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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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- Bhushan Steel Limited - India
- Port Waratah Coal Services - Australia
- Central Electricity Authority - India
- Indogreen Group - Indonesia
- Sindya Power Generating Company Private Ltd
- Indonesian Coal Mining Association
- Makarim & Taira - Indonesia
- Ministry of Transport, Egypt
- IEA Clean Coal Centre - UK
- Kaltim Prima Coal - Indonesia
- McConnell Dowell - Australia
- Barasentosa Lestari - Indonesia
- Global Coal Blending Company Limited - Australia
- Star Paper Mills Limited - India
- Singapore Mercantile Exchange
- Bharathi Cement Corporation - India
- GN Power Mariveles Coal Plant, Philippines
- Meenaskhi Energy Private Limited - India
- Orica Australia Pty. Ltd.
- Renaissance Capital - South Africa
- CIMB Investment Bank - Malaysia
- SMC Global Power, Philippines
- Edison Trading Spa - Italy
- Gujarat Mineral Development Corp Ltd - India
- Larsen & Toubro Limited - India
- TeaM Sual Corporation - Philippines
- Leighton Contractors Pty Ltd - Australia
- Binh Thuan Hamico - Vietnam
- Kalimantan Lumbung Energi - Indonesia
- Anglo American - United Kingdom
- Holcim Trading Pte Ltd - Singapore
- Mintek Dendrill Indonesia
- Africa Commodities Group - South Africa
- Formosa Plastics Group - Taiwan
- Xindia Steels Limited - India
- The State Trading Corporation of India Ltd
- Videocon Industries ltd - India
- ICICI Bank Limited - India
- San Jose City I Power Corp, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Directorate General of MIneral and Coal - Indonesia
- Energy Link Ltd, New Zealand
- Maharashtra Electricity Regulatory Commission - India
- Siam City Cement PLC, Thailand
- Therma Luzon, Inc, Philippines
- Vedanta Resources Plc - India
- Merrill Lynch Commodities Europe
- Rashtriya Ispat Nigam Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Mercator Lines Limited - India
- Oldendorff Carriers - Singapore
- Borneo Indobara - Indonesia
- ASAPP Information Group - India
- Bhatia International Limited - India
- Toyota Tsusho Corporation, Japan
- Sinarmas Energy and Mining - Indonesia
- SMG Consultants - Indonesia
- Indika Energy - Indonesia
- VISA Power Limited - India
- Maheswari Brothers Coal Limited - India
- Semirara Mining Corp, Philippines
- Salva Resources Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Jaiprakash Power Ventures ltd
- LBH Netherlands Bv - Netherlands
- Ind-Barath Power Infra Limited - India
- Ambuja Cements Ltd - India
- Eastern Coal Council - USA
- Parliament of New Zealand
- TNB Fuel Sdn Bhd - Malaysia
- Orica Mining Services - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Kideco Jaya Agung - Indonesia
- MS Steel International - UAE
- GMR Energy Limited - India
- OPG Power Generation Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Bangladesh Power Developement Board
- Intertek Mineral Services - Indonesia
- Baramulti Group, Indonesia
- Mercuria Energy - Indonesia
- Rio Tinto Coal - Australia
- Krishnapatnam Port Company Ltd. - India
- GVK Power & Infra Limited - India
- Wilmar Investment Holdings
- Malabar Cements Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Manunggal Multi Energi - Indonesia
- Simpson Spence & Young - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Bulk Trading Sa - Switzerland
- Coal and Oil Company - UAE
- PNOC Exploration Corporation - Philippines
- Independent Power Producers Association of India
- The Treasury - Australian Government
- Gujarat Sidhee Cement - India
- New Zealand Coal & Carbon
- Pipit Mutiara Jaya. PT, Indonesia
- Altura Mining Limited, Indonesia
- Central Java Power - Indonesia
- The University of Queensland
- Trasteel International SA, Italy
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Tamil Nadu electricity Board
