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