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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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Monday, 12 September 16
THE CAPE MARKET HAS GAINS ON WEEK; THE CAPE INDEX SETTLING AT 1566 POINTS ON FRIDAY
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities rose and ending in a positive note this past week. The BD ...
Friday, 09 September 16
U.S. WEEKLY COAL OUTPUT DECLINED SLIGHTLY TO 16.1 MMST, EIA SAYS
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totalled an estimated 16.1 million short ton ...
Friday, 09 September 16
CAPESIZE: THE SENTIMENT IS SOLID, SAYS FEARNLEYS
Supramax
A quiet start with Labour Day celebrations in the United States leading to very little being reported from the Atlantic basin. Supramaxe ...
Thursday, 08 September 16
U.S. COAL EXPORTS IN JUNE 2016 UP 29% COMPARED TO MAY 2016, SAYS EIA
U.S. coal production in August was 71 million short tons (MMst), which is 6 MMst (9%) higher than in the previous month and 12 MMst (14%) lower tha ...
Wednesday, 07 September 16
WEEKLY MARKET (TANKER) REPORT - INTERMODAL
What goes around comes around! The Shipping industry is infamous for its seasonality and cyclicality and the tanker sector is no exception to these ...
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- Baramulti Group, Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Singapore Mercantile Exchange
- Minerals Council of Australia
- Neyveli Lignite Corporation Ltd, - India
- Leighton Contractors Pty Ltd - Australia
- London Commodity Brokers - England
- Electricity Generating Authority of Thailand
- Wood Mackenzie - Singapore
- LBH Netherlands Bv - Netherlands
- Bukit Baiduri Energy - Indonesia
- Price Waterhouse Coopers - Russia
- Sojitz Corporation - Japan
- Star Paper Mills Limited - India
- Barasentosa Lestari - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Jaiprakash Power Ventures ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Videocon Industries ltd - India
- San Jose City I Power Corp, Philippines
- Antam Resourcindo - Indonesia
- Economic Council, Georgia
- Central Electricity Authority - India
- Savvy Resources Ltd - HongKong
- Malabar Cements Ltd - India
- International Coal Ventures Pvt Ltd - India
- Electricity Authority, New Zealand
- Coastal Gujarat Power Limited - India
- IEA Clean Coal Centre - UK
- AsiaOL BioFuels Corp., Philippines
- Gujarat Electricity Regulatory Commission - India
- Meralco Power Generation, Philippines
- Maheswari Brothers Coal Limited - India
- GVK Power & Infra Limited - India
- Central Java Power - Indonesia
- Indogreen Group - Indonesia
- The State Trading Corporation of India Ltd
- Africa Commodities Group - South Africa
- Kideco Jaya Agung - Indonesia
- GAC Shipping (India) Pvt Ltd
- Ministry of Mines - Canada
- Eastern Energy - Thailand
- Grasim Industreis Ltd - India
- Salva Resources Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Simpson Spence & Young - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Attock Cement Pakistan Limited
- Energy Link Ltd, New Zealand
- Tamil Nadu electricity Board
- Australian Coal Association
- Kartika Selabumi Mining - Indonesia
- Petron Corporation, Philippines
- Orica Mining Services - Indonesia
- Ambuja Cements Ltd - India
- Indian Energy Exchange, India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- Standard Chartered Bank - UAE
- Pendopo Energi Batubara - Indonesia
- Independent Power Producers Association of India
- Miang Besar Coal Terminal - Indonesia
- Mercuria Energy - Indonesia
- Sakthi Sugars Limited - India
- Bhoruka Overseas - Indonesia
- Trasteel International SA, Italy
- Energy Development Corp, Philippines
- Global Business Power Corporation, Philippines
- Indian Oil Corporation Limited
- White Energy Company Limited
- SMG Consultants - Indonesia
- Ind-Barath Power Infra Limited - India
- Eastern Coal Council - USA
- Vijayanagar Sugar Pvt Ltd - India
- Carbofer General Trading SA - India
- Heidelberg Cement - Germany
- Bayan Resources Tbk. - Indonesia
- Deloitte Consulting - India
- PTC India Limited - India
- Mjunction Services Limited - India
- Dalmia Cement Bharat India
- The University of Queensland
- Posco Energy - South Korea
- Tata Chemicals Ltd - India
- Cement Manufacturers Association - India
- Gujarat Mineral Development Corp Ltd - India
- ICICI Bank Limited - India
- Orica Australia Pty. Ltd.
