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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, 11 November 15
Q3' 16 RICHARDS BAY COAL SWAP LOST 15.47% SINCE 6 AUGUST; 18.65% SINCE 6 MAY
COALspot.com: API4 FOB Richards Bay Coal swap for delivery Q1’ 2016 declined week over week and month over month.
The Q1’ 2016 &nb ...
Wednesday, 11 November 15
VESSEL VALUES ARE DOWN BY AT LEAST 20% SINCE MID-AUGUST - INTERMODAL
I had promised not to spend another broker’s insight focusing on the dry bulk side. However, the sale of the M/V Churchill Bulker (179,362 dw ...
Tuesday, 10 November 15
SELF-HEATING OF COAL HAS EMPHASISED THE IMPORTANCE OF CHECKING THE ACCURACY OF SHIPPER'S DECLARATIONS - GARD
Recent incidents involving self-heating of coal has emphasised the importance of checking the accuracy of shipper’s declarations for all type ...
Tuesday, 10 November 15
API 5 FOB NEWCASTLE COAL SWAP SLIDES CONTINUE
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2016 delivery slid $3.55 per ton (8.50%) month over month to US$ 38.20 per ton. The swap ...
Monday, 09 November 15
BUNKER PRICES TO KEEP SLIDING THIS WEEK, EXPERT SAYS - MARINE BUNKER EXCHANGE
The oil price volatility has continued this week. Two dollars up one day and the next day two dollars down. The oil market has been trading on the ...
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- Australian Coal Association
- Standard Chartered Bank - UAE
- Trasteel International SA, Italy
- Sinarmas Energy and Mining - Indonesia
- Ministry of Finance - Indonesia
- Essar Steel Hazira Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- Sical Logistics Limited - India
- Bukit Baiduri Energy - Indonesia
- Merrill Lynch Commodities Europe
- Maharashtra Electricity Regulatory Commission - India
- Malabar Cements Ltd - India
- Thai Mozambique Logistica
- Romanian Commodities Exchange
- Indogreen Group - Indonesia
- Antam Resourcindo - Indonesia
- Global Coal Blending Company Limited - Australia
- PTC India Limited - India
- Savvy Resources Ltd - HongKong
- Energy Development Corp, Philippines
- Eastern Coal Council - USA
- Chamber of Mines of South Africa
- Renaissance Capital - South Africa
- Independent Power Producers Association of India
- Posco Energy - South Korea
- Larsen & Toubro Limited - India
- Star Paper Mills Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Toyota Tsusho Corporation, Japan
- Jindal Steel & Power Ltd - India
- PNOC Exploration Corporation - Philippines
- Rio Tinto Coal - Australia
- Karaikal Port Pvt Ltd - India
- Interocean Group of Companies - India
- Intertek Mineral Services - Indonesia
- Billiton Holdings Pty Ltd - Australia
- San Jose City I Power Corp, Philippines
- Krishnapatnam Port Company Ltd. - India
- Bangladesh Power Developement Board
- VISA Power Limited - India
- Bayan Resources Tbk. - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indika Energy - Indonesia
- Manunggal Multi Energi - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Electricity Authority, New Zealand
- Central Electricity Authority - India
- McConnell Dowell - Australia
- International Coal Ventures Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- GAC Shipping (India) Pvt Ltd
- Petron Corporation, Philippines
- Vedanta Resources Plc - India
- Sarangani Energy Corporation, Philippines
- SMG Consultants - Indonesia
- Formosa Plastics Group - Taiwan
- Bahari Cakrawala Sebuku - Indonesia
- CNBM International Corporation - China
- Xindia Steels Limited - India
- Carbofer General Trading SA - India
- Bhushan Steel Limited - India
- Africa Commodities Group - South Africa
- Leighton Contractors Pty Ltd - Australia
- Power Finance Corporation Ltd., India
- TeaM Sual Corporation - Philippines
- LBH Netherlands Bv - Netherlands
- Iligan Light & Power Inc, Philippines
- White Energy Company Limited
- Anglo American - United Kingdom
- Kartika Selabumi Mining - Indonesia
- Minerals Council of Australia
- Global Business Power Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Georgia Ports Authority, United States
- Wood Mackenzie - Singapore
- Videocon Industries ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Singapore Mercantile Exchange
- Lanco Infratech Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Edison Trading Spa - Italy
- Indian Oil Corporation Limited
- Kepco SPC Power Corporation, Philippines
- GMR Energy Limited - India
- SN Aboitiz Power Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- Medco Energi Mining Internasional
- Heidelberg Cement - Germany
- Orica Australia Pty. Ltd.
