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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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Monday, 05 October 15
Q1 & Q2 2016 DELIVERY SWAPS DECLINED M-M AND W-W THIS PAST WEEK
COALspot.com: API 5 FOB Newcastle Coal swap for Q4’ 2015 delivery decreased $0.36 per ton (0.85%) month over month to US$ 42.12 per ton. The ...
Monday, 05 October 15
Q1' 16 CFR SOUTH CHINA COAL SWAP CLOSED US$ 48.05 PER TON
COALspot.com: API 8 CFR South China Coal swap for 4Q’ 2015 delivery down US$ 0.47 (0.96 %) per ton month over month.
A commodity swap is ...
Monday, 05 October 15
SMALL DECLINE IN 2014 SHIP OPERATING COSTS - MOORE STEPHENS
Total annual operating costs in the shipping industry fell by an average of 0.8% in 2014. This compares with the 0.3% average fall in costs recorde ...
Sunday, 04 October 15
THE INDO-INDIA FREIGHT MARKET REMAINS UNDER PRESSURE
COALspot.com: The BDI closed on Friday (2 Oct 2015) at 889 points, down by 54 points compared to previous Friday's closing ( 24 Sept 2015) of 9 ...
Friday, 02 October 15
COAL PRODUCTION IN THE UNITED STATES DECREASED THIS WEEK - EIA
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 17.5 million shor ...
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- Mercuria Energy - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Goldman Sachs - Singapore
- International Coal Ventures Pvt Ltd - India
- Trasteel International SA, Italy
- Parry Sugars Refinery, India
- Krishnapatnam Port Company Ltd. - India
- Vedanta Resources Plc - India
- New Zealand Coal & Carbon
- Jaiprakash Power Ventures ltd
- Rashtriya Ispat Nigam Limited - India
- Sinarmas Energy and Mining - Indonesia
- Directorate Of Revenue Intelligence - India
- Ambuja Cements Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Minerals Council of Australia
- Oldendorff Carriers - Singapore
- Vizag Seaport Private Limited - India
- Sical Logistics Limited - India
- AsiaOL BioFuels Corp., Philippines
- Kartika Selabumi Mining - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- McConnell Dowell - Australia
- Indian Oil Corporation Limited
- European Bulk Services B.V. - Netherlands
- Pipit Mutiara Jaya. PT, Indonesia
- Latin American Coal - Colombia
- Pendopo Energi Batubara - Indonesia
- Mintek Dendrill Indonesia
- Standard Chartered Bank - UAE
- Posco Energy - South Korea
- Kalimantan Lumbung Energi - Indonesia
- Marubeni Corporation - India
- GAC Shipping (India) Pvt Ltd
- Parliament of New Zealand
- Kumho Petrochemical, South Korea
- Global Business Power Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Meralco Power Generation, Philippines
- Toyota Tsusho Corporation, Japan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- SMG Consultants - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Port Waratah Coal Services - Australia
- Global Coal Blending Company Limited - Australia
- Singapore Mercantile Exchange
- Ministry of Finance - Indonesia
- Bukit Baiduri Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- Karaikal Port Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Edison Trading Spa - Italy
- CIMB Investment Bank - Malaysia
- Eastern Coal Council - USA
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mercator Lines Limited - India
- White Energy Company Limited
- Siam City Cement PLC, Thailand
- Commonwealth Bank - Australia
- Kepco SPC Power Corporation, Philippines
- Deloitte Consulting - India
- Central Java Power - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Manunggal Multi Energi - Indonesia
- Energy Development Corp, Philippines
- Binh Thuan Hamico - Vietnam
- Neyveli Lignite Corporation Ltd, - India
- Baramulti Group, Indonesia
- Grasim Industreis Ltd - India
- ASAPP Information Group - India
- IHS Mccloskey Coal Group - USA
- Ministry of Mines - Canada
- GVK Power & Infra Limited - India
- Bhoruka Overseas - Indonesia
- Romanian Commodities Exchange
- Altura Mining Limited, Indonesia
- Independent Power Producers Association of India
- South Luzon Thermal Energy Corporation
- Xindia Steels Limited - India
- Indika Energy - Indonesia
- India Bulls Power Limited - India
- Timah Investasi Mineral - Indoneisa
- Lanco Infratech Ltd - India
- Bhushan Steel Limited - India
- MS Steel International - UAE
- Electricity Authority, New Zealand
- Malabar Cements Ltd - India
- Coastal Gujarat Power Limited - India
- Eastern Energy - Thailand
- Borneo Indobara - Indonesia
