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