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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, 07 March 16
INDONESIAN 5700 GAR COAL INDEX DECLINE $0.05 A TON WEEK OVER WEEK
COALspot.com: Average 5000 GAR coal index of Indonesian origin decline 0.28 percent week over week to averaging $38.66 per ton on this past Friday, ...
Monday, 07 March 16
FREIGHT MARKET MOVING POSITIVE; ALL SEGMENTS EXCEPT CAPE SHOWING A FIRM TREND
COALspot.com: The freight market was steady this past week and showing a firm trend for all segments except for Cape index.
The Baltic Dry Ind ...
Friday, 04 March 16
GLOBAL ECONOMY'S JITTERS ARE SLOWING DOWN SHIPPING EVEN FURTHER - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The global economy’s shaky condition to say the least is now hampering growth and as a result demand for shipping is slowing down, something ...
Friday, 04 March 16
U.S. YEAR-TO-DATE COAL PRODUCTION TOTALED 109.3 MMST; 30.2% LOWER THAN THE COMPARABLE YEAR-TO-DATE COAL PRODUCTION IN 2015 - EIA
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 13.1 million shor ...
Thursday, 03 March 16
INDIA'S BUDGET NOT ENOUGH TO BOOST STEELMAKERS' PROFITABILITY - FITCH RATINGS
COALspot.com: Fitch Ratings says that increase in proposed infrastructure spending in India's latest government budget is unlikely to provide a ...
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- Vedanta Resources Plc - India
- Trasteel International SA, Italy
- PetroVietnam Power Coal Import and Supply Company
- Carbofer General Trading SA - India
- Kideco Jaya Agung - Indonesia
- International Coal Ventures Pvt Ltd - India
- Romanian Commodities Exchange
- Krishnapatnam Port Company Ltd. - India
- European Bulk Services B.V. - Netherlands
- Semirara Mining and Power Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Ceylon Electricity Board - Sri Lanka
- Price Waterhouse Coopers - Russia
- GVK Power & Infra Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Australian Commodity Traders Exchange
- Indian Energy Exchange, India
- AsiaOL BioFuels Corp., Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Medco Energi Mining Internasional
- Rio Tinto Coal - Australia
- The State Trading Corporation of India Ltd
- Interocean Group of Companies - India
- Lanco Infratech Ltd - India
- Central Java Power - Indonesia
- Marubeni Corporation - India
- Mercuria Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Merrill Lynch Commodities Europe
- Jaiprakash Power Ventures ltd
- The Treasury - Australian Government
- SMG Consultants - Indonesia
- Planning Commission, India
- Electricity Generating Authority of Thailand
- Antam Resourcindo - Indonesia
- Formosa Plastics Group - Taiwan
- Bulk Trading Sa - Switzerland
- Parry Sugars Refinery, India
- Vijayanagar Sugar Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Sinarmas Energy and Mining - Indonesia
- Xindia Steels Limited - India
- Madhucon Powers Ltd - India
- Minerals Council of Australia
- Indogreen Group - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Timah Investasi Mineral - Indoneisa
- Bukit Makmur.PT - Indonesia
- Barasentosa Lestari - Indonesia
- Wood Mackenzie - Singapore
- Global Coal Blending Company Limited - Australia
- Ambuja Cements Ltd - India
- MS Steel International - UAE
- Goldman Sachs - Singapore
- Agrawal Coal Company - India
- Coastal Gujarat Power Limited - India
- Standard Chartered Bank - UAE
- Bharathi Cement Corporation - India
- Baramulti Group, Indonesia
- Mintek Dendrill Indonesia
- GN Power Mariveles Coal Plant, Philippines
- OPG Power Generation Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Posco Energy - South Korea
- Latin American Coal - Colombia
- Ministry of Transport, Egypt
- Global Green Power PLC Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Gujarat Electricity Regulatory Commission - India
- Videocon Industries ltd - India
- South Luzon Thermal Energy Corporation
- Jorong Barutama Greston.PT - Indonesia
- Tata Chemicals Ltd - India
- Power Finance Corporation Ltd., India
- Chamber of Mines of South Africa
- ICICI Bank Limited - India
- CNBM International Corporation - China
- Eastern Coal Council - USA
- Bhatia International Limited - India
- New Zealand Coal & Carbon
- Africa Commodities Group - South Africa
- The University of Queensland
- Bhushan Steel Limited - India
- ASAPP Information Group - India
- Kobexindo Tractors - Indoneisa
- Neyveli Lignite Corporation Ltd, - India
- Attock Cement Pakistan Limited
- Pipit Mutiara Jaya. PT, Indonesia
