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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, 11 November 15
Q3' 16 RICHARDS BAY COAL SWAP LOST 15.47% SINCE 6 AUGUST; 18.65% SINCE 6 MAY
COALspot.com: API4 FOB Richards Bay Coal swap for delivery Q1’ 2016 declined week over week and month over month.
The Q1’ 2016 &nb ...
Wednesday, 11 November 15
VESSEL VALUES ARE DOWN BY AT LEAST 20% SINCE MID-AUGUST - INTERMODAL
I had promised not to spend another broker’s insight focusing on the dry bulk side. However, the sale of the M/V Churchill Bulker (179,362 dw ...
Tuesday, 10 November 15
SELF-HEATING OF COAL HAS EMPHASISED THE IMPORTANCE OF CHECKING THE ACCURACY OF SHIPPER'S DECLARATIONS - GARD
Recent incidents involving self-heating of coal has emphasised the importance of checking the accuracy of shipper’s declarations for all type ...
Tuesday, 10 November 15
API 5 FOB NEWCASTLE COAL SWAP SLIDES CONTINUE
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2016 delivery slid $3.55 per ton (8.50%) month over month to US$ 38.20 per ton. The swap ...
Monday, 09 November 15
BUNKER PRICES TO KEEP SLIDING THIS WEEK, EXPERT SAYS - MARINE BUNKER EXCHANGE
The oil price volatility has continued this week. Two dollars up one day and the next day two dollars down. The oil market has been trading on the ...
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- Global Coal Blending Company Limited - Australia
- Iligan Light & Power Inc, Philippines
- Formosa Plastics Group - Taiwan
- Ministry of Finance - Indonesia
- Kobexindo Tractors - Indoneisa
- Neyveli Lignite Corporation Ltd, - India
- Africa Commodities Group - South Africa
- Sarangani Energy Corporation, Philippines
- Central Electricity Authority - India
- Kalimantan Lumbung Energi - Indonesia
- Renaissance Capital - South Africa
- Bhoruka Overseas - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Baramulti Group, Indonesia
- Tamil Nadu electricity Board
- Medco Energi Mining Internasional
- AsiaOL BioFuels Corp., Philippines
- Chamber of Mines of South Africa
- Mercuria Energy - Indonesia
- SN Aboitiz Power Inc, Philippines
- Jindal Steel & Power Ltd - India
- Salva Resources Pvt Ltd - India
- Thiess Contractors Indonesia
- Meenaskhi Energy Private Limited - India
- London Commodity Brokers - England
- TNB Fuel Sdn Bhd - Malaysia
- Sinarmas Energy and Mining - Indonesia
- Power Finance Corporation Ltd., India
- The Treasury - Australian Government
- Bhatia International Limited - India
- Chettinad Cement Corporation Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Ministry of Transport, Egypt
- Indika Energy - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Parry Sugars Refinery, India
- Bahari Cakrawala Sebuku - Indonesia
- Parliament of New Zealand
- Wood Mackenzie - Singapore
- Binh Thuan Hamico - Vietnam
- Indogreen Group - Indonesia
- Kumho Petrochemical, South Korea
- Ministry of Mines - Canada
- Cigading International Bulk Terminal - Indonesia
- Malabar Cements Ltd - India
- Aboitiz Power Corporation - Philippines
- Indo Tambangraya Megah - Indonesia
- Bharathi Cement Corporation - India
- Savvy Resources Ltd - HongKong
- Directorate Of Revenue Intelligence - India
- New Zealand Coal & Carbon
- Offshore Bulk Terminal Pte Ltd, Singapore
- Miang Besar Coal Terminal - Indonesia
- OPG Power Generation Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Indonesian Coal Mining Association
- Mjunction Services Limited - India
- Coal and Oil Company - UAE
- Vijayanagar Sugar Pvt Ltd - India
- Marubeni Corporation - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Mintek Dendrill Indonesia
- Agrawal Coal Company - India
- GN Power Mariveles Coal Plant, Philippines
- Aditya Birla Group - India
- The State Trading Corporation of India Ltd
- Bukit Makmur.PT - Indonesia
- Ambuja Cements Ltd - India
- Orica Australia Pty. Ltd.
