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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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Monday, 07 February 11
RBCT SHIPPED 28.67 PERCENT LESS COAL IN JANUARY
COALspot.com - Richards Bay Coal Terminal (RBCT) is the single largest export coal terminal in the world, shipped 4,389,925 MT of coal in January 20 ...
Sunday, 06 February 11
THE PANAMAX & SUPRAMAX FUTURES FOR 2011-2013 WAS AT AROUND US$ 16,500 & US$ 15,000 PER DAY RESPECTIVELY
COALspot.com - With the Chinese new year holidays this week, the market has been fairly quite as expected.
The BDI saw a bigger drop compared to ...
Saturday, 05 February 11
INDONESIAN ENERGY MINISTER HAS SIGNED A DECREE FOR COAL TRANSPORTATION PERMITS ON FRIDAY
COALspot.com - Minister of Energy, Darwin Minister Saleh said, that, he had signed a decree for transportation and sale of coal, which was the ...
Saturday, 05 February 11
ANCHORAGE LOADING POINT MOVED TO MUARA JAWA
COALspot.com - The Ministry of Transportation Republic Indonesia has announced that, the loading point at Muara Berau, East kalimantan h ...
Friday, 04 February 11
PERTAMINA DENIES KAREN AGUSTIAWAN RESIGNS FROM PERTAMINA
COALspot.com - The President Director of PT Pertamina, Karen Agustiawan reportedly will replace Darwin Saleh as Minister of Energy and Mineral Resou ...
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- Dr Ramakrishna Prasad Power Pvt Ltd - India
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- Economic Council, Georgia
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- Aditya Birla Group - India
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- Standard Chartered Bank - UAE
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- Thai Mozambique Logistica
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- Interocean Group of Companies - India
- Bangladesh Power Developement Board
- Parliament of New Zealand
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- International Coal Ventures Pvt Ltd - India
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- Straits Asia Resources Limited - Singapore
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- Power Finance Corporation Ltd., India
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- Planning Commission, India
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- Toyota Tsusho Corporation, Japan
- Commonwealth Bank - Australia
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- Directorate General of MIneral and Coal - Indonesia
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- Mintek Dendrill Indonesia
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- Medco Energi Mining Internasional
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- New Zealand Coal & Carbon
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- Cigading International Bulk Terminal - Indonesia
- ICICI Bank Limited - India
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- SMC Global Power, Philippines
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- Chamber of Mines of South Africa
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- Metalloyd Limited - United Kingdom
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- Indian Energy Exchange, India
- Therma Luzon, Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Energy Link Ltd, New Zealand
- Georgia Ports Authority, United States
- Bhushan Steel Limited - India
- Anglo American - United Kingdom
- Meenaskhi Energy Private Limited - India
- Kaltim Prima Coal - Indonesia
- Xindia Steels Limited - India
- Ministry of Mines - Canada
- Salva Resources Pvt Ltd - India
- Antam Resourcindo - Indonesia
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- Eastern Energy - Thailand
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- Dalmia Cement Bharat India
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- White Energy Company Limited
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- Electricity Generating Authority of Thailand
- GAC Shipping (India) Pvt Ltd
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- McConnell Dowell - Australia
- Maharashtra Electricity Regulatory Commission - India
- Siam City Cement PLC, Thailand
- The Treasury - Australian Government
- Energy Development Corp, Philippines
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- Indonesian Coal Mining Association
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- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Petrochimia International Co. Ltd.- Taiwan
- Chettinad Cement Corporation Ltd - India
- Heidelberg Cement - Germany
- Krishnapatnam Port Company Ltd. - India
- OPG Power Generation Pvt Ltd - India
- SMG Consultants - Indonesia
- Siam City Cement - Thailand
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- Banpu Public Company Limited - Thailand
- Trasteel International SA, Italy
- Thiess Contractors Indonesia
- CNBM International Corporation - China
- Altura Mining Limited, Indonesia
- Orica Australia Pty. Ltd.
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- Baramulti Group, Indonesia
- Ambuja Cements Ltd - India
- India Bulls Power Limited - India
- Karaikal Port Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Vijayanagar Sugar Pvt Ltd - India
- Minerals Council of Australia
- IEA Clean Coal Centre - UK
- AsiaOL BioFuels Corp., Philippines
- Lanco Infratech Ltd - India
- The State Trading Corporation of India Ltd
- Renaissance Capital - South Africa
- Singapore Mercantile Exchange
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- Attock Cement Pakistan Limited
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- Sojitz Corporation - Japan
- Independent Power Producers Association of India
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- The University of Queensland
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- Offshore Bulk Terminal Pte Ltd, Singapore
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- Ministry of Transport, Egypt
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- Kohat Cement Company Ltd. - Pakistan
- Africa Commodities Group - South Africa
- Star Paper Mills Limited - India
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- Bulk Trading Sa - Switzerland
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