Opportunities in Alternative Usage of Coal

Jan. 2019

India - 5th largest coal reserves

2

India has over 100 years of recoverable coal reserves at current consumption rate

357 391

301

39

136

206

0

203

230

49

0

50

100

150

200

250

300

350

400

450

0.0

50.0

100.0

150.0

200.0

250.0

300.0

US Russia Australia China India Germany Ukraine Poland Kazakhstan Indonesia

Coal reserves in Billion tons R/P ratio

Source : BP statistical review of world energy – 2018 The reserves are at the end of 2017 Ukraine is omitted because of abnormal R/P ratio

Pro

ved

re

serv

e s

in

billio

n T

on

s

Coal Utilization Scenario - India

560

725

1000

2012-13 2016-17 2019-20

Coal Production – India in Million Tons

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The dream of producing 1 billion tons can be achieved by adopting Chemical/Fertilizer production through Coal Gasification

Coal production in 2016 -17 : 725 Million tons

Targeted in 2019-20 : 1 Billion tons

The largest consumer of coal is power sector (60%)

Due to the advent of Renewable power, CEA indicated that the

country doesn’t need more coal based power addition till 2022

Alternate utilization of coal needs to be explored for future targets of coal production

Taking a cue from China, India may utilize coal reserves for the production valuable fertilizer /chemicals

Target

4

3.34

12.21

2.21

13.51

USGC petcoke Regasified LNG Indian Coal Crude Oil

USGC Pet-coke 110 $/T

LNG 12.2 $/MMBtu

Indian coal 35 $/T

Crude Oil (YTD) 82 $/bbl

Price Advantage of Coal

Petcoke GCV – 8300 kcal/kg, Indian coal – 4000 kcal/kg, Crude Oil – 10,880 kcal/kg, YTD – Average year to date

Prices of various energy feedstocks at Coal Pithead In India (in $/MMBtu)

Coal offers energy at cheap price thereby offering maximum value addition

China’s reliance on Gasification

China relies on gasification technology to meet Fertilizer, Energy and Petrochem needs.

Gasification based ammonia accounts for 79% of China’s total Ammonia output.

China is also fulfilling 80% (60 MMTPA) of its Urea production through gasification.

China clearly demonstrates the advantages of this technology for utilizing domestic energy sources to produce valuable chemicals & fertilizers.

Sector-wise coal consumption

Source: Sector wise coal consumption by Wison – China, Market share of Coal Gasification from Asia chem report 2015

Product Production in 2015, Mt

Methanol 34

LPG 4*

DME 12

Olefin 12

Ethylene glycol 1.7

Oil products 2.4

Urea 60

Coal to Poly-generation in China - 2015

5

China is leveraging coal resources to meet Energy, Chemical and Petrochemical demands

6

Chinese NRDC plan boosted CTC / CTL production

Product Production in 2015, Mt Exp. production in 2020, Mt

Methanol 34 66

LPG 4* 5

DME 12 20

Olefin 12 15

Ethylene glycol 1.7 n/a

Oil products 2.4 30

Urea 60 n/a

Inner

Mongolia

Xinjiang

Xizang

QinghaiGansu

Yunnan

Guizhou

Hainan

Shandong

Hebei

Fujian

Guangxi

Zhejiang

Jiangsu

Liaoning

Jilin

Heilongjiang

Shanxi

Henan

Hubei

Shaanxi

HunanJiangxi

Guangdong

Sichuan

Anhui

Tianjin

Shanghai

Beijing

Ningxia

Chongqing

1 3

4

2

5

6

7

Many CTL/CTC projects have been planned in response to the policy

Xinjiang CTL: 10mt/a MeOH: 5mt/a

Ningxia CTL: 11mt/a DME: 7mt/a

Inner Mongolia CTL: tbd MeOH: 10mt/a

Heilongjiang CTL: tbd MeOH: tbd

Jiangsu-Shandong CTL: tbd MeOH: tbd

Central China CTL: 6mt/a MeOH: tbd

Yuannan-Guizhou area CTL: 6mt/a MeOH: tbd

1

2

3

4

5

6 7

* - Planned in NRDC Source: BCG ; Research papers and company analysis

Methanol Blending -China

China has started using methanol as a vehicle fuel with the

advent of Coal to methanol plants.

