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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, 06 September 16
INDO GOVT. SETS SEPTEMBER COAL REFERENCE PRICE AT US$ 63.93 PER TON; JUMP 20.17% YTD
COALspot.com: The Indonesia coal benchmark price hits to its highest level since April 2015. The government declared benchmark prices f ...
Tuesday, 06 September 16
CAPESIZE: THE PACIFIC BASIN WAS THE MAIN REGION KEEPING UP WITH THE POSITIVE SUPPORT - ALLIED
Capesize
Despite some mixed feelings being seen early on in the week, we managed to see a positive week-on-week close on Friday with some positiv ...
Monday, 05 September 16
INDIA BECAME ADARO'S SECOND LARGEST MARKET IN 1H' 16
COALspot.com: The Wara Balangan blend product has been well received by customers in China and India - AI
In the second quarter of 2 ...
Monday, 05 September 16
POOR FREIGHT RATES DESPITE STRONG DEMAND GROWTH FROM CHINA - BIMCO
Demand
The dry bulk commodity imports into and exports out of China we have seen in the first half of 2016 are very positive – and nothing ...
Monday, 05 September 16
FREIGHT RATE FROM INDONESIA TO INDIA IS EXPECTED TO BE FLAT TO SOFT THIS WEEK
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities rose and ending in a positive note this past week except ...
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- TNB Fuel Sdn Bhd - Malaysia
- Indian Oil Corporation Limited
- PTC India Limited - India
- Sical Logistics Limited - India
- Kapuas Tunggal Persada - Indonesia
- Coalindo Energy - Indonesia
- The University of Queensland
- Agrawal Coal Company - India
- Australian Coal Association
- Meenaskhi Energy Private Limited - India
- Energy Development Corp, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Georgia Ports Authority, United States
- Jindal Steel & Power Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Parry Sugars Refinery, India
- SMG Consultants - Indonesia
- San Jose City I Power Corp, Philippines
- Rio Tinto Coal - Australia
- Interocean Group of Companies - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bhushan Steel Limited - India
- Riau Bara Harum - Indonesia
- Timah Investasi Mineral - Indoneisa
- Kepco SPC Power Corporation, Philippines
- Port Waratah Coal Services - Australia
- Bukit Makmur.PT - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Oldendorff Carriers - Singapore
- Bhatia International Limited - India
- TeaM Sual Corporation - Philippines
- Ambuja Cements Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Coal and Oil Company - UAE
- ASAPP Information Group - India
- PetroVietnam Power Coal Import and Supply Company
- Posco Energy - South Korea
- Eastern Coal Council - USA
- Maheswari Brothers Coal Limited - India
- Aboitiz Power Corporation - Philippines
- The State Trading Corporation of India Ltd
- Edison Trading Spa - Italy
- Wood Mackenzie - Singapore
- Sree Jayajothi Cements Limited - India
- Aditya Birla Group - India
- ICICI Bank Limited - India
- Formosa Plastics Group - Taiwan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Siam City Cement PLC, Thailand
- Ministry of Mines - Canada
- Ministry of Transport, Egypt
- Heidelberg Cement - Germany
- OPG Power Generation Pvt Ltd - India
- Petron Corporation, Philippines
- Trasteel International SA, Italy
- Karbindo Abesyapradhi - Indoneisa
- GAC Shipping (India) Pvt Ltd
- Videocon Industries ltd - India
- Semirara Mining Corp, Philippines
- McConnell Dowell - Australia
- Standard Chartered Bank - UAE
- Gujarat Electricity Regulatory Commission - India
- Essar Steel Hazira Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Madhucon Powers Ltd - India
- Goldman Sachs - Singapore
- Kartika Selabumi Mining - Indonesia
- Straits Asia Resources Limited - Singapore
- Bukit Baiduri Energy - Indonesia
- Bulk Trading Sa - Switzerland
- Africa Commodities Group - South Africa
- India Bulls Power Limited - India
- Intertek Mineral Services - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Planning Commission, India
- Global Coal Blending Company Limited - Australia
- Rashtriya Ispat Nigam Limited - India
- Mjunction Services Limited - India
- Altura Mining Limited, Indonesia
- MS Steel International - UAE
- Minerals Council of Australia
- Baramulti Group, Indonesia
- Electricity Authority, New Zealand
- Deloitte Consulting - India
- CNBM International Corporation - China
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Chettinad Cement Corporation Ltd - India
- Ministry of Finance - Indonesia
- Meralco Power Generation, Philippines