- Asmin Koalindo Tuhup - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- New Zealand Coal & Carbon
- Siam City Cement PLC, Thailand
- Sree Jayajothi Cements Limited - India
- Power Finance Corporation Ltd., India
- Karaikal Port Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Goldman Sachs - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Georgia Ports Authority, United States
- Pipit Mutiara Jaya. PT, Indonesia
- Lanco Infratech Ltd - India
- ASAPP Information Group - India
- Vizag Seaport Private Limited - India
- Makarim & Taira - Indonesia
- Straits Asia Resources Limited - Singapore
- Coal and Oil Company - UAE
- Mercator Lines Limited - India
- Xindia Steels Limited - India
- Gujarat Sidhee Cement - India
- Mintek Dendrill Indonesia
- Sical Logistics Limited - India
- Global Coal Blending Company Limited - Australia
- PowerSource Philippines DevCo
- Indika Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Bangladesh Power Developement Board
- Marubeni Corporation - India
- Bahari Cakrawala Sebuku - Indonesia
- Toyota Tsusho Corporation, Japan
- Ceylon Electricity Board - Sri Lanka
- Sarangani Energy Corporation, Philippines
- Renaissance Capital - South Africa
- Chamber of Mines of South Africa
- Kaltim Prima Coal - Indonesia
- Port Waratah Coal Services - Australia
- Anglo American - United Kingdom
- GMR Energy Limited - India
- Holcim Trading Pte Ltd - Singapore
- Australian Commodity Traders Exchange
- McConnell Dowell - Australia
- Samtan Co., Ltd - South Korea
- Aditya Birla Group - India
- Metalloyd Limited - United Kingdom
- CIMB Investment Bank - Malaysia
- PNOC Exploration Corporation - Philippines
- Wilmar Investment Holdings
- Meenaskhi Energy Private Limited - India
- Alfred C Toepfer International GmbH - Germany
- Indonesian Coal Mining Association
- India Bulls Power Limited - India
- Bulk Trading Sa - Switzerland
- Timah Investasi Mineral - Indoneisa
- Cigading International Bulk Terminal - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Sindya Power Generating Company Private Ltd
- Larsen & Toubro Limited - India
- Uttam Galva Steels Limited - India
- Madhucon Powers Ltd - India
- Riau Bara Harum - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Global Green Power PLC Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Agrawal Coal Company - India
- VISA Power Limited - India
- Medco Energi Mining Internasional
- Petrochimia International Co. Ltd.- Taiwan
- Commonwealth Bank - Australia
- Oldendorff Carriers - Singapore
- Parliament of New Zealand
- Kepco SPC Power Corporation, Philippines
- Rio Tinto Coal - Australia
- The Treasury - Australian Government
- CNBM International Corporation - China
- Billiton Holdings Pty Ltd - Australia
- Directorate Of Revenue Intelligence - India
- European Bulk Services B.V. - Netherlands
- South Luzon Thermal Energy Corporation
- Ministry of Finance - Indonesia
- Siam City Cement - Thailand
- Bhatia International Limited - India
- Merrill Lynch Commodities Europe
- Intertek Mineral Services - Indonesia
- Formosa Plastics Group - Taiwan
- Aboitiz Power Corporation - Philippines
- Thiess Contractors Indonesia
- Kobexindo Tractors - Indoneisa
- Semirara Mining and Power Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Vedanta Resources Plc - India
- Edison Trading Spa - Italy
- Planning Commission, India
- Thai Mozambique Logistica
- Therma Luzon, Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- Interocean Group of Companies - India
- Bukit Makmur.PT - Indonesia
- Romanian Commodities Exchange
- Jindal Steel & Power Ltd - India
- Parry Sugars Refinery, India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kumho Petrochemical, South Korea
- SMC Global Power, Philippines
- Bhushan Steel Limited - India
- Krishnapatnam Port Company Ltd. - India
- Maharashtra Electricity Regulatory Commission - India
- MS Steel International - UAE
- Bharathi Cement Corporation - India
- Iligan Light & Power Inc, Philippines
- SN Aboitiz Power Inc, Philippines
- Borneo Indobara - Indonesia
- Chettinad Cement Corporation Ltd - India
- TeaM Sual Corporation - Philippines
- OPG Power Generation Pvt Ltd - India
- Ministry of Transport, Egypt
- Banpu Public Company Limited - Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- IHS Mccloskey Coal Group - USA
- Latin American Coal - Colombia
- TNB Fuel Sdn Bhd - Malaysia
- Coalindo Energy - Indonesia
- Essar Steel Hazira Ltd - India
- Globalindo Alam Lestari - Indonesia
- Semirara Mining Corp, Philippines
- Binh Thuan Hamico - Vietnam
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