September 2017

ITA Conference 2017

Metallurgical Coke Production, Coal Tar Production and Coal Tar

Distillation across India and future trends

Vikram Handa, Epsilon Carbon Pvt Ltd

CONFIDENTIAL
2017 © Epsilon Carbon Pvt Ltd. All Rights Reserved
Epsilon Carbon – About Us
Epsilon has a total tar distillation capacity of 240,000 TPA with a continuous coal tar distillation setup

✓ All of Epsilon’s Facilities are strategically

SAMBALPUR (Pitch Melting)
MUMBAI (Head Office)
JAJPUR ( Distillation)
Vijayanagar (Distillation)
Current Facilities
located either very close to the raw material
hub or in the vicinity of customers
✓ Sea Port - From Vijayanagar
• Karwar Port 353 Kms
• Mormugao Port 377 Kms
✓ Railways – Toranagallu (9.5 Kms)
✓ Road Network – Nation highway (NH-63) at a
distance of 4.5 kms
✓ Airport – VOJV (within premises), Hubli (180
Kms)
✓ Epsilon has a pitch melting facility at
Sambalpur Odisha which is located in close
proximity to domestic aluminium customers

Privileged and Confidential 1

Epsilon Carbon – Product Portfolio

Products End user Industry

Aluminium Grade Pitch Aluminium Industry

Graphite Grade Binder Pitch Graphite Electrodes

Zero QI/Impregnation Pitch Graphite Electrodes

Carbon Black Oil (CBO)/CBFS Carbon Black Industry

Light Oil Auto Fuel, Solvents

Creosote Oil/Anthracene Oil Anthraquinone dyes, oil paint, wood preservative, printing ink

Extraction of benzene, Wood Preservation, Enamels, Rasin,

Mix Phenolic /Wash oil/ Mix Cresol
Varnish etc.

Crude/Refined Naphthalene Dyes and dyes intermediate, other chemical industries

Privileged and Confidential 2

Indian Metallurgical Coke Industry

✓ Coking Coal
✓ India has the fourth largest proven reserves of coal. Though India has 285.9 billion tonnes of coal
reserve, Indian coal is of poor quality, with high ash content. Nearly 87% of Indian coal reserve is of
non-coking variety.
✓ India does not have low ash metallurgical coking coal. It depends on imported coal from Australia,
Russia, US, Mozambique, Canada to run its coke manufacturing activities.
✓ Metallurgical Coke Industry
✓ The Indian coke industry is dominated by the integrated steel plants (ISPs). These units possess
captive coking facilities
✓ In India, the merchant metallurgical coke capacities are largely situated in western India, logistics and
proximity to a large consumer market being the primary factors contributing to this skewed
concentration.
✓ In the East, there are a large number of small cokeries with capacities ranging between 6,000 TPA to
48,000 TPA. Their cumulative capacity is estimated at around 0.5 million TPA.

Privileged and Confidential 3

Indian Metallurgical Coke Market (Market Size: ~30-35 Million Tonnes)

Supply Side Demand Side

Imports Ferro Alloys Others
13% 7% 3%

Merchant
Coke
10% Captive Pig
iron
23%
Captive Pig
iron
10%
ISPs ISPs
67% 67%

✓ The Indian coke industry is dominated by the integrated steel plants (ISPs). These units possess captive
coking facilities. Coke produced by these units is a blend of imported coal and indigenous varieties; hence,
the coke quality differs with each producer and cannot be sold in the open market in large quantities.
✓ Pig iron producing units - Only a few companies possess captive coke manufacturing facilities while the other
units rely largely on imported coke.