- Sree Jayajothi Cements Limited - India
- Ministry of Mines - Canada
- Attock Cement Pakistan Limited
- Thiess Contractors Indonesia
- GAC Shipping (India) Pvt Ltd
- Pendopo Energi Batubara - Indonesia
- Sarangani Energy Corporation, Philippines
- PowerSource Philippines DevCo
- Jindal Steel & Power Ltd - India
- Samtan Co., Ltd - South Korea
- Sakthi Sugars Limited - India
- Marubeni Corporation - India
- Neyveli Lignite Corporation Ltd, - India
- European Bulk Services B.V. - Netherlands
- Antam Resourcindo - Indonesia
- Chettinad Cement Corporation Ltd - India
- Ministry of Finance - Indonesia
- Indo Tambangraya Megah - Indonesia
- Eastern Energy - Thailand
- Petron Corporation, Philippines
- Uttam Galva Steels Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Electricity Generating Authority of Thailand
- International Coal Ventures Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Indian Energy Exchange, India
- Bahari Cakrawala Sebuku - Indonesia
- White Energy Company Limited
- Electricity Authority, New Zealand
- Parry Sugars Refinery, India
- London Commodity Brokers - England
- Globalindo Alam Lestari - Indonesia
- Vizag Seaport Private Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Deloitte Consulting - India
- Bukit Baiduri Energy - Indonesia
- Savvy Resources Ltd - HongKong
- Meralco Power Generation, Philippines
- Global Business Power Corporation, Philippines
- Mjunction Services Limited - India
- Lanco Infratech Ltd - India
- Kobexindo Tractors - Indoneisa
- Australian Coal Association
- Economic Council, Georgia
- South Luzon Thermal Energy Corporation
- Standard Chartered Bank - UAE
- Karaikal Port Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Gujarat Electricity Regulatory Commission - India
- Romanian Commodities Exchange
- PTC India Limited - India
- Thai Mozambique Logistica
- Bayan Resources Tbk. - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Siam City Cement - Thailand
- Price Waterhouse Coopers - Russia
- Madhucon Powers Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Chamber of Mines of South Africa
- Planning Commission, India
- Kartika Selabumi Mining - Indonesia
- Tata Chemicals Ltd - India
- Banpu Public Company Limited - Thailand
- PetroVietnam Power Coal Import and Supply Company
- Semirara Mining and Power Corporation, Philippines
- Kumho Petrochemical, South Korea
- IHS Mccloskey Coal Group - USA
- Commonwealth Bank - Australia
- Australian Commodity Traders Exchange
- Minerals Council of Australia
- Indian Oil Corporation Limited
- Vijayanagar Sugar Pvt Ltd - India
- Heidelberg Cement - Germany
- Bukit Makmur.PT - Indonesia
- Georgia Ports Authority, United States
- Metalloyd Limited - United Kingdom
- Miang Besar Coal Terminal - Indonesia
- Energy Development Corp, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Medco Energi Mining Internasional
- Sojitz Corporation - Japan
- SN Aboitiz Power Inc, Philippines
- Coalindo Energy - Indonesia
- Essar Steel Hazira Ltd - India
- CNBM International Corporation - China
- Wood Mackenzie - Singapore
- Aditya Birla Group - India
- Riau Bara Harum - Indonesia
- Iligan Light & Power Inc, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Sical Logistics Limited - India
- Coastal Gujarat Power Limited - India
- Agrawal Coal Company - India
- Posco Energy - South Korea
- India Bulls Power Limited - India
- Cement Manufacturers Association - India
- Timah Investasi Mineral - Indoneisa
- Goldman Sachs - Singapore
- Power Finance Corporation Ltd., India
- Straits Asia Resources Limited - Singapore
- Alfred C Toepfer International GmbH - Germany
- Carbofer General Trading SA - India
- Latin American Coal - Colombia
- Kepco SPC Power Corporation, Philippines
- Interocean Group of Companies - India
- Grasim Industreis Ltd - India
- Dalmia Cement Bharat India
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