- Central Electricity Authority - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- Makarim & Taira - Indonesia
- Global Business Power Corporation, Philippines
- VISA Power Limited - India
- Global Green Power PLC Corporation, Philippines
- Parliament of New Zealand
- Indian Energy Exchange, India
- Vizag Seaport Private Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Attock Cement Pakistan Limited
- Jaiprakash Power Ventures ltd
- Sakthi Sugars Limited - India
- Wilmar Investment Holdings
- Semirara Mining and Power Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- GMR Energy Limited - India
- Siam City Cement - Thailand
- Chamber of Mines of South Africa
- Globalindo Alam Lestari - Indonesia
- Larsen & Toubro Limited - India
- Barasentosa Lestari - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- GVK Power & Infra Limited - India
- Sojitz Corporation - Japan
- Sindya Power Generating Company Private Ltd
- Toyota Tsusho Corporation, Japan
- Holcim Trading Pte Ltd - Singapore
- Bhoruka Overseas - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Sarangani Energy Corporation, Philippines
- White Energy Company Limited
- Leighton Contractors Pty Ltd - Australia
- Thiess Contractors Indonesia
- Mintek Dendrill Indonesia
- Latin American Coal - Colombia
- Electricity Generating Authority of Thailand
- Malabar Cements Ltd - India
- Australian Commodity Traders Exchange
- Mercuria Energy - Indonesia
- Merrill Lynch Commodities Europe
- Banpu Public Company Limited - Thailand
- Ceylon Electricity Board - Sri Lanka
- Thai Mozambique Logistica
- SMC Global Power, Philippines
- PNOC Exploration Corporation - Philippines
- Directorate General of MIneral and Coal - Indonesia
- Economic Council, Georgia
- Simpson Spence & Young - Indonesia
- CIMB Investment Bank - Malaysia
- Independent Power Producers Association of India
- Therma Luzon, Inc, Philippines
- Grasim Industreis Ltd - India
- Karaikal Port Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- The Treasury - Australian Government
- Metalloyd Limited - United Kingdom
- Indika Energy - Indonesia
- Tata Chemicals Ltd - India
- Carbofer General Trading SA - India
- Antam Resourcindo - Indonesia
- IEA Clean Coal Centre - UK
- London Commodity Brokers - England
- Directorate Of Revenue Intelligence - India
- Petrochimia International Co. Ltd.- Taiwan
- Xindia Steels Limited - India
- Ind-Barath Power Infra Limited - India
- Bayan Resources Tbk. - Indonesia
- Medco Energi Mining Internasional
- Indonesian Coal Mining Association
- Kobexindo Tractors - Indoneisa
- Indo Tambangraya Megah - Indonesia
- Savvy Resources Ltd - HongKong
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bharathi Cement Corporation - India
- Coastal Gujarat Power Limited - India
- Mercator Lines Limited - India
- New Zealand Coal & Carbon
- IHS Mccloskey Coal Group - USA
- Singapore Mercantile Exchange
- Kohat Cement Company Ltd. - Pakistan
- Kumho Petrochemical, South Korea
- Power Finance Corporation Ltd., India
- Bukit Asam (Persero) Tbk - Indonesia
- European Bulk Services B.V. - Netherlands
- Orica Australia Pty. Ltd.
- Kaltim Prima Coal - Indonesia
- Lanco Infratech Ltd - India
- Gujarat Sidhee Cement - India
- Salva Resources Pvt Ltd - India
- Marubeni Corporation - India
- Star Paper Mills Limited - India
- Uttam Galva Steels Limited - India
- Renaissance Capital - South Africa
- Bangladesh Power Developement Board
- Iligan Light & Power Inc, Philippines
- Central Java Power - Indonesia
- International Coal Ventures Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Price Waterhouse Coopers - Russia
- Binh Thuan Hamico - Vietnam
- Indogreen Group - Indonesia
- Dalmia Cement Bharat India
- Asmin Koalindo Tuhup - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Manunggal Multi Energi - Indonesia
- Tamil Nadu electricity Board
- PowerSource Philippines DevCo
- Alfred C Toepfer International GmbH - Germany
- Cement Manufacturers Association - India
- Pipit Mutiara Jaya. PT, Indonesia
- South Luzon Thermal Energy Corporation
- Borneo Indobara - Indonesia
- Kideco Jaya Agung - Indonesia
- Vedanta Resources Plc - India
- Anglo American - United Kingdom
- Eastern Energy - Thailand
- Cigading International Bulk Terminal - Indonesia
- Energy Link Ltd, New Zealand
- Commonwealth Bank - Australia
- SN Aboitiz Power Inc, Philippines
- Romanian Commodities Exchange
- LBH Netherlands Bv - Netherlands
- Kalimantan Lumbung Energi - Indonesia
- Orica Mining Services - Indonesia
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