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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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Thursday, 15 September 16
INDONESIA MAY FACE A COAL CRISIS BY 2035!
COALspot.com: Indonesia is the world’s fourth-largest coal producer and the world’s largest thermal coal exporter may face a coal crisi ...
Thursday, 15 September 16
CAPESIZE: LAST WEEK ENDED ON A VERY STRONG NOTE MAINLY DRIVEN BY A ACTIVE BRAZIL MARKET - FEARNLYS
Supramax
With holidays in the eastern hemisphere beginning this week, the sentiment and activity level has been decreasing.
In the Pacific, ...
Wednesday, 14 September 16
THE DRY BULK MARKET REACHED LEVELS LAST SEEN BACK IN 2015 - INTERMODAL
In an earlier column we commented that we are undergoing “shipping’s new (ab)normal” with constrained financing, shift in demand ...
Wednesday, 14 September 16
THE PORT OF NEWCASTLE SHIPPED 12.48 MMT OF COAL IN AUGUST; AVERAGE SELLING PRICE WAS $AU 83.33
COALspot.com: The Port of Newcastle, Australia’s major trading ports and the world’s largest coal export port has shipped $AU $1,040.4 ...
Tuesday, 13 September 16
CAPESIZE: BIG STRENGTH SEEN IN THE MARKET THIS WEEK - ALLIED
Capesize - Big strength seen in the market this week, with an upbeat in sentiment amongst owners helping pull up rates fairly quickly and many hold ...
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- Savvy Resources Ltd - HongKong
- Posco Energy - South Korea
- Commonwealth Bank - Australia
- Sakthi Sugars Limited - India
- Energy Development Corp, Philippines
- Ambuja Cements Ltd - India
- Siam City Cement PLC, Thailand
- ICICI Bank Limited - India
- Minerals Council of Australia
- Cigading International Bulk Terminal - Indonesia
- Jaiprakash Power Ventures ltd
- Malabar Cements Ltd - India
- PowerSource Philippines DevCo
- Altura Mining Limited, Indonesia
- Singapore Mercantile Exchange
- Gujarat Mineral Development Corp Ltd - India
- Kartika Selabumi Mining - Indonesia
- MS Steel International - UAE
- Power Finance Corporation Ltd., India
- Orica Mining Services - Indonesia
- Bangladesh Power Developement Board
- Barasentosa Lestari - Indonesia
- Sarangani Energy Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Australian Coal Association
- TeaM Sual Corporation - Philippines
- Essar Steel Hazira Ltd - India
- Port Waratah Coal Services - Australia
- Australian Commodity Traders Exchange
- Mjunction Services Limited - India
- Tamil Nadu electricity Board
- Sindya Power Generating Company Private Ltd
- India Bulls Power Limited - India
- Aditya Birla Group - India
- CIMB Investment Bank - Malaysia
- Coastal Gujarat Power Limited - India
- Parry Sugars Refinery, India
- Directorate Of Revenue Intelligence - India
- AsiaOL BioFuels Corp., Philippines
- Alfred C Toepfer International GmbH - Germany
- Africa Commodities Group - South Africa
- Miang Besar Coal Terminal - Indonesia
- Makarim & Taira - Indonesia
- Oldendorff Carriers - Singapore
- Larsen & Toubro Limited - India
- Therma Luzon, Inc, Philippines
- Electricity Authority, New Zealand
- Gujarat Electricity Regulatory Commission - India
- SMC Global Power, Philippines
- Central Electricity Authority - India
- Riau Bara Harum - Indonesia
- Kaltim Prima Coal - Indonesia
- Borneo Indobara - Indonesia
- Renaissance Capital - South Africa
- Parliament of New Zealand
- Sree Jayajothi Cements Limited - India
- SMG Consultants - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Ministry of Transport, Egypt
- Asmin Koalindo Tuhup - Indonesia
- Medco Energi Mining Internasional
- Indian Energy Exchange, India
- Antam Resourcindo - Indonesia
- Global Green Power PLC Corporation, Philippines
- Baramulti Group, Indonesia
- Intertek Mineral Services - Indonesia
- Cement Manufacturers Association - India
- Chettinad Cement Corporation Ltd - India
- Heidelberg Cement - Germany
- Ministry of Finance - Indonesia
- Binh Thuan Hamico - Vietnam
- TNB Fuel Sdn Bhd - Malaysia
- Central Java Power - Indonesia
- Eastern Coal Council - USA
- Vijayanagar Sugar Pvt Ltd - India
- Eastern Energy - Thailand
- Aboitiz Power Corporation - Philippines
- Latin American Coal - Colombia
- Bukit Makmur.PT - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Jindal Steel & Power Ltd - India
- PTC India Limited - India
- Electricity Generating Authority of Thailand
- LBH Netherlands Bv - Netherlands
- GN Power Mariveles Coal Plant, Philippines
- Xindia Steels Limited - India
- Siam City Cement - Thailand
- Madhucon Powers Ltd - India