Privileged and Confidential 4

Merchant Coke Market - Indian Metallurgical Coke

Merchant Coke Demand Merchant Coke – Demand & Supply (2017)

Others* Supply Side
24%
Merchant Coke 10-12 Million Tonnes
Non Capacity
captive Capacity utilization Approx 25-35%
pig iron
plants Key Players Saurashtra Fuels Pvt. Ltd
50% Gujarat NRE Coke Ltd
Ferro Carbon Edge Industries Ltd
Alloys Bhatia Coke & Energy Ltd
26% Basudha Udyog Pvt. Ltd
* - Other coke consumers include soda ash, zinc and lead smelters,
Ennore Coke Ltd
and small scale foundries among others Bengal Energy
Visa SunCoke

✓ India has an estimated merchant coke Demand Side

demand of ~ 7 Million Tonnes driven mainly Merchant Coke 6-7 Million Tonnes
Demand
by the non integrated mini blast furnace
Imports ~ 4 Million tonnes (China)
based pig iron producers and ferro-alloy
Domestic players ~ 3 Million tonnes
producers
Privileged and Confidential 5
Indian Merchant Coke Market - Anti Dumping Duty
Domestic metallurgical coke industry, has been reeling under increasing imports from China, and
thus operating at about 25-35 % of its capacity.

Imposition of definitive anti-dumping duty on the subject goods, originating in, or exported from the subject countries, in
order to remove injury to the domestic industry

Product Exporting Country Amount in USD UOM

Low Ash Metallurgical China 25.20 Per MT basis
Coke excluding
Metallurgical Coke
with ash content in Australia 16.29 Per MT basis
excess of 18%.

Validity - Period of five years from November 2016 i.e. Till November 2021

Privileged and Confidential 6

 Indian Steel Industry - Overview

Indian steel industry is also characterized by the presence of a large number of small steel producers
who utilize sponge iron, melting scrap and non-coking coal (EAF/IF route) for steelmaking
✓ Crude steel capacity was 125 MTPA in 2016-17 , up by 3.6% over 2015-16 and India, which emerged as the 3rd largest
producer of crude steel in the world
✓ The Indian steel industry is structured in between three broad categories based on route wise production viz. BF-BOF, EAF
and IF.
✓ BF-BOF route producers have large integrated steel making facilities which utilize iron ore and coking coal for production
of steel.
✓ Unlike other large steel producers, the Indian steel industry is also characterized by the presence of a large number of
small steel producers who utilize sponge iron, melting scrap and non-coking coal (EAF/IF route) for steelmaking.
✓ As on March 2016,
✓ there were 308 sponge iron producers that use iron ore/ pellets and non-coking coal/gas providing feedstock for
steel production;
✓ 47 electric arc furnaces & 1128 induction furnaces that use sponge iron and/or melting scrap to produce semi-
finished steel and
✓ 1392 re-rollers that rolls out semi-finished steel into finished steel products for consumer end use.

Privileged and Confidential 7

 Indian Steel Industry - Overview

BF-BOF route is expected to contribute about 40 % of the crude steel capacity & production with
remaining 60% by EAF & IF

Privileged and Confidential 8

 Indian Steel Industry - Overview

India emerged as the 3rd largest producer of crude steel in the world

140

120

100

80

60

40

20

0
2012 2013 2014 2015 2016 2017
Capacity (MTPA) 91 97 102 110 122 125
Production (MTPA) 76 79 88 92 92 101

Privileged and Confidential 9

 Major Steel Plants - Location and Capacities

Jharkhand
•SAIL Bokaro Steel Plant (4.61MTPA) / 30,000 TPA Tar
•Tata Steel Jamshedpur (10 MTPA ) / 36000 TPA TAr
West Bengal
•SAIL Durgapur Steel Plant (2.2 MTPA)/ 45000 TPA Tar
•SAIL IISCO Steel Plant (2.5 MTPA) / 40,000 TPA Tar

Gujarat
•Essar Steel (10 MTPA )/ No Tar Chhattisgarh
•SAIL Bhilai Steel (7.0 MTPA) / 45,000 TPA Tar
•Monnet Ispat (1.5 MTPA ) / No Tar
•Jindal Steel and Power (3.5 MTPA) / 15000 TPA Tar

