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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, 29 October 14
GOOD REASON WHY Q4 CAPESIZE OUTLOOK WAS SO BULLISH AT START OF THE YEAR - COMMODORE RESEARCH
COALspot.com: There was good reason why so many analysts' capesize outlook for Q4 was so very strong at the start of this year. Brazilian ...
Tuesday, 28 October 14
SGX'S FOB RICHARDS BAY COAL SWAP FOR DELIVERY Q1' 2015 CLOSED AT $ 68.07 ON 24 OCT
COALspot.com: API 4 FOB Richards Bay coal swap for Q4’ 2014 delivery decreased US$ 0.65 (-0.96%) month over month and increased US$ 1.79 (+2. ...
Tuesday, 28 October 14
SUB-BIT FOB INDONESIA COAL SWAP FOR Q1' 15 DELIVERY CLOSED 3.68% LOWER MONTH ON MONTH
COALspot.com: Indonesian coal swaps for delivery Q4' 2014 lost month on month and gained day on day and week on week.
The swap has lost US ...
Monday, 27 October 14
GOVT PROMISES TO EASE LICENSING PROCEDURES IN MINING SECTOR - THE JAKARTA POST
The Energy and Mineral Resources Ministry’s directorate general for mineral and coal plans to simplify the complicated licensing procedures i ...
Monday, 27 October 14
FOB NEWCASTLE COAL SWAP FOR Q1' 15 DELIVERY CLOSED $ 0.10 LESSER THAN Q4' 14 CLOSING OF $ 53.27 PMT
COALspot.com: API 5 FOB Newcastle Coal swap for Q4’ 2014 delivery decreased US$ 1.43 (-2.61%) month over month and increased US$ 0.05 (+0.09% ...
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- South Luzon Thermal Energy Corporation
- Alfred C Toepfer International GmbH - Germany
- SN Aboitiz Power Inc, Philippines
- Ind-Barath Power Infra Limited - India
- Electricity Authority, New Zealand
- Maharashtra Electricity Regulatory Commission - India
- Semirara Mining and Power Corporation, Philippines
- Star Paper Mills Limited - India
- Directorate General of MIneral and Coal - Indonesia
- OPG Power Generation Pvt Ltd - India
- Minerals Council of Australia
- Holcim Trading Pte Ltd - Singapore
- PTC India Limited - India
- Mjunction Services Limited - India
- Carbofer General Trading SA - India
- Sarangani Energy Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Semirara Mining Corp, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Central Java Power - Indonesia
- Videocon Industries ltd - India
- Larsen & Toubro Limited - India
- Global Coal Blending Company Limited - Australia
- IHS Mccloskey Coal Group - USA
- Jorong Barutama Greston.PT - Indonesia
- Georgia Ports Authority, United States
- Romanian Commodities Exchange
- ICICI Bank Limited - India
- Kapuas Tunggal Persada - Indonesia
- Sindya Power Generating Company Private Ltd
- Dalmia Cement Bharat India
- Kalimantan Lumbung Energi - Indonesia
- Tata Chemicals Ltd - India
- Posco Energy - South Korea
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Parliament of New Zealand
- Latin American Coal - Colombia
- Bukit Asam (Persero) Tbk - Indonesia
- Merrill Lynch Commodities Europe
- Power Finance Corporation Ltd., India
- Bulk Trading Sa - Switzerland
- Siam City Cement PLC, Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Uttam Galva Steels Limited - India
- Tamil Nadu electricity Board
- Leighton Contractors Pty Ltd - Australia
- McConnell Dowell - Australia
- Thiess Contractors Indonesia
- Altura Mining Limited, Indonesia
- PowerSource Philippines DevCo
- Bukit Makmur.PT - Indonesia
- Jaiprakash Power Ventures ltd
- The Treasury - Australian Government
- Vizag Seaport Private Limited - India
- Australian Commodity Traders Exchange
- TeaM Sual Corporation - Philippines
- Lanco Infratech Ltd - India
- Manunggal Multi Energi - Indonesia
- Siam City Cement - Thailand
- Energy Development Corp, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Indonesian Coal Mining Association
- Renaissance Capital - South Africa
- Intertek Mineral Services - Indonesia
- Borneo Indobara - Indonesia
- SMG Consultants - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Attock Cement Pakistan Limited
- Sree Jayajothi Cements Limited - India
- PNOC Exploration Corporation - Philippines
- Directorate Of Revenue Intelligence - India
- Bukit Baiduri Energy - Indonesia
- GAC Shipping (India) Pvt Ltd
- Medco Energi Mining Internasional
- CIMB Investment Bank - Malaysia
- Africa Commodities Group - South Africa
- Heidelberg Cement - Germany
- Global Green Power PLC Corporation, Philippines
- Agrawal Coal Company - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Marubeni Corporation - India
- Ministry of Finance - Indonesia
- Ministry of Mines - Canada
- Makarim & Taira - Indonesia
- Trasteel International SA, Italy
- Parry Sugars Refinery, India
- The University of Queensland
- Savvy Resources Ltd - HongKong
- Mintek Dendrill Indonesia
- Coalindo Energy - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- SMC Global Power, Philippines
- Energy Link Ltd, New Zealand
- TNB Fuel Sdn Bhd - Malaysia
- Kumho Petrochemical, South Korea
- LBH Netherlands Bv - Netherlands
- VISA Power Limited - India
- New Zealand Coal & Carbon
- Sinarmas Energy and Mining - Indonesia
- Iligan Light & Power Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Malabar Cements Ltd - India
- Indian Energy Exchange, India
- Maheswari Brothers Coal Limited - India
- Aditya Birla Group - India
- Orica Australia Pty. Ltd.
