VALIA MINING PROJECT, SOUTH GUJARAT

Introduction:

At the behest of Government of Gujarat, Neyveli Lignite Corporation

has decided to develop the lignite deposits of Valia area in Bharuch
and Surat Districts in Gujarat for an integrated mine-Gum-power
projects. As per the MQU signed between NLC and Government of
Gujarat on 28-07-2006, NLC proposes to develop Valia block in two
phases. Initially, the First Phase is to develop a mine with capacity
of 8 Million tonnes to be linked with 1000 MW Power Plant and to
add additional capacity of mine 4 million tonnes to be linked with
500 MW Power Plant in Phase-Il.

For the above purpose, E, F, G & C, D and part of B blocks of Valia

and Mangrol areas will be allocated to NLC.

For 1000MW project in first phase, a total of about 200 MT mineable

resources is required for 25 years. Accordingly, mining is prioritized
in Block - E,D & C and part of Block-B (upto River Bagha) having
about 230 MT of mineable reserves followed by Block F&G having
about 80 MT of mineable reserves.

Location:

The proposed area is an extension of the existing Vastan lignite

mine area being mined by Gujarat Industries Power Company
Limited (GIPCL. A total of about 44 Sq. kms is roughly bounded by
Bagha river in the South, Valia-Netrang road in the north, Kim river
in the west and lignite development boundary in the East. The
proposed area is about 60 Kms. from Surat. This area falls in both
Surat and Bharuch District. The entire area is extending over a
strike length of 20 to 22 Kms in North East — South West direction
dipping towards west. The width of the deposit varies from 2 to 4
kms. (Plan)

Geology:
The area is occupied by subsurface Eocene group of rocks of
Tertiary age, Deccan Trap forms the basement of this formation. The
Stratigraphic sequence established for the area is as follows:

Age Formation Lithology

Recent Alluvium Soils and Sub-soils
Upper Eocene Amaravati Nummulitic time
stones, yellow clay,
Sandstone,
Conglomeratic bands
etc
Lower Eocene Cambay shale Variegated clays,
Grey and dark, Grey
Clays, Lignite, Side
rite
UNCONFORMITY
Palaeocene to Up Deccan Trap Basalt and Rhyolites.
Creataceous

Vastan-Mangrol-Valia lignite block is a part of the Cambay mega-

basin extending from Gujarat to Barmer District of Rajasthan.
Generally, significant lignite deposits are associated with thick
tertiary sedimentaries deposited in the paleo-depressions of Deccan
traps. Deccan traps, which are exposed in the East of Vastan village,
form the basal configuration for the overlying sub-surface
sedimentanes including lignite. The general trend of contact
between trap and the overlying sedimentaries is in NE-SW direction.
Dip is North West at 2 to 5 degrees. Lignite is of Lower Eocene age.

The overburden thickness in the area ranges from 30 to 60m in the

North side and 60 to 80 m in the southern side. The lignite in the
area generally occurs as 3 horizons. The cumulative thickness of
lignite ranges from 6 to 8 metres in Mangrol and 8 to 11 metres in
Valia area.

Overburden and interburden consist, in varying thickness, of

alluvium, black cotton soil, Kankar, grey clay, variegated clay,
nummilitic limestone, calcareous sandstone, brown calcareous clay,
bentonitic clay. Predominance in the Vastan mining area is
argillaceous with the variegated clay and greenish grey clays. The
grey clays are plastic and expansive when wet and on drying crack
up.

Geological Structure:

On the basis of depth of intersection of lignite seams and tendency

of seam splitting, suggest the area has undergone structural
disturbances. MECL interpreted 5 faults in this area — Fl-Fl to F5-F5
with throws ranging from 15 to 50 meters, which will not affect the
mining operations.
Lignite Reserves:

For the purpose of development and applying Mining lease in the

ValiaMangrol area, Gujarat Industries Power Company Limited
(GIPCL) has divided the area into number of sub-blocks as A, B, C,
D, E, F and G. GIPCL is at present mining lignite from A block which
has been designated as Vastan Mine. GIPCL has also proposed to
develop the Block-B (South) in future, which is having reserves of
about 35 MT of mineable reserves. The details in respect of other
sub-blocks where NLC has proposed to develop mines are given
below:

Lignite Quality:

The average values determined from results of proximate analysis

on “As received basis” as per Commissionerate of Geology & Mining
, Government of Gujarat (CGMIG) are as follows:
Moisture - 51%
Ash - 5.75%
Volatile Matter - 24.86%
Fixed Carbon - 18.39%
Gross Calorific Value - 2890 K.cal./Kg.
Sulphur - Around 1 to 2 % (Air dried)

Though the sulphur indicated by CGM/G is high, it may be due to

analysis Air-dried samples. As per GIPCL report, sulphur content is
much lesser (less than 1%).

Valia Lignite Mining Project

Background

Government of Gujarat has been planning to set up lignite based

Power Projects utilizing lignite deposits available in Gujarat to meet
the growing power demand in the State and was looking for
potential promoter for taking up these projects. In this process, GoG
had invited NLC to set up lignite based power project in Gujarat.
NLC had shown interest to implement integrated mine cum Thermal
power project utilizing the lignite deposits available in South Gujarat
as NLC has got long standing experience in both mining cum power
sector and adequate financial resource.