- Georgia Ports Authority, United States
- Indonesian Coal Mining Association
- Energy Link Ltd, New Zealand
- Larsen & Toubro Limited - India
- Renaissance Capital - South Africa
- Kumho Petrochemical, South Korea
- Ministry of Finance - Indonesia
- CIMB Investment Bank - Malaysia
- Bangladesh Power Developement Board
- Kohat Cement Company Ltd. - Pakistan
- Toyota Tsusho Corporation, Japan
- Globalindo Alam Lestari - Indonesia
- PowerSource Philippines DevCo
- IEA Clean Coal Centre - UK
- Electricity Authority, New Zealand
- Kartika Selabumi Mining - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Riau Bara Harum - Indonesia
- Australian Coal Association
- Ministry of Mines - Canada
- Sical Logistics Limited - India
- Borneo Indobara - Indonesia
- Mercator Lines Limited - India
- Star Paper Mills Limited - India
- VISA Power Limited - India
- Aditya Birla Group - India
- Coal and Oil Company - UAE
- TNB Fuel Sdn Bhd - Malaysia
- Chettinad Cement Corporation Ltd - India
- Thiess Contractors Indonesia
- Vizag Seaport Private Limited - India
- Edison Trading Spa - Italy
- Deloitte Consulting - India
- India Bulls Power Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Global Business Power Corporation, Philippines
- Meralco Power Generation, Philippines
- Port Waratah Coal Services - Australia
- Savvy Resources Ltd - HongKong
- PNOC Exploration Corporation - Philippines
- Energy Development Corp, Philippines
- Siam City Cement PLC, Thailand
- Sree Jayajothi Cements Limited - India
- Karaikal Port Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Rashtriya Ispat Nigam Limited - India
- Uttam Galva Steels Limited - India
- Semirara Mining Corp, Philippines
- Intertek Mineral Services - Indonesia
- Therma Luzon, Inc, Philippines
- PTC India Limited - India
- Asmin Koalindo Tuhup - Indonesia
- GAC Shipping (India) Pvt Ltd
- Heidelberg Cement - Germany
- Straits Asia Resources Limited - Singapore
- Mjunction Services Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sarangani Energy Corporation, Philippines
- SMC Global Power, Philippines
- LBH Netherlands Bv - Netherlands
- Karbindo Abesyapradhi - Indoneisa
- Samtan Co., Ltd - South Korea
- Aboitiz Power Corporation - Philippines
- Meenaskhi Energy Private Limited - India
- SN Aboitiz Power Inc, Philippines
- Economic Council, Georgia
- Gujarat Sidhee Cement - India
- Directorate Of Revenue Intelligence - India
- Iligan Light & Power Inc, Philippines
- Indika Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- Eastern Energy - Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- White Energy Company Limited
- Salva Resources Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- McConnell Dowell - Australia
- Malabar Cements Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Indo Tambangraya Megah - Indonesia
- Orica Mining Services - Indonesia
- Banpu Public Company Limited - Thailand
- Singapore Mercantile Exchange
- Cigading International Bulk Terminal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bayan Resources Tbk. - Indonesia
- Ind-Barath Power Infra Limited - India
- Siam City Cement - Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- IHS Mccloskey Coal Group - USA
- Oldendorff Carriers - Singapore
- Binh Thuan Hamico - Vietnam
- Metalloyd Limited - United Kingdom
- Sakthi Sugars Limited - India
- Commonwealth Bank - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Tamil Nadu electricity Board
- Bhoruka Overseas - Indonesia
- Coalindo Energy - Indonesia
- Cement Manufacturers Association - India
- Altura Mining Limited, Indonesia
- Petron Corporation, Philippines
- Independent Power Producers Association of India
- Essar Steel Hazira Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Simpson Spence & Young - Indonesia
- Bukit Baiduri Energy - Indonesia
- Parliament of New Zealand
- Orica Australia Pty. Ltd.
- Sojitz Corporation - Japan
- Makarim & Taira - Indonesia
- Pendopo Energi Batubara - Indonesia
- GMR Energy Limited - India
- Alfred C Toepfer International GmbH - Germany
- Dalmia Cement Bharat India
- Central Electricity Authority - India
- Manunggal Multi Energi - Indonesia
- Thai Mozambique Logistica
- Grasim Industreis Ltd - India
- Indian Oil Corporation Limited
- Leighton Contractors Pty Ltd - Australia
- Wilmar Investment Holdings
- Anglo American - United Kingdom
- Maheswari Brothers Coal Limited - India
- London Commodity Brokers - England
- TeaM Sual Corporation - Philippines
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