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Monday, 07 February 11
COAL PRICES ON RISE: DEMAND FROM INDIA AND CHINA - ANALYZED SUNIL K KUMBHAT
 INDONESIA IS HEART OF ASIAN COAL BOOM
COALspot.com - Rising demand of Coal from India and China, coupled with global financial recovery, is driving thermal coal prices that have appreciated in the recent past few months and it is expected that the global prices of Coal shall remain firm and go up further.
Power generation is what is driving the demand of Coal in India and China . In India new coal-fired power plants, ranging in the size from 50 MW to 4,000 MW, are being built throughout India. Power plants are symbol of how rapidly India's economy is expanding.
Similarly China, shall remain a net importer of thermal coal for coming few years as it's economy is growing at firm speed and is expected to deliver mind-boggling growth in 2011. China's coal imports more than doubled to 150 million tonnes from the previous year. Closure of smaller mines, coupled with increased demand from power sector, has triggered China's demand for imported coal.
India has also emerged as one of the major importer of coal. The imports are likely to be around 100-150 million tonnes for the current year as it adds new thermal capacities. India imports about three-fourths of its coal requirement from Indonesia, while South Africa and Australia accounts for the rest.
The quality of Indonesian coal is much better than Indian coal. The gross calorific value of Indonesian coal ranges between 5,000 and 6,500 kilo calories per kilogram (kcl/kg); while for Indian coal it is only 3,000-4,500 kcl/kg- with high ash contents. Bulk of the imported coal in India is used by power companies, which use it to blend with the local coal to improve calorific value. The coal prices also depend upon the ash content and the calorific value .Indonesia’s strategic geographic location makes it the most preferred country for Indian companies for its proximity to the country, which means lower ocean freight charges and better timing compared to other countries such as Australia.
Indonesia's coal Industry has transformed itself from being an minor player in Asia's Coal market to the world's largest Exporter of Steam Coal .Indonesia has come from nowhere to challenge Australia as the world’s largest exporter of thermal coal and is expected soon to topple Australia as the largest coal exporter.
The higher energy demand in India would drive up import of coal .The overall energy generated in India could double within a decade.
Indian power sector will be heavily depend on coal for decades to come. At the same time, India's steel industry, also dependent on coal, is expected to treble its output within a decade.
But there is growing concern about where all the coal is going to come from. India has significant coal reserves suitable for power generation and boasts the world's biggest coal company - the government-owned Coal India Limited. But the expansion of the Indian economy has been so rapid, demand is outstripping domestic supply.
The government wants the economy to expand at 9-10 per cent a year to help lift millions of poor families out of poverty. But an energy supply crunch could compromise that growth target.
India has theoretically significant reserves but it will take a long time to get into actual production, There is a urgent need to re-examine the regulations and policies associated with exploration, exploitation and production. India is still not fully encouraging commercial coal mining by the private sector.
India's coal reserves are concentrated in the eastern states of Orissa, Jharkhand, Chhattisgarh, West Bengal and Madhya Pradesh, where basic logistics infrastructure (such as ports and railways) is lacking. Various government regulation concerning forestry and environmental restrictions are also hindering mine development. Unless such bottlenecks are addressed, growth in domestic coal production could be difficult.'
Due to government regulatory delays, infrastructure bottlenecks and security risks are encouraging Indian firms to look overseas to secure coal supply especially in Indonesia, South Africa, Mozambique, Australia etc. for their ambitious power projects in India.
Indonesia's thermal coal mines have a comparative advantage over Australia's because they are nearer to India but Australia's reputation as a reliable supplier is attractive to Indian buyers.’ Australian mines might be more expensive but they are reliable. Australia’s advantages are that the coal is good and the infrastructure is good'
In spit of all , Australia will face stiff competition from Indonesia - which has lower transport costs. A significant proportion of coal transport in Indonesia is water based, which allows for coal to be transported along rivers via barges to the open sea for loading onto larger vessels. Indonesia’s coal suppliers rely heavily on floating transhipment facilities due to economic reasons.
Indonesia's coal Industry has transformed itself from being an minor player in Asia's Coal market to the world's largest Exporter of Steam Coal .Indonesia has come from nowhere to challenge Australia as the world’s largest exporter of thermal coal and is expected soon to topple Australia as the largest coal exporter.
