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Steam Coal Imports – Sourcing Options, Prices & Economics
Infraline Energy, Dec 2011
India's Active Role in Global Coal Market
India – world's third largest producer of coal is one of the fast-developing economy extensively relying on COAL for its commercial energy needs. India started importing high quality coking coal for its steel and iron plants. Surprisingly the same trend and practice has been gradually mimicked steam coal for the utilities with erratic domestic supplies. Though not on the accounts of quality, India's Big 10 private utilities went strategic and some had successfully acquired international coal assets to secure fuel for their future needs. Despite the advance predictions on domestic fuel crisis, the efforts of the state-owned/ subsidiary companies was late and lacked the strategic knack and was just venturesome.
Alternative Options
Captive coal mining option would prove to be a solution but only in the long run. The expected transformation due to implementation of MMDR Act and institutionalization of National Mineral Regulatory Authority is large. Captive mining may address the fuel risk of the developers, but certain techno-commercial changes like “Competitive block allocation process” and “Twenty-six percent profitsharing mechanism” are set to unveil fresh legal risks. Compared with these macro sized issues and challenges associated with the domestic coal sector governance and policy making, the Imported Coal option, opted for addressing the immediate domestic shortfalls appears to be pursuable alternative for the upcoming and proposed plants.
On-Going Coal Crisis
Recently, the domestic coal production shortfalls have touched unprecedented levels. The coal stock position at 33 power stations has gone from bad to worse forcing the power industry to brace itself for a possible closure of some units. More than this, the ongoing coal crisis is costing India dear on the power capacity addition front. 40-50 GW of aggregate under-construction capacities lined up for XII Plan period addition are assured with just 50 percent of the total coal requirements by CIL. These developers are anxiously weighing options to combat present fuel crisis in the country.
Imported Coal
More than cost factors, various apprehensions are attached with imported coal. The under construction capacities have their boiler designed based on indigenous coal. Hence blending of more than 10-15 percent may not be technically feasible. To cater the requirement of domestic power plants, imported coal of the nature of 300-400 MTPA would be required, which craft a question on preparedness of Indian ports in handling huge quantum of imported coal. The major bottleneck is in evacuating coal from ports to desired location through Indian Railways, the freight capacity available which connects ports is significantly less than the required.
Future of Coal Trade in India
Indian companies are scouting around the coal rich world to acquire coal mine or minority stake in overseas mines to ensure supply security. Acquisition of global coal assets would only be possible by private players having huge financial reserves or by public utilities having assurance of the state or central government. Declining coal demand from European countries on account of climate change mitigation measures and increased reliance on imported coal by India and China would create a facilitating global environment. Along with China, India with its huge demands can dictate the international coal market, making long or medium term coal import contracts (similar to Standard Coal Trading Agreement (SCoTA)) a viable and most preferred business arrangement
Infraline's Initiative
Infraline on behalf of its clients is coming out with an international business research report on “Steam Coal Imports - Sourcing Options, Prices & Economics” featuring Australia, Indonesia, Mozambique and South Africa (AIMS) countries. The report is structured with profiling of AIMS countries on the aspects of current business and regulatory environment, coal production and consumption trends, details of major miners, traders & coal suppliers, the available infrastructure & logistics facilities and projections on future expansion plans. Also it deals with the assessment of logistics facilities available at Indian ports and capability of Indian railways to transport imported coal.
Core Objectives of the Research
1. To showcase the current coal imports scenario in India by capturing the volume traded, demand – supply mix, the business entities engaged, their end-use plants and the mechanisms involved
2. To study the costs incurred in various stages of the supply chain and upon which to assess the economics behind coal imports
3. To project the future FOB, CIF prices, increased quantum of imports, logistics and infrastructural capabilities in medium, long run providing an outlook the future
4. To draw inferences/ recommendations which can help stakeholders to strategize their future and maximize their value
Scope of Research
To alleviate the current crisis power plant developers are scouting for coal assets in coal rich world and seeking long term imported coal linkage. Infraline's preliminary investigation suggest that there will be limited coal mine acquisition opportunities and most of the imported coal trade will feature in standard long and medium term contracts.
Keeping this in backdrop InfralineEnergy is coming with “Steam Coal Imports – Sourcing Options, Prices & Economics” report. The research report majorly focuses on arrangements available in international coal market other than acquisitions. The prime objective is to study the economics of imported coal from AIMS countries and comparative risk assessment and management process for importing coal from AIMS countries.
Study of regulatory and political environment of the foreign country, trading arrangements, infrastructure availability in foreign country and host country is extremely vital for reaching at an effective strategic decision. It has been observed from past experience that regulatory environment is dynamically shifting due to enormous presence of foreign players in coal rich countries and exploiting country's scare resources. The ability to anticipate threats, respond and continually adapt is as critical a part of the risk management process.
This research study will provide an exclusive information on key data points, risk assessment and mitigation techniques and suggest various strategies to counter balance the coal crisis
Industry Inputs
Four countries (AIMS) were filtered from set of countries for importing coal based on past trends, economics, industry interaction, expert opinion and based on market sentiments to keep the scope of the work of this research report quiet specific to render the needs of the stakeholders. The content of this report is extensively designed by taking inputs from various stake holders as Indiabulls Power, JSW Energy, LAnCO, TATA Power, Moserbear, Gupta Coal Traders, Bhatia Coal Traders and Regulatory Bodies
Research Methodology
InfralineEnergy as the leading information provider on India's energy sector, has been actively monitoring the industry's development. This report aims to provide comprehensive information on imported coal sourcing options from Australia, Indonesia, Mozambique and South Africa.
InfralineEnergy will collect data from its deep association with various information organizations in respective countries and sectors; Indonesian Coal Mining Association, Petromindo, Platts, Chambers of Mines of South Africa, Australian Bureau of Agricultural and Resource Economics, mjunction, Australian Coal Association, Geoscience Australia, International Energy Agency are few to name. Most of the data will be obtained from primary sources such as direct interaction with mining companies, logistic suppliers, coal traders, Energy ministries of various countries and Mineral Resources Data, while some others will be sourced from various reports and publication.
The inputs received will be scanned using various parameters and weights to take an informed decision in terms of deciding their strategies for imported coal sourcing. The process will give vital input materials to prepare an effective and implementable strategy to procure coal from AIMS countries
Who Should Buy
Indian Power Developers, Captive Power Producers, Logistics and Infrastructure companies, Coal Traders, Financing Institutions, and Risk Managers can be more profitable and stay ahead of the competition by getting the critical information and latest updates from the Steam Coal Imports Report
Reports features exclusive data on shipping movements, deals and contracts offer and other detailed information the stakeholders need for decision making in the dynamic marketplace
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