- Grasim Industreis Ltd - India
- Independent Power Producers Association of India
- Edison Trading Spa - Italy
- Coalindo Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- Tata Chemicals Ltd - India
- Interocean Group of Companies - India
- Standard Chartered Bank - UAE
- Indian Oil Corporation Limited
- Global Green Power PLC Corporation, Philippines
- Attock Cement Pakistan Limited
- Gujarat Mineral Development Corp Ltd - India
- Siam City Cement - Thailand
- Xindia Steels Limited - India
- Indian Energy Exchange, India
- Sindya Power Generating Company Private Ltd
- Simpson Spence & Young - Indonesia
- Lanco Infratech Ltd - India
- Dalmia Cement Bharat India
- MS Steel International - UAE
- Price Waterhouse Coopers - Russia
- Global Business Power Corporation, Philippines
- SMG Consultants - Indonesia
- Trasteel International SA, Italy
- Eastern Energy - Thailand
- IEA Clean Coal Centre - UK
- Deloitte Consulting - India
- Altura Mining Limited, Indonesia
- Larsen & Toubro Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Makarim & Taira - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- TeaM Sual Corporation - Philippines
- Port Waratah Coal Services - Australia
- Kapuas Tunggal Persada - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Energy Development Corp, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Sical Logistics Limited - India
- Merrill Lynch Commodities Europe
- Economic Council, Georgia
- ASAPP Information Group - India
- Electricity Authority, New Zealand
- CIMB Investment Bank - Malaysia
- Ceylon Electricity Board - Sri Lanka
- Australian Coal Association
- The University of Queensland
- Borneo Indobara - Indonesia
- Madhucon Powers Ltd - India
- Meralco Power Generation, Philippines
- Latin American Coal - Colombia
- Kepco SPC Power Corporation, Philippines
- Samtan Co., Ltd - South Korea
- South Luzon Thermal Energy Corporation
- Videocon Industries ltd - India
- Karaikal Port Pvt Ltd - India
- Minerals Council of Australia
- SMC Global Power, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Eastern Coal Council - USA
- Romanian Commodities Exchange
- PTC India Limited - India
- Pendopo Energi Batubara - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Rashtriya Ispat Nigam Limited - India
- Holcim Trading Pte Ltd - Singapore
- Therma Luzon, Inc, Philippines
- Petron Corporation, Philippines
- India Bulls Power Limited - India
- Orica Mining Services - Indonesia
- PNOC Exploration Corporation - Philippines
- Vizag Seaport Private Limited - India
- Vedanta Resources Plc - India
- Sree Jayajothi Cements Limited - India
- Bangladesh Power Developement Board
- Pipit Mutiara Jaya. PT, Indonesia
- Manunggal Multi Energi - Indonesia
- Wilmar Investment Holdings
- Kideco Jaya Agung - Indonesia
- Thai Mozambique Logistica
- Mercator Lines Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- CNBM International Corporation - China
- Timah Investasi Mineral - Indoneisa
- Kartika Selabumi Mining - Indonesia
- Straits Asia Resources Limited - Singapore
- Bukit Baiduri Energy - Indonesia
- PowerSource Philippines DevCo
- Jorong Barutama Greston.PT - Indonesia
- Ind-Barath Power Infra Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Goldman Sachs - Singapore
- Antam Resourcindo - Indonesia
- Carbofer General Trading SA - India
- GVK Power & Infra Limited - India
- San Jose City I Power Corp, Philippines
- Cement Manufacturers Association - India
- Essar Steel Hazira Ltd - India
- Singapore Mercantile Exchange
- Electricity Generating Authority of Thailand
- Bulk Trading Sa - Switzerland
- Central Java Power - Indonesia
- Semirara Mining Corp, Philippines
- ICICI Bank Limited - India
- European Bulk Services B.V. - Netherlands
- Billiton Holdings Pty Ltd - Australia
- Metalloyd Limited - United Kingdom
- Rio Tinto Coal - Australia
- Gujarat Sidhee Cement - India
- Toyota Tsusho Corporation, Japan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Australian Commodity Traders Exchange
- Petrochimia International Co. Ltd.- Taiwan
- Heidelberg Cement - Germany
- VISA Power Limited - India
- White Energy Company Limited
- Commonwealth Bank - Australia
- Planning Commission, India
- Georgia Ports Authority, United States
- Uttam Galva Steels Limited - India
- Globalindo Alam Lestari - Indonesia
- Siam City Cement PLC, Thailand
- Sojitz Corporation - Japan
- Kaltim Prima Coal - Indonesia
- Krishnapatnam Port Company Ltd. - India
- GAC Shipping (India) Pvt Ltd
- Bukit Asam (Persero) Tbk - Indonesia
- Bhushan Steel Limited - India
- Coastal Gujarat Power Limited - India
- Oldendorff Carriers - Singapore
- International Coal Ventures Pvt Ltd - India
- Star Paper Mills Limited - India
- McConnell Dowell - Australia
- Jaiprakash Power Ventures ltd
- Bayan Resources Tbk. - Indonesia
- GMR Energy Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Asmin Koalindo Tuhup - Indonesia
- LBH Netherlands Bv - Netherlands
- Posco Energy - South Korea
- Anglo American - United Kingdom
- IHS Mccloskey Coal Group - USA
- Energy Link Ltd, New Zealand
- Intertek Mineral Services - Indonesia
- Sakthi Sugars Limited - India
- Riau Bara Harum - Indonesia
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