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. 2

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% Power (U) 73.93 % Coal Production : Company -wise Share Sector-wise Supply Share from CIL Sources * Others include captive producer ,TATA STEEL, Meghalaya & Other PSUs ** Non Power include Steel, cement, sponge iron, fertilizer. Bricks etc

Projections of Major Coal Consumer Sectors - Power Coal will remain most preferred fuel for Indian Power Sector 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

COAL DEMAND SUPPLY SCENARIO COAL DEMAND MATRIX COAL SUPPLY MATRIX (Optimistic scenario) COAL INDIA LIMITED  2011-12  2012-13  2013-14 (Target) Manual 0.38 0.31 0.30 Mechanised 397.07 413.46 442.78 TOTAL OPENCAST 397.44 413.77 443.08 Conventional B&P 3.52 2.08 Conventional LW 0.02 0.00 Mechanised B&P(SDL/LHD) 32.31 32.46 33.45   Mechanised LW 0.26 0.06 0.15 Continuous Miner 1.70 2.22 2.38 Special Methods 0.59 0.68 0.87 TOTAL UNDERGROUND 38.40 37.49 38.92 CIL - TOTAL 435.84 451.25 482.00 SCCL : 57 MT 115 Captive Blocks : 100 MT Others (Six PSE companies -JKML, JSMDCL, DVC, IISCO), Tata Steel and Meghalaya) : 23 MT

COAL IMPORTS India is likely to become the second largest importer of coal next to Japan. Power Sector is the biggest importer of Thermal Coal 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. India imported 135 million tonnes of Coal in 2012-13 valued at $15.5 billion 185.0 Million Tonnes 98.93 43.08 20.6 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; Benefits of Mine Developer Operator (MDO) Scaling up coal production at an accelerated pace; Harnessing additional capital and efficiencies in the context of a long-term agreement Risk of project completion and delivery of agreed outputs will be borne by the separate entity. Will help optimize life-cycle costs and thus reduce mining costs;

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. Geological structures of the mine including strike, dip, faults, seam description, details of dirt-band, seam quality, geological reserve etc. 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; Coal handling arrangements including storage, loading and despatch; Civil construction including buildings, roads and culverts, etc.; and Broad specifications of major equipment CIL would prepare a Project Report which shall be provided to the prospective bidders.

Two Stage Bidding Process 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.

Payment Mechanism to MDO 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 First Phase – 7 Projects/Mines OC – 5 Nos. (Total Cap – 14.00 Mty) UG – 2 Nos. (Total Cap 2.52 Mty) Other Prospective Projects/Mines OC –7 Nos. (Total Cap – 113 Mty) 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. No Block/ mine Cap (MTY) Exploration /PR Status Reserve (MT) SR (M3/T) Grade Eastern Coalfields Ltd.   1 Itapara OC, Dist. Bardhaman, WB 3 PR prepared (03/2011) 80.38 (M) 6.92 F Central Coalfields Ltd. 2 Ara OC, Dist. Ramgarh, Jharkhand PR under preparation 38.00 (M) 4.86 W-II, III DRD OC Project, Dist. Bokaro, Jharkhand 4 PR approved in principle 69.26 (M) 2.53 W II Sub-total 6 Northern Coalfields Ltd. Jhingurdah Bottom OC, Dist. Singrauli, MP PR available 15.10 (M) 6.18 F-G (M ) - Mineable Reserve, (G) – Geological Reserve 20

Exploration /PR Status PR approved in principle Sl. No Block/ mine Cap (MTY) Exploration /PR Status Reserve (MT) SR (M3/T) Grade South Eastern Coalfields Ltd.   5 Malachua OC, Johilla Area, Dist. Shahdol, MP 3 PR approved in principle 57.54 (M) 13.78 D-G UG PROJECTS Mahanadi Coalfields Ltd. 6 Talcher(W) UG, Dist. Angul, Talcher CF 0.52 PR approved 17.93 (M) - A-C Western Coalfields Ltd. 7 Murpar Expansion UG, Umrer Area, Dist. Chandrapur, MH 2.00 PR available 278.79 (G) B-F Grand Total 16.52 21

Exploration / PR Status Central Coalfields Ltd. MDO – Salient Details of other prospective OC Mines/projects Sl no Block/ mine Cap (MTY) Exploration / PR Status Reserve (MT) SR (M3/T) Grade Central Coalfields Ltd. 1 Magadh OC, Dist. Chatra & Latehar, J’khand 20 PR approved 351 (M) 1.51 F 2 Amrapali OC, Dist. Chatra, J’khand 12 291.1 (M) 1.58  Sub-total 32  

South Eastern Coalfields Ltd. 3 Pelma OC, Dist. Raigarh, CG 15 Continued… Sl no Block/ mine Cap (MTY) Exploration / PR Status Reserve (MT) SR (M3/T) Grade South Eastern Coalfields Ltd. 3 Pelma OC, Dist. Raigarh, CG 15 10 mty PR approved, 15 Mty PR under preparation 443.065 (M) 3.52 F 4 Durgapur OC, Dist. Raigarh, CG 6 PR approved in principle 140.5 (M) 6.04 E 5 Madan Nagar OC, Dist Surajpur, CG. Bhatgaon Area. 10 Draft PR under preparation at CMPDIL 240.22 (G) NA   Sub-total 31

Mahanadi Coalfields Ltd. 6 Siarmal OC Dist. Sundargarh (Odisha) 40 Continued… Sl no Block/ mine Cap (MTY) Exploration / PR Status Reserve (MT) SR (M3/T) Grade Mahanadi Coalfields Ltd. 6 Siarmal OC Dist. Sundargarh (Odisha) 40 Draft PR submitted by CMPDIL 1547.82 (M) 1.47 C-G (mostly F) 7 Garjanbahal OC, 10 PR prepared, advance action approved 229.25 (M) 0.98 D-G (mostly F) Sub-total 50   Grand Total 113

Western Coalfields Ltd Salient Details of 6 additional UG Mines/projects Sl no Block/ mine Cap (MTY) Exploration / PR Status Reserve (MT) Grade Western Coalfields Ltd 1 Borda UG 2.00 GR available 212.09 (G) D-E 2 Jamunia 0.72 PR approved In-principle 22.76 (M) C 3 Dhankasa UG 1.00 17.71 (M) D Sub-total 3.72

Central Coalfields Ltd. Continued… Sl no Block/ mine Cap (MTY) Exploration / PR Status Reserve (MT) Grade Central Coalfields Ltd. 4 Piparwar Mangardaha UG 1.38 PR approval under process 25.27 (M) B-C 5 Churi Benti UG (Cont. Miner Panels Only) 0.81 PR approved 5.13 (M) B 6 Parej East UG 0.51 17.61 (M) W- I to IV Sub-total 2.70 Grand Total 6.42

WCL Projects offered for MDO

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 involved. FC application to be submitted. EC Required, WCL proposes that EMP to be prepared by MDO Eva-cuation 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.

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 Eva-cuation For evacuation extension of track taken with RITES. Bidding Status Part I opened on 10.07.13. Three bidders participated.

Tenancy 407 Ha, Forest 74.70 Ha, Govt 9.06 Ha. 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 Eva-cuation Available Bidding Status Draft RFQ document for UG mines prepared by CMPDIL and circulated to subsidiary companies for their comments.

FC application submitted on 20.11.09. Under process. 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 Eva-cuation Available Bidding Status Draft RFQ document for UG mines prepared by CMPDIL and circulated to subsidiary companies for their comments.

Thank You