- Formosa Plastics Group - Taiwan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GVK Power & Infra Limited - India
- Thiess Contractors Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Indonesian Coal Mining Association
- The Treasury - Australian Government
- Krishnapatnam Port Company Ltd. - India
- Bhatia International Limited - India
- South Luzon Thermal Energy Corporation
- Wood Mackenzie - Singapore
- Indo Tambangraya Megah - Indonesia
- Sojitz Corporation - Japan
- Kalimantan Lumbung Energi - Indonesia
- Karaikal Port Pvt Ltd - India
- Bhushan Steel Limited - India
- Bulk Trading Sa - Switzerland
- Rio Tinto Coal - Australia
- Agrawal Coal Company - India
- OPG Power Generation Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Star Paper Mills Limited - India
- Timah Investasi Mineral - Indoneisa
- Coalindo Energy - Indonesia
- Lanco Infratech Ltd - India
- Interocean Group of Companies - India
- Bayan Resources Tbk. - Indonesia
- The State Trading Corporation of India Ltd
- Kepco SPC Power Corporation, Philippines
- Deloitte Consulting - India
- Indian Oil Corporation Limited
- Mercuria Energy - Indonesia
- Independent Power Producers Association of India
- Samtan Co., Ltd - South Korea
- Kobexindo Tractors - Indoneisa
- GAC Shipping (India) Pvt Ltd
- IEA Clean Coal Centre - UK
- Standard Chartered Bank - UAE
- The University of Queensland
- Indika Energy - Indonesia
- European Bulk Services B.V. - Netherlands
- Bukit Baiduri Energy - Indonesia
- Economic Council, Georgia
- Mintek Dendrill Indonesia
- SN Aboitiz Power Inc, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Romanian Commodities Exchange
- Kideco Jaya Agung - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Maheswari Brothers Coal Limited - India
- Gujarat Sidhee Cement - India
- Vedanta Resources Plc - India
- San Jose City I Power Corp, Philippines
- Marubeni Corporation - India
- Petrochimia International Co. Ltd.- Taiwan
- Rashtriya Ispat Nigam Limited - India
- Mercator Lines Limited - India
- Carbofer General Trading SA - India
- Ministry of Mines - Canada
- London Commodity Brokers - England
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sinarmas Energy and Mining - Indonesia
- ASAPP Information Group - India
- Chamber of Mines of South Africa
- VISA Power Limited - India
- Salva Resources Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Petron Corporation, Philippines
- Georgia Ports Authority, United States
- Pipit Mutiara Jaya. PT, Indonesia
- Metalloyd Limited - United Kingdom
- Kohat Cement Company Ltd. - Pakistan
- Edison Trading Spa - Italy
- Vizag Seaport Private Limited - India
- Price Waterhouse Coopers - Russia
- Meenaskhi Energy Private Limited - India
- CNBM International Corporation - China
- GMR Energy Limited - India
- Ind-Barath Power Infra Limited - India
- Merrill Lynch Commodities Europe
- Global Coal Blending Company Limited - Australia
- Jorong Barutama Greston.PT - Indonesia
- Goldman Sachs - Singapore
- Bharathi Cement Corporation - India
- Uttam Galva Steels Limited - India
- Attock Cement Pakistan Limited
- Toyota Tsusho Corporation, Japan
- Maharashtra Electricity Regulatory Commission - India
- International Coal Ventures Pvt Ltd - India
- Dalmia Cement Bharat India
- Ceylon Electricity Board - Sri Lanka
- Meralco Power Generation, Philippines
- Straits Asia Resources Limited - Singapore
- Billiton Holdings Pty Ltd - Australia
- Trasteel International SA, Italy
- Sical Logistics Limited - India
- Kapuas Tunggal Persada - Indonesia
- Global Business Power Corporation, Philippines
- Indogreen Group - Indonesia
- Wilmar Investment Holdings
- Pendopo Energi Batubara - Indonesia
- Grasim Industreis Ltd - India
- Kumho Petrochemical, South Korea
- McConnell Dowell - Australia
- Karbindo Abesyapradhi - Indoneisa
- Coal and Oil Company - UAE
- IHS Mccloskey Coal Group - USA
- White Energy Company Limited
- Tata Chemicals Ltd - India
- Videocon Industries ltd - India
- Thai Mozambique Logistica
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- Globalindo Alam Lestari - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Anglo American - United Kingdom
- PetroVietnam Power Coal Import and Supply Company
- Manunggal Multi Energi - Indonesia
- Simpson Spence & Young - Indonesia
- PNOC Exploration Corporation - Philippines
- Planning Commission, India
- New Zealand Coal & Carbon
- Semirara Mining Corp, Philippines
- Energy Link Ltd, New Zealand
- Bhoruka Overseas - Indonesia
- Orica Australia Pty. Ltd.
- Banpu Public Company Limited - Thailand
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