- Oldendorff Carriers - Singapore
- Indian Oil Corporation Limited
- Pendopo Energi Batubara - Indonesia
- Meralco Power Generation, Philippines
- Bhushan Steel Limited - India
- Singapore Mercantile Exchange
- Bayan Resources Tbk. - Indonesia
- Global Business Power Corporation, Philippines
- Eastern Coal Council - USA
- Samtan Co., Ltd - South Korea
- Pipit Mutiara Jaya. PT, Indonesia
- Xindia Steels Limited - India
- IEA Clean Coal Centre - UK
- Kideco Jaya Agung - Indonesia
- GVK Power & Infra Limited - India
- Aboitiz Power Corporation - Philippines
- Economic Council, Georgia
- ASAPP Information Group - India
- Orica Mining Services - Indonesia
- Jindal Steel & Power Ltd - India
- Toyota Tsusho Corporation, Japan
- Anglo American - United Kingdom
- Wood Mackenzie - Singapore
- Kohat Cement Company Ltd. - Pakistan
- GN Power Mariveles Coal Plant, Philippines
- Price Waterhouse Coopers - Russia
- Kepco SPC Power Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Neyveli Lignite Corporation Ltd, - India
- European Bulk Services B.V. - Netherlands
- Essar Steel Hazira Ltd - India
- Indika Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- Barasentosa Lestari - Indonesia
- Commonwealth Bank - Australia
- Bhoruka Overseas - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Eastern Energy - Thailand
- Indogreen Group - Indonesia
- Goldman Sachs - Singapore
- Antam Resourcindo - Indonesia
- Baramulti Group, Indonesia
- Bharathi Cement Corporation - India
- Edison Trading Spa - Italy
- MS Steel International - UAE
- Riau Bara Harum - Indonesia
- Rio Tinto Coal - Australia
- Sakthi Sugars Limited - India
- Independent Power Producers Association of India
- Billiton Holdings Pty Ltd - Australia
- Port Waratah Coal Services - Australia
- Cement Manufacturers Association - India
- AsiaOL BioFuels Corp., Philippines
- Sical Logistics Limited - India
- Ceylon Electricity Board - Sri Lanka
- Straits Asia Resources Limited - Singapore
- Gujarat Electricity Regulatory Commission - India
- Wilmar Investment Holdings
- Standard Chartered Bank - UAE
- Therma Luzon, Inc, Philippines
- Karaikal Port Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Rashtriya Ispat Nigam Limited - India
- India Bulls Power Limited - India
- Formosa Plastics Group - Taiwan
- Mercator Lines Limited - India
- Madhucon Powers Ltd - India
- Coal and Oil Company - UAE
- Electricity Generating Authority of Thailand
- Planning Commission, India
- Krishnapatnam Port Company Ltd. - India
- Metalloyd Limited - United Kingdom
- The State Trading Corporation of India Ltd
- London Commodity Brokers - England
- Central Electricity Authority - India
- Chettinad Cement Corporation Ltd - India
- Ambuja Cements Ltd - India
- Grasim Industreis Ltd - India
- Timah Investasi Mineral - Indoneisa
- Ministry of Transport, Egypt
- Gujarat Sidhee Cement - India
- GMR Energy Limited - India
- Australian Coal Association
- Offshore Bulk Terminal Pte Ltd, Singapore
- Salva Resources Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Bangladesh Power Developement Board
- Thai Mozambique Logistica
- Interocean Group of Companies - India
- Kaltim Prima Coal - Indonesia
- Coastal Gujarat Power Limited - India
- Kobexindo Tractors - Indoneisa
- Simpson Spence & Young - Indonesia
- Mercuria Energy - Indonesia
- Chamber of Mines of South Africa
- Banpu Public Company Limited - Thailand
- Sojitz Corporation - Japan
- White Energy Company Limited
- Vedanta Resources Plc - India
- Deloitte Consulting - India
- PetroVietnam Power Coal Import and Supply Company
- Bhatia International Limited - India
- CNBM International Corporation - China
- Cigading International Bulk Terminal - Indonesia
- Kartika Selabumi Mining - Indonesia
- Petron Corporation, Philippines
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