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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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- The Treasury - Australian Government
- New Zealand Coal & Carbon
- Indonesian Coal Mining Association
- Indo Tambangraya Megah - Indonesia
- Price Waterhouse Coopers - Russia
- Merrill Lynch Commodities Europe
- Malabar Cements Ltd - India
- IEA Clean Coal Centre - UK
- IHS Mccloskey Coal Group - USA
- Formosa Plastics Group - Taiwan
- Gujarat Electricity Regulatory Commission - India
- Minerals Council of Australia
- Barasentosa Lestari - Indonesia
- Edison Trading Spa - Italy
- Madhucon Powers Ltd - India
- Meenaskhi Energy Private Limited - India
- International Coal Ventures Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Goldman Sachs - Singapore
- SMG Consultants - Indonesia
- Georgia Ports Authority, United States
- McConnell Dowell - Australia
- Kobexindo Tractors - Indoneisa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Africa Commodities Group - South Africa
- Australian Coal Association
- Gujarat Sidhee Cement - India
- Carbofer General Trading SA - India
- Bulk Trading Sa - Switzerland
- Riau Bara Harum - Indonesia
- Manunggal Multi Energi - Indonesia
- SN Aboitiz Power Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Vizag Seaport Private Limited - India
- Siam City Cement - Thailand
- Leighton Contractors Pty Ltd - Australia
- Savvy Resources Ltd - HongKong
- Star Paper Mills Limited - India
- Tamil Nadu electricity Board
- Bukit Baiduri Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Posco Energy - South Korea
- Semirara Mining and Power Corporation, Philippines
- Australian Commodity Traders Exchange
- Sree Jayajothi Cements Limited - India
- CNBM International Corporation - China
- Antam Resourcindo - Indonesia
- Cigading International Bulk Terminal - Indonesia
- SMC Global Power, Philippines
- Kepco SPC Power Corporation, Philippines
- Planning Commission, India
- Globalindo Alam Lestari - Indonesia
- Karaikal Port Pvt Ltd - India
- Sakthi Sugars Limited - India
- Jindal Steel & Power Ltd - India
- Ministry of Transport, Egypt
- Larsen & Toubro Limited - India
- London Commodity Brokers - England
- Kideco Jaya Agung - Indonesia
- Meralco Power Generation, Philippines
- Grasim Industreis Ltd - India
- Bhushan Steel Limited - India
- Bayan Resources Tbk. - Indonesia
- Intertek Mineral Services - Indonesia
- Mercuria Energy - Indonesia
- Toyota Tsusho Corporation, Japan
- Kumho Petrochemical, South Korea
- Bhoruka Overseas - Indonesia
- Global Coal Blending Company Limited - Australia
- Pendopo Energi Batubara - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Orica Mining Services - Indonesia
- Aditya Birla Group - India
- Kaltim Prima Coal - Indonesia
- Salva Resources Pvt Ltd - India
- Renaissance Capital - South Africa
- Straits Asia Resources Limited - Singapore
- Central Java Power - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Indian Energy Exchange, India
- PowerSource Philippines DevCo
- Cement Manufacturers Association - India
- Energy Development Corp, Philippines
- Coastal Gujarat Power Limited - India
- Mintek Dendrill Indonesia
- Chettinad Cement Corporation Ltd - India
- Petron Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Marubeni Corporation - India
- Xindia Steels Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Semirara Mining Corp, Philippines
- Mercator Lines Limited - India
- Oldendorff Carriers - Singapore
- Ambuja Cements Ltd - India
- Orica Australia Pty. Ltd.
