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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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Monday, 05 October 15
Q1 & Q2 2016 DELIVERY SWAPS DECLINED M-M AND W-W THIS PAST WEEK
COALspot.com: API 5 FOB Newcastle Coal swap for Q4’ 2015 delivery decreased $0.36 per ton (0.85%) month over month to US$ 42.12 per ton. The ...
Monday, 05 October 15
Q1' 16 CFR SOUTH CHINA COAL SWAP CLOSED US$ 48.05 PER TON
COALspot.com: API 8 CFR South China Coal swap for 4Q’ 2015 delivery down US$ 0.47 (0.96 %) per ton month over month.
A commodity swap is ...
Monday, 05 October 15
SMALL DECLINE IN 2014 SHIP OPERATING COSTS - MOORE STEPHENS
Total annual operating costs in the shipping industry fell by an average of 0.8% in 2014. This compares with the 0.3% average fall in costs recorde ...
Sunday, 04 October 15
THE INDO-INDIA FREIGHT MARKET REMAINS UNDER PRESSURE
COALspot.com: The BDI closed on Friday (2 Oct 2015) at 889 points, down by 54 points compared to previous Friday's closing ( 24 Sept 2015) of 9 ...
Friday, 02 October 15
COAL PRODUCTION IN THE UNITED STATES DECREASED THIS WEEK - EIA
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 17.5 million shor ...
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- Bayan Resources Tbk. - Indonesia
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- Lanco Infratech Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Tamil Nadu electricity Board
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- Romanian Commodities Exchange
- Georgia Ports Authority, United States
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- Mercuria Energy - Indonesia
- Holcim Trading Pte Ltd - Singapore
- VISA Power Limited - India
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- Merrill Lynch Commodities Europe
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- Parliament of New Zealand
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- Price Waterhouse Coopers - Russia
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- Iligan Light & Power Inc, Philippines
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- Straits Asia Resources Limited - Singapore
- Energy Link Ltd, New Zealand
- Australian Coal Association
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- Maheswari Brothers Coal Limited - India
- Mjunction Services Limited - India
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- ICICI Bank Limited - India
- San Jose City I Power Corp, Philippines
- Alfred C Toepfer International GmbH - Germany
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- PowerSource Philippines DevCo
- Maharashtra Electricity Regulatory Commission - India
- Carbofer General Trading SA - India
- Metalloyd Limited - United Kingdom
- Electricity Authority, New Zealand
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- Port Waratah Coal Services - Australia
- Thiess Contractors Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Ministry of Transport, Egypt
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- Australian Commodity Traders Exchange
- Oldendorff Carriers - Singapore
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- Chamber of Mines of South Africa
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- Global Business Power Corporation, Philippines
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- The State Trading Corporation of India Ltd
- Dalmia Cement Bharat India
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- Kobexindo Tractors - Indoneisa
- Directorate Of Revenue Intelligence - India
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- The Treasury - Australian Government
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- Krishnapatnam Port Company Ltd. - India
- Aditya Birla Group - India
- Makarim & Taira - Indonesia
- Manunggal Multi Energi - Indonesia
- Ministry of Finance - Indonesia
- Global Green Power PLC Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Wilmar Investment Holdings
- Central Electricity Authority - India
- Bhoruka Overseas - Indonesia
- Vedanta Resources Plc - India
- Meenaskhi Energy Private Limited - India
- Kaltim Prima Coal - Indonesia
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- Riau Bara Harum - Indonesia
- Interocean Group of Companies - India
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- Indonesian Coal Mining Association
- European Bulk Services B.V. - Netherlands
- Parry Sugars Refinery, India
- Ministry of Mines - Canada
- Indika Energy - Indonesia
- Heidelberg Cement - Germany
- GMR Energy Limited - India
- Anglo American - United Kingdom
- Asmin Koalindo Tuhup - Indonesia
- Minerals Council of Australia
- Mintek Dendrill Indonesia
- Salva Resources Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- SMC Global Power, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Madhucon Powers Ltd - India
- New Zealand Coal & Carbon
- Gujarat Electricity Regulatory Commission - India
- Altura Mining Limited, Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- OPG Power Generation Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Siam City Cement PLC, Thailand
- Economic Council, Georgia
- Power Finance Corporation Ltd., India
- Vizag Seaport Private Limited - India
- Antam Resourcindo - Indonesia
- Petron Corporation, Philippines
- Borneo Indobara - Indonesia
- Renaissance Capital - South Africa
- Commonwealth Bank - Australia
- White Energy Company Limited
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- Cigading International Bulk Terminal - Indonesia
- LBH Netherlands Bv - Netherlands
- Planning Commission, India
- Coal and Oil Company - UAE
- Eastern Energy - Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Ind-Barath Power Infra Limited - India
- Cement Manufacturers Association - India
- Toyota Tsusho Corporation, Japan
- Bulk Trading Sa - Switzerland
- GAC Shipping (India) Pvt Ltd
- Wood Mackenzie - Singapore
- IHS Mccloskey Coal Group - USA
- Independent Power Producers Association of India
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- Bharathi Cement Corporation - India
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- Bukit Baiduri Energy - Indonesia
- Baramulti Group, Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
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- Formosa Plastics Group - Taiwan
- Jaiprakash Power Ventures ltd
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- CIMB Investment Bank - Malaysia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Meralco Power Generation, Philippines
- Bangladesh Power Developement Board
- Billiton Holdings Pty Ltd - Australia
- Sarangani Energy Corporation, Philippines
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- Energy Development Corp, Philippines
- Africa Commodities Group - South Africa
- Bhushan Steel Limited - India
- TeaM Sual Corporation - Philippines
- McConnell Dowell - Australia
- Globalindo Alam Lestari - Indonesia
- Grasim Industreis Ltd - India
- The University of Queensland
- Directorate General of MIneral and Coal - Indonesia
- PTC India Limited - India
- Global Coal Blending Company Limited - Australia
- Karbindo Abesyapradhi - Indoneisa
- Aboitiz Power Corporation - Philippines
- Pendopo Energi Batubara - Indonesia
- Edison Trading Spa - Italy
- ASAPP Information Group - India
- Trasteel International SA, Italy
- Petrochimia International Co. Ltd.- Taiwan
- TNB Fuel Sdn Bhd - Malaysia
- Banpu Public Company Limited - Thailand
- Samtan Co., Ltd - South Korea
- Orica Australia Pty. Ltd.
- Vijayanagar Sugar Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Posco Energy - South Korea
- Agrawal Coal Company - India
- Standard Chartered Bank - UAE
- Indian Oil Corporation Limited
- Attock Cement Pakistan Limited
- Sree Jayajothi Cements Limited - India
- Siam City Cement - Thailand
- Barasentosa Lestari - Indonesia
- CNBM International Corporation - China
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- Sical Logistics Limited - India
- Indian Energy Exchange, India
- Simpson Spence & Young - Indonesia
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- London Commodity Brokers - England
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- Singapore Mercantile Exchange
- Jindal Steel & Power Ltd - India
- South Luzon Thermal Energy Corporation
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