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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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Saturday, 06 April 19
AUSTRALIA COAL POSTS BIGGEST WEEKLY DROP IN A DECADE AMID WEAK DEMAND - REUTERS
Australian thermal coal prices this week registered their biggest weekly fall since the financial market turmoil of a decade ago as demand plunged ...
Saturday, 06 April 19
SUPRAMAX: IT WAS A POOR WEEK OVERALL FOR THE BALTIC SUPRAMAX INDEX, WHICH LOST GROUND - BALTIC BRIEFING
Capesize
The Capesize market over the past week looked to have found a floor on Tuesday with the BCI 5TC at $3460 before firming into the rest ...
Thursday, 04 April 19
OVERSUPPLY STILL MAJOR CHALLENGE WARNS ICS
Speaking in Istanbul, Simon Bennett, Deputy Secretary General of the International Chamber of Shipping (ICS) warned that avoiding overcapacity and ...
Thursday, 04 April 19
GLENCORE, TOHOKU ELECTRIC SET COAL CONTRACT PRICE AT $94.75/T - SOURCE, REUTERS REPORTED
Global miner Glencore and Japan’s Tohoku Electric Power agreed on a price of $94.75 per tonne for supplies of thermal coal from Australia for ...
Monday, 01 April 19
FORCE MAJEURE SUCCESS NOT A SEA CHANGE - BALTIC EXCHANGE
KNOWLEDGE TO ELEVATE
It is difficult to successfully argue that contractual performance has been prevented or delayed by force majeure. This i ...
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- Meenaskhi Energy Private Limited - India
- Sarangani Energy Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- Mintek Dendrill Indonesia
- Planning Commission, India
- Gujarat Electricity Regulatory Commission - India
- Electricity Generating Authority of Thailand
- Sree Jayajothi Cements Limited - India
- Petron Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Parry Sugars Refinery, India
- Anglo American - United Kingdom
- Semirara Mining Corp, Philippines
- OPG Power Generation Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- GVK Power & Infra Limited - India
- Jindal Steel & Power Ltd - India
- Deloitte Consulting - India
- Directorate Of Revenue Intelligence - India
- Dalmia Cement Bharat India
- Jorong Barutama Greston.PT - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Wood Mackenzie - Singapore
- Leighton Contractors Pty Ltd - Australia
- Ministry of Transport, Egypt
- Toyota Tsusho Corporation, Japan
- SMC Global Power, Philippines
- Eastern Energy - Thailand
- Australian Coal Association
- Alfred C Toepfer International GmbH - Germany
- Power Finance Corporation Ltd., India
- Indonesian Coal Mining Association
- Aboitiz Power Corporation - Philippines
- Carbofer General Trading SA - India
- Meralco Power Generation, Philippines
- Coastal Gujarat Power Limited - India
- Port Waratah Coal Services - Australia
- Star Paper Mills Limited - India
- Economic Council, Georgia
- CIMB Investment Bank - Malaysia
- Central Electricity Authority - India
- Kohat Cement Company Ltd. - Pakistan
- Bahari Cakrawala Sebuku - Indonesia
- Videocon Industries ltd - India
- Merrill Lynch Commodities Europe
- Standard Chartered Bank - UAE
- White Energy Company Limited
- VISA Power Limited - India
- Timah Investasi Mineral - Indoneisa
- European Bulk Services B.V. - Netherlands
- Straits Asia Resources Limited - Singapore
- Salva Resources Pvt Ltd - India
- Independent Power Producers Association of India
- Vedanta Resources Plc - India
- Bharathi Cement Corporation - India
- Malabar Cements Ltd - India
- PowerSource Philippines DevCo
- Rashtriya Ispat Nigam Limited - India
- Australian Commodity Traders Exchange
- Bank of Tokyo Mitsubishi UFJ Ltd
- Africa Commodities Group - South Africa
- Madhucon Powers Ltd - India
- Singapore Mercantile Exchange
- Sical Logistics Limited - India
- Makarim & Taira - Indonesia
- Bhushan Steel Limited - India
- Uttam Galva Steels Limited - India
- Goldman Sachs - Singapore
- Kaltim Prima Coal - Indonesia
- Bukit Baiduri Energy - Indonesia
- Samtan Co., Ltd - South Korea
- Sakthi Sugars Limited - India
- The State Trading Corporation of India Ltd
- Billiton Holdings Pty Ltd - Australia
- TeaM Sual Corporation - Philippines
- New Zealand Coal & Carbon
- Siam City Cement PLC, Thailand
- Coalindo Energy - Indonesia
- Heidelberg Cement - Germany
- Kideco Jaya Agung - Indonesia
- Savvy Resources Ltd - HongKong
- Ministry of Mines - Canada
- Kobexindo Tractors - Indoneisa
- Holcim Trading Pte Ltd - Singapore
- Siam City Cement - Thailand
- Neyveli Lignite Corporation Ltd, - India
