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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, 09 September 14
WEAK M&A DESPITE ABUNDANT DISTRESSED INDONESIA COAL ASSETS - FITCH RATINGS
COALspot.com: Fitch Ratings says that a meaningful level of merger and acquisition (M&A) activity leading to a consolidation of the coal sector ...
Tuesday, 09 September 14
PORT OF NEWCASTLE SHIPPED 13.207 MTN OF COAL IN AUGUST; TRADE VALUE AROUND $1.17 BILLION
COALspot.com: The Port of Newcastle, Australia’s major trading ports and the world’s largest coal export port, has shipped $1.17 billio ...
Monday, 08 September 14
SUB-BIT FOB INDONESIA COAL SWAP UNDERPERFORMED LAST WEEK
COALspot.com: Indonesian coal swaps for average October 2014 decreased US$ 0.20 (-0.39%) day on day and US$ 1.60 (-3.04%) per mt week on week. The ...
Monday, 08 September 14
API 8 CFR SOUTH CHINA COAL SWAP FOR DELIVERY JAN'15 CLOSED AT US$ 66.30 PMT W/E 5 SEPTEMBER 2014; LOST 5.15% M-O-M
COALspot.com: API 8 CFR South China Coal swap for delivery in October 2014 decreased US$ 0.15 (-0.23%) day on day and US$ 2.05 (-3.04%) week on wee ...
Monday, 08 September 14
CHINESE IRON ORE IMPORT DEMAND VERY STRONG - COMMODORE
COALspot.com: 30 dry bulk vessels were chartered in the spot iron ore market last week to haul iron ore import cargoes to Chinese buyers.
Acco ...
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- Trasteel International SA, Italy
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- Sarangani Energy Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Dalmia Cement Bharat India
- Kohat Cement Company Ltd. - Pakistan
- Antam Resourcindo - Indonesia
- Port Waratah Coal Services - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Kumho Petrochemical, South Korea
- Global Green Power PLC Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Eastern Coal Council - USA
- Ministry of Transport, Egypt
- Chamber of Mines of South Africa
- Straits Asia Resources Limited - Singapore
- Intertek Mineral Services - Indonesia
- Africa Commodities Group - South Africa
- White Energy Company Limited
- MS Steel International - UAE
- PowerSource Philippines DevCo
- Gujarat Mineral Development Corp Ltd - India
- CIMB Investment Bank - Malaysia
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- Baramulti Group, Indonesia
- Ministry of Mines - Canada
- London Commodity Brokers - England
- Bulk Trading Sa - Switzerland
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- Merrill Lynch Commodities Europe
- Thiess Contractors Indonesia
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- Tamil Nadu electricity Board
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- Parry Sugars Refinery, India
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- Bukit Asam (Persero) Tbk - Indonesia
- Wilmar Investment Holdings
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- Coalindo Energy - Indonesia
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- SMC Global Power, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
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- Billiton Holdings Pty Ltd - Australia
- Maharashtra Electricity Regulatory Commission - India
- PTC India Limited - India
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- Central Java Power - Indonesia
- Ministry of Finance - Indonesia
- Agrawal Coal Company - India
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- PNOC Exploration Corporation - Philippines
- Electricity Generating Authority of Thailand
- SMG Consultants - Indonesia
- Savvy Resources Ltd - HongKong
- Simpson Spence & Young - Indonesia
- Bharathi Cement Corporation - India
- GMR Energy Limited - India
- Indonesian Coal Mining Association
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- Kepco SPC Power Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- OPG Power Generation Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Commonwealth Bank - Australia
- Salva Resources Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Global Business Power Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Electricity Authority, New Zealand
- Parliament of New Zealand
- Sree Jayajothi Cements Limited - India
- Videocon Industries ltd - India
- Directorate Of Revenue Intelligence - India
- Meralco Power Generation, Philippines
- GVK Power & Infra Limited - India
- Lanco Infratech Ltd - India
- Central Electricity Authority - India
- Indian Oil Corporation Limited
- Global Coal Blending Company Limited - Australia
- Sindya Power Generating Company Private Ltd
- TNB Fuel Sdn Bhd - Malaysia
- Orica Australia Pty. Ltd.
- Asmin Koalindo Tuhup - Indonesia
- VISA Power Limited - India
- Coastal Gujarat Power Limited - India
- Semirara Mining Corp, Philippines
- Singapore Mercantile Exchange
- Riau Bara Harum - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Ind-Barath Power Infra Limited - India
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- Pendopo Energi Batubara - Indonesia
- Oldendorff Carriers - Singapore
- International Coal Ventures Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Siam City Cement PLC, Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
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- Jorong Barutama Greston.PT - Indonesia
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- Bhushan Steel Limited - India
- Metalloyd Limited - United Kingdom
- ASAPP Information Group - India
- New Zealand Coal & Carbon
- The Treasury - Australian Government
- Barasentosa Lestari - Indonesia
- The University of Queensland
- Aditya Birla Group - India
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- Semirara Mining and Power Corporation, Philippines
- Rio Tinto Coal - Australia
- Wood Mackenzie - Singapore
- San Jose City I Power Corp, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- European Bulk Services B.V. - Netherlands
- Orica Mining Services - Indonesia
- Banpu Public Company Limited - Thailand
- Anglo American - United Kingdom
- Toyota Tsusho Corporation, Japan
- Renaissance Capital - South Africa
- Meenaskhi Energy Private Limited - India
- Bangladesh Power Developement Board
- Australian Commodity Traders Exchange
- Gujarat Sidhee Cement - India
- Cement Manufacturers Association - India
- Minerals Council of Australia
- Eastern Energy - Thailand
- The State Trading Corporation of India Ltd
- Samtan Co., Ltd - South Korea
- Jindal Steel & Power Ltd - India
- Uttam Galva Steels Limited - India
- Indika Energy - Indonesia
- Georgia Ports Authority, United States
- South Luzon Thermal Energy Corporation
- Edison Trading Spa - Italy
- Goldman Sachs - Singapore
- Xindia Steels Limited - India
- Timah Investasi Mineral - Indoneisa
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- Mercator Lines Limited - India
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- Australian Coal Association
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- IHS Mccloskey Coal Group - USA
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- Iligan Light & Power Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- Directorate General of MIneral and Coal - Indonesia
- Indian Energy Exchange, India
- Ceylon Electricity Board - Sri Lanka
- Economic Council, Georgia
- Price Waterhouse Coopers - Russia
- Ambuja Cements Ltd - India
- Bhatia International Limited - India
- Romanian Commodities Exchange
- Grasim Industreis Ltd - India
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- Petron Corporation, Philippines
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- Sical Logistics Limited - India
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- Larsen & Toubro Limited - India
- Alfred C Toepfer International GmbH - Germany
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- Energy Link Ltd, New Zealand
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