Government of Gujarat (GoG) has assured to provide basic

infrastructural facilities and shown interest to absorb maximum
power generated from this project. In a meeting held on 01.12.2004
at Gandhinagar, with Govt of Gujarat, it was agreed between GoG
and NLC for developing a 500MW to 1000MW power project in two
stages in South Gujarat independently or jointly with a State
organization of GoG. In this regard, an Expression Of Interest (EOl)
was prepared and it was approved by NLC Board and MOC, vide Ir.
no.43011 /67/2004/NLC/CPAM dt. 10.01.2005.

Subsequently a meeting was held on 15.10.2005 at Gahdhinagar

with Hon’ble Chief Minister and other senior officials and discussed
various issues on lignite block allocation, water source, site for
power plant, implementation time schedule and power allocation.

Further, a meeting was held at Neyveli on 07.02.2006 between NLC

and GoG, wherein it was decided to implement a 1000 MW lignite
based power plant initially and 8.0 MTPA lignite mine in South
Gujarat jointly with GoG / the company (ies) nominated by GoG and
planned for additional 500 MW subject to the availability of lignite
reserves and NLC agreed for the same. Further, the points discussed
in the earlier meeting including formation of Joint Venture Company
were frozen and decided to enter into a Memorandum of
Understanding (MOU) between NLC and GoG for the implementation
of the project

The Board of Directors of NLC at the meeting held on 25th May,

2006 accorded approval for the draft MOU to be entered with G0G
and the same was approved by MOC on 06.07.06.

The MOU was signed in presence of Chief Minister of Gujarat on

28.07.06 at Chennal.

PROJECT DETAILS

The project proposal is to build, own and operate lignite mine of

capacity 8.0 MTPA and 1000 MW power project in the first phase
with addition of another 500 MW in the second phase subject to the
availability of additional lignite reserve in South Gujarat Region and
increase the mining capacity suitably. To implement this proposal a
Joint Venture Company will be formed within six months from the
date of signing of MOU (28.07.2006) with the Govt. of Gujarat (GoG)
/company(ies) nominated by Govt. of Gujarat with equity
participation of NLC as 74 to 89% and that of Govt. of Gujarat as 26
to 11 %.

G0G has agreed to allocate lignite blocks of Valia, E, F, G blocks in

Baruch District and C & D blocks in Surat district bounded by Bagha
river & Motomia Mangrol Village on the South, Valia — Netrang road
on the North, Kim river on the West and lignite development
boundary on the East and Block B to the extent required. These
blocks are expected to host about 310 MT Lignite resources which
could meet the requirement of 1000 MW power project for the life of
the plant. Mining lease, which are in favour of GIPCL/GMDC to be
transferred to NLC and for fresh lease to be applied wherever
mining lease has not been applied. Action has been taken to engage
MECL for carrying out Geological exploration and this will be
completed in six months period for the blocks, which is required for
first phase of mining plan.

GIPCL is at present operating Vastan lignit mine of 1.5 MT per

annum capacity to feed 2 x 125 MW units. This mine of 42 MT is
being mined since year 2000. GIPCL has obtained mining lease to
the northern side of existing mine over an area of 2080h which has
mineable reserve of 84MT. this reserve has been planned to be used
by GIPCL for feeding to one unit of 250MW (+20% addl. Capacity)
which is adjacent to the existing Power Plant. GIPCL is offering the
balance 86 MT of lignite from this block to NLC. GIPCL has applied
for mining lease for valia block which has minabe reserve of I 7OMT
and Govt, Gujarat has agreed to offer the same to NLC.

The valia block has been explored on a 1000 mtr grid except in a
small area where detailed exploration has been done a 250 mtr grid
space. In order to increase the confidence level detailed exploration
is to be done on closed space drilling. NLC has awarded exploration
contract to MECL and the work will be taken up as soon as advance
action proposal is approved by MOC. The fuel requirement is
estimated to be about 300MT with CV of 2800 Kcal/KG and Sp.
Consumption of 0.975 kg/kwhr at 80 PLF for life span of 35- 40
years to feed 1000MW Power project. Govt of Gujarat has agreed to
allocate lignite blocks - Valia Blocks-E, F, G and C & D blocks and
block B to the extent required.

Power Plant: It is proposed to develop a mine and to set up the

power plant preferably near mine mouth. In this regard, G0G has
identified five locations and NLC on inspection has freezed three
locations viz locations C,D & E near Valia town for locating the NLC
has estimated about 800h of land for establishing the power plant
and its infrastructure which includes ash dyke. power plant and any
one site will be chosen based on the suitability. Joint inspection with
GIPCL to the above site is to be made and suitable site to be firmed
up.
The necessity of soil investigation study is to be studied. NLC has
estimated about 800h of land for establishing the power plant and
its infrastructure which includes ash dyke.
Water Requirement: The requirement of water is estimated to be
about 5000 m3/hr and it is proposed to take water at
Bhodan/Kakrapar weir from Tapi River or from Rudh regulator of
Narmada River based on the detailed tech-economic study. Based
on the site selection, water intake point and water corridor to be
finalized. The water requirement for the power plant is estimated to
be about 5000 Cu. M/hr.

