Coal to Chemicals and Petrochemicals -An efficient way of monetising coal to meet Indian Chemical demand Sept 2017

India Chemicals & petrochemicals Scenario India Chemical and Petrochemical Imports ($ billion) Chemicals: India's chemicals demand growth is forecasted at 12- 14%. In 2015-16, India has imported USD 40 billion worth of chemicals. In 2025, the imports would reach to more than USD 100 billion 136 53 Petrochemicals In 2015-16, India imports stand at USD 13 billion. In 2025, the imports would reach to ~ USD 32 billion. Forecasts show that India’s import dependency would rise from 45% in 2013 to 75-80% in 2025 Source: Chemicals and petrochemicals statistics & McKinsey report on Indian petrochemicals For chemicals and petrochemicals, Impors CAGR is assumed 10% considering no/minimal capacity addition

China’s reliance on Coal Gasification Sector-wise coal consumption - 2013 Coal to Poly-generation plan in China - 2015 Product Production in 2015, Mt Exp. production in 2020, Mt Methanol 34 66 LPG 4 5 DME 12 20 Olefin 15 Ethylene glycol 1.7 n/a Oil products 2.4 30 Urea 60 China relies heavily on gasification technology to meet Fertilizer, Energy and Petrochem needs Around 500 MT of coal is being gassified annually by China to produce valuable chemical & fertilizer products China clearly demonstrates the advantages of this technology for utilizing domestic energy sources to produce valuable products like chemicals & Fertilizers Source: Sector wise coal consumption from Wison, NRDC China Plan

India is dependent on imports, some requiring more than 50% Imports Domestic Import dependency 2010 Inner ring 2025 outer ring Historical data: Ministry of petrochemicals Report & MOFC Demand projections : ICIS future outlook report

Economics support coal-to-chemical conversion Coal to Chemical conversion is very attractive use of Indian coal Value addition per ton of coal Value addition to the coal is defined as the net value added to the coal in the manufacturing process. Urea adds more value to coal than any other products Methanol & Methanol derivatives also seems attractive Value addition to Coal through Chemicals is attractive compared to power Source: Internal estimates

Exploitation of coal for Indian Chemical needs Key Chemicals Demand gap by 2025 (MMTPA) Coal required for chemical production (MMTPA) Acetic acid 1.1 7 Methanol* 4.2 20 MEG 1.4 8 PVC 3.7 11 Poly-Olefins 7.0 87 DME* 2.3 4.8 Total 19.6 138 Coal to Chemicals sector could be frontrunner in utilisation of untapped coal reserves Coal requirement calculation is based on Indian Coal of GCV 3300 Kcal/kg and 45% Ash Demand supply gap taken from ICIS database. *Assumed 5% of Methanol blending will be by Govt. DME as replacement of LPG and 5% blending in diesel would also be allowed by Govt

Intune with the demand gap of various chemicals by 2025 – Three Coal to Chemical clusters can be planned at mine pithead in coal rich states - Odisha, Jharkhand and Chhattisgarh

Syngas Network The syngas produced from coal gasification can be distributed to Industrial/Domestic users using a syngas pipeline network. Europe has developed and successfully operating such syngas networks. Air Liquide has the following network in Antwerp (Belgium) and Rotterdam (Netherlands) and Most of them are laid Underground. Type of Network Length (KM) Flowrate (Nm3/Hr) User H2 Pipeline 35 1,35,000 Neste Oil CO Pipeline 10 10,000 BASF, Bayer Syngas pipeline 15 (6-8 ’’ dia) 30,000 (30 barg) Exxon Mobil India too can explore the option of building syngas network infrastructure at mine mouth and coastal location

Europe Syngas Pipelines Antwerp - 1 M dia. H2 pipe

Advantages of Coal to Chemicals Can boost the coal production of the country and save coal mining jobs. Reduce the annual import bill in key chemicals & create energy security Coal to chemicals offers the cheapest and best indigenized solution compared to other feedstock like Natural Gas & Naphtha Higher value addition to coal as compared to many of its other current use. Substantial Employment generation and revenue to both State & Central Govt.in terms of taxes and duties over the life of the project Would attract a great deal of further investment in the downstream chemical sector Coal to Chemical Clusters at coal pit-heads can boost coal production as well as bring regional economic prosperity

Steps required to catalyse Coal to Chemicals in India Feedstock Security : Coal Block allocation for Coal to Chemicals Feedstock Price: Exemption of Clean Energy Cess - Gasification is a Clean Technology Notifying Coal price similar to that of Power plant use De-risking Investment: Capital Subsidy from Clean Energy Cess collected