1. OVERSEAS COAL ASSETS ACQUISITIONS Ajay Mathur Chief Executive Officer INTERNATIONAL COAL VENTURES (P) LIMITED, New Delhi.

2.  Coal is found in about 70 countries across the globe.  It is the most widely distributed fossil fuel in the world.  The proven reserve of are estimated to be about 860 billion Tonnes.  78% of world coal reserves are located in five countries.  INDIA ranks 5th in the world in terms of coal reserves – 7.1%.  Other countries having significant share of coal reserves are United States (28.9%), Russia (19%), China (13.9%) and Australia (9.2%). GEOGRAPHICAL DISTRIBUTION OF COAL 2

3. COAL RESERVES/ RESOURCES OF INDIA  Estimated Resource is 286 billion tonnes (Thermal + Coking)  Proven Reserves are estimated at 113 billion tonnes  87% is Thermal Coal  About 35 billion tonnes of these are coking coal with Proven reserves being half of it.  Prime coking coal is 4.61 Bt, mainly in Jharkhand

4. ICVL’S TARGET COUNTRIES COKING COAL ASSETS  AUSTRALIA  USA  CANADA  MOZAMBIQUE  NEW ZEALAND  RUSSIA  COLOMBIA  MONGOLIA THERMAL COAL ASSETS  INDONESIA  AUSTRALIA  SOUTH AFRICA  MOZAMBIQUE

5. 5 ISSUES TO ADDRESS FOR ACQUISITIONS Difficulties in assessment of quality and size of the reserves, particularly Greenfield assets where decisions have to be taken based on borehole data. Difficult mining conditions which includes underground mining, gaseous deposits, faults and dikes, thin seams, high stripping ratios etc.. High Capital expenditure involved in developing Greenfield assets which upsets the IRR of the project. Inadequate/constrained infrastructure for export in almost all geographies which includes rail network and port capacities. Resource nationalism in less developed countries and restrictive policy frameworks. Legal and environmental issues/ risks. Vacillating government policies/ political risks.

6. 6 FUTURE OUTLOOK New coal basins to become significant sources in the medium term to long term Demand-Supply position to be largely matching Mongolia to become a major source for meeting China’s requirements Prices likely to remain stable unless China resorts to sea borne imports India may emerge as the largest importer of coking coal May also become the largest importer of thermal coal

7. TOP COAL PRODUCING COUNTRIESCOUNTRY PRODUCTION (Mt) CHINA3471 USA1004 INDIA585 AUSTRALIA414 INDONESIA376 RUSSIA334 SOUTH AFRICA253 GERMANY189 POLAND139 KAZAKHSTAN117 7

8. TOP COAL EXPORTING COUNTRIES COUNTRY STEAM (Mt) COKING (Mt) TOTAL EXPORT (Mt) INDONESIA3090 AUSTRALIA140144284 RUSSIA11014124 USA346397 COLOMBIA750 KAZAKHSTAN720 CANADA62127 8

9. COAL BASINS OF AUSTRALIA

10. AUSTRALIA  Queensland (Bowen Basin): premium quality hard coking coal.  NSW has mostly low ash thermal coal.  Coking coal - Low to mid volatile content; Low sulphur content  Major good quality coking coal deposits are with the mining majors.  New coal formations prospective of having coking coal are yet to be explored.  High costs of acquisitions because premium expectations on assets is high.  Suitable investment climate.  Operating costs are on the rise – material & labor costs (skilled labor particularly for UG operations is becoming a challenge)  Introduction of MRRT and Carbon tax.  Constraints in ports and railway capacity.

11. USA

12.  Large reserves of good quality metallurgical coal in Central Appalachia region but can be exported to India in the blended form.  Coal deposits characterized by thin seams.  Well developed transport & support infrastructure.  Favorable FDI policy.  Availability of technology and human resource.  Met coal trade can be competitive with large size vessels and low cost of mining. USA

13. MOZAMBIQUE Moatize Tete Nacala Chinde Biera Maputo

14.  Emerging destination for sourcing coking coal to India.  Proven but limited coking coal reserves in Moatize Basin, Tete province  High in ash content & sulphur - Yield of HCC around 17% to 20% only.  Inadequate Rail and Port infrastructure- deterrent for new projects - Beira Port unable to handle Cap size vessels  Deep water port Nacala requires huge investment along with connecting rail link passing through Malawi.  Sena railway line operational with limited capacity. MOZAMBIQUE