- Australian Commodity Traders Exchange
- The State Trading Corporation of India Ltd
- Salva Resources Pvt Ltd - India
- Medco Energi Mining Internasional
- Metalloyd Limited - United Kingdom
- Samtan Co., Ltd - South Korea
- Intertek Mineral Services - Indonesia
- OPG Power Generation Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Barasentosa Lestari - Indonesia
- Bhatia International Limited - India
- Banpu Public Company Limited - Thailand
- Aboitiz Power Corporation - Philippines
- Dalmia Cement Bharat India
- San Jose City I Power Corp, Philippines
- Chettinad Cement Corporation Ltd - India
- Maheswari Brothers Coal Limited - India
- Sindya Power Generating Company Private Ltd
- Global Green Power PLC Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- Jorong Barutama Greston.PT - Indonesia
- Tata Chemicals Ltd - India
- Bulk Trading Sa - Switzerland
- Therma Luzon, Inc, Philippines
- GMR Energy Limited - India
- Uttam Galva Steels Limited - India
- Semirara Mining Corp, Philippines
- Cigading International Bulk Terminal - Indonesia
- Planning Commission, India
- Gujarat Mineral Development Corp Ltd - India
- CNBM International Corporation - China
- Antam Resourcindo - Indonesia
- Madhucon Powers Ltd - India
- Chamber of Mines of South Africa
- Karbindo Abesyapradhi - Indoneisa
- Power Finance Corporation Ltd., India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Economic Council, Georgia
- Kideco Jaya Agung - Indonesia
- Rio Tinto Coal - Australia
- Sree Jayajothi Cements Limited - India
- Siam City Cement - Thailand
- Jindal Steel & Power Ltd - India
- Wood Mackenzie - Singapore
- Videocon Industries ltd - India
- Petron Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Savvy Resources Ltd - HongKong
- Mjunction Services Limited - India
- The University of Queensland
- Directorate General of MIneral and Coal - Indonesia
- Indonesian Coal Mining Association
- Interocean Group of Companies - India
- Africa Commodities Group - South Africa
- Larsen & Toubro Limited - India
- Bukit Makmur.PT - Indonesia
- Holcim Trading Pte Ltd - Singapore
- ICICI Bank Limited - India
- Ind-Barath Power Infra Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Simpson Spence & Young - Indonesia
- Coalindo Energy - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Attock Cement Pakistan Limited
- Ministry of Transport, Egypt
- Thiess Contractors Indonesia
- Gujarat Electricity Regulatory Commission - India
- London Commodity Brokers - England
- Georgia Ports Authority, United States
- PNOC Exploration Corporation - Philippines
- Thai Mozambique Logistica
- TNB Fuel Sdn Bhd - Malaysia
- Central Electricity Authority - India
- Tamil Nadu electricity Board
- The Treasury - Australian Government
- Coal and Oil Company - UAE
- TeaM Sual Corporation - Philippines
- PTC India Limited - India
- Gujarat Sidhee Cement - India
- Agrawal Coal Company - India
- Carbofer General Trading SA - India
- Electricity Generating Authority of Thailand
- Aditya Birla Group - India
- Kobexindo Tractors - Indoneisa
- Cement Manufacturers Association - India
- Energy Link Ltd, New Zealand
- Leighton Contractors Pty Ltd - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Star Paper Mills Limited - India
- Orica Mining Services - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Alfred C Toepfer International GmbH - Germany
- Riau Bara Harum - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Straits Asia Resources Limited - Singapore
- Indian Energy Exchange, India
- Indogreen Group - Indonesia
- Globalindo Alam Lestari - Indonesia
- Price Waterhouse Coopers - Russia
- Heidelberg Cement - Germany
- Australian Coal Association
- Bayan Resources Tbk. - Indonesia
- Anglo American - United Kingdom
- Formosa Plastics Group - Taiwan
- IEA Clean Coal Centre - UK
- Orica Australia Pty. Ltd.
- Renaissance Capital - South Africa
- Kaltim Prima Coal - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Meenaskhi Energy Private Limited - India
- Billiton Holdings Pty Ltd - Australia
- PowerSource Philippines DevCo
- Sojitz Corporation - Japan
- Bangladesh Power Developement Board
- Semirara Mining and Power Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Makarim & Taira - Indonesia
- Bharathi Cement Corporation - India
- Wilmar Investment Holdings
- Sakthi Sugars Limited - India
- SMC Global Power, Philippines
- VISA Power Limited - India
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