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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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Tuesday, 24 November 15
COAL PRICES SET TO REMAIN UNDER PRESSURE UNTIL 2016 DUE TO OVER SUPPLY GLUT; H1 '16 COAL SWAPS DOWN 13% M-M
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2016 delivery slid $5 per ton (12.05%) month over month to US$ 36.50 per ton. The s ...
Monday, 23 November 15
NEGATIVE 2016 OUTLOOK FOR WESTERN EUROPEAN STEEL - SAYS FITCH RATINGS
COALspot.com: European steel in 2016 are both negative for the sector and for issuer ratings.
This reflects our expectation that import levels ...
Monday, 23 November 15
DRY BULK MARKET: NET FLEET GROWTH IS SLOWING DOWN, AS SHIP OWNERS ARE LOOKING FOR WAYS TO ALLEVIATING MARKET MELTDOWN - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market has been in “meltdown” mode for a few weeks now, unable to find support and avoid the fall in historical lows. As s ...
Monday, 23 November 15
CS50 COAL INDEX CLOSED AT $40.27 PER TON; FELL 0.15% FROM LAST WEEK
COALspot.com: The 5700 GAR CS (i) coal index fell by US cents 3 per ton week over week on 20 November 2015. CS 57 (5700 GAR coal) index closed at U ...
Monday, 23 November 15
CFR SOUTH CHINA COAL SWAPS FALL FURTHER ON LOW DEMAND
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2016 delivery declined US$ 6.75 (13.99%) per ton month over month.
A commodity swa ...
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- Bhushan Steel Limited - India
- European Bulk Services B.V. - Netherlands
- Manunggal Multi Energi - Indonesia
- Kaltim Prima Coal - Indonesia
- Agrawal Coal Company - India
- Indo Tambangraya Megah - Indonesia
- Gujarat Sidhee Cement - India
- Gujarat Electricity Regulatory Commission - India
- Minerals Council of Australia
- PetroVietnam Power Coal Import and Supply Company
- GAC Shipping (India) Pvt Ltd
- White Energy Company Limited
- Makarim & Taira - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Malabar Cements Ltd - India
- Goldman Sachs - Singapore
- Alfred C Toepfer International GmbH - Germany
- Planning Commission, India
- Port Waratah Coal Services - Australia
- Oldendorff Carriers - Singapore
- Riau Bara Harum - Indonesia
- Meralco Power Generation, Philippines
- The University of Queensland
- Timah Investasi Mineral - Indoneisa
- Petron Corporation, Philippines
- PTC India Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Carbofer General Trading SA - India
- Therma Luzon, Inc, Philippines
- Videocon Industries ltd - India
- Latin American Coal - Colombia
- Iligan Light & Power Inc, Philippines
- Rashtriya Ispat Nigam Limited - India
- Indika Energy - Indonesia
- Metalloyd Limited - United Kingdom
- Tamil Nadu electricity Board
- Maharashtra Electricity Regulatory Commission - India
- Mercator Lines Limited - India
- SN Aboitiz Power Inc, Philippines
- Karaikal Port Pvt Ltd - India
- Georgia Ports Authority, United States
- Romanian Commodities Exchange
- Kumho Petrochemical, South Korea
- Holcim Trading Pte Ltd - Singapore
- IHS Mccloskey Coal Group - USA
- Indian Oil Corporation Limited
- TNB Fuel Sdn Bhd - Malaysia
- Grasim Industreis Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Essar Steel Hazira Ltd - India
- Pendopo Energi Batubara - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indogreen Group - Indonesia
- Vedanta Resources Plc - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bukit Baiduri Energy - Indonesia
- Borneo Indobara - Indonesia
- Kobexindo Tractors - Indoneisa
- Economic Council, Georgia
- Vijayanagar Sugar Pvt Ltd - India
- Marubeni Corporation - India
- GN Power Mariveles Coal Plant, Philippines
- GMR Energy Limited - India
- Formosa Plastics Group - Taiwan
- Vizag Seaport Private Limited - India
- Energy Development Corp, Philippines
- LBH Netherlands Bv - Netherlands
- Rio Tinto Coal - Australia
- Intertek Mineral Services - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Antam Resourcindo - Indonesia
- Banpu Public Company Limited - Thailand
- Bharathi Cement Corporation - India
- Sarangani Energy Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Interocean Group of Companies - India
- Global Business Power Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Aboitiz Power Corporation - Philippines
- Billiton Holdings Pty Ltd - Australia
- Electricity Authority, New Zealand
- Uttam Galva Steels Limited - India
- Maheswari Brothers Coal Limited - India
- Power Finance Corporation Ltd., India
- GVK Power & Infra Limited - India
- ICICI Bank Limited - India
- Siam City Cement PLC, Thailand