15. INDONESIA

16.  Preferred destination for thermal coal sourcing  Only Central Kalimantan province has some semi-coking coal reserves which have Low ash and sulfur contents, high Volatile Matter and Vitrinite content (94%)  Coal will not coke on its own - Only a good coal for blending  Underdeveloped rail infrastructure and other support infrastructures but availability of river network.  Lowest freight cost to India.  Low cost of mining due to opencast –able reserves.  Non-transparent Resource & Reserve Estimates.  Political Risk and Regulatory Uncertainty. INDONESIA

17. SOUTH AFRICA Richards Bay Maputo Central Coal Basin (Witbank, Highveld & Ermelo Coalfields)

18. SOUTH AFRICA  One of the preferred destination for acquisitions of thermal coal assets after Indonesia and Australia.  Only limited resources of coking coal are available in Limpopo province most of which are in the initial exploration stages.  Coking coal quality yet to be ascertained.  Availability of technology and human resource.  TRANSNET - railway network, as well as RBCT has capacity constraint.  Other alternative routes for coal evacuation  through Maputo to be explored.  Uncertainty over regulatory framework and political risks.

19. COLOMBIA

20.  Huge coal deposits of both Thermal & Metallurgical grade over the northern & western regions  Coking coal deposits - Boyaca, Cundinamarca – Norte Santander regions  Coal quality is good with very low in sulphur & ash content and high heat value.  Infrastructure is a big constraint  Freight will always be higher due to distance.  Law & order situation – insurgency  Adverse climatic conditions – Jan to August dry period followed by strong rains/ cloudbursts leading to floods COLOMBIA

21. MONGOLIA

22.  A land locked Sovereign country between Russia in north and China in south.  Extreme climate with temperature ranging between (-)55°C to (+)45°C.  Extensive unexploited mineral deposits including coal.  High grade coking coal - 35% of coal reserve.s  Tavan Tolgoi coal deposits in South Gobi province has about 6.2 billion tonnes of coal reserves most of which is high grade quality coking coal.  Evacuation of coal is a major issue as sea access via China (Tianjin) is 1344 kms and via Russia (Nakhodka) is 4037 kms.  Dependence on the Trans-Siberian Highway for rail route.  Underdeveloped infrastructure in power supply and water.  Generally poor accessibility (marked by low road and rail density). MONGOLIA

23. NEW ZEALAND

24.  Large resources of Lignite, Sub-Bituminous & Bituminous coals  Production Centres located on the Waikato for domestic consumption, while west coast coking coal production is mainly for coal exports.  Low phosphorus, high heating value, mid to high volatile content.  Only suitable as A Blend Coking Coal.  Coal seams are steeply dipping & highly faulted.  Special method of mining - Hydraulic Mining.  New Zealand Government owns about 50% of all coal resources.  State-owned Solid Energy is responsible for over 80% of national production, with a number of smaller private coal mining companies producing the remainder. NEW ZEALAND

25. RUSSIA

26.  World’s second largest high quality recoverable reserves.  All types of coals are available ranging from Lignite to high quality coking coal.  Very low in ash and sulfur contents.  Extreme cold conditions specially in Siberian region makes working difficult.  Rail/ Ports are with the Govt.  Low cost of production but very high cost of transportation both Inland as well as sea.  Russia has one of the most highly skilled workforces in the world. RUSSIA

27. 27 CANADA

28. British Columbia - Coalfields

29.  Coal deposits predominantly located in Western Provinces of British Columbia, Alberta and Saskatchewan.  Met coal mainly in British Columbia.  Good quality but normally low in fluidity makes coal as less preferred for recovery type coke ovens.  Coals have a tendency for generation of micro fines.  Freight cost are higher. 29 CANADA

30. THANK YOU

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32. TREND OF GOONYELLA MIDDLE SEAM MET COAL PRICES 32

33. HISTORICAL BEHAVIOUR OF INTERNATIONAL MET COAL PRICES 33

34. HISTORICAL BEHAVIOUR OF INTERNATIONAL MET COAL PRICES 34

35. HISTORICAL BEHAVIOUR OF INTERNATIONAL MET COAL PRICES 35