Indonesia’s government needs to accelerate reforms for foreign direct investment (FDI) in mining and energy sector to give direct control to foreign investors, in order to win confidence and attract/invite major international companies into Indonesia. There is need of more coordination between Ministry of Energy and Mineral Resources Deptt , Indonesian Investment Co-ordination Board (BKPM) ,and Various Regional administrations.
The phenomenal growth in Indonesia’s coal exports in last five years reflects the ability of its coal industry to respond to the rapid growth in Asian demand for thermal coal.
Indonesia has huge coal reserves and exporting coal to many countries for use in power plants for generating energy but it is paradoxical that Indonesia is short of energy. Many Indian companies (Tata , Reliance,Jindal ,L&T, Monnet, Adani ,Essar etc) are capable of sharing power technology and setting up mega power plants in Indonesia
Indonesian private companies can buy equity stakes in Indian power plants in exchange / barter for long-term coal supply. Since India is today one of the fastest growing economies and also has a shortage of power supply then such deals can be beneficial to both parties .Indonesian government or Indonesian companies can invite Coal barter bids (CBB) ,where from foreign companies for development of ports , Roads , Railway lines , Power Plants etc. In Coal barter bids , coal will be supplied to party who will set up Power plants or develop infrastructure etc. Coal mining in Indonesia can be an extremely lucrative sector for overall economic growth. Indonesian government should make single window clearance system to operate business in Indonesia to encourage foreign enterprises and Investment for Coal barter bids. Indonesian Coal companies are fully aware that India is a market into which they can export or thru barter transactions, its major share of Coal Production.
Today Indonesia has stable economic outlook and if reform efforts towards basic infrastructures continues it may become Economic Tiger of Asia by 2020.
Today Indonesia is the heart of the Asian Coal boom.
Analyst - Sunil K Kumbhat , Jodhpur (Rajasthan), India
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Friday, 06 September 24
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- Eastern Coal Council - USA
- Ministry of Mines - Canada
- Renaissance Capital - South Africa
- Port Waratah Coal Services - Australia
- Maheswari Brothers Coal Limited - India
- Bhushan Steel Limited - India
- Global Coal Blending Company Limited - Australia
- Semirara Mining and Power Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Indian Energy Exchange, India
- LBH Netherlands Bv - Netherlands
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- Gujarat Sidhee Cement - India
- Sojitz Corporation - Japan
- Singapore Mercantile Exchange
- Petron Corporation, Philippines
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- Sical Logistics Limited - India
- Economic Council, Georgia
- Electricity Authority, New Zealand
- Dalmia Cement Bharat India
- Videocon Industries ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Romanian Commodities Exchange
- Semirara Mining Corp, Philippines
- Carbofer General Trading SA - India
- Meralco Power Generation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Indian Oil Corporation Limited
- Price Waterhouse Coopers - Russia
- Bulk Trading Sa - Switzerland
- Rashtriya Ispat Nigam Limited - India
- CNBM International Corporation - China
- Ind-Barath Power Infra Limited - India
- Planning Commission, India
- Mercator Lines Limited - India
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- ASAPP Information Group - India
- Billiton Holdings Pty Ltd - Australia
- Antam Resourcindo - Indonesia
- International Coal Ventures Pvt Ltd - India
- Coal and Oil Company - UAE
- Electricity Generating Authority of Thailand
- Edison Trading Spa - Italy
- Indo Tambangraya Megah - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Sarangani Energy Corporation, Philippines
- Ministry of Finance - Indonesia
- Intertek Mineral Services - Indonesia
- Indika Energy - Indonesia
- Deloitte Consulting - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Global Green Power PLC Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Asmin Koalindo Tuhup - Indonesia
- Essar Steel Hazira Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Merrill Lynch Commodities Europe
- Karbindo Abesyapradhi - Indoneisa
- Jorong Barutama Greston.PT - Indonesia
- Parry Sugars Refinery, India
- Samtan Co., Ltd - South Korea
- Tamil Nadu electricity Board
- Georgia Ports Authority, United States
- Australian Coal Association
