. Application under
section 7(i) to be submitted after approval of PR.
R&R
Involved
FC
Forest land
submitted.
EC
Required, WCL proposes that EMP to be prepared
by MDO
Evacuation
Railway siding proposed near Murpar UG mine. Till
then coal is to be transported by road to Umrer
Railway siding, 72 Km away from the project. It is
further proposed to extend the railway line upto
Murpar Expansion project, matter being taken up
with RITES.
Bidding
Status
Part I opened on 09.07.13, two bidders participated.
involved.
FC
application
to
be
WCL – Borda UG
LAND
3341 Ha notified u/s 4(i) of CBA on
20.07.13. Proposal u/s 7(i) to be
submitted after approval of PR.
R&R
Involved
FC
Forest land involved. FC application to
be submitted.
EC
Required, WCL proposes that EMP to be
prepared by MDO
EvaFor evacuation extension of track taken
cuation with RITES.
Bidding
Status
Part I opened on 10.07.13.
Three bidders participated.
WCL – Jamuniya UG
LAND
Tenancy 407 Ha, Forest 74.70 Ha, Govt
9.06 Ha.
369.94 Ha land vested u/s 11(i) on
29.08.12.
R&R
Involved
FC
FC application submitted on 17.01.12.
Under process.
EC
Required, WCL proposes that EMP to be prepared
by MDO
Evacuation
Available
Bidding
Status
Draft RFQ document for UG mines prepared by
CMPDIL and circulated to subsidiary companies
for their comments.
WCL – Dhankasa UG
LAND
Total 582.65 Ha (Tenancy 193.23 ha, Forest
371.43 ha, Govt 17.99 ha. Proposal for
notification u/s 11(i) submitted to MOC on
16.05.13.
R&R
Involved
FC
FC application submitted on 20.11.09.
Under process.
EC
Required, WCL proposes that EMP to be prepared
by MDO
Evacuation
Available
Bidding
Status
Draft RFQ document for UG mines prepared by
CMPDIL and circulated to subsidiary companies
for their comments.
Thank You