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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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Tuesday, 10 January 17
SHIPPING MARKET 2017
After having entered into a New Year, fresh hopes seem to be high for this to be the turning point in the market that many have been looking forwar ...
Monday, 09 January 17
FFA SUPRAMAX: Q1 AND Q2 TRADING UP TO $7100 WHILE CAL17 PRINTED $7250 - FIS
Capesize
Sentiment has swung quickly on capes and although there appears to be a very short list for open tonnage in the Atlantic Feb dates appea ...
Monday, 09 January 17
COAL MARKETS WERE UNEXPECTEDLY ONE OF THE STRONGEST PERFORMERS OF 2016 - SGX
COALspot.com: Coal markets were unexpectedly one of the strongest performers of 2016, with domestic production restrictions in China as well as sup ...
Monday, 09 January 17
THE INDONESIA COAL BENCHMARK PRICE SLIDES AFTER THE RECENT RALLY
COALspot.com: The Indonesia coal benchmark price slides in January 2017 after the recent rally. The government declared benchmark prices for Indone ...
Friday, 06 January 17
U.S. WEEKLY ESTIMATED COAL PRODUCTION TOTALED APPROXIMATELY 12.4 MMST; DOWN 18.4% W/W - EIA
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totalled an estimated 12.4 million short ton ...
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- Leighton Contractors Pty Ltd - Australia
- Rio Tinto Coal - Australia
- Singapore Mercantile Exchange
- Intertek Mineral Services - Indonesia
- Vedanta Resources Plc - India
- Bhoruka Overseas - Indonesia
- Planning Commission, India
- White Energy Company Limited
- The Treasury - Australian Government
- Grasim Industreis Ltd - India
- San Jose City I Power Corp, Philippines
- Formosa Plastics Group - Taiwan
- TNB Fuel Sdn Bhd - Malaysia
- Bayan Resources Tbk. - Indonesia
- Heidelberg Cement - Germany
- Kapuas Tunggal Persada - Indonesia
- Ind-Barath Power Infra Limited - India
- OPG Power Generation Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Globalindo Alam Lestari - Indonesia
- Meenaskhi Energy Private Limited - India
- Binh Thuan Hamico - Vietnam
- Central Java Power - Indonesia
- Minerals Council of Australia
- Riau Bara Harum - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Essar Steel Hazira Ltd - India
- Port Waratah Coal Services - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- LBH Netherlands Bv - Netherlands
- Coal and Oil Company - UAE
- Parry Sugars Refinery, India
- Indogreen Group - Indonesia
- Sakthi Sugars Limited - India
- Baramulti Group, Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Marubeni Corporation - India
- Dalmia Cement Bharat India
- Therma Luzon, Inc, Philippines
- Mintek Dendrill Indonesia
- Sree Jayajothi Cements Limited - India
- Karaikal Port Pvt Ltd - India
- Mercator Lines Limited - India
- Siam City Cement PLC, Thailand
- Renaissance Capital - South Africa
- Bharathi Cement Corporation - India
- Semirara Mining Corp, Philippines
- Straits Asia Resources Limited - Singapore
- Ambuja Cements Ltd - India
- South Luzon Thermal Energy Corporation
- Ministry of Transport, Egypt
- VISA Power Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indika Energy - Indonesia
- Star Paper Mills Limited - India
- Georgia Ports Authority, United States
- Maheswari Brothers Coal Limited - India
- Ministry of Finance - Indonesia
- Trasteel International SA, Italy
- Neyveli Lignite Corporation Ltd, - India
- Australian Coal Association
- CIMB Investment Bank - Malaysia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kumho Petrochemical, South Korea
- Malabar Cements Ltd - India
- ASAPP Information Group - India
- Asmin Koalindo Tuhup - Indonesia
- Vizag Seaport Private Limited - India
- Attock Cement Pakistan Limited
- Mjunction Services Limited - India
- Meralco Power Generation, Philippines
- European Bulk Services B.V. - Netherlands
- International Coal Ventures Pvt Ltd - India
- Eastern Energy - Thailand
- Indian Oil Corporation Limited
- Vijayanagar Sugar Pvt Ltd - India
- Carbofer General Trading SA - India
- Electricity Generating Authority of Thailand
- Metalloyd Limited - United Kingdom
- Orica Australia Pty. Ltd.