- Marubeni Corporation - India
- Altura Mining Limited, Indonesia
- Latin American Coal - Colombia
- The Treasury - Australian Government
- Simpson Spence & Young - Indonesia
- Planning Commission, India
- Kobexindo Tractors - Indoneisa
- Cement Manufacturers Association - India
- Cigading International Bulk Terminal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Commonwealth Bank - Australia
- Ministry of Mines - Canada
- Ind-Barath Power Infra Limited - India
- Sindya Power Generating Company Private Ltd
- Sree Jayajothi Cements Limited - India
- Banpu Public Company Limited - Thailand
- Eastern Energy - Thailand
- Aditya Birla Group - India
- IHS Mccloskey Coal Group - USA
- Attock Cement Pakistan Limited
- Siam City Cement PLC, Thailand
- Kideco Jaya Agung - Indonesia
- Straits Asia Resources Limited - Singapore
- Directorate Of Revenue Intelligence - India
- Wilmar Investment Holdings
- Indian Energy Exchange, India
- Asmin Koalindo Tuhup - Indonesia
- Oldendorff Carriers - Singapore
- Aboitiz Power Corporation - Philippines
- Central Java Power - Indonesia
- Bhatia International Limited - India
- Madhucon Powers Ltd - India
- Energy Link Ltd, New Zealand
- South Luzon Thermal Energy Corporation
- Meralco Power Generation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Semirara Mining Corp, Philippines
- Mercuria Energy - Indonesia
- Borneo Indobara - Indonesia
- Indonesian Coal Mining Association
- Kalimantan Lumbung Energi - Indonesia
- London Commodity Brokers - England
- Parliament of New Zealand
- Uttam Galva Steels Limited - India
- OPG Power Generation Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Kapuas Tunggal Persada - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- CIMB Investment Bank - Malaysia
- Vijayanagar Sugar Pvt Ltd - India
- GVK Power & Infra Limited - India
- Riau Bara Harum - Indonesia
- Bulk Trading Sa - Switzerland
- Dalmia Cement Bharat India
- Meenaskhi Energy Private Limited - India
- Timah Investasi Mineral - Indoneisa
- Goldman Sachs - Singapore
- Kaltim Prima Coal - Indonesia
- Deloitte Consulting - India
- Grasim Industreis Ltd - India
- Bharathi Cement Corporation - India
- Price Waterhouse Coopers - Russia
- Vizag Seaport Private Limited - India
- Global Green Power PLC Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Orica Mining Services - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Barasentosa Lestari - Indonesia
- The State Trading Corporation of India Ltd
- Samtan Co., Ltd - South Korea
- ASAPP Information Group - India
- Thiess Contractors Indonesia
- European Bulk Services B.V. - Netherlands
- Alfred C Toepfer International GmbH - Germany
- Therma Luzon, Inc, Philippines
- Bhoruka Overseas - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Tata Chemicals Ltd - India
- Port Waratah Coal Services - Australia
- Mjunction Services Limited - India
- PowerSource Philippines DevCo
- Tamil Nadu electricity Board
- The University of Queensland
- Jorong Barutama Greston.PT - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Sakthi Sugars Limited - India
- Globalindo Alam Lestari - Indonesia
- Kumho Petrochemical, South Korea
- Bukit Makmur.PT - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- MS Steel International - UAE
- Maheswari Brothers Coal Limited - India
- Baramulti Group, Indonesia
- New Zealand Coal & Carbon
- AsiaOL BioFuels Corp., Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Ministry of Transport, Egypt
- Ceylon Electricity Board - Sri Lanka
- Holcim Trading Pte Ltd - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Coalindo Energy - Indonesia
- IEA Clean Coal Centre - UK
- Parry Sugars Refinery, India
- Siam City Cement - Thailand
- Ambuja Cements Ltd - India
- Coal and Oil Company - UAE
- ICICI Bank Limited - India
- Makarim & Taira - Indonesia
- Chettinad Cement Corporation Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- India Bulls Power Limited - India
- Gujarat Sidhee Cement - India
- Electricity Generating Authority of Thailand
- Economic Council, Georgia
- Pendopo Energi Batubara - Indonesia
- Sojitz Corporation - Japan
- Salva Resources Pvt Ltd - India
- Agrawal Coal Company - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- SMC Global Power, Philippines
- Coastal Gujarat Power Limited - India
- Australian Commodity Traders Exchange
- Mintek Dendrill Indonesia
- Mercator Lines Limited - India
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