Maharashtra Orissa Units

•JSW Dolvi (5 MTPA )/ 40,000 TPA Tar •SAIL Rourkela Steel Plant (4.2 MTPA) / 65,000 TPA Tar
•Tata Steel Kalinganagar ( 3 MTPA) / 54000 TPA Tar
•Jindal Steel and Power (3 MTPA ) / 60000 TPA Tar
Karnataka •Bhushan Steel Limited (5.6 MTPA) / 60,000 TPA Tar
•JSW Bellary (12 MTPA ) / 120,000 TPA Tar •Electro Steels ( 2.5 MTPA ) / No Tar
•Jindal Stainless (1.8 MTPA) / 18000 TPA Tar
•NINL Steel Plant (1.1 MTPA) / 36000 TPA Tar
Andhra Pradesh
•RINL Vizag Steel (6.3 MTPA)/ 36000 TPA Tar
Tamil Nadu
•JSW Steel – Salem (1 MTPA )/ No Tar
TAR Quantities denotes the quantity of Tar available for distillation.

Privileged and Confidential 10

 Major Steel Plants and Tar Generation

Around 550,000 – 600,000 TPA Tar is available for distillation

# Company Locations Crude Steel Capacity Coal Tar

Generation
1 SAIL West Bengal, Chhattisgarh, Odisha, 21.4 (2018) 225,000
Jharkhand
2 JSW Steel Maharashtra, Karnataka, Tamil Nadu 18 160,000

3 Tata Steel Jharkhand, Odisha 13 90,000

4 Jindal Steel and Power Chhattisgarh, Odisha 6.5 75,000
5 RINL & NINL Andhra Pradesh, Odisha 7.4 72,000
6 Bhushan Steel Odisha 5.6 60,000
7 Jindal Stainless Steel Odisha 1.8 18,000

✓ SAIL plants are the largest tar producer in India. All of the tar generated is auctioned in the market and sold
to highest bidder
✓ All of the players except Epsilon Carbon purchase coal tar from open auctions from various steel plants

Privileged and Confidential 11

Current Coal Tar Production
Domestic Coal Tar production is completely dominated by Integrated Steel plants
Coal Tar Generation (2017)
Govt
Private Owned
Sector 46%
54%
✓ Most of the Tar generation is concentrated
in Eastern part of India
✓ Key Tar producers
✓ Private Players - JSW Steel, TATA,
Bhushan Steel, Others
✓ Govt. Owned Plants - SAIL, MMTC, RINL,
others
Privileged and Confidential
Coal Tar Generation (2017)
High Temp Coal Tar (HTC)
Total Generation ~ 650,000 – 700,000 Tonnes
Source Integrated Steel Plants (ISPs)
Captive use as a fuel etc ~ 100,000 Tonnes
Available for Distillation ~ 550,000 – 600,000 Tonnes
Low Temp Coal Tar (LTC)
Total Generation ~ 50,000 – 70,000 Tonnes
Source Coal Gasification units
Remarks High moisture and low Pitch
content of LTC restricts its
distillation and mainly used as a
fuel or as a blend with other
distillation product in making of
Carbon Black Oil (CBO)
12
 Coal Tar Distillation – Location Map

West Bengal
• Himadri(Howrah Plant)
•Himadri (Mahistirky Plant)
•Balaji Hydrocarbon
Jharkhand •Nangalia Hydrocarbon Ltd
•Bhilai Cement •Konark Tar Products
•Pariwal Industries
•Jalan Carbons

Chhattisgarh
•Himadri Korba Plant
Karnataka
•Bhilai Cement - Durg
•Epsilon Carbon
•Koromandal Refractories
Orissa Units
•Epsilon Carbon– Sambalpur
•Mahabir Coke – Jajpur
•Agrawal Rasayan –Sambalpur
•Kedia Carbon
•Western Bitumen
Andhra Pradesh •Goyal Tar
•Himadri Vizag Plant •Intercontinental Tar

Domestic Coal Tar Distillation is mainly concentrated in Eastern India

Privileged and Confidential 13
 Coal Tar Distillation Industry

Total domestic Coal Tar Distillation capacity is close to 900,000- 950,000 TPA
# Companies Capacity (TPA)
1 Himadri Speciality Chemicals Ltd 400,000
2 Epsilon Carbon Pvt Ltd 200,000
3 Kedia Carbon Pvt Ltd 45,000
4 Aparna Carbon Pvt Ltd 45,000
5 Jalan Carbon Pvt Ltd 45,000
6 Nitya Sai Pvt Ltd 36,000
7 Coal Chem Pvt Ltd 36,000
8 Palriwal Industries 25,000
9 Nagrika Industries 25,000
10 Other Small players 30,000

