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Tuesday, 06 September 11
INDONESIAS PROPOSED COAL EXPORT BAN MAY HAVE IMPACT ON THE INDIAN POWER SECTOR - DIPESH DIPU
.jpg) COALspot.com - This is a special interview about Indonesian proposed coal export ban by 2014, with Mr. Dipesh Dipu, Director of Deloitte Touche Tohmatsu, India.
The Indonesian government is currently in the process of drafting a new regulation that could ban the export of low-grade coal by January 12, 2014. This is likely to apply to coal below 5700 kcal/kg on air dried basis in value.
As of now Indonesia is producing around 150 million tons of coal with calorific value below 5700 GAD (according to chairman of Indonesian coal mining association). However by 2014, there are possibilities the total production of below 5700 GAD coal may reach more than 200 million per annum.
Will Indonesian coal export ban impact on the Indian fuel requirements?
The earlier grade of coal that was being considered for proposed ban has GCV of 5100 kcal/kg of less (adb), which can be comparable to 3800-4200 kcal/kg (arb) domestic coal available in India. This grade of coal has found favor in India primarily due to likely price advantage but economics of power generation based on such grade of imported coal may be a suspect. This considering that such grades of coal from Indonesia typically have high moisture content, which makes transportation cost per unit of energy generated higher. The quantum of the low grade of coal (<5100 kcal/kg adb) procured from Indonesia is likely to remain relatively low.
However, if the new definition of low grade coal is applied (<5700 kcal/kg adb), it may be reasonable to believe that such a ban may have impact on the Indian power sector as volumes in this grade of coal are expected to rise in the proportion of coal exports to India. Several of the acquisitions made by Indian power generation companies in Indonesia have been in coal blocks that will produce coal of this grade, and a blanket ban on the exports can jeopardize power plant development in India.
On the other hand, the domestic Indonesian market may not be prepared to consume all the coal mined of this grade in view of the power generation capacity addition plans in Indonesia. In such a case, the coal mine development is likely to be deferred. The Indonesian law makers may need to reconsider domestic market demand, investment climate in coal sector and impact of the legislation on the export revenues.
What is the alternative source for Indian power industry if the proposed coal export ban come into effect by 2014?
Indian power generation companies have been forced to look out for coal assets abroad due to the investment and regulatory environment within the country. India boasts of more than 110 billion tonnes of coal reserves, which largely fall within a 300 meters of depth. If the regulatory and investment environment is amended to allow greater participation of private sector Indian dependence on imports will be reduced.
However, for imports, India will continue to look at Indonesia, South Africa, Australia and newer destinations like Mozambique and Columbia. But these sources also have constraints, domestic demands in South Africa is likely to restrict quantum jump in exports out of South Africa. Indonesia has also proposed domestic market obligations. Mozambique may have infrastructure constraints for large volumes of coal being transported from Tete province to ports of Maputo, Ncala or Beira. Australian coal is of high quality but may have higher costs of mining and transport.
What would be the additional cost if Indian consumers switch their sourcing origin from Indonesia?
Indonesia has competitive advantage due to its geographical closeness. However, on a per tonne basis, assuming comparable quality, costs of transport may make marginal difference when compared with South Africa and Mozambique.
When compared to Australian coal, due to the high quality, cost of energy may well be comparable even though shipping costs are higher. Between Indonesian coal (5500 kcal/kg adb priced at USD 90 per tonne) and Australian coal (6500 kcal/kg adb priced at USD 120 per tonne), indicative variable cost difference of power generation may be about Indian Rupees 0.20 to 0.30 per kWh (electricity unit) in favor of Indonesian coal.
Will it affect Indian economy growth or this coal export ban is ignorable as India can easily identify alternative sources of fuel?
The magnitude of growth in power generation in India will necessarily mean that coal will remain the mainstay. Natural gas has had issues of availability. Nuclear plant development is facing socio-political challenge in view of the risks of technology failure. Development of hydel power has also faced issues of land acquisition, rehabilitation & resettlement apart from the technical issues of hydro-geological features. Renewable sources such as solar and wind generation are still projected to constitute a small portion of India power generation mix. Identifying an alternative source that can match coal in its accessibility, availability and affordability in the context of scale of capacity addition required in India is a challenge.
What is the Indian government's role on this issue, whether government has to come out with the solution such as easing Indian mining and environment law, open up mining for foreigners, G2G arrangement, etc…?
There is a need to look at domestic sources with pro-active and constructive approach and make all necessary legal and statutory amendments that make the resources available and mineable. Easing the regulations may not be one of such measures but making those regulations work in sync with each other in a time bound and predictable manner must certainly be.
There is certainly a case for opening the domestic coal sector for private participation, including independent miners, and for foreign participation so that newer technology and enhanced scale of operations are implemented in India. The regulation also needs to permit risk capital to come in for prospecting and exploration.
