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ACQUISITION NEED – WHY :

CHALLENGES & STRATEGIES OF ACQUISITION OF COAL BLOCK ABROAD BY DR. M.M. SEAM ADVISOR (MINING), ESSAR GROUP. ACQUISITION NEED – WHY :. COAL FROM WHERE:. INTERNATIONAL COAL MARKET PRODUCTION (2011) : 7678 Mt (TABLE-I) COKING : 967 Mt THERMAL : 5670 Mt LIGNITE : 1041 Mt

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ACQUISITION NEED – WHY :

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  1. CHALLENGES & STRATEGIESOFACQUISITION OF COAL BLOCK ABROADBYDR. M.M. SEAMADVISOR (MINING), ESSAR GROUP

  2. ACQUISITION NEED – WHY :

  3. COAL FROM WHERE: • INTERNATIONAL COAL MARKET • PRODUCTION (2011) : 7678 Mt (TABLE-I) • COKING : 967 Mt • THERMAL : 5670 Mt • LIGNITE : 1041 Mt • COAL TRADE (2011) : 1142 MT (TABLE-II & III) • COKING : 276 Mt • THERMAL : 861 Mt • LIGNITE : 5 Mt • SOUTH EASTERN ASIA / INDIA : 665 Mt (COKING : 150 Mt) EUROPE : 120 Mt (COKING : 25 Mt)

  4. COAL FROM WHERE Continue… MAJOR COAL PRODUCING COUNTRIES (IN Mt) TABLE – I

  5. COAL FROM WHERE Continue… MAJOR COAL EXPORTERS (IN Mt) TABLE – II 5

  6. COAL FROM WHERE Continue… MAJOR COAL IMPORTERS (IN MT) TABLE – III * Includes 5 Mt of Lignite

  7. FUTURE COAL TRADE: • USE OFFICIAL GLOBALLY : +28% (YR 2001-2010) • CURRENTLY (YR 2011) : 1142 Mt • PROJECTED (YR 2020): 2000 Mt • DEMAND : ASIA • FAREAST / S.E. ASIA / INDIA • SOUTH & EAST AFRICA • NORTHERN S. AMERICA • COAL LIKELY TO STAY AMONG MAJOR ENERGY FUELS FOR NEXT FEW DECADES • COAL IMPORTS INTO INDIA TOO LIKELY TO STAY

  8. TARGETS FOR COAL IMPORTS: • LIMITED CHOICE • ASIA – MONGOLIA, VIETNAM • AFRICA – S. AFRICA, MOZAMBIQUE, BOTSWANA, ZIMBABWE • AMERICAS – CANADA, USA, COLUMBIA • OTHERS – EX-USSR (RUSSIA, UKRAIN, KAZAKSTAN) & CHINA

  9. ACQUISITION PROCEDURE: • NATURE OF BLOCK – GREENFIELD / BROWNFIELD • PROCEDURAL STEPS: • INITIAL CONTACT : • EMBASSY • FINANCIAL INSTITUTION • DIRECT OWNER / AGENT • NON DISCLOSURE AGREEMENT • ENGAGE FINANCIAL / LEGAL CONSULTANT • DUE DILIGENCE • ESCROT ADVANCE – NO OTHER DEALINGS • CHECK DRILLING • ENGAGE MINING CONSULTANT - PREFESIBILITY STUDY

  10. CHECK PERMISSIONS , OWNERSHIP DOCUMENTS , LEGALITY OF TRANSACTION • BROWNFIELD – MINING PLANS, EQUIPMENT CAPITAL EX/ MANPOWER ETC. • PRICE NEGOTIATION • COMPLETE TRANSACTION THROUGH LEGAL PRINCIPAL CONSULTANTS / GOVERNMENT AGENCIES.

  11. CHALLENGES: • LACK OF GOVT. SUPPORT • RESOURCE NATIONALISM : • SPECIAL TAXES • JV WITH LOCAL • POPULIST TAXATION MEASURES – (LOCAL POLITICS) • DIFFICULT MINING DESTINATION • INVESTMENT NOT ONLY IN MINES BUT ALSO ON LOGISTICS – RAIL / ROAD / PORT • DIFFICULT LAND ACQUISITION DUE TO ABSENCE OF LAND RECORDS • R&R HURDLES • LANGUAGE BARRIER • IGNORANCE OF LOCAL LAWS • ADMINSTRATIVE RED-TAPE

  12. STRATGIES: • REWORK WORKING GROUP PROJECTION – INDENTITY TARGET COUNTRIES FOR LONGTERM IMPORTS • UPGRADE POLITICAL EFFORTS FOR STRONGER BILATERAL DIPLOMATIC RELATIONS • INSTITUTE SPECIAL FUND FORFOREIGN COAL ACQUISITIONS • PROD PSU’s FOR FOREIGN ACQUISITION • FORMULATE LONG TERM COSTAL THERMAL POWER-GENERATION STRATEGY • DIVERSIFY COAL IMPORTS • MODERATE RESOURRCES NATIONALISM BY GREATER COMMERCIAL / CULTURAL PRESENCE

  13. THANK YOU

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