- IEA Clean Coal Centre - UK
- Trasteel International SA, Italy
- Kumho Petrochemical, South Korea
- PNOC Exploration Corporation - Philippines
- Interocean Group of Companies - India
- Iligan Light & Power Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- SN Aboitiz Power Inc, Philippines
- Coal and Oil Company - UAE
- Bukit Asam (Persero) Tbk - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- McConnell Dowell - Australia
- Binh Thuan Hamico - Vietnam
- International Coal Ventures Pvt Ltd - India
- Baramulti Group, Indonesia
- Bulk Trading Sa - Switzerland
- IHS Mccloskey Coal Group - USA
- Asmin Koalindo Tuhup - Indonesia
- Indo Tambangraya Megah - Indonesia
- Vizag Seaport Private Limited - India
- Bukit Makmur.PT - Indonesia
- ASAPP Information Group - India
- Rio Tinto Coal - Australia
- Indian Oil Corporation Limited
- Indika Energy - Indonesia
- Georgia Ports Authority, United States
- Formosa Plastics Group - Taiwan
- Central Java Power - Indonesia
- Tamil Nadu electricity Board
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- SMG Consultants - Indonesia
- Edison Trading Spa - Italy
- Global Coal Blending Company Limited - Australia
- Riau Bara Harum - Indonesia
- Simpson Spence & Young - Indonesia
- Intertek Mineral Services - Indonesia
- Miang Besar Coal Terminal - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- LBH Netherlands Bv - Netherlands
- Cement Manufacturers Association - India
- Pendopo Energi Batubara - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Lanco Infratech Ltd - India
- Indogreen Group - Indonesia
- Wilmar Investment Holdings
- Globalindo Alam Lestari - Indonesia
- Global Green Power PLC Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Orica Mining Services - Indonesia
- PTC India Limited - India
- Commonwealth Bank - Australia
- Karaikal Port Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Thiess Contractors Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Chamber of Mines of South Africa
- India Bulls Power Limited - India
- MS Steel International - UAE
- GAC Shipping (India) Pvt Ltd
- Minerals Council of Australia
- Manunggal Multi Energi - Indonesia
- Tata Chemicals Ltd - India
- Ministry of Finance - Indonesia
- Metalloyd Limited - United Kingdom
- Eastern Coal Council - USA
- Therma Luzon, Inc, Philippines
- Marubeni Corporation - India
- Energy Development Corp, Philippines
- GMR Energy Limited - India
- CNBM International Corporation - China
- Borneo Indobara - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Posco Energy - South Korea
- Attock Cement Pakistan Limited
- Indian Energy Exchange, India
- Jaiprakash Power Ventures ltd
- Sinarmas Energy and Mining - Indonesia
- Altura Mining Limited, Indonesia
- Bangladesh Power Developement Board
- Directorate General of MIneral and Coal - Indonesia
- Orica Australia Pty. Ltd.
- ICICI Bank Limited - India
- Sindya Power Generating Company Private Ltd
- Thai Mozambique Logistica
- Agrawal Coal Company - India
- Parliament of New Zealand
- Maheswari Brothers Coal Limited - India
- The University of Queensland
- Ind-Barath Power Infra Limited - India
- The Treasury - Australian Government
- Barasentosa Lestari - Indonesia
- Mercuria Energy - Indonesia
- Chettinad Cement Corporation Ltd - India
- Xindia Steels Limited - India
- Larsen & Toubro Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Global Business Power Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- AsiaOL BioFuels Corp., Philippines
- Gujarat Sidhee Cement - India
- Oldendorff Carriers - Singapore
- Aditya Birla Group - India
- Essar Steel Hazira Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Pipit Mutiara Jaya. PT, Indonesia
- Romanian Commodities Exchange
- Cigading International Bulk Terminal - Indonesia
- Antam Resourcindo - Indonesia
- Sojitz Corporation - Japan
- Krishnapatnam Port Company Ltd. - India
- Vijayanagar Sugar Pvt Ltd - India
- Mercator Lines Limited - India
- Bhatia International Limited - India
- Electricity Authority, New Zealand
- Gujarat Mineral Development Corp Ltd - India
- London Commodity Brokers - England
- South Luzon Thermal Energy Corporation
- San Jose City I Power Corp, Philippines
- Mjunction Services Limited - India
- Medco Energi Mining Internasional
- Grasim Industreis Ltd - India
- Renaissance Capital - South Africa
- Energy Link Ltd, New Zealand
- Latin American Coal - Colombia
- Petrochimia International Co. Ltd.- Taiwan
- Ambuja Cements Ltd - India
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