- OPG Power Generation Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Kobexindo Tractors - Indoneisa
- Kideco Jaya Agung - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- McConnell Dowell - Australia
- Power Finance Corporation Ltd., India
- Goldman Sachs - Singapore
- Leighton Contractors Pty Ltd - Australia
- Metalloyd Limited - United Kingdom
- Bhatia International Limited - India
- Africa Commodities Group - South Africa
- Altura Mining Limited, Indonesia
- Mjunction Services Limited - India
- Jaiprakash Power Ventures ltd
- Minerals Council of Australia
- The State Trading Corporation of India Ltd
- Straits Asia Resources Limited - Singapore
- Agrawal Coal Company - India
- Marubeni Corporation - India
- Eastern Energy - Thailand
- Bhoruka Overseas - Indonesia
- VISA Power Limited - India
- Mintek Dendrill Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Toyota Tsusho Corporation, Japan
- Siam City Cement PLC, Thailand
- Binh Thuan Hamico - Vietnam
- Simpson Spence & Young - Indonesia
- Jindal Steel & Power Ltd - India
- San Jose City I Power Corp, Philippines
- Global Business Power Corporation, Philippines
- Rio Tinto Coal - Australia
- Maharashtra Electricity Regulatory Commission - India
- Wood Mackenzie - Singapore
- Alfred C Toepfer International GmbH - Germany
- Medco Energi Mining Internasional
- European Bulk Services B.V. - Netherlands
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Barasentosa Lestari - Indonesia
- Kepco SPC Power Corporation, Philippines
- Coalindo Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Attock Cement Pakistan Limited
- Directorate General of MIneral and Coal - Indonesia
- Ceylon Electricity Board - Sri Lanka
- AsiaOL BioFuels Corp., Philippines
- Central Electricity Authority - India
- Interocean Group of Companies - India
- GVK Power & Infra Limited - India
- Bayan Resources Tbk. - Indonesia
- Larsen & Toubro Limited - India
- Commonwealth Bank - Australia
- Karaikal Port Pvt Ltd - India
- Mercuria Energy - Indonesia
- Savvy Resources Ltd - HongKong
- Pipit Mutiara Jaya. PT, Indonesia
- Baramulti Group, Indonesia
- Energy Development Corp, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Ministry of Transport, Egypt
- Lanco Infratech Ltd - India
- Borneo Indobara - Indonesia
- Aboitiz Power Corporation - Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Indonesian Coal Mining Association
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Malabar Cements Ltd - India
- TeaM Sual Corporation - Philippines
- Therma Luzon, Inc, Philippines
- Krishnapatnam Port Company Ltd. - India
- Banpu Public Company Limited - Thailand
- Cigading International Bulk Terminal - Indonesia
- Star Paper Mills Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Cement Manufacturers Association - India
- Heidelberg Cement - Germany
- Orica Mining Services - Indonesia
- Kaltim Prima Coal - Indonesia
- Makarim & Taira - Indonesia
- Thai Mozambique Logistica
- Kumho Petrochemical, South Korea
- IHS Mccloskey Coal Group - USA
- Vizag Seaport Private Limited - India
- Parliament of New Zealand
- SMC Global Power, Philippines
- Anglo American - United Kingdom
- Bank of Tokyo Mitsubishi UFJ Ltd
- Siam City Cement - Thailand
- Meenaskhi Energy Private Limited - India
- Chettinad Cement Corporation Ltd - India
- Formosa Plastics Group - Taiwan
- Sinarmas Energy and Mining - Indonesia
- Vedanta Resources Plc - India
- Miang Besar Coal Terminal - Indonesia
- MS Steel International - UAE
- Directorate Of Revenue Intelligence - India
- Sakthi Sugars Limited - India
- SN Aboitiz Power Inc, Philippines
- London Commodity Brokers - England
- Sree Jayajothi Cements Limited - India
- Australian Commodity Traders Exchange
- IEA Clean Coal Centre - UK
- Kartika Selabumi Mining - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bharathi Cement Corporation - India
- Energy Link Ltd, New Zealand
- Aditya Birla Group - India
- India Bulls Power Limited - India
- Oldendorff Carriers - Singapore
- Bukit Makmur.PT - Indonesia
- Xindia Steels Limited - India
- Trasteel International SA, Italy
- Salva Resources Pvt Ltd - India
- SMG Consultants - Indonesia
- Posco Energy - South Korea
- ICICI Bank Limited - India
- New Zealand Coal & Carbon
- PowerSource Philippines DevCo
- Ambuja Cements Ltd - India
- Central Java Power - Indonesia
- PNOC Exploration Corporation - Philippines
- Indogreen Group - Indonesia
- Chamber of Mines of South Africa
- Madhucon Powers Ltd - India
- Bukit Baiduri Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- Manunggal Multi Energi - Indonesia
- GAC Shipping (India) Pvt Ltd
- White Energy Company Limited
- Tata Chemicals Ltd - India
- Uttam Galva Steels Limited - India
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