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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, 12 April 17
SHIPPING MARKET INSIGHT - VASSILIS VASSILIOU
The first quarter of 2017 started relatively busy for the ship repair sector, with most of the repair facilities being nearly fully occupied till t ...
Monday, 10 April 17
THE CAPE INDEX WAS DOWN BY 16.32% WEEK OVER WEEK
COALspot.com: The Freight market was steady week over a week except for Cape. The cape index was down 16.32 percent week over week.
The Baltic ...
Friday, 07 April 17
INDONESIAN GOVERNMENT DECLARED SPOT COAL PRICES STAGE FIRST INCREASE OF THE YEAR
COALspot.com: Indonesian government declared coal benchmark price rose slightly in April, government data showed.
The benchmark price of Indon ...
Friday, 07 April 17
U.S WEEKLY COAL OUTPUT ALMOST FLAT WEEK OVER WEEK - EIA
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totaled an estimated 14.5 million short tons ...
Thursday, 06 April 17
PANAMAX: THE MARKET HAS CONTINUED THE FIRM SENTIMENT FROM LAST WEEK IN BOTH HEMISPHERES - FEARNLEYS
Supramax
With holidays in Asia, the week has started very slow in Pacific. Some fixtures have still been done and levels have remained quite stab ...
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- Miang Besar Coal Terminal - Indonesia
- GVK Power & Infra Limited - India
- Indo Tambangraya Megah - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Siam City Cement - Thailand
- New Zealand Coal & Carbon
- Ambuja Cements Ltd - India
- Kumho Petrochemical, South Korea
- IEA Clean Coal Centre - UK
- Straits Asia Resources Limited - Singapore
- Toyota Tsusho Corporation, Japan
- Metalloyd Limited - United Kingdom
- Energy Link Ltd, New Zealand
- White Energy Company Limited
- SMC Global Power, Philippines
- Ministry of Mines - Canada
- Maheswari Brothers Coal Limited - India
- Bhoruka Overseas - Indonesia
- Cement Manufacturers Association - India
- Price Waterhouse Coopers - Russia
- International Coal Ventures Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Edison Trading Spa - Italy
- Thai Mozambique Logistica
- Antam Resourcindo - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Gujarat Mineral Development Corp Ltd - India
- Coastal Gujarat Power Limited - India
- McConnell Dowell - Australia
- SMG Consultants - Indonesia
- The University of Queensland
- Karbindo Abesyapradhi - Indoneisa
- Merrill Lynch Commodities Europe
- Sarangani Energy Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Krishnapatnam Port Company Ltd. - India
- Indian Energy Exchange, India
- Pendopo Energi Batubara - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Kalimantan Lumbung Energi - Indonesia
- TeaM Sual Corporation - Philippines
- Borneo Indobara - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Anglo American - United Kingdom
- Central Electricity Authority - India
- Star Paper Mills Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Parliament of New Zealand
- Central Java Power - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- The State Trading Corporation of India Ltd
- Kideco Jaya Agung - Indonesia
- Wood Mackenzie - Singapore
- Malabar Cements Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Australian Commodity Traders Exchange
- Mintek Dendrill Indonesia
- Energy Development Corp, Philippines
- Iligan Light & Power Inc, Philippines
- Heidelberg Cement - Germany
- The Treasury - Australian Government
- GN Power Mariveles Coal Plant, Philippines
- Medco Energi Mining Internasional
- Electricity Authority, New Zealand
- Gujarat Sidhee Cement - India
- Bahari Cakrawala Sebuku - Indonesia
- Economic Council, Georgia
- AsiaOL BioFuels Corp., Philippines
- Riau Bara Harum - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Bangladesh Power Developement Board
- Sindya Power Generating Company Private Ltd
- Madhucon Powers Ltd - India
- ASAPP Information Group - India
- Manunggal Multi Energi - Indonesia
- European Bulk Services B.V. - Netherlands
- Vizag Seaport Private Limited - India
- ICICI Bank Limited - India
- Bharathi Cement Corporation - India
- Port Waratah Coal Services - Australia
- Ind-Barath Power Infra Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- PTC India Limited - India
- Altura Mining Limited, Indonesia
- Singapore Mercantile Exchange
- Latin American Coal - Colombia
- MS Steel International - UAE
- Jindal Steel & Power Ltd - India
- GAC Shipping (India) Pvt Ltd
- Billiton Holdings Pty Ltd - Australia
