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