For imports the G2G relations can be leveraged to secure coal assets. India has good relationship with Indonesia and has also signed a tax treaty with Mozambique in 2010 which will facilitate investments. Government may also engage with these countries to ease exports to India and extend fiscal support to coal mining companies investing in mining and associated infrastructure development.
About Dipesh Dipu
Dipesh Dipu works as Director with Deloitte Touche Tohmatsu India Pvt. Ltd in the Energy and Resources consulting practice of the firm and anchors the Firm’s initiative in the mining and metals sectors.
He is a mining engineering graduate from Indian School of Mines and is a Chartered Financial Analyst (CFA). He has also done executive program in business management from Indian Institute of Management Calcutta. Dipesh has recently been awarded the Abheraj Baldota Gold Medal for the Young Mining Engineer of the Year 2007 by the Mining Engineers’ Association of India in recognition of his contributions in the improvement of mining industry in India.
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Wednesday, 16 December 15
FOB RICHARDS BAY COAL SWAP SLUMP 5.5% FROM LAST MONTH
COALspot.com: API4 FOB Richards Bay Coal swap for delivery Q1’ 2016 decline month over month and week over week.
The Q1’ 2016 &nbs ...
Wednesday, 16 December 15
MARKET INSIGHT - KATERINA RESTIS
On Friday 4th of December the meeting of OPEC was held in Vienna, Austria. Since its last meeting, oil and product stock levels have continued to r ...
Tuesday, 15 December 15
THE GOVERNMENT DECLARED THERMAL COAL BENCHMARK PRICE CRASHING ONCE AGAIN
COALspot.com: Low coal demand and excess supplies sent Indonesian benchmark coal price down to below 2009 level. HBA has slumped by 1.69% mo ...
Tuesday, 15 December 15
API 5 FOB NEWCASTLE COAL SWAP FIRM W-W; WEAK M-M
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2016 delivery slid $.13 per ton (0.35%) month over month to US$ 37.07 per ton. The swap w ...
Monday, 14 December 15
5000 GAR CS (I) COAL INDEX DECLINE US$ 0.04 PER TON W-O-W
COALspot.com: The 5000 GAR CS (i) coal index decline US$ 0.04 per ton (-0.10 %) week over week.
According to the CS (i) coal (system generated ...
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- Madhucon Powers Ltd - India
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- Bank of Tokyo Mitsubishi UFJ Ltd
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- Tamil Nadu electricity Board
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- Larsen & Toubro Limited - India
- IEA Clean Coal Centre - UK
- Vedanta Resources Plc - India
- Siam City Cement PLC, Thailand
- Gujarat Mineral Development Corp Ltd - India
- Savvy Resources Ltd - HongKong
- Commonwealth Bank - Australia
- Sakthi Sugars Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Trasteel International SA, Italy
- Bukit Makmur.PT - Indonesia
- Independent Power Producers Association of India
- South Luzon Thermal Energy Corporation
- Aboitiz Power Corporation - Philippines
- Bukit Baiduri Energy - Indonesia
- Marubeni Corporation - India
- Sindya Power Generating Company Private Ltd
- Uttam Galva Steels Limited - India
- Attock Cement Pakistan Limited
- European Bulk Services B.V. - Netherlands
- Thai Mozambique Logistica
- Krishnapatnam Port Company Ltd. - India
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- Kapuas Tunggal Persada - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Price Waterhouse Coopers - Russia
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- Salva Resources Pvt Ltd - India
- Chamber of Mines of South Africa
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- Toyota Tsusho Corporation, Japan
- Grasim Industreis Ltd - India
- Directorate Of Revenue Intelligence - India
- Electricity Generating Authority of Thailand
- Kobexindo Tractors - Indoneisa
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- Latin American Coal - Colombia
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- Wood Mackenzie - Singapore
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- Anglo American - United Kingdom
- Goldman Sachs - Singapore
- Mercator Lines Limited - India
- Georgia Ports Authority, United States
- Australian Coal Association
- Holcim Trading Pte Ltd - Singapore
- ICICI Bank Limited - India
- The University of Queensland
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- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Asmin Koalindo Tuhup - Indonesia
- Central Electricity Authority - India
- Straits Asia Resources Limited - Singapore
- Merrill Lynch Commodities Europe
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- Mintek Dendrill Indonesia
- Baramulti Group, Indonesia
- Karaikal Port Pvt Ltd - India
- Indian Energy Exchange, India
- Deloitte Consulting - India
- CIMB Investment Bank - Malaysia
- Offshore Bulk Terminal Pte Ltd, Singapore
- GN Power Mariveles Coal Plant, Philippines
- Banpu Public Company Limited - Thailand
- TeaM Sual Corporation - Philippines