China has significantly Increased blending of Methanol &

its derivatives in fuels over the last few years which now

stands at 21 MMTPA.

o Methanol direct blending with Gasoline (8.5

MMTPA)

o MTBE+MTG blending in gasoline

o DME blending in LPG

Direct blending now stands at 8.5 MMTPA or 9% of transport fuel demand

While M15(Methanol-15%, Gasoline 85%) is the main methanol blend available in major cities and provinces. Other

blends like M25, M30, M85 and M100 are also being used

M15 is sold commercially mainly in the coal-producing provinces such as Shanxi and Shaanxi

China has built 43 blending facilities with more than 100,000 tons blending capability each

Source: US EIA for Washington Methanol Policy Forum

India chemicals and petrochemicals segment is heavily dependent on Imports

8

0.0

0.5

1.0

1.5

2.0

2.5

3.0

2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17

Chemicals and Petrochemicals Imports ( INR Trillion)

India chemical and Petrochemical imports is one of the major contributor of Country’s trade deficit

Source: Chemicals and Petrochemicals statistics 2017

Monetization of abundant coal reserves equivalent to >130 years of current consumption

As emission norms becoming more stringent - timely exploitation of country’s coal resources

through environment friendly gasification technology

Creating Energy security through effective utilization of gasification industry – resulting in reduction

of crude, chemical & Petchem imports

Gasification offers cleanest way of utilizing Coal - SOx and NOx emissions are minimal compared to

any other coal usage

Proven technology with hundreds of reference plants.

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Meeting challenges through Gasification

Exploitation of coal for Indian Chemical demand

Key Chemicals Demand gap by 2025

(MMTPA) Coal required for chemical

production (MMTPA)

Acetic acid 1.1 7

Methanol* 6.6 32

MEG 1.4 8

PVC 3.7 11

Poly-Olefins 7.0 87

DME* 2.3 4.8

Total 22.1 150

10

Coal requirement calculation is based on Indian Coal of GCV 3300 Kcal/kg and 45% Ash. Demand supply gap taken from ICIS database. *Assumed 15% of Methanol blending with petrol and 10% of DME blending with LPG will be by Govt. 38 MMSCMD of SNG would be generated through slipped methane (FBDB) along with above products

Coal to Chemicals sector could be frontrunner in utilisation of untapped coal reserves

Revenue of coal to chemical clusters

Key Chemicals Total capacity of three

clusters (MMTPA) Price ($/T)

Revenue generation ( Million USD)

Acetic acid 1.1 400 440

Methanol 6.6 350 2310

MEG 1.4 750 1068

PVC 3.7 1000 3663

Poly-Olefins 7.0 1100 7700

DME 2.3 420 945

SNG* 38 8 3485

Other by -products 4.2 310 1296

Total Revenue Generation ~21000

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Coal to Chemicals can save import bill to the tune of 21 Billion USD per Annum

SNG - generation is in MMSCMD, Price is $ per MMBtu

Steps required to catalyse Coal gasification projects in India

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Ensuring Feedstock Security:

• Continuous and consistent quality coal supply from a single source to be ensured for Coal to Chemical

projects.

Economical Feedstock Price:

• Since Coal Gasification is a clean technology, GST Compensation cess (previously clean environment cess) may

be waived off on coal used for gasification

• Coal may be provided to Coal to Chemical projects at economical price

• Product price:

• Notifying a viable Methanol price for petrol blending. Govt. may allow blending of indigenously produced

methanol (with petrol) using coal

• Chemicals (Ammonia, Methanol etc.) produced from coal should get price protection against imported

products.

Thank youThank you

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