- Orica Mining Services - Indonesia
- The State Trading Corporation of India Ltd
- Siam City Cement - Thailand
- Trasteel International SA, Italy
- Australian Commodity Traders Exchange
- Eastern Coal Council - USA
- Tata Chemicals Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Mercuria Energy - Indonesia
- Bangladesh Power Developement Board
- Salva Resources Pvt Ltd - India
- Thiess Contractors Indonesia
- South Luzon Thermal Energy Corporation
- Price Waterhouse Coopers - Russia
- Binh Thuan Hamico - Vietnam
- Semirara Mining and Power Corporation, Philippines
- Edison Trading Spa - Italy
- Lanco Infratech Ltd - India
- Jaiprakash Power Ventures ltd
- Miang Besar Coal Terminal - Indonesia
- The Treasury - Australian Government
- McConnell Dowell - Australia
- Karbindo Abesyapradhi - Indoneisa
- Directorate Of Revenue Intelligence - India
- Sree Jayajothi Cements Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Bukit Asam (Persero) Tbk - Indonesia
- Mintek Dendrill Indonesia
- Bayan Resources Tbk. - Indonesia
- Ministry of Finance - Indonesia
- TeaM Sual Corporation - Philippines
- Parliament of New Zealand
- Anglo American - United Kingdom
- Xindia Steels Limited - India
- Eastern Energy - Thailand
- Parry Sugars Refinery, India
- CIMB Investment Bank - Malaysia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sakthi Sugars Limited - India
- Australian Coal Association
- Asmin Koalindo Tuhup - Indonesia
- Kideco Jaya Agung - Indonesia
- Samtan Co., Ltd - South Korea
- Orica Australia Pty. Ltd.
- Meenaskhi Energy Private Limited - India
- Coastal Gujarat Power Limited - India
- Sical Logistics Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Wilmar Investment Holdings
- Pipit Mutiara Jaya. PT, Indonesia
- Electricity Generating Authority of Thailand
- India Bulls Power Limited - India
- PowerSource Philippines DevCo
- Attock Cement Pakistan Limited
- Coal and Oil Company - UAE
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Thai Mozambique Logistica
- Star Paper Mills Limited - India
- Ind-Barath Power Infra Limited - India
- Aditya Birla Group - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ambuja Cements Ltd - India
- PNOC Exploration Corporation - Philippines
- Chamber of Mines of South Africa
- Central Java Power - Indonesia
- Baramulti Group, Indonesia
- Altura Mining Limited, Indonesia
- Ceylon Electricity Board - Sri Lanka
- Barasentosa Lestari - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Madhucon Powers Ltd - India
- Deloitte Consulting - India
- Heidelberg Cement - Germany
- Simpson Spence & Young - Indonesia
- Semirara Mining Corp, Philippines
- Sindya Power Generating Company Private Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- San Jose City I Power Corp, Philippines
- IEA Clean Coal Centre - UK
- Coalindo Energy - Indonesia
- Renaissance Capital - South Africa
- Leighton Contractors Pty Ltd - Australia
- ASAPP Information Group - India
- SMC Global Power, Philippines
- Bhoruka Overseas - Indonesia
- Merrill Lynch Commodities Europe
- Sinarmas Energy and Mining - Indonesia
- Straits Asia Resources Limited - Singapore
- Jindal Steel & Power Ltd - India
- Bulk Trading Sa - Switzerland
- SMG Consultants - Indonesia
- Africa Commodities Group - South Africa
- Jorong Barutama Greston.PT - Indonesia
- Dalmia Cement Bharat India
- Toyota Tsusho Corporation, Japan
- International Coal Ventures Pvt Ltd - India
- Mjunction Services Limited - India
- CNBM International Corporation - China
- Global Green Power PLC Corporation, Philippines
- Standard Chartered Bank - UAE
- Kepco SPC Power Corporation, Philippines
- Medco Energi Mining Internasional
- Sojitz Corporation - Japan
- Kapuas Tunggal Persada - Indonesia
- Commonwealth Bank - Australia
- London Commodity Brokers - England
- Posco Energy - South Korea
- Independent Power Producers Association of India
- MS Steel International - UAE
- Cement Manufacturers Association - India
- Global Coal Blending Company Limited - Australia
- Central Electricity Authority - India
- Ministry of Mines - Canada
- Ministry of Transport, Egypt
- Chettinad Cement Corporation Ltd - India
- Savvy Resources Ltd - HongKong
- New Zealand Coal & Carbon
- Wood Mackenzie - Singapore
- Gujarat Mineral Development Corp Ltd - India
- VISA Power Limited - India
- Indian Energy Exchange, India
- Larsen & Toubro Limited - India
- Bhatia International Limited - India
- Indonesian Coal Mining Association
- Kartika Selabumi Mining - Indonesia
- Singapore Mercantile Exchange
- OPG Power Generation Pvt Ltd - India
- Energy Link Ltd, New Zealand
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