✓ Most of the smaller players operate the plant based on product orders if available and coal tar
availability

Privileged and Confidential 14

 Coal Tar Distillation – Technological Status of Indian Industry

Soft Pitch

Needle Coke
Artificial Graphite
Binder Pitch
Pitch Coke
Isotropic Graphite
Impregnation pitch
Blocks
Coal Tar

Mesophase Pitch Carbon Fibre

Naphthalene Refined Naphthalene Pthalic Anhydride

Sulfonated Naphthalene
Formaldehyde
Creosote Oil Carbon Black + Power

Other Oils Fraction Phenol, Cresols, Xynelols

Current Industry
Future Potential

Privileged and Confidential 15

 Future outlook – Indian Steel Industry

The policy has planned for a steel demand of about 230 million tonne by 2030-31

400 Capacity Expansion (All numbers in Million Tonnes)

300
300
215
200
91 97 102 110 122 125
100
0
2014
2012

2013

2015

2016

2017

2025

2030
Current demand Projected demand
# Sector
2015-16 2030-31
1 Construction & Infrastructure 50.5 138
2 Engineering & Fabrication 18 50
3 Automotive 8.2 28
4 Other Transport - Rail lines, Wagons , Ship , Coastal 2.4 8
5 Packaging & Others 2.4 6
Total Finished Steel Consumption in MT 81.5 230

Per Capita Finished Steel Consumption in Kgs 61 158

Even with this demand of finished steel by 2030-31, India’s per capita consumption would reach only to
158 Kgs, lower than the current global average of 208 kg

Privileged and Confidential 16

 Announced Expansion Plans of Steel Majors

It is estimated that 60-65 % of steel production in 2030-31 shall be coming through BF-BOF route and rest
through EAF/IF route.

# Company Current Capacity Announced Total by 2025

Plans
1 SAIL 21.4 28 50
2 JSW Steel 18 22 40
3 Tata Steel 13 13 26

✓ SAIL also plans to ramp up capacity further to 50 million tonnes per annum (MTPA) by 2025.
The proposed capacity expansion to 50 mtpa is in line with government's vision of enhancing India's steel-making
capacity to 300 MTPA by 2030.
✓ JSW Steel plans to expand its steel capacity to 40 MTPA by 2025 by means of Brownfield and Greenfield expansions
✓ Tata Steel intends to ramp up capacity of its Kalinganagar steel making facility to 16 million tonne per
annum (MTPA) by 2025

Privileged and Confidential 17

 Expected Coal Tar Generation Growth

Around 1.9 Million Tonnes of coal tar would be generated by 2030-31 based on steel capacity projections

# Particulars Unit 2017 2025 2030

1 Crude Steel Capacity MTPA 125 215 300

2 Crude Steel Demand MTPA 101 183 255

3 Steel through BF/BOF % 40% ~60% ~65%

4 Steel through BF/BOF MTPA 50 ~129 ~195

5 Coal Rate (kg/thm) - Approx Kg/thm ~500 ~450 ~350

6 Coke Oven Capacity Million ~20 ~41 ~54

Requirement Tonnes

7 Coal Tar Generation Tonnes ~700,000 ~14,50,000 ~19,00,000

(0.7 Million) (1.45 Million) (1.9 Million)

Privileged and Confidential 18

 Conclusion

✓ Indian Market provide great potential for growth due to ability of its domestic market to
support the growth (not export dependent)
✓ Growth plan and Investment in steel industry will provide much needed access to coal tar
✓ Apart from healthy growth in demand of conventional products (Pitch, Oils, Naphthalene),
Indian market demand for downstream products ( Cresols, Anode Material, Specialty pitch)
is very large and currently is being met mostly by imports

Privileged and Confidential 19

 Thank You

Vikram Handa (vikram.handa@epsiloncarbon.com)

Epsilon Carbon Pvt Ltd
www.epsiloncarbon.com Privileged & Confidential