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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, 14 April 15
COAL OUTPUT FALLS AS PRICES CONTINUE TO LAG - JP
Coal output dropped by 21 percent in the first three months of the year as low prices for the commodity forced mining companies to reduce activitie ...
Tuesday, 14 April 15
SUB-BIT FOB INDONESIA COAL SWAPS FOR Q4 DELIVERY CRASHES THROUGH $44
COALspot.com: Indonesian coal swap for delivery Q2 2015 declined month on month and week over week.
The Q2 swap was declined US$ 2.25 (4.77%) ...
Monday, 13 April 15
Q2 FOB NEWCASTLE COAL SWAP CLOSED AT $45.28 PMT; DECLINED 7.50% M-M
COALspot.com: API 5 FOB Newcastle Coal swap for Q2’ 2015 delivery declined US$ 3.67 per MT (-7.50%) month over month and US$ 0.39 week on wee ...
Monday, 13 April 15
Q4 CFR SOUTH CHINA COAL SWAP CLOSED AT US$ 50.97
COALspot.com: API 8 CFR South China Coal swap for Q2’ 2015 delivery declined US$ 4.50 (-8.05%) per MT month over month and US$ 0.12 (-0 ...
Sunday, 12 April 15
INDONESIA TO INDIA FREIGHT RATE IS EXPECTED TO BE SOFT
COALspot.com: The freight market was steady, however the BDI was declined slightly week over week.
BDI dropped 1.36 pct and closed at 580 poin ...
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- PNOC Exploration Corporation - Philippines
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- Banpu Public Company Limited - Thailand
- Kaltim Prima Coal - Indonesia
- Sarangani Energy Corporation, Philippines
- Indika Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Mjunction Services Limited - India
- Vedanta Resources Plc - India
- IEA Clean Coal Centre - UK
- Indogreen Group - Indonesia
- Agrawal Coal Company - India
- Savvy Resources Ltd - HongKong
- Indian Oil Corporation Limited
- Petrochimia International Co. Ltd.- Taiwan
- Holcim Trading Pte Ltd - Singapore
- Toyota Tsusho Corporation, Japan
- GMR Energy Limited - India
- Eastern Energy - Thailand
- Commonwealth Bank - Australia
- Maheswari Brothers Coal Limited - India
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- Global Business Power Corporation, Philippines
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- Ceylon Electricity Board - Sri Lanka
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- Pipit Mutiara Jaya. PT, Indonesia
- Economic Council, Georgia
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- Alfred C Toepfer International GmbH - Germany
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- Petron Corporation, Philippines
- Chamber of Mines of South Africa
- Bahari Cakrawala Sebuku - Indonesia
- Attock Cement Pakistan Limited
- Edison Trading Spa - Italy
- Central Java Power - Indonesia
- Directorate Of Revenue Intelligence - India
- Australian Coal Association
- Ministry of Transport, Egypt
- Trasteel International SA, Italy
- Kapuas Tunggal Persada - Indonesia
- Global Coal Blending Company Limited - Australia
- GAC Shipping (India) Pvt Ltd
- Billiton Holdings Pty Ltd - Australia
- Directorate General of MIneral and Coal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Uttam Galva Steels Limited - India
- Tamil Nadu electricity Board
- Marubeni Corporation - India
- Parliament of New Zealand
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- Goldman Sachs - Singapore
- SMC Global Power, Philippines
- Videocon Industries ltd - India
- Binh Thuan Hamico - Vietnam
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- The State Trading Corporation of India Ltd
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- Bangladesh Power Developement Board
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- Iligan Light & Power Inc, Philippines
- Mintek Dendrill Indonesia
- Australian Commodity Traders Exchange
- Price Waterhouse Coopers - Russia
- Planning Commission, India
- Eastern Coal Council - USA
- CIMB Investment Bank - Malaysia
- New Zealand Coal & Carbon
- Riau Bara Harum - Indonesia
- Rio Tinto Coal - Australia
- Semirara Mining Corp, Philippines
- Malabar Cements Ltd - India
- Borneo Indobara - Indonesia
- Anglo American - United Kingdom
- Manunggal Multi Energi - Indonesia
- Coal and Oil Company - UAE
- Chettinad Cement Corporation Ltd - India