- Sinarmas Energy and Mining - Indonesia
- Sarangani Energy Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Malabar Cements Ltd - India
- Economic Council, Georgia
- Maheswari Brothers Coal Limited - India
- GAC Shipping (India) Pvt Ltd
- Alfred C Toepfer International GmbH - Germany
- Posco Energy - South Korea
- SMC Global Power, Philippines
- Sojitz Corporation - Japan
- Oldendorff Carriers - Singapore
- PTC India Limited - India
- GMR Energy Limited - India
- The Treasury - Australian Government
- International Coal Ventures Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Standard Chartered Bank - UAE
- Indogreen Group - Indonesia
- Central Java Power - Indonesia
- Kaltim Prima Coal - Indonesia
- Romanian Commodities Exchange
- Binh Thuan Hamico - Vietnam
- Minerals Council of Australia
- Ministry of Mines - Canada
- Antam Resourcindo - Indonesia
- Parry Sugars Refinery, India
- CNBM International Corporation - China
- Metalloyd Limited - United Kingdom
- Thiess Contractors Indonesia
- VISA Power Limited - India
- Xindia Steels Limited - India
- Formosa Plastics Group - Taiwan
- Kideco Jaya Agung - Indonesia
- McConnell Dowell - Australia
- Medco Energi Mining Internasional
- Carbofer General Trading SA - India
- Heidelberg Cement - Germany
- PNOC Exploration Corporation - Philippines
- Eastern Energy - Thailand
- Coastal Gujarat Power Limited - India
- Cigading International Bulk Terminal - Indonesia
- Essar Steel Hazira Ltd - India
- Indian Oil Corporation Limited
- PowerSource Philippines DevCo
- Neyveli Lignite Corporation Ltd, - India
- Mercuria Energy - Indonesia
- Energy Link Ltd, New Zealand
- Samtan Co., Ltd - South Korea
- Australian Commodity Traders Exchange
- Maharashtra Electricity Regulatory Commission - India
- Electricity Authority, New Zealand
- Power Finance Corporation Ltd., India
- San Jose City I Power Corp, Philippines
- Simpson Spence & Young - Indonesia
- Ministry of Finance - Indonesia
- Billiton Holdings Pty Ltd - Australia
- PetroVietnam Power Coal Import and Supply Company
- Indonesian Coal Mining Association
- Bhatia International Limited - India
- SN Aboitiz Power Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ministry of Transport, Egypt
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- Altura Mining Limited, Indonesia
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- Gujarat Electricity Regulatory Commission - India
- Cement Manufacturers Association - India
- Riau Bara Harum - Indonesia
- Eastern Coal Council - USA
- Jindal Steel & Power Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Parliament of New Zealand
- Orica Australia Pty. Ltd.
- Edison Trading Spa - Italy
- Intertek Mineral Services - Indonesia
- Ambuja Cements Ltd - India
- Tata Chemicals Ltd - India
- Coal and Oil Company - UAE
- IHS Mccloskey Coal Group - USA
- Bulk Trading Sa - Switzerland
- London Commodity Brokers - England
- Port Waratah Coal Services - Australia
- Semirara Mining Corp, Philippines
- Gujarat Sidhee Cement - India
- Leighton Contractors Pty Ltd - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bayan Resources Tbk. - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Meenaskhi Energy Private Limited - India
- Manunggal Multi Energi - Indonesia
- Iligan Light & Power Inc, Philippines
- Bharathi Cement Corporation - India
- Global Green Power PLC Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Orica Mining Services - Indonesia
- Rio Tinto Coal - Australia
- Aditya Birla Group - India
- Jaiprakash Power Ventures ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Dalmia Cement Bharat India
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- Global Business Power Corporation, Philippines
- Planning Commission, India
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- Meralco Power Generation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Chettinad Cement Corporation Ltd - India
- Timah Investasi Mineral - Indoneisa
- Interocean Group of Companies - India
- Therma Luzon, Inc, Philippines
- Wilmar Investment Holdings
- SMG Consultants - Indonesia
- India Bulls Power Limited - India
- Bangladesh Power Developement Board
- Mjunction Services Limited - India
- Vizag Seaport Private Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- White Energy Company Limited
- The State Trading Corporation of India Ltd
- Star Paper Mills Limited - India
- Lanco Infratech Ltd - India
- Renaissance Capital - South Africa
- MS Steel International - UAE
- Videocon Industries ltd - India
- Singapore Mercantile Exchange
- Kartika Selabumi Mining - Indonesia
- Kumho Petrochemical, South Korea
- Bhushan Steel Limited - India
- Agrawal Coal Company - India
- Global Coal Blending Company Limited - Australia
- Directorate General of MIneral and Coal - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Indo Tambangraya Megah - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- ASAPP Information Group - India
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