- Sical Logistics Limited - India
- Anglo American - United Kingdom
- Therma Luzon, Inc, Philippines
- The State Trading Corporation of India Ltd
- GN Power Mariveles Coal Plant, Philippines
- Iligan Light & Power Inc, Philippines
- Metalloyd Limited - United Kingdom
- Standard Chartered Bank - UAE
- Global Business Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Binh Thuan Hamico - Vietnam
- Electricity Authority, New Zealand
- Latin American Coal - Colombia
- Karbindo Abesyapradhi - Indoneisa
- Rashtriya Ispat Nigam Limited - India
- AsiaOL BioFuels Corp., Philippines
- Deloitte Consulting - India
- San Jose City I Power Corp, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ind-Barath Power Infra Limited - India
- Agrawal Coal Company - India
- European Bulk Services B.V. - Netherlands
- Bukit Asam (Persero) Tbk - Indonesia
- Mjunction Services Limited - India
- Indian Oil Corporation Limited
- Indika Energy - Indonesia
- Tata Chemicals Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Makarim & Taira - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- India Bulls Power Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Rio Tinto Coal - Australia
- Parliament of New Zealand
- Krishnapatnam Port Company Ltd. - India
- VISA Power Limited - India
- Thiess Contractors Indonesia
- Power Finance Corporation Ltd., India
- Medco Energi Mining Internasional
- Economic Council, Georgia
- Independent Power Producers Association of India
- Eastern Energy - Thailand
- PetroVietnam Power Coal Import and Supply Company
- Coal and Oil Company - UAE
- Banpu Public Company Limited - Thailand
- Directorate General of MIneral and Coal - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Aboitiz Power Corporation - Philippines
- Ministry of Mines - Canada
- Jaiprakash Power Ventures ltd
- Romanian Commodities Exchange
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Parry Sugars Refinery, India
- ASAPP Information Group - India
- Alfred C Toepfer International GmbH - Germany
- Kohat Cement Company Ltd. - Pakistan
- Eastern Coal Council - USA
- GMR Energy Limited - India
- CIMB Investment Bank - Malaysia
- Bangladesh Power Developement Board
- Essar Steel Hazira Ltd - India
- Sojitz Corporation - Japan
- White Energy Company Limited
- Bhatia International Limited - India
- Port Waratah Coal Services - Australia
- Timah Investasi Mineral - Indoneisa
- Trasteel International SA, Italy
- Sindya Power Generating Company Private Ltd
- Vedanta Resources Plc - India
- Wood Mackenzie - Singapore
- Attock Cement Pakistan Limited
- Holcim Trading Pte Ltd - Singapore
- ICICI Bank Limited - India
- Bharathi Cement Corporation - India
- Heidelberg Cement - Germany
- Singapore Mercantile Exchange
- Borneo Indobara - Indonesia
- The University of Queensland
- Kapuas Tunggal Persada - Indonesia
- Baramulti Group, Indonesia
- Chamber of Mines of South Africa
- Central Electricity Authority - India
- PTC India Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Altura Mining Limited, Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Energy Link Ltd, New Zealand
- Simpson Spence & Young - Indonesia
- Electricity Generating Authority of Thailand
- Ministry of Finance - Indonesia
- TeaM Sual Corporation - Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Dalmia Cement Bharat India
- Siam City Cement PLC, Thailand
- Bukit Makmur.PT - Indonesia
- Kartika Selabumi Mining - Indonesia
- Directorate Of Revenue Intelligence - India
- PNOC Exploration Corporation - Philippines
- GAC Shipping (India) Pvt Ltd
- Global Green Power PLC Corporation, Philippines
- MS Steel International - UAE
- TNB Fuel Sdn Bhd - Malaysia
- Interocean Group of Companies - India
- Maheswari Brothers Coal Limited - India
- South Luzon Thermal Energy Corporation
- GVK Power & Infra Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Indogreen Group - Indonesia
- OPG Power Generation Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Coalindo Energy - Indonesia
- Wilmar Investment Holdings
- Commonwealth Bank - Australia
- Uttam Galva Steels Limited - India
- Thai Mozambique Logistica
- Lanco Infratech Ltd - India
- Videocon Industries ltd - India
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