- SMG Consultants - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bhatia International Limited - India
- PowerSource Philippines DevCo
- Aboitiz Power Corporation - Philippines
- Meenaskhi Energy Private Limited - India
- Kobexindo Tractors - Indoneisa
- Minerals Council of Australia
- Ministry of Finance - Indonesia
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- India Bulls Power Limited - India
- Coalindo Energy - Indonesia
- Bhoruka Overseas - Indonesia
- Bukit Makmur.PT - Indonesia
- Antam Resourcindo - Indonesia
- Latin American Coal - Colombia
- Krishnapatnam Port Company Ltd. - India
- Formosa Plastics Group - Taiwan
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- Meralco Power Generation, Philippines
- Renaissance Capital - South Africa
- Lanco Infratech Ltd - India
- VISA Power Limited - India
- The University of Queensland
- Samtan Co., Ltd - South Korea
- European Bulk Services B.V. - Netherlands
- Asmin Koalindo Tuhup - Indonesia
- Posco Energy - South Korea
- Therma Luzon, Inc, Philippines
- Heidelberg Cement - Germany
- Tata Chemicals Ltd - India
- Central Electricity Authority - India
- Bukit Asam (Persero) Tbk - Indonesia
- Singapore Mercantile Exchange
- Standard Chartered Bank - UAE
- CNBM International Corporation - China
- Ambuja Cements Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- The Treasury - Australian Government
- SN Aboitiz Power Inc, Philippines
- Thiess Contractors Indonesia
- Kepco SPC Power Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kartika Selabumi Mining - Indonesia
- Coastal Gujarat Power Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Port Waratah Coal Services - Australia
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- McConnell Dowell - Australia
- Orica Australia Pty. Ltd.
- Baramulti Group, Indonesia
- Xindia Steels Limited - India
- Independent Power Producers Association of India
- Kumho Petrochemical, South Korea
- Wood Mackenzie - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Electricity Authority, New Zealand
- GVK Power & Infra Limited - India
- Indo Tambangraya Megah - Indonesia
- MS Steel International - UAE
- Altura Mining Limited, Indonesia
- Gujarat Electricity Regulatory Commission - India
- Rashtriya Ispat Nigam Limited - India
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- Cement Manufacturers Association - India
- Global Green Power PLC Corporation, Philippines
- Dalmia Cement Bharat India
- Gujarat Mineral Development Corp Ltd - India
- Energy Development Corp, Philippines
- Metalloyd Limited - United Kingdom
- South Luzon Thermal Energy Corporation
- Georgia Ports Authority, United States
- Straits Asia Resources Limited - Singapore
- Globalindo Alam Lestari - Indonesia
- Aditya Birla Group - India
- Sojitz Corporation - Japan
- OPG Power Generation Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Miang Besar Coal Terminal - Indonesia
- London Commodity Brokers - England
- Ministry of Mines - Canada
- Siam City Cement - Thailand
- AsiaOL BioFuels Corp., Philippines
- LBH Netherlands Bv - Netherlands
- Wilmar Investment Holdings
- Medco Energi Mining Internasional
- Bayan Resources Tbk. - Indonesia
- Sakthi Sugars Limited - India
- International Coal Ventures Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Energy Link Ltd, New Zealand
- Leighton Contractors Pty Ltd - Australia
- Intertek Mineral Services - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Africa Commodities Group - South Africa
- Bulk Trading Sa - Switzerland
- Mercator Lines Limited - India
- Thai Mozambique Logistica
- Vizag Seaport Private Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Merrill Lynch Commodities Europe
- Mercuria Energy - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Salva Resources Pvt Ltd - India
- PTC India Limited - India
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- Sindya Power Generating Company Private Ltd
- Makarim & Taira - Indonesia
- Interocean Group of Companies - India
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- Bharathi Cement Corporation - India
- Indonesian Coal Mining Association
- Carbofer General Trading SA - India
- Power Finance Corporation Ltd., India
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