- PTC India Limited - India
- Eastern Coal Council - USA
- Ceylon Electricity Board - Sri Lanka
- Krishnapatnam Port Company Ltd. - India
- Standard Chartered Bank - UAE
- Kohat Cement Company Ltd. - Pakistan
- New Zealand Coal & Carbon
- Energy Link Ltd, New Zealand
- Kartika Selabumi Mining - Indonesia
- Chettinad Cement Corporation Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Economic Council, Georgia
- Sinarmas Energy and Mining - Indonesia
- Iligan Light & Power Inc, Philippines
- IEA Clean Coal Centre - UK
- Merrill Lynch Commodities Europe
- Central Electricity Authority - India
- Chamber of Mines of South Africa
- India Bulls Power Limited - India
- Bhushan Steel Limited - India
- AsiaOL BioFuels Corp., Philippines
- ICICI Bank Limited - India
- Sindya Power Generating Company Private Ltd
- The University of Queensland
- Thai Mozambique Logistica
- Salva Resources Pvt Ltd - India
- Electricity Authority, New Zealand
- Orica Mining Services - Indonesia
- Global Green Power PLC Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Africa Commodities Group - South Africa
- MS Steel International - UAE
- London Commodity Brokers - England
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Lanco Infratech Ltd - India
- Siam City Cement - Thailand
- Xindia Steels Limited - India
- Gujarat Electricity Regulatory Commission - India
- Independent Power Producers Association of India
- Anglo American - United Kingdom
- Jindal Steel & Power Ltd - India
- CNBM International Corporation - China
- Bhatia International Limited - India
- Wood Mackenzie - Singapore
- The State Trading Corporation of India Ltd
- Maharashtra Electricity Regulatory Commission - India
- Gujarat Mineral Development Corp Ltd - India
- Sojitz Corporation - Japan
- Bukit Asam (Persero) Tbk - Indonesia
- Tamil Nadu electricity Board
- SN Aboitiz Power Inc, Philippines
- Bangladesh Power Developement Board
- Commonwealth Bank - Australia
- Parliament of New Zealand
- Coalindo Energy - Indonesia
- Savvy Resources Ltd - HongKong
- Altura Mining Limited, Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Videocon Industries ltd - India
- IHS Mccloskey Coal Group - USA
- Petron Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Tata Chemicals Ltd - India
- Toyota Tsusho Corporation, Japan
- Oldendorff Carriers - Singapore
- Bulk Trading Sa - Switzerland
- Bukit Baiduri Energy - Indonesia
- GAC Shipping (India) Pvt Ltd
- Thiess Contractors Indonesia
- Posco Energy - South Korea
- TeaM Sual Corporation - Philippines
- Billiton Holdings Pty Ltd - Australia
- Edison Trading Spa - Italy
- Romanian Commodities Exchange
- Cigading International Bulk Terminal - Indonesia
- Latin American Coal - Colombia
- Kaltim Prima Coal - Indonesia
- Kobexindo Tractors - Indoneisa
- Medco Energi Mining Internasional
- Sarangani Energy Corporation, Philippines
- Samtan Co., Ltd - South Korea
- Coastal Gujarat Power Limited - India
- Price Waterhouse Coopers - Russia
- Aboitiz Power Corporation - Philippines
- Manunggal Multi Energi - Indonesia
- Energy Development Corp, Philippines
- Indonesian Coal Mining Association
- Australian Commodity Traders Exchange
- Directorate General of MIneral and Coal - Indonesia
- Banpu Public Company Limited - Thailand
- Madhucon Powers Ltd - India
- Uttam Galva Steels Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Miang Besar Coal Terminal - Indonesia
- Indo Tambangraya Megah - Indonesia
- Mercuria Energy - Indonesia
- SMC Global Power, Philippines
- McConnell Dowell - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Timah Investasi Mineral - Indoneisa
- Alfred C Toepfer International GmbH - Germany
- Gujarat Sidhee Cement - India
- Wilmar Investment Holdings
- Aditya Birla Group - India
- Makarim & Taira - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Bukit Makmur.PT - Indonesia
- GVK Power & Infra Limited - India
- SMG Consultants - Indonesia
- Goldman Sachs - Singapore
- Indian Energy Exchange, India
- Kalimantan Lumbung Energi - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Global Coal Blending Company Limited - Australia
- Kepco SPC Power Corporation, Philippines
- GMR Energy Limited - India
- Jaiprakash Power Ventures ltd
- Holcim Trading Pte Ltd - Singapore
- Pipit Mutiara Jaya. PT, Indonesia
- PowerSource Philippines DevCo
- Deloitte Consulting - India
- Sical Logistics Limited - India
- Cement Manufacturers Association - India
- Global Business Power Corporation, Philippines
- Antam Resourcindo - Indonesia
- Simpson Spence & Young - Indonesia
- Kideco Jaya Agung - Indonesia
- Directorate Of Revenue Intelligence - India
- Larsen & Toubro Limited - India
- Agrawal Coal Company - India
- Pendopo Energi Batubara - Indonesia
- Power Finance Corporation Ltd., India
- Ministry of Mines - Canada
- Interocean Group of Companies - India
- Borneo Indobara - Indonesia
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