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