- Meenaskhi Energy Private Limited - India
- Grasim Industreis Ltd - India
- Indian Oil Corporation Limited
- London Commodity Brokers - England
- Petron Corporation, Philippines
- Interocean Group of Companies - India
- Therma Luzon, Inc, Philippines
- Baramulti Group, Indonesia
- Bulk Trading Sa - Switzerland
- Georgia Ports Authority, United States
- Ministry of Finance - Indonesia
- Bhushan Steel Limited - India
- Kepco SPC Power Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Thiess Contractors Indonesia
- Makarim & Taira - Indonesia
- Bukit Baiduri Energy - Indonesia
- Xindia Steels Limited - India
- South Luzon Thermal Energy Corporation
- TNB Fuel Sdn Bhd - Malaysia
- Aboitiz Power Corporation - Philippines
- CIMB Investment Bank - Malaysia
- Gujarat Electricity Regulatory Commission - India
- PNOC Exploration Corporation - Philippines
- Mercuria Energy - Indonesia
- Eastern Coal Council - USA
- Eastern Energy - Thailand
- Orica Mining Services - Indonesia
- LBH Netherlands Bv - Netherlands
- Agrawal Coal Company - India
- Barasentosa Lestari - Indonesia
- Renaissance Capital - South Africa
- Asmin Koalindo Tuhup - Indonesia
- Karaikal Port Pvt Ltd - India
- Attock Cement Pakistan Limited
- Directorate General of MIneral and Coal - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bhatia International Limited - India
- Globalindo Alam Lestari - Indonesia
- San Jose City I Power Corp, Philippines
- Leighton Contractors Pty Ltd - Australia
- VISA Power Limited - India
- Alfred C Toepfer International GmbH - Germany
- Planning Commission, India
- Semirara Mining and Power Corporation, Philippines
- Parry Sugars Refinery, India
- Chettinad Cement Corporation Ltd - India
- Romanian Commodities Exchange
- IHS Mccloskey Coal Group - USA
- Samtan Co., Ltd - South Korea
- Commonwealth Bank - Australia
- Binh Thuan Hamico - Vietnam
- Banpu Public Company Limited - Thailand
- Semirara Mining Corp, Philippines
- Vedanta Resources Plc - India
- Bukit Makmur.PT - Indonesia
- Aditya Birla Group - India
- Lanco Infratech Ltd - India
- Kaltim Prima Coal - Indonesia
- India Bulls Power Limited - India
- Deloitte Consulting - India
- Cigading International Bulk Terminal - Indonesia
- SN Aboitiz Power Inc, Philippines
- Oldendorff Carriers - Singapore
- Jaiprakash Power Ventures ltd
- PowerSource Philippines DevCo
- Meralco Power Generation, Philippines
- Larsen & Toubro Limited - India
- Dalmia Cement Bharat India
- GMR Energy Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Essar Steel Hazira Ltd - India
- Formosa Plastics Group - Taiwan
- Power Finance Corporation Ltd., India
- Rio Tinto Coal - Australia
- Minerals Council of Australia
- Orica Australia Pty. Ltd.
- Carbofer General Trading SA - India
- Trasteel International SA, Italy
- Tamil Nadu electricity Board
- Timah Investasi Mineral - Indoneisa
- Indika Energy - Indonesia
- Indogreen Group - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Sical Logistics Limited - India
- Coal and Oil Company - UAE
- Bayan Resources Tbk. - Indonesia
- Uttam Galva Steels Limited - India
- Marubeni Corporation - India
- Ceylon Electricity Board - Sri Lanka
- Tata Chemicals Ltd - India
- Ministry of Transport, Egypt
- CNBM International Corporation - China
- Mercator Lines Limited - India
- Sojitz Corporation - Japan
- Electricity Generating Authority of Thailand
- Kartika Selabumi Mining - Indonesia
- Independent Power Producers Association of India
- Global Coal Blending Company Limited - Australia
- Sree Jayajothi Cements Limited - India
- Intertek Mineral Services - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Chamber of Mines of South Africa
- Simpson Spence & Young - Indonesia
- Coalindo Energy - Indonesia
- Wilmar Investment Holdings
- Africa Commodities Group - South Africa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Siam City Cement PLC, Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kapuas Tunggal Persada - Indonesia
- Videocon Industries ltd - India
- Indonesian Coal Mining Association
- Directorate Of Revenue Intelligence - India
- Mjunction Services Limited - India
- Standard Chartered Bank - UAE
- Kobexindo Tractors - Indoneisa
- Posco Energy - South Korea
- Global Green Power PLC Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Sakthi Sugars Limited - India
- Goldman Sachs - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Australian Coal Association
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