GIPCL has engaged M/s C.C.Patel, to study about the water carrier
system. The company has surveyed the area and suggested the
following 5 options:

• Location of 2 x 1000 Mw power plant near Nani Naroli plant &

water supply from Bodhan, Tapi river ( estimated cost Rs. 25 crores)
• Location of 2 x 1000 MW plant near’Nani Naroli & water supply
from in- take at village Rudh on left bank of river Narmadha.
(estimated cost Rs. 93 crores)
• Location of 2 x 1000 MW plant near valia & entire 30 MGD water
requirement from new in-take at village Rudh on left bank of river
Narmadha. (estimated cost Rs. 83 crores)
• Location of 2 x 1000 MW plant near valia & using surplus
infrastructure
facility avilabe at Bodhan to draw additional 10 MGD from Bhodan
and 20
MGD from new in-take at village Rudh on left bank of river
Narmadha (
estimated cost Rs. 83 crores).
• Location of 2 x 1000 MW plant near valia & drawl of entire 30 MGD
water requirement from new in-take at village from Kakarapar weir
pond on right bank of river Tapi. (estimated cost Rs. 118 crores)
After appropriate decision on the location of the power plant is
decided, detailed survey of the water carrier has to made to fix the
water carrier system.

Construction water.

The source of water for construction purpose either by sinking bore

well or from near by water source (GIPCL power plantl Narmadha
river / Tapii river.) is to firmed up.

Approach roads.

Based on the selection of mining boundary and power plant

location, the approach roads to be provided / strengthened /
diverted.
Construction Power:

Regarding the requirement of construction power supply, GoG has

agreed to provide power supply from the nearest sub station. The
nearst sub station to be identified and the power drawl scheme to
be decided. The power requirement is about 5MVA and one no 5
MVA transformer will be provided.

Time schedule

It is proposed to implement the project with the following time

schedule:

Preparation of various reports, 18 months from date of signing

getting various clearances and of MOU
GOt sanction,
Award of contract for main plant 06 months from GOl sanction
package
Construction and synchronization 36 months from LOA
of the first unit
Total 60 months from date of signing
of MOU

Investment

With regard to project cost of the power plant, it would be between

Rs.4.5 to 5.OCrores per MW of installation and total investment
required for the power plant would be around Rs.4500 5000Crores.
If Mega power project status is obtained, the project cost would be
about Rs.4500Crores.

With regard to mining of about 8.OMTPA, the project cost would be

about Rs.l000Crores and the entire overburden and lignite mining
operations is proposed to be outsourced. Mining lease will be
obtained from the appropriate authority.

NLC Board has approved the Advance Action Plan for Rs.6.2oCrores
in the meeting held on 09.06.2006 and MOC has been requested to
approve the same for taking up pre-project sanction activities.
Approval of MOC is awaited. As soon as AAP is approved, action will
be taken to implement the same.

FORMATION OF JOINT VENTURE COMPANY:

Subject to investment and other approvals, as may be required, of

the appropriate Governments/ the Board of Directors of NLC &
Company I (ies) nominated by Govt. of Gujarat, a Joint Venture
Agreement (JVA) on mutually agreed terms and Memorandum of
Association (MOA) & Articles of Association (AOA) prepared in tine
with the provisions of the JVA is proposed to be signed by between
NLC and GoG I company (ies) nominated by GoG to form the Joint
Venture Company (JVC).

JVC is proposed to be formed and incorporated under the

Companies Act, 1956 as an integrated Company involving mining
and generation of power for the establishment, operation and
maintenance of the integrated Project in South Gujarat.

NLC and GoG, have proposed to have the initial authorized paid-up
equity capital of the JVC at the time of incorporation as Rs.5.OCrores
and subsequently enhance the authorized paid-up equity capital
through a detailed planning process. The proposed equity share
holding pattern between NLC arid GoG I Company (ies) nominated
by G0G is as under:

a) Neyveli Lignite Corporation Limited - 74% to 89% and

b) GoG / Company (ies) nominated by Govt. of Gujarat - 26% to
11%.

Valia Lignite Mining Project — Present status and action Programme

The action taken by NLC is as below.

1. A Geologist from NLC has been deputed to Gujarat to collect the

available geological exploration details and hydro geological study
carried out by GMDC and GIPCL. Action has been taken to engage
M/s.MECL for carrying out Geological exploration and this will be
completed in six months period for the blocks, which is required for
first phase of mining plan.
2. NLC has addressed CMPDI to furnish the budgetary offer to carry
out feasibility report for mine.
3. A tender was floated for carrying out feasibility report for thermal
power plant. Five bids were received. After techno commercial
review, the price cover will be opened shortly.
4. Limited tender enquiry was floated for carrying out EIA!EMP study
for both thermal and mine. The bids received are under scrutiny.
After techno commercial review, the price cover will be opened
shortly.